UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q/A

Amendment No.1

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
For the quarterly period ended December 31, 2019
 
   or
   
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: 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)

  

4695 Chabot Drive - Suite 200    
Pleasanton, CA   94588
(Address of principal executive offices)   (Zip Code)

  

702-747-7305
(Registrant’s telephone number, including area code)
 

8275 S. Eastern Ave, Suite 200, Las Vegas, NV 89123
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 to be filed by Section 13 and Section 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 files 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 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer Accelerated filer
  Non-accelerated filer 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 for 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 12-b2 of the Exchange Act). Yes.  No.

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
None   None   None

 

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 11, 2020, there were 6,288,457 shares of Common Stock, par value $0.001 per shares outstanding.

 

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  TABLE OF CONTENTS
 
PART I – FINANCIAL INFORMATION
    Page 
Item 1. Condensed Financial Statements 5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14
Item 3. Quantitative and Qualitative Disclosures about Market Risk 19
Item 4. Controls and Procedures 19
 
PART II – OTHER INFORMATION
     
Item 1. Legal Proceedings 20
Item 1A. Risk Factors 20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Mine Safety Disclosures 21
Item 5. Other Information 21
Item 6. Exhibits 21
  Signatures 22

 

 

  2  
 

  Explanatory Note

We are filing this Amendment No.1 to our Form 10-Q for the fiscal period ended December 31, 2019, for the purposes of updating our shares outstanding numbers in order to reflect the 1-90 reverse split and to clarify the details and status of the Hempwave transaction as well as other disclosures related to the appointment and resignations of our Officers and Directors. This Amendment No. 1 also contains currently dated certifications as Exhibits 31.1, and 32.1. This Amendment No. 1 does not reflect events occurring after the filing of the original Form 10-Q or modify or update those disclosures that may be affected by subsequent events. Accordingly, this Amendment No. 1 should be read in conjunction with the Original 10-Q and our other SEC filings subsequent to the filing of the Original 10-Q.

 

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PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

  Page
Condenced Balance Sheets as of December 31, 2019 (Unaudited) and March 31, 2019 5
   
Condenced Statements of Operations for the three and nine months ended December 31, 2019 and 2018 (Unaudited) 6
   
Condenced Statements of Stockholders’ Deficit for the nine months ended December 31, 2019 and 2018 (Unaudited) 7
   
Condenced Statements of Cash Flows for the nine months ended December 31, 2019 and 2018 (Unaudited) 8
   
Notes to Unaudited Consolidated Financial Statements (unaudited) 9

 

 

  4  
 

Celexus, Inc.

Condensed Balance Sheets 

 

    December 31, 2019  

March 31,

2019

Assets       (unaudited)    
Current assets                
Cash in bank   $ 5,873     $ 44,862  
Total current assets     5,873       44,862  
Total assets   $ 5,873     $ 44,862  
                 
Liabilities and Stockholders' Deficit                
Current liabilities                
Accounts payable and accrued expenses   $ 7,111     $ 3,557  
Related party advances payable     79,169       58,500  

Interest payable – related party

    8,087       5,802  
Convertible revolving demand note - related party     25,000       25,000  
Total current liabilities     119,367       92,859  
Total liabilities     119,367       92,859  
                 
Commitments and contingencies     —         —    
                 
Stockholders' Deficit                
Common stock: $0.09 par value; 1,500,000,000 shares authorized; 6,288,457 shares issued and outstanding    

628,738

      628,738  
Additional paid-in capital    

8,255,975

      8,255,975  
Retained deficit     8,998,207      

8,255,975

Total stockholders' deficit     (113,494 )     (47,997 )
Total liabilities and stockholders' deficit   $ 5,873     $ 44,862  

 

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

  

 

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Celexus, Inc.

Condensed Statements of Operations 

(Unaudited)

  

 

    Three Months Ended   Nine Months Ended
    December 31, 2019   December 31, 2018   December 31, 2019   December 31, 2018
Revenue   $ —       $ —       $ —       $ —    
                                 
Operating expenses                                
General and administrative     3,325       2,570       7,394       3,770  
Professional fees     6,995       —         55,820       48  
Total operating expenses     10,320       2,570       63,214       3,818  
                                 
Loss from operations     (10,320 )     (2,570 )     (63,214 )     (3,818 )
                                 
Other income (expenses)                                
Gain on forgiveness of liabilities     —         —         2       —    
Interest expense     (784 )     (712 )     (2,285 )     (2,078 )
Total other income (expenses)     (784 )     (712 )     (2,283 )     (2,078 )
                                 
Net loss   $ (11,104 )   $ (3,282 )   $ (65,497 )   $ (5,896 )
                                 
Basic and diluted loss per common share   $ (0.00 )   $ (0.00 )   $ (0.01 )   $ (0.00 )
                                 
Weighted average number of common shares outstanding - basic and diluted     6,288,457       6,288,457       6,288,457       6,288,457  

 

 

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

 

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Celexus, Inc.

Statement of Changes in Stockholders’ Deficit

For the Nine Months Ended December 31, 2019

(Unaudited)

 

 

 

  Common Stock   Additional Paid-in   Retained   Total Stockholders'
  Shares   Amount   Capital   Deficit   Deficit
Balance, March 31, 2019   6,288,457   $        628,738   $   8,255,975   $ (8,932,710)   $    (47,997)
Net loss for the period                 -                       -                        -             (53,629)        (53,629)
Balance, June 30, 2019   6,288,457           628,738       8,255,975     (8,986,339)      (101,626)
Net loss for the period                 -                       -                        -                  (764)            (764)
Balance, September 30, 2019   6,288,457            628,738       8,255,975     (8,987,103)      (102,390)
Net loss for the period                 -                       -                        -             (11,104)        (11,104)
Balance, December 31, 2019   6,288,457   $    628,738   $   8,255,975   $ (8,998,207)   $  (113,494)

 

Celexus, Inc. 

Statement of Changes in Stockholders’ Deficit

For the Nine Months Ended December 31, 2018

(Unaudited)

 

  Common Stock   Additional Paid-in   Retained   Total Stockholders'
  Shares   Amount   Capital   Deficit   Deficit
Balance, March 31, 2018   6,288,457   $        628,738   $   8,246,697   $ (8,911,476)   $    (36,041)
Net loss for the period                 -                       -                        -               (1,283)          (1,283)
Balance, June 30, 2018   6,288,457            628,738       8,246,697     (8,912,759)        (37,324)
Net loss for the period                 -                       -                        -               (1,331)          (1,331)
Balance, September 30, 2018   6,288,457            628,738       8,246,697     (8,914,090)        (38,655)
Related party gain on extinguishment of debt                 -                       -                 9,278                      -                9,278
Net loss for the period                 -                       -                        -               (3,282)          (3,282)
Balance, December 31, 2018   6,288,457   $        628,738   $   8,255,975   $ (8,917,372)   $    (32,659)

 

  

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

 

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Celexus, Inc.

Condensed Statements of Cash Flows

(Unaudited)

  

 

    Nine Months Ended
    December 31, 2019   December 31, 2018
Cash flows from operating activities:                
Net loss   $ (65,497 )   $ (5,896 )
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     3,554       3,818  
Increase (decrease) in interest payable     2,285       2,078  
Net cash flows used in operating activities     (59,658 )     —    
                 
Cash flows from investing activities:                
Net cash flows from investing activities     —         —    
                 
Cash flows from financing activities:                
Proceeds from related party advances     20,669       —    
Net cash flows from financing activities     20,669       —    
Change in cash and cash equivalents     (38,989 )     —    
Cash and cash equivalents, beginning of period     44,862       —    
Cash and cash equivalents, end of period   $ 5,873     $ —    
                 
Supplemental disclosure of cash flow information:                
Interest paid in cash   $ —       $ —    
Income taxes paid in cash   $ —       $ —    

 

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

 

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Celexus, Inc.

Notes to Condensed Financial Statements

December 31, 2019

(Unaudited)

 

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.

 

On March 27, 2019 the Board of Directors elected David Soto as COO of the corporation.

Mr. Soto also to serve as Chief Executive Officer of HempWave, (f/k/a Bio Distributions, Inc.) a hemp industry company with which the Company has entered into an agreement by which HempWave will be acquired following the completion of an appraisal

 

On May 13, 2019, Celexus has entered an amendment to the February 2019, exchange agreement (“Exchange Agreement”); wherein, the Company will acquire a related entity, HempWave , contingent upon the completion of an appraisal satisfactory to management of both companies.
 

On that same date, Michael R Cashion, was hired as Chief Sales Strategist for the corporation. Michael is a Start up Sales strategist that is focused on driving revenue. His approach in creating teams and implementing strategic plans has created strong growth in different markets. With a executive level presence, he is able work with customers, Board of Directors, and internal stake holders to drive sales and profits.
 

On May 20, 2019 the Board of Directors elected David Soto as President, and the Sole Officer of the corporation. As of May 20, 2019, Lisa Averbuch has resigned as President of Celexus, Inc. (the “Company”). Ms. Averbuch will continue to serve as a Director of the Company and maintains the authority to vote the shares of the Company’s majority shareholder, Global Services Unlimited Group, Inc.

On July 31, 2019, Celexus, Inc. (the “Company”) and an related party, HempWave entered into a further amendment to the Exchange Agreement entered in February 2019,through the Exchange Agreement. . The July 31, 2019, amendment includes changes to four provisions of the Exchange Agreement, and are summarized below:

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  1. Section A of the Exchange Agreement is amended to provide that instead of the acquisition for $13,000,000 in Company stock, the value of the stock to be issued will be calculated by an independent appraisal;

 

  2. Section V.02(e) of the Exchange Agreement is amended to clarify that the due diligence investigation conducted by the Company shall include an appraisal of HempWave;

 

  3. Section V.03(f) of the Exchange Agreement is amended to include a corresponding change to that made in Section V.02(e) of the Exchange Agreement; and

 

  4. Section VI.01(c) of the Exchange Agreement is amended to extend the period for the completion of due diligence and to effect the acquisition from July 31, 2019 to January 3, 2020.

 

Celexus, Inc.’s business plan is to be an acquisition, management and holding company for early stage, high growth businesses and technologies in the hemp industry. The Company has developed specific criteria and standards that must be met by each acquisition candidate. Once identified, the Company will engage its team of industry professionals to perform thorough due diligence on the potential acquisition partner. Following successful due diligence, Celexus will send in its M & A team to structure and present an attractive win win proposal to the selling entity.

 

On October 22, 2019, David Soto resigned as the Sole Officer of the Company. On October 22, 2019, Ms. Averbuch was appointed as the Sole Officer and Director of the Company.

 

On December 30, 2019, the Company and Hempwave announced their intentions to replace the Exchange Agreement with Hempwave and restructure that Exchange Agreement into a stock purchase of the Company’s controlling shares from our President, Ms. Averbuch and set the record date of the completion of the stock purchase (“Stock Purchase Agreement”) to an estimated date of May 31, 2020 or sooner. 

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 December 31, 2019, the Company had an accumulated deficit of $8,998,207. 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.

 

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.

 

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Cash

 

Cash includes amounts held in bank accounts. The Company has no 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.

 

Recent Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

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.

 

Prior to the Company filing the Form 10 General Form for Registration of Securities on February 5, 2019, this revolving demand note was acquired by European Trade Partners, LLC as part of the change in majority ownership. European Trade Partners, LLC is a related party under the control of Lisa Averbuch, the Company’s major shareholder, member of the board of directors and president.

 

European Trade Partners, LLC has advanced the corporation an additional amount of $58,500 as of March 31, 2019 and an additional $20,669 through December 2019. The advances bear no interest and are payable on demand.

 

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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. The 1-90 reverse split has been retroactively accounted for, accordingly.

 

At December 31, 2019, the Company had 1,500,000,000 authorized shares of common stock with a par value of $0.09 per share and 6,287,384 shares of common stock outstanding.

 

NOTE 5 - Net Loss Per Share

 

During the nine months ended December 31, 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.

 

Following is the computation of basic and diluted net loss per share for the nine months ended December 31, 2019 and 2018:

 

    Nine months Ended December 31, 2019   Nine months Ended December 31, 2018
Basic and Diluted EPS Computation                
Numerator:                
Loss available to common stockholders'   $ (65,497 )   $ (5,896 )
Denominator:                
Weighted average number of common shares outstanding     6,288,457       6,288,457  
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     33,087,462       30,802,000  

  

NOTE 6 – Subsequent Events

  

On February 12, 2020, the Securities and Exchange Commission (the “SEC”) issued an order suspending trading in the common stock of Celexus, Inc. (the “Company” or “CXUS”) on the OTC Bulletin Board and OTC Link for a period of 14 days ending on February 27, 2020.  In its order, the SEC alleged that there were “questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the company’s business combinations, related parties, relationship with its auditors, control persons, and business prospects.” Neither the Company nor Lisa Averbuch, its officer and director is aware of any untrue statements of material fact or any omission to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, in any of the Company’s filings or press releases.

 

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The Company has discussed the issues with the Securities and Exchange Commission and plans to address and resolve these concerns. 
 

There has been no change to the Company’s business plan.  The Company will be seeking to have a broker or dealer publish quotations for the Company’s common stock on the OTC Bulletin Board or another interdealer quotation system, although there can be no assurance that this will be achieved.

 

On May 20, 2020, the Company and Hempwave, Inc., due to economic conditions and material changes to the Company, the Company and Hempwave, have decided to terminate the contemplated Stock Purchase Agreement by and between the Companies.


On May 22, 2020, The Company has determined not to proceed with its proposed initial offering at this time because the Company has determined that pursuing the public offering at this time is not in the best interests of the Company.  Because the Company does not intend to proceed with the proposed offering at this time, the Company believes that withdrawal of the Registration Statement is consistent with the public interest and the protection of investors.

 

Management has reviewed material events subsequent of the period ended December 31, 2019 and through the date of filing of financial statements in accordance with FASB ASC 855 “Subsequent Events”.

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Forward Looking Statements

 

This Quarterly Report on Form 10-Q contains forward-looking statements. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “continue” and similar expressions or the negative of these similar terms. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information.

 

These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, (d) whether we are able to successfully fulfill our primary requirements for cash, which are explained below under “Liquidity and Capital Resources”. We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws. Unless stated otherwise, terms such as the “Company,” “Celexus,” “we,” “us,” “our,” and similar terms shall refer to Celexus, Inc., a Nevada corporation.

 

Overview

 

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 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

 

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  · 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.  

 

We expect the proposed HempWave acquisition to be a key part of establishing the company as a leader in the hemp industry. The acquisition agreement that was executed in February 2019 is expected to be fully consummated by May 31, 2020 or sooner, providing all due diligence and market analysis confirms that moving forward will be beneficial to the company and its shareholders. As noted in the Exchange Agreement filed in February 2019 with the SEC, the deal consists of the company acquiring 100% of the outstanding shares of HempWave (formerly Bio Distribution, Inc) in exchange for common stock of the Company based on a fair market appraisal valuation.

We expect to generate operating losses and experience negative cash flows for the immediate future and it is uncertain if we will achieve future profitability. We may not have enough funds to sustain the business until it becomes profitable. The company needs $500,000 for additional capital in order to fund operations through, at a minimum, the next 12 months.

 

Results of Operations

 

Working Capital

 

    December 31, 2019   March 31, 2019
Current assets   $ 5,873     $ 44,862  
Current liabilities   $ 119,367     $ 92,859  
Working capital deficit   $ (113,494 )   $ (47,997 )

 

 

Cash Flows

  

    December 31, 2019   December 31, 2018
Cash flows used in operating activities     (59,658 )     —    
Cash flows provided by financing activities     —         —    
Cash flows used in investing activities     20,669       —    
Net change in cash during period     (38,989 )     —    

 

 

Results for the Three Months Ended December 31, 2019 Compared to the Three Months Ended December 31, 2018

 

Operating Revenues

 

The Company had no revenue for the three months ended December 31, 2019 or for the same period in 2018.

 

Cost of Revenues

 

The Company had no cost of revenues for the three months ended December 31, 2019 or for the same period in 2018.

 

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General and Administrative Expenses

 

General and administrative expenses and professional fees, consisted primarily of consulting fees, professional fees, in preparation of a Registration Statement on Form S-1, SEC Reporting obligations and accounting expenses. For the three months ended December 31, 2019 and December 31, 2018, general and administrative expenses increased to $10,320 from $2,570 for the same period in 2018 representing an increase of $7,750 or 301%. The $7,750 increase is primarily attributable to an increase in professional fees due to the filing of the Registration Statement on Form S-1.

 

Other Income (Expense)

 

Other income (expense) consisted of interest income from third-party notes. For the three months ended December 31, 2019, there was a $784 loss from interest on the third-party notes. There was a $712 loss on interest for the same period in 2018.

 

Net Income (loss)

 

Our net loss for the three months ended December 31, 2019, was $11,104 compared with net loss of $3,282 for the three months ended December 31, 2018, an increase of $7,822 or 238%. The net loss is influenced by the matters discussed above.

 

Results for the Nine Months Ended December 31, 2019 Compared to the Nine Months Ended December 31, 2018

 

Operating Revenues

 

The Company had no revenue for the nine months ended December 31, 2019 or for the same period in 2018.

 

Cost of Revenues

 

The Company had no cost of revenues for the nine months ended December 31, 2019 or for the same period in 2018.

 

Operating Expenses

 

General and administrative expenses and professional fees consisted primarily of consulting fees, professional fees, in preparation of a Registration Statement on Form S-1, SEC Reporting obligations and accounting expenses. For the nine months ended December 31, 2019 and December 31, 2018, general and administrative expenses increased to $63,214 from $3,818 for the same period in 2018 representing an increase of $59,396 or 1,556%. The $59,396 increase is primarily attributable to an increase in professional fees in relation to the Company filing its Registration Statement on Form S-1.

 

Other Income (Expense)

 

Other income (expense) consisted of interest income from third-party notes. For the nine months ended December 31, 2019, there was a $2,285 loss from interest on that third-party notes. There was a $2,078 loss on interest for the same period in 2018.

 

Net Income (loss)

 

Our net loss for the nine months ended December 31, 2019, was $65,497 compared with net loss of $5,896 for the nine months ended December 31, 2018, an increase of $59,601 or 1,011%. The net loss is influenced by the matters discussed above.

 

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Liquidity and Capital Resources

 

The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its inception, the Company has been funded by related parties and third parties, through capital investment and borrowing of funds.

 

At December 31, 2019, the Company had total current assets of $5,873 compared to $44,862 at December 31, 2018. Current assets consisted primarily of cash. The decrease in current assets $38,989 was primarily attributed to an increase in corporate expenses.

 

At December 31, 2019, the Company had total current liabilities of $119,367 compared to $92,859 at December 31, 2018. Current liabilities consisted primarily of the accrued expenses to a related party and notes payable to third parties. The increase in our current liabilities was attributed to the increase in the amounts owed to a related party of $79,169 and the increase in accounts payable and accrued expenses of $7,111.

 

We had negative working capital of $113,494 as of December 31, 2019 compared to $47,997 as of December 31, 2018, an increase of $65,497 or 134%.

 

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 to be determined during the due diligence process 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. The company needs $500,000 for additional capital in order to fund operations through, at a minimum, the next 12 months.

 

Cash Flow from Operating Activities

 

During the nine months ended December 31, 2019, cash used in operating activities was $65,497 compared to $5,896 for the nine months ended December 31, 2018. The increase in the amounts of cash used for operating activities was primarily due to the increase in general and administrative expenses in relation to preparing and filing of the Registration Statement on Form S-1.

 

Cash Flow from Investing Activities

 

There were no investing activities for the nine months ended December 31, 2019 or for the nine months ended December 31, 2018.

 

Cash Flow from Financing Activities

 

During the nine months ended December 31, 2019, cash provided by financing activity was $20,669 compared to $nil provided during the nine months ended December 31, 2018.

 

Quarterly Developments

 

On October 22, 2019, David Soto resigned as the Sole Officer of the Company. On October 22, 2019, Ms. Averbuch was appointed as the Sole Officer and Director of the Company.

 

On December 30, 2019, the Company and Hempwave announced their intentions to replace the Exchange Agreement with Hempwave and restructure that Exchange Agreement into a stock purchase of the Company’s controlling shares from our President, Ms. Averbuch and set the record date of the completion of the stock purchase (“Stock Purchase Agreement”) to an estimated date of May 31, 2020 or sooner.

 

Subsequent Developments

 

On February 12, 2020, the Securities and Exchange Commission (the “SEC”) issued an order suspending trading in the common stock of Celexus, Inc. (the “Company” or “CXUS”) on the OTC Bulletin Board and OTC Link for a period of 14 days ending on February 27, 2020.  In its order, the SEC alleged that there were “questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the company’s business combinations, related parties, relationship with its auditors, control persons, and business prospects.” Neither the Company nor Lisa Averbuch, its officer and director is aware of any untrue statements of material fact or any omission to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, in any of the Company’s filings or press releases.

 

On May 20, 2020, the Company and Hempwave, Inc., due to economic conditions and material changes to the Company, the Company and Hempwave, have decided to terminate the contemplated Stock Purchase Agreement by and between the Companies.

 

On May 22, 2020, The Company has determined not to proceed with its proposed initial offering at this time because the Company has determined that pursuing the public offering at this time is not in the best interests of the Company.  Because the Company does not intend to proceed with the proposed offering at this time, the Company believes that withdrawal of the Registration Statement is consistent with the public interest and the protection of investors.

 

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Going Concern

 

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

 

The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs for the next fiscal year and allow it to continue as a going concern. 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. As of the nine months ended December 31, 2019, the Company has a net loss of $65,497, an accumulated deficit of $8,998,207 and if the Company is unable to obtain adequate capital, it could be forced to cease operations.

 

In order to continue as a going concern during the next fiscal year, the Company if it does not raise enough funds the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. We may not have enough funds to sustain the business until it becomes profitable. The company needs $500,000 for additional capital in order to fund operations through, at a minimum, the next 12 months.

 

Future Financings.

 

We will continue to rely on equity sales of the Company’s common shares in order to continue to fund business operations. Issuances of additional shares will result in dilution to existing shareholders. There is no assurance that the Company will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our business plan of entering the hemp, production and sales industry.

 

Since inception, we have financed our cash flow requirements through issuance of common stock and loans to third parties. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of revenues. Additionally, we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. In the future we will need to generate sufficient revenues from sales in order to eliminate or reduce the need to sell additional stock or obtain additional loans. There can be no assurance we will be successful in raising the necessary funds to execute our business plan.

 

We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth.

 

To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop and upgrade our business model and website, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

 

Critical Accounting Policies.

 

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

  18  

 

 

Management regularly evaluates the accounting policies and estimates that are used to prepare the financial statements. A complete summary of these policies is included in Note 1 of the Company’s audited financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

 

Off-Balance Sheet Arrangements

 

We have no significant 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 stockholders.

 

Recently Issued Accounting Pronouncements

 

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

 

Contractual Obligations

 

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

 

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

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, they concluded that our disclosure controls and procedures were not effective for the quarterly period ended December 31, 2019.

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

  1. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the period ended December 31, 2019. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
     
  2. We do not have sufficient resources in our accounting function, which restricts the Company’s ability to gather, analyze and properly review information related to financial reporting in a timely manner. As a result, as of the date of filing, we have not completed our ASC 606 implementation process and, thus, cannot disclose the quantitative impact of adoption on our financial statements. In addition, due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
  19  

 

     
  3.   We have inadequate controls to ensure that information necessary to properly record transactions is adequately communicated on a timely basis from non-financial personnel to those responsible for financial reporting. Management evaluated the impact of the lack of timely communication between non–financial personnel and financial personnel on our assessment of our reporting controls and procedures and has concluded that the control deficiency represented a material weakness.
     
  4.  Certain control procedures were unable to be verified due to performance not being sufficiently documented. As an example, some procedures requiring review of certain reports could not be verified due to there being no written documentation of such review. Management evaluated the impact of its failure to maintain proper documentation of the review process on its assessment of its reporting controls and procedures and has concluded deficiencies represented a material weakness.

 

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

 

Changes in Internal Controls

 

Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended December 31, 2019, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

On February 12, 2020, the Securities and Exchange Commission (the “SEC”) issued an order suspending trading in the common stock of Celexus, Inc. (the “Company” or “CXUS”) on the OTC Bulletin Board and OTC Link for a period of 14 days ending on February 27, 2020.  In its order, the SEC alleged that there were “questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the company’s business combinations, related parties, relationship with its auditors, control persons, and business prospects.” Neither the Company nor Lisa Averbuch, its officer and director is aware of any untrue statements of material fact or any omission to state a material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading, in any of the Company’s filings or press releases.

 

The Company has discussed the issues with the Securities and Exchange Commission and plans to address and resolve these concerns. 

 

There has been no change to the Company’s business plan.  The Company will be seeking to have a broker or dealer publish quotations for the Company’s common stock on the OTC Bulletin Board or another interdealer quotation system, although there can be no assurance that this will be achieved.

 

Item 1A. Risk Factors.

 

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

 

  20  

 

 

 

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

 

Exhibit Number
Description
31.1 Section 302 Certification of Principal Executive Officer*
31.2 Section 302 Certification of Principal Financial and Accounting Officer*
32.1 Section 906 Certification of Principal Executive Officer*
32.2 Section 906 Certification of Principal Financial and Accounting Officer*
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 Linkbase Document*
101.LAB XBRL Taxonomy Extension Label Linkbase Document*
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document*

 

 

* filed herewith

 

  21  
 

 

SIGNATURES

 

In accordance with 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 hereunto duly authorized.

 

  CELEXUS, INC.
     
Date: May 26, 2020 By: /s/ Lisa Averbuch
  Name: Lisa Averbuch
  Title:

Chief Executive Officer and

Interim Chief Financial Officer

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

 

  

 

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