Karbon-X Corp. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included in “Item 8. Financial Statements and Supplementary Data.” In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors. Plan of Operations Our plan of operation has two Phases. In Phase I, we intend to complete this offering of $150,000 and to develop a business relationship with our proposed manufacturer and supplier while seeking out additional companies to provide us the same services for redundancy and possible competitive price advantages. Phase II, we intended to raise an additional $250,000 and we plan to use the majority of these funds to conduct social media marketing to support initial customer online sales and begin to market our complete product lines for sale and use in salons and spas. Within the next 24 months CocoLuv Inc. plans to begin manufacturing and the sale of the 5 different hair products. According to Research Nesters Virgin Coconut Oil Market the Global Demand Analysis & Opportunity Outlook 2023, the North American market is the second largest for Virgin Coconut Oil sales, in many forms, including hair products for both men and women. CocoLuv Inc. expects to capitalize on this future growth and demand potential. We intend to contribute to the social media exposure with a marketing campaign that is expected to reach individual customers and salons. This will prepare us for the latter part of the second Phase of our plan, which is to have complete product lines sold in salons across North America. As the demand for quality and healthy haircare products is substantial, CocoLuv Inc. believes that we will be able to reach many cities across the whole of North America. Maintaining o ur mission; to create a company that will provide exceptional products of quality that embody the true value of the benefits of virgin coconut oil. This will be our plan of operation for the twelve months following the date of this prospectus. It is as follows: (i) complete the first Phase of our proposed plan: which is our intention to develop a business relationship with a manufacturer and supplier while seeking out additional companies to provide us the same services for redundancy and possible competitive price advantages (ii) at the same time we expect to drive a large marketing campaign over social media in order to generate interest in our products and product line. 8 Table of Contents We plan to find a marketing firm to assist in marketing our products and product line and the development of the second Phase of our proposed operational plan: we plan to conduct social media marketing to support online sales initially and support the expansion to sell complete product lines for sale and use in salons and spas. In addition, we will look to hire consultant and developer to upgrade our website to support expected sales demands, continue marketing and customer support services. In order to execute the two Phases of our proposed development program as outlined below, we anticipate spending $400,000 on program development, professional and administrative fees, including fees payable in connection with the filing of this registration statement, complying with reporting obligations and arranging financing for both Phases of our development program. Total expenditures during the next twelve months is estimated to be $200,000. If we are unable to raise the full amount in Phase I of this offering, we may not have sufficient to begin operations and may not cover the costs of the offering. Total expenditures over the next twenty-four months are therefore expected to be approximately $400,000. If we experience a shortage of funds prior to funding during the next twenty-four months, we may utilize funds from Mr. Guillermo, our Chairman of the Board of Directors, who has informally agreed to advance funds to allow us to pay for professional fees, including fees payable in connection with the filing of this registration statement and operation expenses, however he has no formal obligation, arrangement or legal commitment to advance or loan funds to the company. We will require the funds from this offering to proceed. If we receive only nominal funds from this offering, we plan to operate on a limited basis for the limited purpose of meeting our reporting obligations to the Securities and Exchange Commission. No such plan exists at this time in case of such contingency, and we cannot assure or guarantee that we would be able to raise additional funding if only nominal funding is obtained from this offering. The above program costs are management’s estimates and the actual project costs may exceed our estimates. To date, we have not commenced with any activities or operations of any phase of our development program. If Phase 1 of the proposed development program proves successful, and we are able to develop a business relationship with our manufacturer and supplier while secure additional companies to provide us the same services for redundancy and possible competitive price advantages we intend to finance Phase II of our proposed development program. Phase II will be the launch of social media marketing, website upgrades, and additional large-scale marketing by an outside hired firm to support initial online customer sales. We will also begin a direct and dedicated marketing and advertising strategy and to market our complete product lines for sale and use in salons and spas. The estimated cost of Phase is $250,000 and is anticipated to take approximately 12 to 15 months to complete. As with Phase I, we cannot provide investors with any assurance that we will be able to raise sufficient funds to proceed with any work or activities of Phase I of our proposed development program. We plan to raise the additional funding for Phase II by way of a private debt or equity financing but have not commenced any activities to raise such funds. As with Phase I, we will require additional funding to proceed with Phase II, we have no current plans on how to raise the additional funding, and we cannot provide investors with any assurance that we will be able to raise sufficient funds to proceed with any work or activities on Phase II of the proposed development program. Going Concern Conditions exist that raise substantial doubt about our ability to continue as a going concern due to our recurring losses from operations, deficit in equity, and the need to raise additional capital to fund operations. The “going concern” opinion by our auditor could impair our ability to finance our operations through the sale of debt or equity securities. Results of Operations Fiscal Year Ended May 31, 2021 compared to May 31, 2020 We did not earn any revenues for the years ended May 31, 2021 and May 31, 2020. 9 Table of Contents Expenses for the year ended May 31, 2021 totaled $30,689 consisting primarily of office expenses of $30,689 resulting in a net loss of $30,689. Comprised of $24,500 in professional fees; filing fees of $3,416; rent expenses of $1,168; telephone expenses of $83; transfer agent expenses of $1,390 and bank services charges of $132. Expenses for the year ended May 31, 2020 totaled $36,452. Comprised of $31,800 in professional fees; filing fees of $2,903; rent expenses of $899; telephone expenses of $110; and bank services charges of $740. The decrease in office and general expenses from fiscal 2021 to fiscal 2020 was primarily due to the decrease in expenses relating to professional fees. Capital Resources and Liquidity Since our director may be unwilling or unable to loan or advance us additional capital, we believe that if we do not raise additional capital over the next 12 months, we may be required to suspend or cease the implementation of our business plans. As of May 31, 2021, we had $352 of cash compared to $494 of cash as of May 31, 2020. We also had $20,000 in prepaid expenses of $20,000 as of May 31, 2020. .We anticipate that our current cash and cash equivalents and cash generated from financing activities will be insufficient to satisfy our liquidity requirements for the next 12 months. To date, the Company has incurred operating losses since inception of $84,142. As at May 31, 2021, the Company has working capital deficit of $65,252. The Company requires additional funding to meet its ongoing obligations and to fund anticipated operating losses. Our auditor has expressed substantial doubt about our ability to continue as a going concern. 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. 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. We expect to incur marketing, professional, and administrative expenses as well expenses associated with maintaining our filings with the Commission. We will require additional funds during this time and will seek to raise the necessary additional capital. If we are unable to obtain additional financing, we may be required to reduce the scope of our business development activities, which could harm our business plans, financial condition and operating results. Additional funding may not be available on favorable terms, if at all. The Company intends to continue to fund its business by way of equity or debt financing and advances from related parties. Any inability to raise capital as needed would have a material adverse effect on our business, financial condition and results of operations. If we cannot raise additional funds, we will have to cease business operations. As a result, investors in the Company’s common stock would lose all of their investment. Off Balance Sheet Arrangements There are no off-balance sheet arrangements currently contemplated by management or in place that are reasonably likely to have a current or future effect on the business, financial condition, changes in financial condition, revenue or expenses, result of operations, liquidity, capital expenditures and/or capital resources. Recent Accounting Pronouncements 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. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable to a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act.