| RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS |
NOTE 4 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
Subsequent to the Company's filing of its Quarterly Report on Form 10-Q for the three and nine months ended April 30, 2024, with the Securities and Exchange Commission on August 26, 2024, the Company performed an evaluation of its accounting in relation to intangible assets subject to amortization. Management determined that the Original and Amended Form 10-Q do not give effect to certain expenses identified. Accordingly, the Company restates its condensed consolidated financial statements in this Form 10-Q as outlined further below. Upon review of the Company's previously filed 10-Q, the following errors were discovered and recorded:
1. Amortization expense associated with two intangible assets, software and customer contracts, had not been amortized in accordance with ASC 350-30-35. The Condensed Statement of Operations and the Condensed Statement of Cash Flows for the nine months ended April 30, 2024 have been updated to properly reflect the amortization expense of intangible assets. The Condensed Statement of Operations for the three months ended April 30, 2024 have been updated to properly reflect the amortization expense of intangible assets.
The following table sets forth the effects of the adjustments on affected items within the Company's previously reported condensed consolidated statement of operations for the nine months ended April 30, 2024:
| |
|
April 30, |
|
|
|
|
|
|
|
April 30, |
|
| |
|
2024 |
|
Adjustments |
|
|
2024 |
|
| |
|
(As Filed) |
|
|
|
|
|
|
|
(As Restated) |
|
| Revenues |
$ |
420 |
|
$ |
- |
|
|
|
$ |
420 |
|
| Cost of sales |
|
- |
|
|
- |
|
|
|
|
- |
|
| Gross margin |
|
420 |
|
|
- |
|
|
|
|
420 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative expenses |
|
579,841 |
|
|
- |
|
|
|
|
579,841 |
|
| Amortization expense |
|
- |
|
|
504,894 |
|
(1 |
) |
|
504,894 |
|
| Total operating expenses |
|
579,841 |
|
|
504,894 |
|
|
|
|
1,084,735 |
|
| Operating loss |
|
(579,421 |
) |
|
(504,894 |
) |
|
|
|
(1,084,315 |
) |
| Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
(62,061 |
) |
|
- |
|
|
|
|
(62,061 |
) |
| Financing expenses |
|
(164,525 |
) |
|
|
|
|
|
|
(164,525 |
) |
| Warrant liability adjustment to fair value |
|
47,250 |
|
|
- |
|
|
|
|
47,250 |
|
| Total other expenses |
|
(179,336 |
) |
|
- |
|
|
|
|
(179,336 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net loss from continuing operations before income taxes |
$ |
(758,757 |
) |
$ |
(504,894 |
) |
|
|
$ |
(1,263,651 |
) |
| Provision for income taxes |
|
- |
|
|
- |
|
|
|
|
- |
|
| Net loss from continuing operations |
|
(758,757 |
) |
|
(504,894 |
) |
|
|
|
(1,263,651 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income from discontinued operations, after tax |
|
177,096 |
|
|
- |
|
|
|
|
177,096 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
$ |
(581,661 |
) |
$ |
(504,894 |
) |
|
|
$ |
(1,086,555 |
) |
The following table sets forth the effects of the adjustments on affected items within the Company's previously reported condensed consolidated statement of operations for the three months ended April 30, 2024:
| |
|
April 30, |
|
|
|
|
|
|
|
April 30, |
|
| |
|
2024 |
|
Adjustments |
|
|
2024 |
|
| |
|
(As Filed) |
|
|
|
|
|
|
|
(As Restated) |
|
| Revenues |
$ |
420 |
|
$ |
- |
|
|
|
$ |
420 |
|
| Cost of sales |
|
- |
|
|
- |
|
|
|
|
- |
|
| Gross margin |
|
420 |
|
|
- |
|
|
|
|
420 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
| Selling, general and administrative expenses |
|
257,251 |
|
|
- |
|
|
|
|
257,251 |
|
| Amortization expense |
|
- |
|
|
168,298 |
|
(1 |
) |
|
168,298 |
|
| Total operating expenses |
|
257,251 |
|
|
168,298 |
|
|
|
|
425,549 |
|
| Operating loss |
|
(256,831 |
) |
|
(168,298 |
) |
|
|
|
(425,129 |
) |
| Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
(21,756 |
) |
|
- |
|
|
|
|
(21,756 |
) |
| Financing expense |
|
(164,525 |
) |
|
|
|
|
|
|
(164,525 |
) |
| Warrant liability adjustment to fair value |
|
(29,250 |
) |
|
- |
|
|
|
|
(29,250 |
) |
| Total other expenses |
|
(215,531 |
) |
|
- |
|
|
|
|
(215,531 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net loss from continuing operations before income taxes |
|
(472,362 |
) |
|
(168,298 |
) |
|
|
|
(640,660 |
) |
| Provision for income taxes |
|
- |
|
|
- |
|
|
|
|
- |
|
| Net loss from continuing operations, after tax |
|
(472,362 |
) |
|
(168,298 |
) |
|
|
|
(640,660 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net loss from discontinued operations, after tax |
|
(32,105 |
) |
|
|
|
|
|
|
(32,105 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
$ |
(504,467 |
) |
$ |
(168,298 |
) |
|
|
$ |
(672,765 |
) |
The following table sets forth the effects of the adjustments on affected items within the Company's previously reported condensed consolidated statements of cash flows for nine months ended April 30, 2024:
| |
|
April 30, |
|
|
|
|
|
|
|
April 30, |
|
| |
|
2024 |
|
Adjustments |
|
|
2024 |
|
| |
|
(As Filed) |
|
|
|
|
|
|
|
(As Restated) |
|
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
$ |
(581,661 |
) |
$ |
(504,894 |
) |
|
|
$ |
(1,086,555 |
) |
| Net income from discontinued operations |
|
177,096 |
|
|
|
|
|
|
|
177,096 |
|
| Net loss from continuing operations |
|
(758,757 |
) |
|
(504,894 |
) |
|
|
|
(1,263,651 |
) |
| Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
| Amortization expense |
|
- |
|
|
504,894 |
|
(1 |
) |
|
504,894 |
|
| Non-cash interest expense |
|
164,525 |
|
|
|
|
|
|
|
|
|
| Warrant adjustment to fair value |
|
(47,250 |
) |
|
|
|
|
|
|
(47,250 |
) |
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
|
|
| Prepaid expenses |
|
7,620 |
|
|
|
|
|
|
|
7,620 |
|
| Accounts payable |
|
1,036,162 |
|
|
|
|
|
|
|
1,036,162 |
|
| Net cash provided by (used in) operating activities |
|
579,396 |
|
|
- |
|
|
|
|
579,396 |
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
| Software costs capitalized as intangible asset |
|
(33,031 |
) |
|
|
|
|
|
|
(33,031 |
) |
| Net cash used in investing activities |
|
(33,031 |
) |
|
- |
|
|
|
|
(33,031 |
) |
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
| Proceeds from related party convertible notes |
|
633,992 |
|
|
- |
|
|
|
|
633,992 |
|
| Net cash provided by (used in) financing activities |
|
633,992 |
|
|
- |
|
|
|
|
633,992 |
|
| Net increase (decrease) in cash from continuing operations |
|
1,180,357 |
|
|
- |
|
|
|
|
1,180,357 |
|
| Net increase (decrease) in cash from discontinued operations |
|
(1,156,841 |
) |
|
- |
|
|
|
|
(1,156,841 |
) |
| Net increase (decrease) in cash |
|
23,516 |
|
|
- |
|
|
|
|
23,516 |
|
| Cash, beginning of period |
|
66,688 |
|
|
- |
|
|
|
|
66,688 |
|
| Cash, end of period |
$ |
90,204 |
|
$ |
|
|
|
|
$ |
90,204 |
|
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
| Cash paid for interest |
$ |
21,756 |
|
$ |
(21,756 |
) |
|
|
$ |
- |
|
| Cash paid for taxes |
$ |
- |
|
$ |
- |
|
|
|
$ |
- |
|
| SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
| Commitment shares issued |
$ |
105,925 |
|
$ |
- |
|
|
|
$ |
105,925 |
|
The specific explanations for the items noted above in the condensed consolidated restated financial statements are as follows:
1. After reexamining the useful lives of the Company's intangible assets, it has been determined that a portion of such assets are subject to amortization and should be segregated and amortized.
|