SEC Info  
    Home      Search      My Interests      Help      Sign In      Please Sign In

CannAssist International Corp – ‘10-Q’ for 9/30/19

On:  Thursday, 11/14/19, at 3:12pm ET   ·   For:  9/30/19   ·   Accession #:  1214659-19-7165   ·   File #:  0-55809

Previous ‘10-Q’:  ‘10-Q’ on 9/10/19 for 6/30/19   ·   Next:  ‘10-Q’ on 5/14/20 for 3/31/20   ·   Latest:  ‘10-Q/A’ on 11/15/23 for 9/30/23

Find Words in Filings emoji
 
  in    Show  and   Hints

  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

11/14/19  CannAssist International Corp     10-Q        9/30/19   34:1.2M                                   Securex Filings/FA

Quarterly Report   —   Form 10-Q   —   Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML    133K 
 2: EX-31.1     Certification -- §302 - SOA'02                      HTML     16K 
 3: EX-31.2     Certification -- §302 - SOA'02                      HTML     16K 
 4: EX-32.1     Certification -- §906 - SOA'02                      HTML     13K 
34: R1          Document and Entity Information                     HTML     45K 
17: R2          Balance Sheets (Unaudited)                          HTML     78K 
14: R3          Balance Sheets (Unaudited) (Parenthetical)          HTML     32K 
21: R4          Statements of Operations (Unaudited)                HTML     61K 
33: R5          Statement of Changes in Stockholders' Equity        HTML     85K 
                (Unaudited)                                                      
16: R6          Statements of Cash Flows (Unaudited)                HTML     76K 
13: R7          Description of Business and History                 HTML     21K 
23: R8          Summary of Significant Accounting Policies          HTML     25K 
32: R9          Going Concern                                       HTML     17K 
25: R10         Loan Payable                                        HTML     14K 
29: R11         Related Party Transactions                          HTML     20K 
20: R12         Common Stock                                        HTML     17K 
12: R13         Subsequent Events                                   HTML     15K 
24: R14         Summary of Significant Accounting Policies          HTML     37K 
                (Policies)                                                       
28: R15         Description of Business and History (Details        HTML     30K 
                Narrative)                                                       
19: R16         Summary of Significant Accounting Policies          HTML     18K 
                (Details Narrative)                                              
11: R17         Going Concern (Details Narrative)                   HTML     26K 
26: R18         Loan Payable (Details Narrative)                    HTML     15K 
27: R19         Related Party Transactions (Details Narrative)      HTML     53K 
18: R20         Common Stock (Details Narrative)                    HTML     43K 
15: R21         Subsequent Events (Details Narrative)               HTML     16K 
30: XML         IDEA XML File -- Filing Summary                      XML     52K 
22: EXCEL       IDEA Workbook of Financial Reports                  XLSX     29K 
 5: EX-101.INS  XBRL Instance -- cik0001709542-20190930              XML    353K 
 7: EX-101.CAL  XBRL Calculations -- cik0001709542-20190930_cal      XML     82K 
 8: EX-101.DEF  XBRL Definitions -- cik0001709542-20190930_def       XML    191K 
 9: EX-101.LAB  XBRL Labels -- cik0001709542-20190930_lab            XML    359K 
10: EX-101.PRE  XBRL Presentations -- cik0001709542-20190930_pre     XML    284K 
 6: EX-101.SCH  XBRL Schema -- cik0001709542-20190930                XSD     60K 
31: ZIP         XBRL Zipped Folder -- 0001214659-19-007165-xbrl      Zip     41K 


‘10-Q’   —   Quarterly Report


This is an HTML Document rendered as filed.  [ Alternative Formats ]



 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 

ACT OF 1934

 

For the quarterly period ended September 30, 2019

 

  o   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

 

Commission file number:  000-55809

 

CANNASSIST INTERNATIONAL CORP.

 (Exact name of registrant as specified in its charter)

 

 Delaware    82-1873116
(State or Other Jurisdiction of Incorporation or
Organization)
  (I.R.S. Employer Identification No.)
     
     
1548 Loch Ness Dr., Fallbrook, CA  92028   82834
(Address of Principal Executive Offices)   (Zip Code)
     

Registrant’s telephone number, including area code: (760) 990-3091 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days).    Yes  x    No ¨

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). 

Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer x Smaller Reporting Company x
Emerging growth company x    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(1) of the Exchange Act. ¨

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No x  

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which
registered
Common Stock N/A N/A

  

As of November 14, 2019, the Company had 18,435,000 shares of its common stock, par value $.0001 per share, issued and outstanding.

 

 

 

 C: 
   
 

 

TABLE OF CONTENTS

 

PART I    
     
Item 1. Condensed Unaudited Financial Statements 3
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
11
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 14
     
Item 4. Controls and Procedures 14
     
PART II   15
     
Item 1. Legal Proceedings 15
     
Item 1A. Risk Factors 15
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
     
Item 3. Defaults Upon Senior Securities 15
     
Item 4. Mining Safety Disclosures 15
     
Item 5. Other Information 15
     
Item 6. Exhibits 16
     
  Signatures 17

 

 C: 
  C: 2 
 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

 

CANNASSIST INTERNATIONAL CORP.

INDEX TO FINANCIAL STATEMENTS

 

 

Balance Sheets as of September 30, 2019 (unaudited) and December 31, 2018 4
   
Statements of Operations for the three and nine months ended September 30, 2019 and 2018 (unaudited) 5
   

Statements of Changes in Stockholders’ Equity (Deficit) for the nine months ended September 30, 2019

and 2018 (unaudited)

6
   
Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (unaudited) 7
   
Notes to Condensed Financial Statements (unaudited) 8

  

 C: 
 3 
 

 

CannAssist International Corp.

Balance Sheets

 

   September 30, 2019  December 31, 2018
   (Unaudited)   
ASSETS      
Current assets:      
    Cash  $85,088   $67,351 
    Accounts receivable   58,632    56,160 
 Prepaid expenses   54,129    62,173 
 Inventory   39,734    19,764 
           
Total assets  $237,583   $205,448 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY
(DEFICIT)
          
Current liabilities:          
    Accounts payable  $155,861   $89,565 
    Accounts payable – related party   12,845    4,373 
    Customer deposits   59,215    59,671 
    Due to a related party   9,498    8,666 
    Loan payable   1,000    1,000 
    Accrual for income taxes   -    6,748 
Total current liabilities   238,419    170,023 
           
Commitments and contingencies        - 
           
Stockholders’ Equity (Deficit):          
Preferred stock, $0.0001 par value 20,000,000 shares
authorized; none issued and outstanding
   -    - 
Common Stock, $0.0001 par value, 100,000,000 shares
authorized; 18,385,000 and 12,410,000 issued and
outstanding, respectively
   1,839    1,241 
Stock subscription receivable   -    (30)
Additional paid in capital   344,572    13,920 
(Accumulated deficit) retained earnings   (347,247)   20,294 
Total Stockholders’ (deficit) equity   (836)   35,425 
           
Total Liabilities and Stockholders’ Deficit  $237,583   $205,448 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 C: 
 4 
 

 

CannAssist International Corp.

Statements of Operations
(Unaudited)

 

   For the Three Months ended
September 30,
  For the Nine Months ended
September 30,
   2019  2018  2019  2018
Revenue  $77,264   $189,330   $515,942   $189,683 
Revenue – related party   -    163,980    -    163,980 
Total revenue   77,264    353,310    515,942    353,663 
                     
Cost of revenue   15,161    141,636    343,729    141,693 
Cost of revenue– related party   -    129,636    -    129,636 
Total cost of revenue   15,161    271,272    343,729    271,329 
Gross margin   62,103    82,038    172,213    82,334 
                     
Operating expenses:                    
     General and administrative   70,163    11,515    194,771    12,371 
     General and administrative– related party   3,350    -    157,450      
     Commissions – related party   11,395    17,594    23,962    17,594 
     Professional fees   56,120    10,797    161,152    17,505 
Total operating expenses   141,028    39,906    537,335    47,470 
                     
Income (loss) from operations   (78,925)   42,132    (365,122)   34,864 
                     
Other expense:                    
     Interest expense   (1,903)   -    (2,419)   - 
Total other expense   (1,903)   -    (2,419)   - 
                     
Income (loss) before provision for income taxes   (80,828)   42,132    (367,541)   34,864 
Provision for income taxes   -    (7,300)   -    (7,300)
                     
Net Income (Loss)  $(80,828)  $34,832   $(367,541)  $27,564 
                     
Income (Loss) per share, basic and diluted  $(0.00)  $0.00   $(0.03)  $0.01 
Weighted average shares outstanding, basic
and diluted
   17,878,478    10,367,501    12,431,452    15,688,608 

  

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 C: 
 5 
 

 

CannAssist International Corp.

Statement of Changes in Stockholders’ Equity

September 30, 2018

(Unaudited)

 

            Additional     Total
   Common Stock  Common Stock  Paid-in  Retained  Stockholders'
   Shares  Amount  To Be Issued  Capital  Earnings  Deficit
Balance, December 31, 2017   20,000,000   $2,000   $-   $471   $(5,091)  $(2,620)
Net loss   -    -    -    -    (345)   (345)
Balance, March 31, 2018   20,000,000    2,000    -    471    (5,436)   (2,965)
Contributed capital   -    -    -    2,400    -    2,400 
Common stock cancelled   (20,000,000)   (2,000)   -    2,000    -    - 
Common stock issued for cash   900,000    90    1    -    -    91 
Common stock issued for cash –
related party
   3,300,000    330    -    -    -    330 
Recapitalization of reverse
merger
   -    -    -    (650)   -    (650)
Net loss   -                   (6,923)   (6,923)
Balance, June 30, 2018   4,200,000    420    1    4,221    (12,359)   (7,717)
Common stock issued for cash   4,600,000    460    (1)   -    -    459 
Common stock issued – related party   3,000,000    300    -    (300)   -    - 
Net loss   -    -    -    -    34,832    34,832 
Balance, September 30, 2018   11,800,000   $1,180   $-   $3,921   $22,473   $27,574 

 

 

 

 

CannAssist International Corp.

Statement of Changes in Stockholders’ Equity

September 30, 2019

(Unaudited)

 

         Additional  Stock     Total
   Common Stock  Paid-in  Subscription  Retained  Stockholders'
   Shares  Amount  Capital  Receivable  Earnings  Deficit
Balance, December 31,
2018
   12,410,000   $1,241   $13,920   $(30)  $20,294   $35,425 
Cash received on
subscription receivable
   -    -    -    30    -    30 
Net loss   -    -    -    -    (36,150)   (36,150)
Balance, March 31, 2019   12,410,000    1,241    13,920    -    (15,856)   (695)
Common stock issued for
license agreement –
related party
   5,000,000    500    149,500    -    -    150,000 
Net loss   -    -    (250,563)   (250,563)          
Balance, June 30, 2019   17,410,000   $1,741   $163,420   $-   $(266,419)  $(101,258)
Common stock issued for cash   850,000    85    149,915    -    -    150,000 
Common stock issued for services   125,000    13    31,237    -    -    31,250 
Net loss   -    -    -    -    (80,828)   (80,828)
Balance, September 30, 2019   18,385,000    1,839    344,572    -    (347,247)   (836)

  

The accompanying notes are an integral part of these unaudited condensed financial statements. 

 

 C: 
 6 
 

 

CannAssist International Corp.

Statements of Cash Flows

(Unaudited)

 

   For the Nine Months ended
September 30,
   2019  2018
Cash flows from operating activities:      
Net (loss) income  $(367,541)  $27,564 
Adjustments to reconcile net loss to net cash used in operating activities:          
    Expenses paid for by stockholder and contributed as capital   -    1,750 
    Common stock issued to licensing expense – related party   150,000    - 
    Common stock issued for services   31,250    - 
Changes in Operating Assets and Liabilities:          
      Accounts receivable   (2,472)   (13,300)
      Inventory   (19,971)   (13,600)
      Prepaid expenses   8,045    (91,181)
     Accounts payable and accrued liabilities   68,020    22,196 
     Customer deposits   (456)   109,320 
Net cash (used) provided by operating activities   (133,125)   42,749 
           
Cash flows from Investing activities:   -    - 
           
Cash flows from Financing activities:          
      Proceeds from loans - related party   12,450    6,000 
      Repayment of loans - related party   (11,618)   - 
      Proceeds from sale of common stock   150,000    2,635 
      Proceeds from stock subscription receivable   30    880 
Net cash provided by financing activities   150,862    9,515 
           
Net increase in cash   17,737    52,264 
Cash, beginning of period   67,351    380 
Cash, end of period  $85,088   $52,644 
           
Supplemental Disclosure of Cash Flow Information:          
Cash paid for interest  $-   $- 
Cash paid for taxes  $-   $- 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 C: 
 7 
 

 

CANNASSIST INTERNATIONAL CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

 

NOTE 1 - DESCRIPTION OF BUSINESS AND HISTORY

 

Description of business

 

CannAssist International Corp. (the “Company” or “CannAssist”) was incorporated on May 17, 2017 under the laws of the state of Delaware under the name Iris Grove Acquisition Corporation to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. On May 23, 2018 the Company changed its name to CannAssist International Corporation.

 

On June 18, 2018, the Company cancelled all 20,000,000 shares of its issued and outstanding stock and issued 4,200,000, shares of common stock pursuant to Section 4(a)(2) of the Securities Act of 1933 at par representing 100% of the total outstanding common stock. With the issuance of the stock and the redemption of the 20,000,000 shares of stock, the Company effected a change in its control and the new majority shareholder(s) elected new management of the Company. The Company intends to develop its business plan by acquiring Xceptor, LLC, a Wyoming corporation.

 

On July 12, 2018, the “Company, entered into a share exchange acquisition agreement with Xceptor LLC, a private company organized under the laws of Wyoming (“Xceptor”). The Acquisition was effected by the Company through the exchange of all the outstanding membership interests of Xceptor for 3,000,000 shares of common stock of the Company, valued at $0.0001 per share. At the time of the Acquisition, there was one shareholder of the Company who is also a shareholder and manager of Xceptor. Xceptor has become a wholly owned subsidiary of the Company and the Company has taken over its operations and business plan. Prior to the Acquisition, the Company had no ongoing business or operations. Since the Company and Xceptor were entities under common control prior to the Acquisition, the transaction is accounted for as a restructuring transaction. The Company has recast prior period financial statements to reflect the conveyance of Xceptor’s common shares as if the restructuring transaction had occurred as of the earliest date of the financial statements.

 

CannAssist produces and sells its cannabidiol ("CBD") product, “Cibidinol,” which is formulated based on a process developed by its founder Mark Palumbo. CBD is a non-psychoactive compound found in hemp and cannabis. CannAssist’s initial research and development work, aimed at enhancing the bioavailability of desired molecular structures, resulted in the creation of a line of CBD products, most notably its CBD product, Cibidinol. Cibidinol will be available in a line of consumable and topical products that the Company believes will make enhanced CBD products more available and accessible to consumers.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and footnotes for the year ended December 31, 2018 included on the Company’s Form 10-K. The results of the nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the full year ending December 31, 2019.

 

In the opinion of management, all adjustments necessary to present fairly the financial position as of September 30, 2019 and the results of operations and cash flows presented herein have been included in the financial statements. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results of operations for the full year.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

 C: 
 8 
 

 

CANNASSIST INTERNATIONAL CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

 

Accounts Receivable

 

Revenues that have been recognized but not yet received are recorded as accounts receivable. Losses on receivables will be recognized when it is more likely than not that a receivable will not be collected. An allowance for estimated uncollectible amounts will be recognized to reduce the amount of receivables to its net realizable value when needed. The allowance for uncollectible amounts is evaluated quarterly.

 

Revenue Recognition

 

Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon delivery.

 

The Company recognizes revenue when product is shipped. The Company will often receive payment and/or pay for the cost of goods prior to shipping. When this occurs, the result is both a prepaid for the supplies to be used in their product and a customer deposit. As of September 30, 2019, the Company has neither a prepaid or customer deposits for orders. As of December 31, 2018, the Company has a prepaid expense of $62,173 and customer deposits of $59,671, for orders to be shipped in Q1, 2019.

 

Cost of Sales

 

Cost of sales is determined on the basis of the cost of production or the purchase of goods, adjusted for the variation of inventory Cost of sale is recognized as the direct cost of products or services sold during the period.

 

Recent Accounting Standards

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The ASU requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. This new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods, and early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The adoption of this standard has had no impact on the financial statements as the Company does not currently have any long-term lease obligations.

 

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

 C: 
 9 
 

 

CANNASSIST INTERNATIONAL CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

 

NOTE 3 - GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated revenues of $515,942 during the nine months ended September 30, 2019 and had a net loss of $367,541 for the nine months ended September 30, 2019. The Company has an accumulated deficit of $347,247 as of September 30, 2019. The Company requires capital for its contemplated operational and marketing activities. The obtainment of additional financing, through an initial capital raise, the successful development of the Company’s contemplated plan of operations, and its transition to the attainment of continued profitable operations are necessary for the Company to continue operations. There is no guarantee that the Company will be able to obtain the necessary financing or profitable operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

NOTE 4 – LOAN PAYABLE

 

On October 11, 2017, the Company received a $1,000 loan from a third party. The loan is unsecured, due on demand and non-interest bearing.

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

Marla Palumbo has advanced the Company a limited amount of funds to cover some general operating expenses and travel costs. These advances are unsecured, due on demand and non-interest bearing. As of September 30, 2019, and December 31, 2018, the balance due to Ms. Palumbo for cash advances is $9,498 and $300, respectively. Ms. Palumbo is the President of the Company and wife of the CEO, Mark Palumbo.

 

On June 29, 2018, Ms. Palumbo advanced the Company $6,000 for general operating expenses. The advance is unsecured, due on demand and non-interest bearing. During the nine months ended September 30, 2019, the $6,000 was repaid.

 

During the year ended December 31, 2018, EME, Ltd. advanced the Company $2,366 to pay for certain operating expenses. EME, Ltd. is owned by Mark Palumbo, CEO. The advance was repaid during the nine months ended September 30, 2019. The advance was unsecured, non-interest bearing and due on demand. In addition, there is $12,845 and $4,373 of accounts payable due to EME, Ltd as of September 30, 2019 and December 31, 2018.

 

During the three and nine months ended September 30, 2019, the Company paid sales commissions of $11,395 and $23,962, respectively, to EME Ltd.

 

During the three and nine months ended September 30, 2018, the Company paid sales commissions of $17,594 and $17,594, respectively, to EME Ltd.

 

During the three and nine months ended September 30, 2019, the Company incurred $3,350 and $7,450, respectively, of expense for Matthew Palumbo for product design services. Matthew Palumbo is the son of Mark Palumbo, CEO.

 

On April 29, 2019, the Company entered into a Technology License Agreement with Mark Palumbo (“Licensor”) whereby the Licensor granted to the Company an exclusive worldwide license (the “License”) to use, market, promote and distribute certain technology related to a provisional patent application for a “Process for creating Carbohydrate Complexes with Cannabinoids and other Hydrophobic Molecules in large scale,” related patent applications, related trade-secrets and associated knowhow, including methods, techniques, specifications, procedures, information, systems, knowledge and business processes required to practice and carry on business in the field of data collection, security and management (the “Technology”). The initial term of the License is 5-years (the “Initial Term”) and shall automatically be renewed for successive 1-year terms (each, a “Renewal Term”) unless the Company elects to terminate the License by giving 30 days’ written notice prior to commencement of a Renewal Term. In exchange for the License of the Technology, the Company shall issue to the Licensor 5,000,000 restricted shares of its common stock, valued at par value per share, at the effective date of the agreement, and shall issue to the Licensor an additional 1,000,000 restricted shares of its common stock, valued at par value per share, at the commencement of each Renewal Term.

 

 C: 
 10 
 

 

CANNASSIST INTERNATIONAL CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2019

 

 

NOTE 6 – COMMON STOCK

 

During the year ended December 31, 2018, the Company sold 5,005,000 shares of common stock to third parties for total cash proceeds of $10,500. As of December 31, 2018, $30 has not been collected and has been debited to stock subscription receivable. The $30 was collected during the nine months ended September 30, 2019.

 

Pursuant to the terms of the licensing agreement with Mark Palumbo (Note 5) the Company issued 5,000,000 shares of common stock. The shares were valued at $0.03, the average price that common stock has recently been sold for, for total non-cash expense of $150,000.

 

During the nine months ended September 30, 2019, the Company granted 125,000 shares of common stock. The shares were valued at $0.25 for total non-cash expense of $31,250.

 

During the nine months ended September 30, 2019, the Company sold 850,000 shares of common stock for total cash proceeds of $150,000.

 

 

NOTE 7 – SUBSEQUENT EVENTS

 

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements other than the following.

 

Subsequent to September 30, 2019, the Company granted 50,000 shares of common stock for services.

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following information should be read in conjunction with our financial statements and related notes thereto included in Part I, Item 1, above.

 

Forward Looking Statements

 

Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:

 

·our future strategic plans

·our future operating results;

·our business prospects;

·our contractual arrangements and relationships with third parties;

·the dependence of our future success on the general economy;

·our possible future financings; and

·the adequacy of our cash resources and working capital.

 

These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

 

 C: 
 11 
 

 

Executive Overview

 

CannAssist International Corporation (“CannAssist” or the "Company") was incorporated on May 17, 2017 under the laws of the State of Delaware under the name Iris Grove Acquisition Corporation to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

 

On July 12, 2018, the “Company, entered into a share exchange acquisition agreement with Xceptor LLC, a private company organized under the laws of Wyoming (“Xceptor”). The Acquisition was effected by the Company through the exchange of all the outstanding membership interests of Xceptor for 3,000,000 shares of common stock of the Company, valued at $0.0001 per share. At the time of the Acquisition, there was one shareholder of the Company who is also a shareholder and manager of Xceptor. Xceptor has become a wholly owned subsidiary of the Company and the Company has taken over its operations and business plan. Prior to the Acquisition, the Company had no ongoing business or operations.

 

CannAssist produces and sells its cannabidiol ("CBD") product, “Cibidinol,” which is formulated based on a process developed by its founder Mark Palumbo. CBD is a non-psychoactive compound found in hemp and cannabis. CannAssist’s initial research and development work, aimed at enhancing the bioavailability of desired molecular structures, resulted in the creation of a line of CBD products, most notably its CBD product, Cibidinol. Cibidinol will be available in a line of consumable and topical products that the Company believes will make enhanced CBD products more available and accessible to consumers.

 

The Company's independent auditors have issued a report raising substantial doubt about the Company's ability to continue as a going concern. At present, the continuation of the Company as a going concern is dependent upon its ability to generate revenues, its financial support from its stockholders, its ability to obtain necessary equity financing to continue operations and/or to successfully locate and negotiate with a business entity for the combination of that target company with it.

 

Results of Operation for the Three Months Ended September 30, 2019 and 2018

 

Revenues

For the three months ended September 30, 2019, the Company had revenues of $77,264, and cost of revenue of $15,161. In comparison, for the three months ended September 30, 2018, the Company had revenue of $353,310 ($163,980 of which was from a related party), and cost of revenue of $271,272, ($129,636 of which was from a related party). The decrease in revenue and cost of revenue is from a change in the demand for our products from an existing customer, who ordered relatively larger volumes of inventory when our products was initially launched but required a relatively lower maintenance volume of inventory after launch.

 

General and administrative expenses

General and administrative expenses (“G&A”) were $70,163 for the three months ended September 30, 2019 compared to $11,515 for the three months ended September 30, 2018, an increase of $58,648. Some of our G&A expenses that have increase in the current period include product testing, supplies and materials, insurance and travel.

 

General and administrative expenses to a related party, were $3,350 for the three months ended September 30, 2019 compared to $0 for the three months ended September 30, 2018. General and administrative expenses to a related party are incurred for product design services provided by the son of the CEO.

 

Commissions

Commission expense was $11,395 for the three months ended September 30, 2019 compared to $17,594 for the three months ended September 30, 2018, a decrease of $6,199 or 35%. Commission expense was paid to EME, LLC, a related party and has decreased in the current period in conjunction with the decrease in sales.

 

Professional fees

Professional fees were $56,120 for the three months ended September 30, 2019 compared to $10,797 for the three months ended September 30, 2018, an increase of $45,323 or 420%. Professional fees consist of audit, accounting, consulting and legal fees. The fees have increased with the increase in services required to comply with SEC filing requirements as well as an increase in consulting expense. In addition, we granted 125,000 shares of common stock for services for non-cash expense of $31,250.

 

Other expense

For the three months ended September 30, 2019 we incurred $1,903 of credit card interest expense compared to $0 for three months ended September 30, 2018.

 

Net Loss

For the three months ended September 30, 2019, we realized a net loss of $80,828 as compared to net income of $34,832, after a $7,300 provision for income taxes, for three months ended September 30, 2018. The decrease from net income in the prior period to a net loss in the current period is the result of lower revenue combined with increased expenses.

 

 C: 
 12 
 

 

Results of Operation for the Nine Months Ended September 30, 2019 and 2018

 

Revenues

For the nine months ended September 30, 2019, the Company had revenues of $515,942, and cost of revenue of $343,729. In comparison, for the nine months ended September 30, 2018, the Company had revenue of $353,663, ($163,980 of which was from a related party), and cost of revenue of $271,329, ($129,636 of which was from a related party). The increase in revenue and cost of revenue is from the operations of Xceptor, a wholly owned subsidiary of the Company that was combined with the Company in July 2018.

 

General and administrative expenses

General and administrative expenses were $194,771 for the nine months ended September 30, 2019 compared to $12,371 for the nine months ended September 30, 2018 an increase of $182,400. Some of our G&A expenses that have increase in the current period include product testing, supplies and materials, insurance and travel. In general G&A expenses have increased with the increase in business activity.

 

General and administrative expenses to a related party, were $157,450 for the nine months ended September 30, 2019 compared to $0 for the nine months ended September 30, 2018. General and administrative expenses to a related party have increased as a result of the issuance of 5,000,000 shares of common stock for a licensing agreement (Note 5) for total non-cash expense of $150,000 and for product design services provided by the son of the CEO.

 

Commissions

Commission expense was $23,962 for the nine months ended September 30, 2019 compared to $17,591, for the nine months ended September 30, 2018, and increase of $6,368 or 36%. Commission expense was paid to EME, LLC, a related party and has increase with the increase in sales.

 

Professional fees

Professional fees were $161,152 for the nine months ended September 30, 2019 compared to $17,505 for the nine months ended September 30, 2018, an increase of $143,647. Professional fees consist of audit, accounting, consulting and legal fees. The fees have increased with the increase in services required to comply with SEC filing requirements as well as an increase in consulting expense. In addition, we granted 125,000 shares of common stock for services for non-cash expense of $31,250.

 

Other expense

For the nine months ended September 30, 2019 we incurred $2,419 of credit card interest expense compared to $0 for nine months ended September 30, 2018.

 

Net Loss

For the nine months ended September 30, 2019, we realized a net loss of $367,541 as compared to net income of $27,564, after a $7,300 provision for income taxes, for nine months ended September 30, 2018. The decrease from net income in the prior period to a net loss in the current period is the result increased expenses including non-cash stock compensation of $181,250.

 

Liquidity and Capital Resources

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated revenues of $515,942 for the nine months ended September 30, 2019 and had a net loss of $367,541 for the nine months ended September 30, 2019. The Company has an accumulated deficit of $347,247 as of September 30, 2019. The Company requires capital for its contemplated operational and marketing activities. The obtainment of additional financing, through an initial capital raise, the successful development of the Company’s contemplated plan of operations, and its transition to the attainment of continued profitable operations are necessary for the Company to continue operations. There is no guarantee that the Company will be able to obtain the necessary financing or profitable operations. These conditions and the ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

The Company used $133,125 of cash from operations for the nine months ended September 30, 2019. Net cash provided by financing activities for the nine months ended September 30, 2019 was $150,862, which included $150,030 from the sale of common stock .

 

As of September 30, 2019, the Company had $85,088 in cash.

 

Critical Accounting Estimates and Policies

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Note 2 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes.  Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

 

 C: 
 13 
 

 

We are subject to various loss contingencies arising in the ordinary course of business.  We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies.  An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated.  We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

 

Off-Balance Sheet Arrangements 

 

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

 

Recent Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable to smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, they concluded that our disclosure controls and procedures were not effective for the quarterly period ended September 30, 2019.

 

The following aspects of the Company were noted as potential material weaknesses:

 

·timely and accurate reconciliation of accounts
·lack of segregation of duties

 

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

 

Changes in Internal Controls

 

Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended September 30, 2019, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

 

 C: 
 14 
 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There are not presently any material pending legal proceedings to which the Company is a party or as to which any of our property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

 

ITEM 1A. RISK FACTORS

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the nine months ended September 30, 2019, the Company granted 125,000 shares of common stock, valued at $0.25 per share, for total non-cash expense of $31,250, to two agents in exchange for services. The shares were issued in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act of 1933.

 

During the nine months ended September 30, 2019, the Company sold 850,000 shares of common stock for total cash proceeds of $150,000 to six investors. The shares were issued in reliance upon the exemption from registration under Rule 506(b) of Regulation D and Section 4(a)(2) of the Securities Act of 1933.

 

Subsequent to September 30, 2019, the Company granted 50,000 shares of common stock. The shares were valued at $0.25 for total non-cash expense of $12,500, to one agent in exchange for services. The shares were issued in reliance upon the exemption from registration under Section 4(a)(2) of the Securities Act of 1933.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINING SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

None

 

 C: 
 15 
 

 

ITEM 6. EXHIBITS

 

No. Description
   
31.1 Chief Executive Officer Section 302 Certification
   
31.2 Chief Financial Officer Section 302 Certification
   
32.1 Section 906 Certification
   
101.INS XBRL Instance Document
   
101.SCH XBRL Taxonomy Extension Schema Document
   
101.CAL XBRL Taxonomy Calculation Linkbase Document
   
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB XBRL Taxonomy Label Linkbase Document
   
101.PRE XBRL Taxonomy Presentation Linkbase Document

 

 C: 
 16 
 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

  CANNASSIST INTERNATIONAL CORPORATION
     
 Dated: November 14, 2019

By:  /s/ Mark Palumbo

Mark Palumbo

Chief Executive Officer

 
     
 

By: /s/ Mark Palumbo

Mark Palumbo

Chief Financial Officer

 

 

 

17

 

 

 

 


Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing    Date    Other Filings
12/31/1910-K,  10-K/A,  5,  NT 10-K
Filed on:11/14/19
For Period end:9/30/19
6/30/1910-Q,  NT 10-Q
4/29/19EFFECT
3/31/1910-Q,  NT 10-Q
12/31/1810-K,  5,  NT 10-K
12/15/18
9/30/1810-Q,  NT 10-Q
7/12/18
6/30/1810-Q,  10-Q/A,  NT 10-Q
6/29/18
6/18/188-K
5/23/188-K
3/31/1810-Q
12/31/1710-K,  NT 10-K
10/11/17
5/17/17
 List all Filings 
Top
Filing Submission 0001214659-19-007165   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
AboutPrivacyRedactionsHelp — Thu., Mar. 28, 1:30:03.1pm ET