U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

(Mark One)

☒ Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
   
  For the quarterly period ended June 30, 2019
   
☐ Transition Report under Section 13 or 15(d) of the Exchange Act
   
  For the Transition Period from ________to __________
   

Commission File Number: 000-52069

 

Celexus, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Nevada 98-0466350
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

 

8275 S. Eastern Ave. Suite 200  
Las Vegas, NV 89123
(Address of principal executive offices) (Zip Code)

 

Registrant's Phone: 702-675-8003

 

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

 

Title of each class Trading Symbol Name of each exchange on which registered
Common Stock CXUS OTCQB

 

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or 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 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 fi les). 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.

 

Large Accelerated Filer ☐ Accelerated Filer ☐
Non-Accelerated Filer  ☒ Smaller Reporting Company ☒
  Emerging Growth Company ☐

 

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

 

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

 

As of August 19, 2019, the registrant had 16,538,457 shares of common stock issued and outstanding.  

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Form 10-K filed on July 15, 2019.

 

Form 8-K filed on August 6, 2019. 

 

   

 

 

 

Explanatory Note

 

This amendment is being filed in response to questions 9-14 of the comment letter received on October 10th, 2019 from the SEC.

 

 

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  TABLE OF CONTENTS Page
 
PART I – FINANCIAL INFORMATION
     
Item 1. Financial Statements 4
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation 16
Item 3. Quantitative and Qualitative Disclosures about Market Risk 17
Item 4. Controls and Procedures 17
 
PART II – OTHER INFORMATION
     
Item 1. Legal Proceedings 18
Item 1A. Risk Factors 18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Mine Safety Disclosures 18
Item 5. Other Information 18
Item 6. Exhibits 18

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

Some of the statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” or the negatives of these terms or other comparable terminology.

 

You should not place undue reliance on forward looking statements. The cautionary statements set forth in this Form 10-Q identify important factors which you should consider in evaluating our forward-looking statements. These factors include, among other things:

 

  · overall strength and stability of general economic conditions and of the hemp and cannabis industry more specifically, both in the United States and globally;
  · changes in the competitive environment;
  · our ability to generate consistent revenues;
  · our ability to effectively execute our business plan;
  · changes in laws or regulations governing our business and operations;
  · our ability to maintain adequate liquidity and financing sources and an appropriate level of debt on terms favorable to our company;
  · our ability to maintain quality control over our operations;
  · costs and risks associated with litigation;
  · changes in accounting principles, or their application or interpretation, and our ability to make estimates and the assumptions underlying the estimates, which could have an effect on earnings;
  · other risks described from time to time in periodic and current reports that we file with the Securities and Exchange Commission (“Commission”).

 

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but not exhaustive. New risk factors and uncertainties not described here or elsewhere in this Form 10-Q, including in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” may emerge from time to time. Moreover, because we operate in a competitive and rapidly changing environment, it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. The forward-looking statements are also subject to the risks and uncertainties specific to the company including but not limited to the fact that we have limited operating history and have limited number of management and other staff. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this annual report may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

 

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assume responsibility for the accuracy and completeness of the forward-looking statements.

 

This Form 10-Q contains estimates and statistical data that we obtained from industry publications and reports. These publications generally indicate that they have obtained their information from sources believed to be reliable, but do not guarantee the accuracy and completeness of their information, and you are cautioned not to give undue weight to such estimates. Although we believe the publications are reliable, we have not independently verified their data. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk.

 

You should read this Form 10-Q and the documents that we reference and have filed as exhibits to this Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect.

 

Should one or more of the risks or uncertainties described in this Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

 

All forward-looking statements, expressed or implied, included in this Form 10-Q are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

 

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Form 10-Q.

 

 

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PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

Financial Statements

 

CELEXUS, INC.

(formerly Telupay International, Inc.)

 

For the Three Months ending June 30, 2019

 

(Unaudited)

 

 

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CELEXUS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

  Page
   

Balance Sheets (Unaudited) as of June 30, 2019 and March 31, 2019

5
   

Statements of Operations (Unaudited) for theThree Months Ended June 30, 2019 and June 30, 2018

6
   

Statements of Stockholders’ Equity (Deficit) for the Three Months Ended June 30, 2019 and June 30, 2018

7
   

Statements of Cash Flows (Unaudited) for theThree Months Ended June 30, 2019 and June 30, 2018

8
   

Notes to Financial Statements

9

 

 

 

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CELEXUS, INC.        
(formerly Telupay International, Inc.)        
Balance Sheets (Unaudited)        
         
    June 30,   March 31,
    2019   2019
ASSETS        
Current assets                
Cash in Bank   $ 16,168     $ 44,862  
Total assets   $ 16,168     $ 44,862  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
                 
Current liabilities                
Accounts payable and accrued expenses   $ 7,086     $ 3,557  
Related Party notes   $ 79,169     $ 58,500  
Interest payable   $ 6,539     $ 5,802  
Convertible Revolving Demand Note   $ 25,000     $ 25,000  
Total current liabilities   $ 117,794     $ 92,859  
                 
Total liabilities   $ 117,794     $ 92,859  
                 
Commitments and contingencies                
                 
Stockholders' deficit                
Common stock: $0.001 par value; 1,500,000,000 shares authorized, and 69,859 outstanding at June 30, 2019 and 6,28769 June 30, 2018 respectively   $ 628,738     $ 565,865  
Additional paid-in capital   $ 8,255,975     $ 8,318,848  
Retained deficit   $ (8,986,339 )   $ (8,932,710 )
Total stockholders' deficit   $ (101,626 )   $ (47,997 )
Total liabilities and stockholders' deficit   $ 16,168     $ 44,862  

 

 

(The accompanying notes are an integral part of these financial statements)

 

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CELEXUS, INC.        
(formerly Telupay International, Inc.)        
Statements of Operations (Unaudited)        
         
    Three Months Ended June 30, 2019   Three Months Ended June 30, 2018
         
         
         
Revenue   $ 0     $ 0  
                 
Operating expense                
  Selling, general and administrative   $ 4,069     $ 600  
  Professional Fees   $ 48,825     $ 12  
Total operating expense   $ 52,894     $ 612  
                 
Loss from operations   $ (52,894 )   $ (612 )
                 
Other income (expense)                
  Gain on forgiveness of liabilities   $ 2     $ 0  
  Interest expense   $ (737 )   $ (671 )
  Accretion of debt discount   $ 0     $ 0  
Total other income (expense)   $ (735 )   $ 671 )
                 
Net loss   $ (53,629 )   $ (1,283 )
                 
Basic and Diluted Loss per Common Share   $ 0   $ 0
                 
Weighted average number of common shares outstanding - basic and diluted     6,287,184       6,287,184  

 

(The accompanying notes are an integral part of these financial statements)

 

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CELEXUS, INC.                    
(formerly Telupay International, Inc.)                    
Statements of Stockholders' Deficit (Unaudited)                   Total
    Common   Stock   Additional       Stockholders'
    Shares   Amount   Paid-in Capital   Retained Deficit   Deficit
Balance March 31, 2018     69,859     $ 628,738     $ 8,246,697     $ (8,911,476.00 )   $ (36,041.00 )
     Related Party Gain on Extinguishment of Debt     —         —         9,278       —         9,278  
   Net loss for the year ended March 31, 2019     69,859               —         (21,234 )     (21,234 )
Balance, March 31, 2019     69,859       628,738       8,255,975       (8,932,710 )     (47,997 )
                                         
   Net loss for Three months ended June 30, 2019     —         —         —         (53,629 )     (53,629 )
Balance, June 30, 2019     69,859     $ 628,738     $ 8,255,975     $ (8,986,339 )   $ (101,626 )

 

 

(The accompanying notes are an integral part of these financial statements)

 

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CELEXUS, INC.        
(formerly Telupay International, Inc.)        
Statements of Cash Flows (Unaudited)        
    Three Months Ended June 30, 2019   Three Months Ended June 30, 2018
         
         
Cash flows from operating activities                
Net loss   $ (53,629 )   $ (1,283 )
Adjustments to reconcile net loss to net cash flows used in operating activities                
Changes in operating assets and liabilities:                
Increase (decrease) in accounts payable and accrued expenses     3,529       612  
Increase (decrease) in related party notes     20,669       —    
Increase (decrease) in interest payable     737       671  
Related party forgiveness of debt     —         —    
Net cash flows used in operating activities     (28,694 )     —    
                 
Cash flows from financing activities                
Net cash flows from financing activities     —         —    
                 
Change in cash and cash equivalents     (28,694 )     —    
                 
Cash and cash equivalents at beginning of period     44,862       —    
                 
Cash and cash equivalents at end of period   $ 16,168     $ —    
                 
Supplemental disclosure of cash flow information:                
Interest paid in cash   $ —       $ —    
Income taxes paid in cash   $ —       $ —    
                 
Supplemental disclosure of non-cash transactions:                
Debt discount recorded for beneficial conversion feature   $ —       $ —    
                 
(The accompanying notes are an integral part of these financial statements)

 

 

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CELEXUS, INC.

(formerly Telupay International, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED JUNE 30, 2019

 

NOTE 1 –Organization and Going Concern

 

Celexus, Inc. (the Company)(formerly Telupay International, Inc.; formerly i-Level Media Group Incorporated; formerly Jackson Ventures, Inc.) was incorporated in the State of Nevada on August 23, 2005 as Jackson Ventures Ltd. and its initial operations included the acquisition and exploration of mineral resources. In March, 2007 the Company changed its name to i-Level Media Group Incorporated (“i-Level”) and changed its business to that of developing and operating a digital media network service. This business ceased operations on December 1, 2008 and its business was wound-up.

 

On September 24, 2013, the Company effected the acquisition of Telupay, PLC by way of a reverse merger. As a result of the Merger, the Company changed its name to Telupay International Inc., effectuated a 1.5-for-1 forward stock split and Telupay became a wholly-owned subsidiary. Telupay was engaged in the mobile banking and payment processing business primarily in the Philippines, Peru, Indonesia, Myanmar and the United Kingdom. Telupay PLC was the primary operating subsidiary of the Company accounting for most of our assets and liabilities. Telupay PLC never reached profitability and was spun out of the Company shortly after December 31, 2014 to the former directors and officers of the Company whereby the business, including the assets and liabilities of Telupay PLC were transferred for no consideration. As a result, the Company had no operations.

 

On January 18, 2017, Barton Hollow, LLC, a limited liability company, was appointed custodian for the Company by the District Court of Clark County, Nevada. The Company was reinstated by the Nevada Secretary of State on November 9, 2017 and on September 9, 2018 changed its name to Celexus, Inc. The Company currently is looking to acquire an operating business or develop a business.

 

Going Concern

 

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs to allow it to continue as a going concern. As of June 30, 2019, the Company had an accumulated deficit of $8,986,339. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

In view of these conditions, the ability of the Company to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. Historically, the Company has relied upon internally generated funds and funds from the sale of shares of stock, issuance of promissory notes and loans from its shareholders and private investors to finance its operations and growth. Management is planning to raise necessary additional funds for working capital through loans and/or additional sales of its common stock. However, there is no assurance that the Company will be successful in raising additional capital or that such additional funds will be available on acceptable terms, if at all. Should the Company be unable to raise this amount of capital its operating plans will be limited to the amount of capital that it can access. These financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying financial statements.

 

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NOTE 2 – Summary of Significant Accounting Policies

  

Use of Estimates

 

The preparation of the Company’s consolidated financial statements requires management to make estimates and use assumptions that affect the reported amounts of assets, liabilities and expenses. These estimates and assumptions are affected by management’s application of accounting policies. On an on-going basis, the Company evaluates its estimates. Actual results and outcomes may differ materially from these estimates and assumptions.

 

Cash

 

Cash includes amounts held in bank accounts. The Company has amounts deposited with financial institutions in excess of federally insured limits.

 

Fair Value Measurements

 

The Company measures fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The Company utilizes a three-tier hierarchy which prioritizes the inputs used in the valuation methodologies in measuring fair value:

 

Level 1. Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. The Company has no assets or liabilities measured and recorded on a recurring or nonrecurring basis with Level 1 inputs.

 

Level 2. Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. The Company has no assets or liabilities measured and recorded on a recurring or nonrecurring basis with Level 2 inputs.

 

Level 3. Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company has no assets or liabilities measured and recorded on a recurring or nonrecurring basis with Level 3 inputs.

 

Fair Value of Financial Instruments

 

The carrying value of cash and cash equivalents, accounts payable and interest payable approximate their fair value because of the short-term nature of these instruments and their liquidity. It is not practical to determine the fair value of the Company’s debentures payable due to the complex terms. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

 

Stock Based Compensation

 

When applicable, the Company will account for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”).  Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the consolidated statement of operations based on their fair values at the date of grant.

 

The Company accounts for stock-based payments to non-employees in accordance with ASC 505-50, “Equity-Based Payments to Non-Employees.”  Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date.

 

The Company calculates the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model.  The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest.  ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.  The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant.  The Company estimates forfeiture rates for all unvested awards when calculating the expense for the period.  In estimating the forfeiture rate, the Company monitors both stock option and warrant exercises as well as employee termination patterns.  The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period.

 

 

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Loss per Share

 

The computation of basic earnings per share (“EPS”) is based on the weighted average number of shares that were outstanding during the period, including shares of common stock that are issuable at the end of the reporting period. The computation of diluted EPS is based on the number of basic weighted-average shares outstanding plus the number of common shares that would be issued assuming the exercise of all potentially dilutive common shares outstanding using the treasury stock method. The computation of diluted net income per share does not assume conversion, exercise or contingent issuance of securities that would have an antidilutive effect on earnings per share. Therefore, when calculating EPS if the Company experienced a loss, there is no inclusion of dilutive securities as their inclusion in the EPS calculation is antidilutive. Furthermore, options and warrants will have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options or warrants (they are in the money). See “NOTE 5 - Net Loss Per Share” for further discussion.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. 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 and carry-forwards 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. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. The Company reports a liability for unrecognized tax benefits resulting from uncertain income tax positions, if any, taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense or other expense, respectively.

 

Business segments

 

ASC 280, “Segment Reporting” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company determined it has one operating segment.

 

 

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Recent Accounting Pronouncements

 

In July 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this Update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features. When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a free-standing equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this Update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception. Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The Company does not expect this accounting update to have a material effect on its Consolidated Financial Statements.

 

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting. The amendments in this Update provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for public business entities for reporting periods for which financial statements have not yet been issued. The Company does not expect this accounting update to have a material effect on its Consolidated Financial Statements.

 

In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting (Topic 718)”, which is intended to simplify several aspects of the accounting for share-based payment award transactions. The guidance is effective for our current fiscal year. The adoption of ASU 2016-09 did not have a material impact on the Consolidated Financial Statements.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842)”, which supersedes ASC Topic 840, Leases, and creates a new topic, ASC 842, Leases. The new guidance requires the recognition of lease assets and liabilities for operating leases with terms of more than 12 months. Presentation of leases within the consolidated statements of operations and consolidated statements of cash flows will be generally consistent with the current lease accounting guidance. The ASU is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. The Company does not expect this accounting update to have a material effect on its Consolidated Financial Statements.

 

The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable, the Company has not identified any standards that the Company believes merit further discussion. The Company believes that none of the new standards will have a significant impact on the financial statements.

 

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NOTE 3 – Debt – Related Party

 

On January 18, 2017, the Company entered into a Revolving Demand Note (the “Revolving Demand Note”) with Securities Compliance Group, Ltd. (the “Creditor”). Pursuant the Revolving Demand Note, the Company borrowed $25,000 at an annual interest rate of 9.5% with a default rate of 22%. The Revolving Demand Note may be converted into common stock at an exercise price of par, or $0.001 per share at the discretion of the Creditor. The Revolving Demand Note does not have a maturity date.

 

The debt discount attributable to the fair value of the beneficial conversion feature amounted to $17,500 and was accreted on the date of issuance due to no maturity date of the Revolving Demand Note.

 

During the 3 Months ended June 30, 2019 and Year Ended March 31, 2019, the Company recognized $737 and $2,538 of interest expense related to the Convertible Debenture.

 

A shareholder who is a related party has loaned the corporation $58,500 as of March 31, 2019 and an additional $20,669 through June 20, 2019. The note bears no interest and is payable on demand.

 

Also see “Note 7” – Related Party Transactions.”

 

NOTE 4 – Common Stock

 

On December 10, 2018 it was RESOLVED by the board of director of the corporation that the name change of the corporation be changed to Celexus and that the outstanding shares of stock of the corporation be reverse split on a 1 for 90 basis without change to authorized shares. The name change and 1-90 reverse took place open of business April 9, 2019.

 

At June 30, 2019, the Company had 1,500,000,000 authorized shares of common stock with a par value of $0.001 per share and 6,287,384 shares of common stock outstanding.

 

During the year ended March 31, 2017, On January 18, 2017, in connection with the custodianship, the Company issued 400,000,000 shares to Barton hollow, LLC to satisfy and caused to be retired, the obligations of the Company. As a result the Company recognized stock compensation expense of $160,000 based on the closing stock price on January 18, 2017 of $0.004 per share.

 

On December 10, 2018 it was RESOLVED by the board of director of the corporation that the name change of the corporation be changed to Celexus and that the outstanding shares of stock of the corporation be reverse split on a 1 for 90 basis without change to authorized shares. The name change and 1-90 reverse took place open of business April 9, 2019. The 1-90 reverse split has been retroactively accounted for, accordingly.

 

 

NOTE 5 - Net Loss Per Share

 

During the years ended June 30, 2019 and 2018, the Company recorded a net loss. Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. The Company has not included the effects of convertible debt on net loss per share because to do so would be antidilutive.

 

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Following is the computation of basic and diluted net loss per share for the years ended June 30, 2019 and 2018:

 

    Three months Ended June 30, 2019   Three months Ended June 30, 2018
         
Basic and Diluted EPS Computation        
Numerator:        
Loss available to common stockholders'   $ (53,629 )   $ (1,283 )
Denominator:                
Weighted average number of common shares outstanding     6,287,384       6,287,384  
Basic and diluted EPS   $ (0.01 )   $ (0.00 )
                 
The shares listed below were not included in the computation of diluted losses                
per share because to do so would have been antidilutive for the periods presented:                
Convertible debt     6,539,005       3,011,097  

 

NOTE 6 – Subsequent Events

 

Management has reviewed material events subsequent of the period ended June 30, 2019 and through the date of filing of financial statements in accordance with FASB ASC 855 “Subsequent Events”.

 

On May 13, 2019 Celexus has entered into a definitive agreement by which it will acquire a related entity, HempWave f/k/a Bio Distributions, upon the completion of an appraisal satisfactory to management of both companies. On July 31, 2019 the Exchange Agreement between Celexus and Hempwave was Amended until January 3, 2020 subject to the conditions of the agreement.

 

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

 

The following discussion of our financial condition and results of operations for the quarterly period ended June 30, 2019 and fiscal year ended March 31, 2019 should be read in conjunction with our financial statements and the related notes, included in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements.

 

Overview

Celexus, Inc. is an acquisition, management and holding company for early stage businesses and technologies in the hemp industry. We intend to become a key supplier of high grade CBD hemp seeds and clones to international farmers entering the market. The quality, durability, performance and certification on hemp seeds and clones will determine their value. Our seeds will ultimately be bio-engineered to grow large, robust crops, durable to a wide range of weather and altitude and will contain some of the highest percentages of CBD on the market. Our genetic improvement strategy includes the following objectives:

  · High yield

 

  · Minimal male contamination

 

  · Premium market quality

 

  · Reliable low levels of THC content

 

  · Continual development of new improvements to our strains of hemp seeds and clones

 

We are committed to breeding strains of hemp that can maximize the profitability of the industrial hemp industry.  

Results of Operations 

The company has not yet begun its principal operations, and will not do so until completing its initial acquisition. As of the date of this quarterly report, the acquisition of HempWave has not yet been completed. As noted in our Form 8-K filed on August 6, 2019, we reached an agreement with HempWave to extend the time period to complete a due diligence review and appraisal of HempWave from July 31, 2019 to January 3, 2020.

For the quarterly period ended June 30, 2019 and fiscal year ended March 31, 2019, we did not record any revenue and our expenses were $52,894 and $18,445, respectively. The main driver of the increase in expenses was an increase in professional fees from $13,300 over the fiscal year ended March 31, 2019, to $48,825 for the quarter ended June 30, 2019. These fees were incurred as a result of compliance with Exchange Act reporting requirements, and preparation of a Form S-1, which was filed on August 2, 2019.

In addition, for the quarterly period ended June 30, 2019 and fiscal year ended March 31, 2019, we recorded selling, general, and administrative expenses of $4,069 and $5,145, respectively.

As a result of the foregoing, the company experienced a ness loss of $53.629 for the quarterly period ended June 30, 2019, as compared to a net loss of $21,234 for the fiscal year ended March 31, 2019.

Liquidity and Capital Resources 

At March 31, 2019 we had $44,862 in current assets compared to $16,168 at June 30, 2019. These assets consisted entirely of cash deposited into our bank account, and the reduction was directly related to the increase in professional fees identified above. Current liabilities at March 31, 2019 totaled $92,859 compared to $117,794 at June 30, 2019, representing an increase of $24,935 in accounts payable and interest payable.

Our operations will not fully commence until we complete our acquisition of HempWave by fulfilling the Exchange Agreement with HempWave prior to the end of the review period, which was extended until January 3, 2020 by mutual consent and amendment of the Exchange Agreement. Pursuant to the Exchange Agreement and subsequent amendment, we will issue Common Stock in the amount of $13,000,000 to HempWave as compensation, with the number of shares calculated by an independent appraisal. Over the course of the current fiscal year ending March 31, 2020, we intend to explore various fundraising methods available to us to replenish the company’s cash reserves and to expand its operations.

The company has significant net operating loss carryforwards that may offset future tax expenses. For the fiscal year ended March 31, 2019, the company had a net operating loss carryforward of $5,812,118, which could be used to defer up to $1,220,545 of federal tax expenses at a 21% statutory tax rate.

Our operations will not fully commence until we complete our acquisition of HempWave by fulfilling the Exchange Agreement with HempWave prior to the end of July 2019. Pursuant to the Exchange Agreement, we will issue Common Stock in the amount of $13,000,000 to HempWave as compensation. Over the course of the current fiscal year ending March 31, 2020, we intend to explore various fundraising methods available to us to replenish the company’s cash reserves and to expand its operations. 

Off-Balance Sheet Arrangements 

We do not have 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 that are material to investors.  

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a smaller reporting company, we have elected to not provide quantitative and qualitative disclosures about market risk in accordance with Item 305(e) of Regulation S-K.

 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”), as of June 30, 2019, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. The evaluation was conducted, under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon this evaluation, the company’s President concluded that our disclosure controls and procedures included material weaknesses as described below.

 

A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

We had the following material weaknesses at June 30, 2019:

 

  ● We have a lack of proper segregation of duties. Management is dominated by a single individual without adequate compensating controls.

 

  ● Our internal control structure lacks multiple levels of review and oversight; and

 

  ● There is an overreliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material, nonstandard transactions.

 

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our third quarter that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

 

 

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PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

The company is not a party to any legal proceedings.

 

ITEM 1A. RISK FACTORS

 

There have been no material changes to our risk factors included in the Form 10-K for the fiscal year ended March 31, 2019.

 

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

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

The following documents are included or incorporated by reference as exhibits to this report:

 

Exhibit Number
Description
31.1 Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase 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.

 

 

 October 28, 2019 Celexus, Inc.
 Date Registrant
   
   
  By: /s/ Lisa Averbuch
 

Lisa Averbuch

President

   

 

 

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