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Summary of Significant Accounting Policies

12 Months Ended

Apr. 30, 2020

Summary of Significant Accounting Policies

NOTE 3: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP 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 reporting amounts of revenues and expenses during the reported period. Accordingly, actual results could differ from those estimates.

Financial Statement Reclassification

Certain account balances from prior periods have been reclassified in these consolidated financial statements to conform to current period classifications.

Cash and Cash Equivalents

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less when purchased, to be cash equivalents.

Inventory

Inventory is valued at the lower of the cost or net realizable value. The Company’s inventory as of April 30, 2020 consisted of $663,750 of finished goods and $255,894 of component and replacement parts. The Company had no inventory at April 30, 2019.

Concentration of Credit Risk

The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash or cash equivalents.

Revenue Recognition

Effective May 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. The adoption of ASC 606 had no impact on the Company’s historical financial statements. The Company’s contracts with customers contain one performance obligation. The Company recognizes revenue for its performance obligation at a point in time once products are shipped or physically delivered, depending on the third-party shipping terms. Amounts collected from customers in advance of revenue being recognized are reflected as deferred revenue on the accompanying consolidated balance sheets.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in the absence of a principal, most advantageous market for the specific asset or liability.

GAAP provides for a three-level hierarchy of inputs to valuation techniques used to measure fair value, defined as follows:

●	Level 1 — Inputs that are quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access.

●	Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability, including:

	–	Quoted prices for similar assets or liabilities in active markets
	–	Quoted prices for identical or similar assets or liabilities in markets that are not active
	–	Inputs other than quoted prices that are observable for the asset or liability
	–	Inputs that are derived principally from or corroborated by observable market data by correlation or other means

●

Level 3 — Inputs that are unobservable and reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available in the circumstances (e.g., internally derived assumptions surrounding the timing and amount of expected cash flows).

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and amounts due to related parties. The carrying amount of these financial instruments approximates fair value due to their short-term maturity. The Company’s derivative liability was calculated using Level 2 assumptions.

Income Taxes

Income taxes are accounted for in accordance with the provisions of ASC 740, Accounting for Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized, but no less than quarterly.

Property and Equipment

Property and equipment are recorded at cost and are depreciated on a straight-line basis over their estimated useful lives of three years. At April 30, 2019, the Company had total capitalized property and equipment costs of $3,000 and accumulated depreciation of $2,250. In connection with the Stock Purchase Agreement (see Note 1), the existing property and equipment with a remaining book value of $500 was contributed to the previous majority shareholder of Lazex. As of April 30, 2020, the remaining book value of property and equipment were $0.

Depreciation expense for the year ended April 30, 2020 and 2019 was $250 and $1,000, respectively.

Intangible Assets

Intangible assets consisted of capitalized software costs and are amortized on a straight-line basis over an estimated useful life of three years. At April 30, 2019, the Company had total gross intangible assets of $4,800 and accumulated amortization of $3,066. In connection with the Stock Purchase Agreement (see Note 1), the existing capitalized software with a remaining book value of $1,334 was contributed to the previous majority shareholder of Lazex. As of April 30, 2020, the remaining book value of intangible assets were $0.

Amortization expense for the year ended April 30, 2020 and 2019 was $400 and $1,600, respectively.

Long-Lived Assets

In accordance with ASC 360-10, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. There was no impairment of long-lived assets identified during the year ended April 30, 2020 or 2019.

Warrants

The Company grants warrants to key employees and executives as compensation on a discretionary basis. The Company also grants warrants in connection with certain note payable agreements. The Company measures the fair value of the awards using the Black-Scholes option pricing model as of the measurement date. Warrants granted in connection with ongoing arrangements are more fully described in Note 6: Note Payable and Note 8: Stockholders’ Deficit.

The warrants granted during the year ended April 30, 2020 and 2019 were valued using the Black-Scholes pricing method on the date of grant using the following assumptions below.

	2020	2019
Expected life in years	2 - 5 years	NA
Stock price volatility	121.4% - 144.2%	NA
Risk free interest rate	0.36% - 2.43%	NA
Expected dividends	0%	NA

Basic and Diluted Earnings Per Share

Basic earnings per share are calculated by dividing income available to stockholders by the weighted-average number of common shares outstanding during each period. Diluted earnings per share are computed using the weighted average number of common and dilutive common share equivalents outstanding during the period. The Company had 8,137,859 common shares issuable as of April 30, 2020 (see Note 5) which were not included in the calculation of diluted earnings per share as the effect is antidilutive. The Company also had outstanding notes payable convertible into 7,465,811 shares of common stock as of April 30, 2020 (see Note 5), as well as outstanding warrants exercisable into 13,000,000 shares of common stock which were excluded from calculation of diluted earnings per share as the effect is antidilutive. There were no common share equivalents outstanding during the year ended April 30, 2019. As a result, the basic and diluted earnings per share are the same for each of the periods presented.

Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update 2016-02, “Leases” (Topic 842). This guidance is effective for public entities for fiscal years beginning after December 15, 2018 including the interim periods within those fiscal years. Early application is permitted. Under the new provisions, all lessees will report a right-of-use asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. All other leases will fall into one of two categories: (i) Financing leases, similar to capital leases, which will require the recognition of an asset and liability, measured at the present value of the lease payments and (ii) Operating leases which will require the recognition of an asset and liability measured at the present value of the lease payments. The Company has adopted this standard on May 1, 2019 with no significant impact to the Company’s financial statements.

Other accounting pronouncements have been issued but deemed by management to be outside the scope of relevance to the Company.