Allied Corp. - Quarter Report: 2019 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

Commission File Number 000-56002

112 North Curry Street, Carson City, Nevada 89703

(Address of principal executive offices) (Zip Code)

800-582-3042

(Registrant’s telephone number, including area code)

N/A

(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 required to be filed by Section 13 or 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 file such reports), and (2) has been subject to such filing requirements for the past 90 days. ¨ Yes    x 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 files). ¨ Yes    x No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.

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 12b-2 of the Exchange Act). x Yes    ¨ No

As of June 30, 2019, there were 86,658,000 shares of common stock issued and outstanding (reflecting a 6.666 shares for one stock dividend treated as a stock split completed subsequent to the end of the period).

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ALLIED CORP.

(Formerly Cosmo Ventures Inc.)

FINANCIAL STATEMENTS

ALLIED CORP.

(Formerly Cosmo Ventures Inc.)

BALANCE SHEETS

As of June 30, 2019 and March 31, 2019

(unaudited)

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

ALLIED CORP.

(Formerly Cosmo Ventures Inc.)

STATEMENTS OF OPERATIONS

For the Three Months Ended June 30, 2019

(unaudited)

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

ALLIED CORP.

(Formerly Cosmo Ventures Inc.)

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

For the Three Ended June 30, 2019 and June 30, 2018

(unaudited)

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

ALLIED CORP.

(Formerly Cosmo Ventures Inc.)

STATEMENTS OF CASH FLOWS

For the Three Months Ended June 30, 2019 and 2018

(unaudited)

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

ALLIED CORP.

(Formerly Cosmo Ventures Inc.)

Notes to Financial Statements

(unaudited)

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

Cosmo Ventures Inc. (the “Company”) was incorporated in the State of Nevada on February 3, 2013, with a year end of March 31. The Company was established to purchase overstocked inventory items from manufacturers and retailers and offer them to the public at discounted prices via a web-based on-line store. Subsequent to the period and effective as of July 10, 2019, the Company changed its name to Allied Corp.

Basis of Presentation – Unaudited Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for financial information and with the instructions to Form 10-Q. They do not include all information and footnotes required by United States generally accepted accounting principles for complete financial statements. However, except as disclosed herein, there has been no material changes in the information disclosed in the notes to the financial statements for the fiscal year ended March 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission. The unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-K. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending March 31, 2020.

Use of Estimates and Assumptions

Preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Accordingly, actual results could differ from those estimates.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

Loss per Common Share

The basic loss per common share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the period. The diluted loss per common share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted loss per common share are the same as basic loss per common share due to the lack of dilutive items in the Company. As of June 30, 2019 and 2018, there were no common stock equivalents outstanding.

ALLIED CORP.

(Formerly Cosmo Ventures Inc.)

Notes to Financial Statements

Income Taxes

The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances and tax loss carry-forwards. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.

Stock-based Compensation

The Company estimates the fair value of each stock-based compensation award at the grant date by using Black-Scholes option pricing model. The fair value determined represents the cost of the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. As stock-based compensation expense is recognized based on awards ultimately expected to vest. Excess tax benefits, if any, are recognized as additional paid in capital.

Recent Accounting Pronouncements

The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.

Subsequent Events

The Company has evaluated subsequent events through the date the financial statements were issued for disclosure and consideration.

NOTE 2 – GOING CONCERN

The accompanying unaudited financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. To date the Company has generated no revenues from its business operations and has incurred operating losses of $88,752 since inception. The Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses. The ability of the Company to continue as a going concern is dependent on raising capital to fund its initial business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern. The Company intends to continue to fund its business by way of private placements and advances from related parties as may be required. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

ALLIED CORP.

(Formerly Cosmo Ventures Inc.)

Notes to Financial Statements

NOTE 3 – RELATED PARTY TRANSACTIONS

The Company’s former CEO had loaned the Company cash to support operations. Balances outstanding as of June 30, 2019 and March 31, 2019 were $31,569 and $31,569, respectively. The balance due is unsecured and non-interest-bearing with no set terms of repayment.

During the three months ended June 30, 2019, the Company’s CEO loaned the Company $6,884. Balances outstanding as of June 30, 2019 and March 31, 2019 were $19,997 and $13,113, respectively. The balance due is unsecured and non-interest-bearing with no set terms of repayment.

NOTE 4 – EQUITY

Subsequent to the period on July 1, 2019, the Company amended our Articles of Incorporation: (i) changing the name of the Company to Allied Corp. and (ii) increasing the authorized capital stock of the Company from 75,000,000 to 300,000,000 shares of common stock, par value $0.0001 per share and 50,000,000 shares of preferred stock, par value $0.0001 per share. Also on July 1, 2019 the board of directors approved a stock dividend treated as a stock split of 6.666 shares for each one share of the Company’s common stock which became effective August 7, 2019. The effects of the stock split have been retroactively reflected in the financial statements.

NOTE 5 – SUBSEQUENT EVENTS

Effective July 1, 2019, the Company was assigned proceeds from a private placement at $0.50 per share completed during May and June 2019 to 11 accredited investors for a total financing of $1,350,000. In August 2019, the Company issued 2,700,000 shares of restricted common stock to such investors.

See Note 4 for discussion on amendment of our Articles of Incorporation.

From August 1, 2019 through August 13, 2019, the Company completed a private placement at $0.75 per share to an accredited investor for a total raise of $3,000,000. In August 2019, the Company issued 4,000,000 shares of restricted common stock to such investor.

Effective August 13, 2019, the Company completed an acquisition transaction with Canadian-based Advanced Micro Biosciences, Inc. As part of that transaction, a majority shareholder transferred 55,700,014 shares to shareholders of Advanced Micro. As part of the transaction, Ashhok Kumar, President of the Company, and the Company’s former CEO terminated $19,997 in outstanding debt due to him from the Company; further Mr. Sonu Ram, the Former President of the Company also terminated $31,569 in outstanding debt due to him from the Company.

The name change and symbol change were completed through a corporate action processed through FINRA. The Company is now listed and trading on the OTC Markets pink exchange under the trading symbol “ALID”. The Company intends to apply to trade on the OTC Markets OTCQB Market. The acquisition of Advanced Micro makes Allied an international medical cannabis company focused on creating and providing targeted cannabinoid health solutions.

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

This section of this Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Business Overview

Cosmo Ventures Inc. (“Cosmo Ventures” or the “Company”) was incorporated in the State of Nevada on February 3, 2013. We are an early stage company that plans to commence operations as an online retailer that intended to offer discounted overstocked inventory items. Subsequent to the period the business of the Company changed and its name was changed to Allied Corp. effective July 10, 2019.

Results of Operations

For the three-month periods ended June 30, 2019 and June 30, 2018, we had no revenue. Expenses for the three-month period ended June 30, 2019 totaled $3,953 resulting in a net loss of $3,593, compared to expenses for the three-month period ended June 30, 2018, totaled $8,798 resulting in a net loss of $8,798. The net loss for the three-month period ended June 30, 2019 is a result of office and general expense of $3,953 comprised primarily of professional fees of $2,463. The decrease in expenses for the three-month period ended June 30, 2019 compared to June 30, 2018 is primarily due to the decrease in accounting fees.

Capital Resources and Liquidity

At June 30, 2019 there was substantial doubt that we could continue as an on-going business for the next twelve months unless we obtain additional capital. No substantial revenues were anticipated pending implementation of our plan of operations. With the exception of cash advances from our sole Officer and Director, our only source for cash at that time is investments by others by way of private placements. Since inception, we have raised $25,000 through the sale of Company’s common stock.

As of June 30, 2019, we had $112 in cash as compared to $103 in cash at June 30, 2018. The funds available to the Company will not be sufficient to fund the planned operations of the Company and maintain a reporting status. As of June 30, 2019, the Company’s officer and director, Mr. Kumar has loaned the Company $19,997, and Mr. Ram the former officer and director had loaned the company $31,569 in the form of a non-secured loan for the next twelve months as the expenses are incurred if no other proceeds are obtained by the Company. However, there is no contract or written agreement in place. Subsequent to June 30, 2019, these related party loans were forgiven.

Off-balance sheet arrangements

Other than the situation described in the section titled Capital Recourses and Liquidity, the company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the company is a party, under which the company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

Critical Accounting Policies and Estimates

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and 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.

Risks

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

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

Item 4. Controls and Procedures.

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 of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’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 or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

In connection with this quarterly report, as required by Rule 15d-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the design and operation of our company’s disclosure controls and procedures. The material weaknesses in our disclosure control procedures are as follows:

1. Lack of formal policies and procedures necessary to adequately review significant accounting transactions. We utilize a third-party independent contractor for the preparation of our financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third-party independent contractor is not involved in our day to day operations and may not be provided information from our management on a timely basis to allow for adequate reporting/consideration of certain transactions.

2. Lack of audit committee and financial expert. We do not have an audit committee with a financial expert and, thus, we lack the appropriate oversight within the financial reporting process.

We intend to initiate measures to remediate the identified material weaknesses, including, but not necessarily limited to, the following:

Changes in Internal Control Over Financial Reporting

There were no change in internal controls over financial reporting during the three months ended June 30, 2019.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Currently, we are not involved in any pending litigation or legal proceeding.

Item 1A. Risk Factors.

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

Item 2. Unregistered Sales of Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information.

On June 5, 2018, Ashok Kumar acquired 10,000,000 shares of common stock from the Company’s former President, Sonu Ram, at par value of $0.001 per share. The consideration provided by Mr. Kumar to Mr. Ram was $10,000 in cash. The acquisition by Mr. Kumar of those shares resulted in a change in control.

Effective July 1, 2019, the Company was assigned proceeds from a private placement at $0.50 per share completed during May and June 2019 to 11 accredited investors for a total raise of $1,350,000. In August 2019, the Company issued 2,700,000 shares of restricted common stock to such investors.

On July 1, 2019, the Shareholders of the Company and the Board of Directors approved an Amendment to Our Articles of Incorporation (i) changing the name of the Company to Allied Corp. and (ii) increasing the authorized capital stock of the Company from 75,000,000 to 300,000,000 shares of common stock, par value $0.0001 per share and 50,000,000 shares of preferred stock, par value $0.0001 per share. Also on July 1, 2019 the board of directors approved a 6.666 shares for each one share stock dividend treated as a stock split on the Company’s common stock which became effective August 7, 2019 upon review of and clearance from FINRA.

From August 1, 2019 through August 13, 2019, the Company completed a private placement at $0.75 per share to an accredited investor for a total raise of $3,000,000. In August 2019, the Company issued 4,000,000 shares of restricted common stock to such investor.

Effective August 13, 2019, the Company completed an acquisition transaction with Canadian-based Advanced Micro Biosciences, Inc. As part of that transaction, a majority shareholder transferred 55,700,014 shares to shareholders of Advanced Micro. As part of the transaction, Ashhok Kumar, President of the Company and Sonu Ram, former President of the Company terminated $19,997 and $31,569 respectively in outstanding debt due to them from the Company.

The name change and symbol change were completed through a corporate action processed through FINRA. The Company is now listed and trading on the OTC Markets pink exchange under the trading symbol “ALID”. The Company intends to apply to trade on the OTC Markets OTCQB Market. The acquisition of Advanced Micro makes Allied an international medical cannabis company focused on creating and providing targeted cannabinoid health solutions.

Item 6. Exhibits.

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.