NOTES
TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR
THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM
FEBRUARY 9, 2012 (INCEPTION) TO APRIL 30, 2014
(UNAUDITED)
NOTE
1 – ORGANIZATION AND BUSINESS OPERATIONS
Organization
and Description of Business
ALPHALA
CORP. (the “Company”) was incorporated under the laws of the State of Nevada on February 9, 2012 (Inception) and plans
to commence operation in the distribution of teeth whitening products. The Company is in the development stage as defined under
Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 915-205 “
Development-Stage
Entities
”. For the period from Inception on February 9, 2012 through April 30, 2014 the Company has accumulated losses
of $45,785.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles
as promulgated in the United States of America (“U.S. GAAP”) and the instructions from Regulation S-X and do not include
all of the information and disclosures required by generally accepted accounting principles for complete financial statements.
All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the
interim period(s), and to make the financial statements not misleading, have been made and are of a recurring nature unless otherwise
disclosed herein. The results of operations for such interim period(s) are not necessarily indicative of operations for a full
year.
Cash
and Cash Equivalents
For
purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with an original maturity
of three months or less to be cash equivalents.
The
Company’s bank accounts are deposited in insured institutions. The funds are insured up to $250,000. At April 30, 2014 and
January 31, 2014, the Company’s bank deposits did not exceed the insured amounts.
Basic
and Diluted Income (Loss) Per Share
The
Company computes loss per share in accordance with ASC 260, “
Earnings per Share
”, which requires presentation
of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing
net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted
loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes
all potential common shares if their effect is anti-dilutive. No potentially dilutive debt or equity instruments were issued of
outstanding during the three month periods ended April 30, 2014 or 2013.
Income
Taxes
The
Company accounts for income taxes pursuant to ASC 740, “
Income Taxes
”. Under ASC 740, deferred income taxes
are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating
loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will
not be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period
in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of enactment.
ALPHALA
CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR
THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM
FEBRUARY 9, 2012 (INCEPTION) TO APRIL 30, 2014
(UNAUDITED)
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income
Taxes (continued)
ASC
740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under ASC
740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not
to be sustained upon audit by the relevant taxing authority. At April 30, 2014 and January 31, 2014, there were no unrecognized
tax benefits.
Revenue
Recognition
The
Company recognizes revenue in accordance with ASC 605, “
Revenue Recognition
”. ASC 605 requires that four basic
criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred;
(3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and
(4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the
collectibility of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other
adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the
product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that
the product has been delivered or no refund will be required.
Advertising
Costs
The
Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expense
of $0 during the three month periods ended April 30, 2014 and 2013.
Recent
Accounting Pronouncements
Management
does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect
on the Company’s condensed financial statements.
Fair
Value of Financial Instruments
ASC
820, “
Fair Value Measurements and Disclosures
”, establishes a three-tier fair value hierarchy, which prioritizes
the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs
used in measuring fair value are observable in the market.
These
tiers include:
Level
1: defined as observable inputs such as quoted prices in active markets;
Level
2: defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level
3: defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The
carrying amounts of financial assets and liabilities, such as cash, prepaid expenses, income taxes receivable, accounts payable
and due to related party approximate their fair values because of the short maturity of these instruments.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements
and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
ALPHALA
CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR
THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM
FEBRUARY 9, 2012 (INCEPTION) TO APRIL 30, 2014
(UNAUDITED)
N
OTE
3 – GOING CONCERN
The
accompanying condensed unaudited financial statements have been prepared on a going concern basis which assumes the Company will
be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company
has incurred a loss since Inception (February 9, 2012) resulting in an accumulated deficit of $45,785 as of April 30, 2014, and
further losses are anticipated in the development of its business. Accordingly, there is substantial doubt about the Company’s
ability to continue as a going concern.
The
ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/ or obtaining
the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come
due.
NOTE
4 – COMMON STOCK
Common
Stock
The
Company has 750,000,000 shares of common stock authorized with a par value of $0.001 per share.
On
October 22, 2012, the Company issued 180,000,000 shares of its common stock for total proceeds of $6,000.
During
the period from October 29, 2012 to December 4, 2012, the Company issued 70,800,000 shares of its common stock for total proceeds
of $23,600.
On
April 11, 2014, the holders of a majority of the Company’s issued and outstanding common stock approved an increase in its
authorized capital from 75,000,000 shares of common stock, par value $0.001, to 750,000,000 shares of common stock, par value
$0.001 (the “Authorized Capital Increase”). The purpose of the Authorized Capital Increase was to reorganize the Company’s
capital structure in connection with the stock dividend described below. The Company formally effected the Authorized Capital
Increase on April 11, 2014 by filing a Certificate of Amendment with the Nevada Secretary of State.
On
April 14, 2014, the Company’s sole director approved a stock dividend of 29 authorized but unissued shares of common stock
on each one (1) pre-dividend issued and outstanding share of the Company’s common stock. On May 1, 2014, the Company received
approval from the Financial Industry Regulatory Authority (FINRA) to effect the stock dividend by way of a forward split, and
on the same date, the Company’s shareholders of record on April 25, 2014 received the dividend. As a result of the stock
dividend, the Company’s issued and outstanding common stock increased from 8,360,000 (pre-dividend) shares to 250,800,000
(post-dividend) shares. All references to common stock have been reflected retroactively.
As
at April 30, 2014 and January 31, 2014, 250,800,000 shares of common stock were issued and outstanding.
Additional
paid in Capital
From
February 9, 2012 (Inception) through January 31, 2014, the Company’s former sole director and principal shareholder loaned
the Company a total of $5,800 to pay for incorporation costs and operating expenses. The loan was non-interest bearing, due upon
demand and unsecured. Effective January 31, 2014, the Company’s former sole director and principal shareholder forgave repayment
of the $5,800 outstanding loan balance which was credited to additional paid in capital at that time.
ALPHALA
CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR
THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM
FEBRUARY 9, 2012 (INCEPTION) TO APRIL 30, 2014
(UNAUDITED)
NOTE
5 – RELATED PARTY TRANSACTIONS
In
support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that
the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing.
There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction
of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.
From
February 9, 2012 (inception) through January 31, 2014, the Company’s former sole director and principal shareholder loaned
the Company a total of $5,800 to pay for incorporation costs and operating expenses. The loan was non-interest bearing, due upon
demand and unsecured. Effective January 31, 2014, the Company’s former sole director and principal shareholder forgave repayment
of the $5,800 outstanding loan balance which was credited to additional paid in capital at that time.
As
at April 30, 2014, the Company owed $3,723 to its sole director and principal shareholder for expense reimbursements. The loan
is non-interest bearing, unsecured and has no specific repayment terms.
NOTE
6 – INCOME TAXES
During
the period from February 9, 2012 (Inception) through January 31, 2013, the Company recognized a taxable profit of $1,760, accrued
a tax liability of $352 and paid $264 tax in respect of this liability during the twelve months ended January 31, 2014.
During
the twelve months ended January 31, 2014, the Company incurred taxable losses of $30,644. $1,760 of these losses can be carried
back to offset the $1,760 taxable profits arising in the period from February 9, 2012 (Inception) through January 31, 2013 and
accordingly the Company is entitled to a refund of the $264 of tax paid in respect of this period and to recognize a full credit
for the $352 tax liability provided for in the prior period. The remaining balance of $28,884 unrelieved tax losses are potentially
available to offset taxable profits the Company may generate in the future.
During
the three months ended April 30, 2014 the Company incurred further tax losses of $16,901 increasing the total available tax losses
potentially available to offset taxable profits the Company may generate in the future to $45,785. The net operating loss carry
forward will expire between 2033 and 2034. This carry forward may be limited upon the consummation of a business combination under
IRC Section 381.
When
it is more likely than not that a tax asset cannot be realized through future income, the Company must record an allowance against
any future potential future tax benefit. The Company provided a full valuation allowance against the net deferred tax asset, consisting
of net operating loss carry forwards, because management has determined that it is more likely than not that it will not earn
income sufficient to realize the deferred tax assets during the carry forward periods.
The
Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the three
month periods ended April 30, 2014 and 2013 as defined under ASC 740, “
Accounting for Income Taxes
”. The Company
did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the
beginning balance of the accumulated deficit on the balance sheet.
ALPHALA
CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
FOR
THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM
FEBRUARY 9, 2012 (INCEPTION) TO APRIL 30, 2014
(UNAUDITED)
NOTE
7 – SUBSEQUENT EVENT
On
June 10, 2014, the Company entered into a non-binding letter of intent with FV Pharma Inc., a private Ontario, Canada corporation
(“FV Pharma”), and all the holders of the Class B non-voting shares of FV Pharma (the “Shares”), pursuant
to which the Company agreed to acquire 100% of the Shares from such holders in exchange for the allotment and issuance of 150,000,000
restricted shares of the Company’s common stock (the “Transaction”). The Transaction is expected to take the
form of a share exchange with the result that FV Pharma will become a partially owned subsidiary of the Company, and is subject
to certain closing conditions. FV Pharma has applied to Health Canada to become a licensed commercial producer of marijuana under
the Government of Canada’s new
Marihuana for Medical Purposes Regulations
(the “MMPR”).
The
Company has evaluated all other subsequent events through the date of issuance of the accompanying condensed unaudited financial
statements on June 19, 2014 and other than as disclosed above, the Company did not have any material recognizable subsequent events.
FORWARD-LOOKING
STATEMENTS
This
quarterly report contains forward-looking statements. All statements other than statements of historical fact are “forward-looking
statements”, including any projections of earnings, revenues or other financial items; any statements of the plans, strategies
and objectives of management for future operations; any statements concerning proposed new products, services or developments;
any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying
any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could
differ materially from those anticipated by any forward-looking statements.
These
forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition,
promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking
statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we
assume no obligation to update such forward-looking statements.