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Xplosion Inc. – ‘10-Q’ for 1/31/21

On:  Friday, 3/12/21, at 8:36am ET   ·   For:  1/31/21   ·   Accession #:  1640334-21-567   ·   File #:  333-215568

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

 3/12/21  Xplosion Inc.                     10-Q        1/31/21   28:1M                                     Pubco Reporting … Inc/FA

Quarterly Report   —   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                    HTML    148K 
 2: EX-31.1     Certification -- §302 - SOA'02                      HTML     15K 
 3: EX-32.1     Certification -- §906 - SOA'02                      HTML     11K 
10: R1          Cover                                               HTML     44K 
11: R2          Condensed Consolidated Balance Sheets               HTML     56K 
12: R3          Condensed Consolidated Balance Sheets               HTML     28K 
                (Parenthetical)                                                  
13: R4          Condensed Consolidated Statements of Operations     HTML     47K 
                (Unaudited)                                                      
14: R5          Condensed Consolidated Statements of Stockholders'  HTML     23K 
                Equity (Unaudited)                                               
15: R6          Condensed Consolidated Statements of Cash Flows     HTML     56K 
                (Unaudited)                                                      
16: R7          Description of Business and Summary of Significant  HTML     36K 
                Accounting Policies                                              
17: R8          Long-term Lease                                     HTML     14K 
18: R9          Revolving Loan Facility                             HTML     13K 
19: R10         Share Capital                                       HTML     14K 
20: R11         Subsequent Events                                   HTML     13K 
21: R12         Description of Business and Summary of Significant  HTML     68K 
                Accounting Policies (Policies)                                   
22: R13         Description of Business and Summary of Significant  HTML     24K 
                Accounting Policies (Details Narrative)                          
23: R14         Long-term Lease (Details Narrative)                 HTML     28K 
24: R15         Revolving Loan Facility (Details Narrative)         HTML     21K 
25: R16         Share Capital (Details Narrative)                   HTML     23K 
27: XML         IDEA XML File -- Filing Summary                      XML     43K 
26: EXCEL       IDEA Workbook of Financial Reports                  XLSX     30K 
 4: EX-101.INS  XBRL Instance -- xpl-20210131                        XML    179K 
 7: EX-101.CAL  XBRL Calculations -- xpl-20210131_cal                XML     64K 
 9: EX-101.DEF  XBRL Definitions -- xpl-20210131_def                 XML     69K 
 6: EX-101.LAB  XBRL Labels -- xpl-20210131_lab                      XML    284K 
 8: EX-101.PRE  XBRL Presentations -- xpl-20210131_pre               XML    206K 
 5: EX-101.SCH  XBRL Schema -- xpl-20210131                          XSD     52K 
28: ZIP         XBRL Zipped Folder -- 0001640334-21-000567-xbrl      Zip     34K 


‘10-Q’   —   Quarterly Report
Document Table of Contents

Page (sequential)   (alphabetic) Top
 
11st Page  –  Filing Submission
"Table of Contents
"Part I-Financial Information
"Item 1
"Financial Statements
"Unaudited Condensed Consolidated Balance Sheets as of January 31, 2021, and October 31, 2020
"Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended January 31, 2021 and 2020
"Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended January 31, 2021 and 2020
"Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended January 31, 2021 and 2020
"Notes to Financial Statements (Unaudited)
"Item 2
"Management's Discussion and Analysis of Financial Condition and Results of Operations
"Item 3
"Quantitative and Qualitative Disclosures About Market Risk
"Item 4
"Controls and Procedures
"Part Ii-Other Information
"Unregistered Sales of Equity Securities and Use of Proceeds
"Item 5
"Other Events
"Item 6
"Exhibits
"Signatures

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the quarterly period ended January 31, 2021

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the transition period from ___________ to ___________

 

Commission File Number 333-185909

 

Xplosion Incorporated

(Exact name of registrant as specified in its charter)

 

Nevada

 

30-0942823

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

Suite 3882 – 304 S. Jones Blvd

 

 

Las Vegas, NV

 

89107

(Address of principal executive offices)

 

(Zip Code)

 

1-702-583-3283

(Registrant’s telephone number)

 

n/a

(Former name, former address and former fiscal year, if changed since last report)

 

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  ☐ No 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted 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 and post such files). ☒ Yes   ☐ No 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting 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

Smaller reporting company

 

 

Emerging growth company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes   ☒ No 

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of March 12, 2021, the issuer had one class of common stock, with a par value of $0.001, of which 60,848,398 shares were issued and outstanding.

 

 

 

  

TABLE OF CONTENTS

 

 

Page

 

PART I—FINANCIAL INFORMATION

 

 

Item 1:

Financial Statements:

3

 

 

 

 

 

 

Unaudited Condensed Consolidated Balance Sheets as of January 31, 2021, and October 31, 2020

3

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended January 31, 2021 and 2020

4

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended January 31, 2021 and 2020

 5

 

 

 

 

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended January 31, 2021 and 2020

6

 

 

 

 

 

 

Notes to Financial Statements (Unaudited)

7

 

 

 

 

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

 

 

 

 

 

Item 3:

Quantitative and Qualitative Disclosures About Market Risk

15

 

 

 

 

Item 4:

Controls and Procedures

15

 

 

PART II—OTHER INFORMATION

 

 

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

16

 

 

 

 

Item 5:

Other Events

16

 

 

 

 

Item 6:

Exhibits

16

 

 

 

 

Signatures

17

 

 

 
2

Table of Contents

 

PART I—FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS 

 

XPLOSION INCORPORATED

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

 

 

 

January 31, 2021 and October 31, 2020

 

 

 

 

(unaudited)

 

 

 

 

 

 

January 31

 

 

October 31

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$ 8,961

 

 

$ -

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

8,961

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Long-term lease, net

 

 

1,775,052

 

 

 

1,794,559

 

 

 

 

 

 

 

 

 

 

Total assets

 

$ 1,784,013

 

 

$ 1,794,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$ 23,167

 

 

$ 26,084

 

Accrued expenses

 

 

202,860

 

 

 

185,130

 

Accrued remuneration

 

 

-

 

 

 

-

 

Loan payable - current portion

 

 

158,166

 

 

 

157,322

 

Total current liabilities

 

 

384,193

 

 

 

368,536

 

 

 

 

 

 

 

 

 

 

Loan

 

 

-

 

 

 

-

 

Total liabilities

 

 

384,193

 

 

 

368,536

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

Preferred stock:

 

 

 

 

 

 

 

 

$0.001 par value, authorized 100,000,000 shares,

 

 

 

 

 

 

 

 

issued and outstanding nil shares

 

 

-

 

 

 

-

 

Common Stock:

 

 

 

 

 

 

 

 

$0.001 par value, authorized 300,000,000 shares,

 

 

 

 

 

 

 

 

issued and outstanding 60,848,398 shares (2019 - 60,848,398)

 

 

60,849

 

 

 

60,849

 

Additional paid-in capital

 

 

5,431,227

 

 

 

5,431,227

 

Accumulated deficit

 

 

(4,092,256 )

 

 

(4,066,053 )

Total stockholders' equity

 

 

1,399,820

 

 

 

1,426,023

 

Total liabilities and stockholders' equity

 

$ 1,784,013

 

 

$ 1,794,559

 

 

See accompanying notes to condensed consolidated financial statements

 

 
3

Table of Contents

 

XPLOSION INCORPORATED

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations

 

 

 

 

 

 

For the three months ended January 31, 2021 and 2020

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Revenue

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

Cost of Revenue

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Gross Profit (Loss)

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

Amortization

 

 

19,506

 

 

 

35,241

 

General and administrative

 

 

13,903

 

 

 

227

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

33,409

 

 

 

35,468

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(33,409 )

 

 

(35,468 )

 

 

 

 

 

 

 

 

 

Other income and (expense)

 

 

 

 

 

 

 

 

Interest expense

 

 

(17,730 )

 

 

(16,252 )

Other income

 

 

24,936

 

 

 

 -

 

Gain on sale of leasehold interest

 

 

-

 

 

 

157,350

 

 

 

 

7,206

 

 

141,098

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

$ (26,203 )

 

$ 105,630

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

$ (0.000 )

 

$ 0.002

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding  

 

 

60,848,398

 

 

 

60,848,398

 

 

See accompanying notes to condensed consolidated financial statements

 

 
4

Table of Contents

 

XPLOSION INCORPORATED

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

For the three months ended January 31, 2021 and 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional Paid-in

 

 

Accumulated

 

 

Total Stockholders'

 

 

 

Number of Shares

 

 

Amount

 

 

 Capital

 

 

 Deficit

 

 

Equity 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance October 31, 2019

 

 

60,848,398

 

 

$ 58,234

 

 

$ 4,387,964

 

 

$ (2,433,593 )

 

$ 3,058,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

105,630

 

 

 

105,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends paid

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,621,720 )

 

 

(1,621,720 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance January 31, 2020

 

 

60,848,398

 

 

$ 58,234

 

 

$ 4,387,964

 

 

$ (3,949,683 )

 

$ 1,542,393

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance October 31, 2020

 

 

60,848,398

 

 

$ 60,849

 

 

$ 5,431,227

 

 

$ (4,066,053 )

 

$ 1,426,023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,203 )

 

 

(26,203 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance  January 31, 2021

 

 

60,848,398

 

 

$ 60,849

 

 

$ 5,431,227

 

 

$ (4,092,256 )

 

$ 1,399,820

 

 

See accompanying notes to condensed consolidated financial statements

 

 
5

Table of Contents

 

XPLOSION INCORPORATED

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

 

 

 

For the three months ended January 31, 2021 and 2020

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

Cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

Net income (loss) for the period

 

$ (26,203 )

 

$ 105,630

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to

 

 

 

 

 

 

 

 

net cash used in operating activities:

 

 

 

 

 

 

 

 

Amortization of long-term lease

 

 

19,506

 

 

 

35,241

 

Gain on sale of leasehold interest

 

 

-

 

 

 

(157,350 )

 

 

 

 

 

 

 

 

 

Changes in assets and liabilities

 

 

 

 

 

 

 

 

   Accounts payable and accrued expenses

 

 

14,814

 

 

 

6,759

 

 

 

 

 

 

 

 

 

 

Net cash from (used in) operating activities

 

 

8,117

 

 

 

(9,720 )

 

 

 

 

 

 

 

 

 

Cash provided by investing activities:

 

 

 

 

 

 

 

 

Proceeds from sale of leasehold interest

 

 

-

 

 

 

30,455

 

 

 

 

 

 

 

 

 

 

Net cash provided by investing activities

 

 

-

 

 

 

30,455

 

 

 

 

 

 

 

 

 

 

Cash provided by financing activities:

 

 

 

 

 

 

 

 

Proceeds from loan payable

 

 

844

 

 

 

860

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

844

 

 

 

860

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash during the period

 

 

8,961

 

 

 

21,595

 

Cash at beginning of the period

 

 

-

 

 

 

32

 

 

 

 

 

 

 

 

 

 

Cash at end of the period

 

$ 8,961

 

 

$ 21,627

 

 

 

 

 

 

 

 

 

 

Supplementary Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

    Interest paid

 

$ -

 

 

$ -

 

    Income taxes

 

$ -

 

 

$ -

 

 

 

 

 

 

 

 

 

 

Non-cash transactions:

 

 

 

 

 

 

 

 

    Shares of Good Life Holdings Corporation

 

 

 

 

 

 

 

 

received for sale of leasehold interest

 

$ -

 

 

$ 1,621,720

 

    Shares of Good Life Holdings Corporation

 

 

 

 

 

 

 

 

dividended to shareholders

 

$ -

 

 

$ 1,621,720

 

 

See accompanying notes to condensed consolidated financial statements.

 

 
6

Table of Contents

 

XPLOSION INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

January 31, 2021

 

Note 1. Description of Business and Summary of Significant Accounting Policies

 

Organization

 

Xplosion Incorporated (the “Company”) was incorporated under the laws of the State of Nevada on October 6, 2015.

 

During the year ended October 31, 2020, the Company continued evolving the business of marketing and distribution of innovative lifestyle and enhancement products that can be created via the land that the Company has acquired and whereby it holds the timber, water and agriculture rights that will allow the Company to pursue the business of lifestyle enhancement products, solutions and ancillary and goods and services.

 

Interim Period Financial Statements

 

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the Securities and Exchange Commission’s instructions. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. The results of operations reflect interim adjustments, all of which are of a normal recurring nature and, in the opinion of management, are necessary for a fair presentation of the results for such interim period. The results reported in these interim financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. Certain information and note disclosure normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited interim condensed financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended October 31, 2020, filed January 28, 2021.

  

Going Concern

 

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. At January 31, 2021 and October 31, 2020, the Company had $8,961 and $nil in cash, respectively, and negative working capital of $375,232 as at January 31, 2021 and $368,536 as at October 31, 2020. For the three months ended January 31, 2021 the Company had a net loss of $26,203 and for the three months ended January 31, 2020 net income of $105,630, after taking into account the non-cash gain on sale of a leasehold interest in the amount of $157,350. Continued losses may adversely affect the liquidity of the Company in the future. Therefore, the factors noted raise substantial doubt about our ability to continue as a going concern. The recoverability of a major portion of the recorded assets amounts shown in the accompanying condensed consolidated financial statements is dependent upon continued operations of the Company, which in turn is dependent on the Company’s ability to raise additional capital, obtain financing and to succeed in its future operations. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company’s existence is dependent upon management’s ability to develop profitable operations and resolve its liquidity problems.

 

 
7

Table of Contents

 

The outbreak of the novel strain of coronavirus, specifically identified as “COVID- 19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company and its operations in future periods.

 

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of Xplosion Incorporated and its wholly owned subsidiary Xplosion (Oregon) Corporation.

 

All significant intercompany balances and transactions have been eliminated.

  

Cash

 

Cash equivalents with maturity dates less than 90 days from the date of origination are considered to be cash equivalents for all financial reporting purposes. The Company currently has no cash equivalents.

  

Fair Value Measurements

 

Fair value is defined as the exchange price that will be received for an asset or paid to transfer a liability (an exit price) in the principal. Valuation techniques used to measure fair value should maximize the use of observable inputs and minimize the use of unobservable inputs. To measure fair value, the Company uses the following fair value hierarchy based on three levels of inputs, of which the first two are considered to be observable and the third unobservable:

  

Level 1 – Quoted prices in active markets for identical assets or liabilities.

  

Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

  

Level 3 – Unobservable inputs are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

  

Advertising Expenses

 

Advertising costs are expensed as incurred. During the three months ended January 31, 2021 and 2020 the Company incurred no advertising costs.

 

 
8

Table of Contents

 

Income Taxes

 

Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance.

 

The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively.

 

Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized.

  

Long-term Lease

 

The long-term lease is being amortized on a straight-line basis over the twenty-five year term of the lease in the amount of approximately $78,000 per year.

 

Impairment of Other Long-Lived Assets

 

The Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances indicate impairment may have occurred. An impairment loss is recognized when the net book value of such assets exceeds the estimated future undiscounted cash flows attributed to the assets or the business to which the assets relate. Impairment losses, if any, are measured as the amount by which the carrying value exceeds the fair value of the assets. During the three months ended January 31, 2021 and 2020, respectively, the Company identified no impairment losses related to the Company’s long-lived assets.

  

Net Loss Per Share

 

Basic net loss per share is calculated by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic loss per share) and potentially dilutive securities. For the three months ended January 31, 2021, there are no potentially dilutive securities outstanding. Common shares issuable are considered outstanding as of the original approval date for purposes of earnings per share computations.

  

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company bases its estimates on historical experience, current conditions and on other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions.

 

 
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Financial Instruments

 

The Company has the following financial instruments: cash, accounts payable, and loan payable. The carrying value of these financial instruments approximates their fair value due to their liquidity or their short-term nature.

 

Share Issuances for Services, Debt Instruments and Interest

 

The Company issues instruments to non-employees for the receipt of goods and services, and, in certain circumstances the settlement of short-term loan arrangements. The applicable GAAP establishes that share-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

 

In these transactions, the Company issues unregistered and restricted equity instruments. Additionally, the Company currently has no shares of freely-tradeable stock with a quoted market price (a Level 1input within the GAAP hierarchy).

 

When unregistered common shares are issued for the settlement of short-term financing arrangements (that are not initially convertible), the reacquisition price of the extinguished financing arrangement is determined by the value of the debt which is more clearly evident, and no additional inducement expense is recognized.

 

In situations in which the Company issues unregistered restricted common shares in exchange for goods and services, and the value of the goods and services are not the most reliably measurable, the Company recognizes the fair value of the unregistered restricted equity instruments based on the value of similar instruments issued in private placements in exchange for cash in the most recent transactions (a Level 2 input within the GAAP hierarchy). The Company has determined this methodology reflects the risk adjusted fair value of its unregistered restricted equity instruments using a commercially reasonable valuation technique.

  

Emerging Growth

 

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved

 

We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act.

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued ASU2016-02, Leases (Topic 842), requiring entities to a right-of-use asset and a lease liability for virtually all of their leases. This standard is effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. The Company has adopted this standard effective November 1, 2019 and it will have no material impact on its consolidated financial statements.

 

 
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In August 2018, FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13). The new standard makes various modifications to the disclosure requirements on fair value measurement in Topic 820. Adoption of ASU 2018-13 is required for fiscal reporting periods beginning after December 15, 2019, including interim reporting periods within those fiscal years with early adoption being permitted.

 

The Company has adopted this standard effective January 1, 2020 and it will have no material impact on its consolidated financial statements.

 

Note 2. Long-term Lease

 

During the year ended October 31, 2018 the Company entered into a twenty-five year lease for approximately 588 acres of land in Jackson County, Oregon, USA. The fair value of the full twenty-five year lease of $3,509,188 was paid in full by the issuance of 8,673,105 shares of common stock.

 

On January 29, 2020, the Company sold 62.94 acres of the leased land for the remaining portion of the twenty-five years in return for $30,455 (CAD 40,000) and 21,299,670 shares, valued at $1,621,720 (CAD 2,129,967), of Good Life Holdings Corporation, a British Columbia corporation. This resulted in the Company recording a gain on sale of the leasehold interest of $157,350.

 

On January 31, 2020, the shares of Good Life Holdings Corporation, valued at $1,621,720, were distributed to the shareholders of the Company as a non-cash dividend.

 

Note 3. Revolving Loan Facility

 

On November 1, 2016 the Company entered into an agreement, and amended May 18, 2018 and October 25, 2019, for a revolving loan facility of up to $250,000. The loan, due on or before October 31, 2021, is unsecured and with interest of 3.75% per month, calculated based on the amount of principal outstanding at the end of each month.

 

The balance outstanding as at January 31, 2021 was $158,166 with an available credit line of $91,834.

 

Note 4. Share Capital

 

Preferred Stock

 

The Company’s authorized capital includes 100,000,000 shares of preferred stock of $0.001 par value. The designation of rights including voting powers, preferences, and restrictions shall be determined by the Board of Directors before the issuance of any shares.

 

No shares of preferred stock are issued and outstanding as of January 31, 2021.

 

Common Stock

 

The Company is authorized to issue 300,000,000 shares of common stock, par value of $0.001.

  

No shares of the Company were issued during the three months ended January 31, 2021and 2020.

 

Note 5. Subsequent Events

 

Management has evaluated subsequent events up to the date of filing. There are no subsequent events to report.

 

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

 

The following discussion should be read in conjunction with the accompanying unaudited financial statements for the three months ended January 31, 2021 and 2020, and our annual report for the year ended October 31, 2020, including the financial statements and notes thereto.

 

Forward-Looking Information May Prove Inaccurate

 

This report contains statements about the future, sometimes referred to as “forward-looking” statements. Forward-looking statements are typically identified by the use of the words “believe,” “may,” “could,” “should,” “expect,” “anticipate,” “estimate,” “project,” “propose,” “plan,” “intend,” and similar words and expressions. Statements that describe our future strategic plans, goals, or objectives are also forward-looking statements.

 

Readers of this report are cautioned that any forward-looking statements, including those regarding our management’s current beliefs, expectations, anticipations, estimations, projections, proposals, plans, or intentions, are not guarantees of future performance or results of events and involve risks and uncertainties. The forward-looking information is based on present circumstances and on our predictions respecting events that have not occurred, that may not occur, or that may occur with different consequences from those now assumed or anticipated. Actual events or results may differ materially from those discussed in the forward-looking statements as a result of various factors. The forward-looking statements included in this report are made only as of the date of this report. We are not obligated to update such forward-looking statements to reflect subsequent events or circumstances.

 

Introduction

 

We were incorporated in the State of Nevada on October 6, 2015. We are a development stage company engaged in the sales, marketing and distribution of innovative lifestyle enhancement products and complimentary goods that target millennials and progressive thinkers of Generation X and Y. We established a wholly owned subsidiary Xplosion (Oregon) Corporation in September of 2018. Our website address is  www.xplosionincorporated.com.

 

In September 2018, the Company was able to locate and successfully negotiate with a private landowner agreement to secure a 25 year long-term land lease on his 588-acre property in Jackson County, Oregon. Xplosion (Oregon) Corporation, our wholly owned subsidiary was then set-up to most effectively manage this opportunity. The site lease provides to the Company Timber, Water and Agricultural rights giving the Company the potential to develop and pursue a number of business initiatives focused around its key goals and objectives of providing unique and innovative lifestyle enhancement products, solutions and ancillary goods to the Millennial and progressive Generation X and Y marketplace (continuing forth with the core business directives that Xplosion has always had since its date of inception). 

 

As it pertains to the rights held under its 25 year prepaid lease the Company has with the landowner, effective the 24th day of May 2019, the Company entered into a further agreement with an unrelated third party company, Good Life Holdings Corporation, whereby the Company subleased the entirety of its rights to the 62.94 acre portion of the 588 acre property site that is deemed and classified as irrigable.

 

During the Q1 Fiscal 2020 period, the Company successfully closed this sub lease transaction covering the 62.94 acre irrigable portion of the property upon receipt by the Company of the full value payment amount equal to $2,199,670 CAD. As was mutually agreed, the settlement was made by way of $40,000 CAD in cash and 21,299,670 shares of the Buyer. On January 31, 2020, the 21,299,670 shares received from Good Life Holdings Corporation were distributed prorata as a dividend payment to the Company’s shareholders.

 

During Fiscal 2020 the Company and its wholly-owned subsidiary continued to develop and define business planning towards the establishment of a mineral grade bottled water production and distribution facility at the Jackson County property site.  The Company further sought to investigate any and all potential opportunities to further exploit the timber and overall land resources on the site and to effectively utilize the resources held under the long-term land lease.

 

 
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During the Q1 period end dated January 31, 2021, as it did throughout the prior Fiscal 2020 year period, the Company continued to remain focused on pursuing a diversity of plans for the property site, as it seeks out appropriate opportunities, strategic alliances, affiliations or any variety of working relationships to take best advantage of the property and resources.

 

Throughout most of the year 2020 and now continuing forward into 2021, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has continued to be particularly problematic and widespread throughout the United States and resulted in enacting emergency measures to combat the spread of the virus including closures and minimization of many businesses and services and total stay at home orders. These measures, which include the implementation of self-imposed quarantine periods and social distancing, have caused material disruption to businesses resulting in an economic slowdown. The Government reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the Government interventions. As yet it is still not possible to reliably estimate the length and severity of these developments and the overall impact on the financial results and condition of the Company and its operations in future periods, but during this on-going external pandemic the Company moves forward to effectively execute its business plan such that when this crisis is controlled the Company will be properly positioned to move ahead as expeditiously as possible.

  

Results of Operations

 

Comparison of the Three Months Ended January 31, 2021

with the Three Months Ended January 31, 2020

 

We had gross revenue of $nil and $nil for the respective three months ended for each of January 31, 2021 and 2020.

 

Our general and administrative expenses from continuing operations for the three months ended January 31, 2021 were $13,903, as compared to $227 for the comparable three months ended January 31, 2020. For the three months ended January 31, 2021 there was amortization of the prepaid lease in the amount of $19,506 as compared to $35,241 for the three months ended January 31, 2020.

 

During the three months ended January 31, 2020 we had a gain on the sale of leasehold interests of $157,350 as compared to $nil for the respective three months ended January 31, 2021.


During the three months ended January 31, 2021 we had other income of $24,936 as compared to $nil for the three months ended January 31, 2020. This resulted from the recovery of amounts written off in previous periods.

   

Overall, we have a net loss of $26,203 for the three months ended January 31, 2021, as compared to a net income of $105,630 for the  three months ended January 31, 2020.

 

Liquidity and Capital Resources

 

As of January 31, 2021, our current assets were $8,961, as compared to $nil at October 31, 2020. As of January 31, 2021, our current liabilities were $384,193, as compared to $368,536 at October 31, 2020.

 

Operating activities provided net cash of $8,117 for the three months ended January 31, 2021, as compared to the use of $9,720 for the three months ended January 31, 2020.

 

Investing activities for the three months ended January 31, 2021 provided net cash of $nil as compared to the provision of $30,455 for the three months ended January 31, 2020.

 

Net cash of $844 was provided by financing activities during the three months ended January 31, 2021, as compared to $860 provided during the comparable three months ended January 31, 2020.

  

 
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Our current balances of cash will not meet our working capital and capital expenditure needs for the whole of the current year. Because we are not currently generating sufficient cash to fund our operations, we will need to rely on external financing to meet future capital and operating requirements. Any projections of future cash needs and cash flows are subject to substantial uncertainty. Our capital requirements depend upon several factors, including the rate of market acceptance, our ability to get to production and generate revenues, our level of expenditures for production, marketing, and sales, purchases of equipment, and other factors. We can make no assurance that financing will be available in amounts or on terms acceptable to us, if at all. Further, if we issue equity securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences, or privileges senior to those of existing holders of common stock, and debt financing, if available, may involve restrictive covenants that could restrict our operations or finances. If we cannot raise funds, when needed, on acceptable terms, we may not be able to continue our operations, grow market share, take advantage of future opportunities, or respond to competitive pressures or unanticipated requirements, all of which could negatively impact our business, operating results, and financial condition. The factors noted raise substantial doubt about our ability to continue as a going concern.

 

Critical Accounting Policies and Estimates

  

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the fiscal year. The Company bases its estimates on historical experience, current conditions and on other assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and assumptions.

 

Income Taxes

 

Deferred income tax assets and liabilities are determined based on temporary differences between financial reporting and tax bases of assets and liabilities, operating loss, and tax credit carryforwards, and are measured using the enacted income tax rates and laws that will be in effect when the differences are expected to be recovered or settled. Realization of certain deferred income tax assets is dependent upon generating sufficient taxable income in the appropriate jurisdiction. The Company records a valuation allowance to reduce deferred income tax assets to amounts that are more likely than not to be realized. The initial recording and any subsequent changes to valuation allowances are based on a number of factors (positive and negative evidence). The Company considers its actual historical results to have a stronger weight than other, more subjective, indicators when considering whether to establish or reduce a valuation allowance.

  

The Company continually evaluates its uncertain income tax positions and may record a liability for any unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense and other expense, respectively.

 

Because tax laws are complex and subject to different interpretations, significant judgment is required. As a result, the Company makes certain estimates and assumptions in: (1) calculating its income tax expense, deferred tax assets, and deferred tax liabilities; (2) determining any valuation allowance recorded against deferred tax assets; and (3) evaluating the amount of unrecognized tax benefits, as well as the interest and penalties related to such uncertain tax positions. The Company’s estimates and assumptions may differ significantly from tax benefits ultimately realized.

 

 
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this quarterly report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer (our “Certifying Officers”), as appropriate, to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our Certifying Officers, the effectiveness of our disclosure controls and procedures as of January 31, 2021, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of January 31, 2021, our disclosure controls and procedures were not effective.

 

There have been no changes in our internal control over financial reporting that occurred during the quarter ended January 31, 2021, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

 

 
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PART II—OTHER INFORMATION

 

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

 

None

 

ITEM 5. OTHER EVENTS

 

Not applicable

 

ITEM 6. EXHIBITS

 

The following exhibits are filed as a part of this report:

 

Exhibit

Number*

Title of Document

Location

 

 

Item 31

 

Rule 13a-14(a)/15d-14(a) Certifications

 

31.01

 

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14

 

Attached

 

 

Item 32

 

Section 1350 Certifications

 

32.01

 

Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer) and (Chief Financial Officer)

 

Attached

 

 

Item 101

 

Interactive Data File

 

101

 

Interactive Data File

 

Attached

_______________

* All exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number following the decimal indicating the sequence of the particular document.

 

 
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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Registrant

 

 

 

 

XPLOSION INCORPORATED

 

 

 

 

Date: March 12, 2021

By:

/s/ EUGENIO GREGORIO

 

 

Eugenio Gregorio

 

 

President, Chief Executive Officer, Chief Financial Officer, Treasurer and Director

 

 

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

 

   

 

17

 


Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing    Date    Other Filings
10/31/21NT 10-K
Filed on:3/12/21
For Period end:1/31/21
1/28/2110-K
10/31/2010-K
1/31/2010-Q,  NT 10-Q
1/29/20
1/1/20
12/15/19
11/1/19
10/31/1910-K,  NT 10-K
10/25/19
12/15/18
10/31/1810-K,  NT 10-K
5/18/18
11/1/16
10/6/15
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