Karbon-X Corp. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 A. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Management assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in SEC guidance on conducting such assessments as of the end of the period covered by this report. Management conducted the assessment based on certain criteria established in Internal Control -. Based on this assessment, management concluded that our internal controls over financial reporting were not effective as of May 31, 2021. The matters involving internal controls and procedures that the Company’s management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the Company's Chief Financial Officer in connection with the audit of our financial statements as of May 31, 2021 and communicated the matters to our management. Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an affect on the Company's financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures can result in the Company's determination to its financial statements for the future years. We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company: i) Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements. Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company's Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the company may encounter in the future. 11 Table of Contents We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report. There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during the small business issuer's last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. Changes in Internal Control over Financial Reporting There were no changes that have affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the fiscal year ended May 31, 2021. ITEM 9B. OTHER INFORMATION None 12 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Our executive officers and director are as follows: Name Age Position Reymund Guillermo 36 President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors Geoff Norman 55 Secretary and Treasurer Mr. Guillermo and Mr. Norman have held their offices/positions since inception of our company. Business Experience Reymund Guillermo has served as Chairman of the Board, President and Chief Executive Officer since September 13, 2017. Since January 2015, Mr. Guillermo has been employed by ON Semiconductor Philippines Inc., in San Antonio, Philippines as its Senior Engineer. Prior to January 2015 Mr. Guillermo was Process Engineer for Texas Instruments Philippines Inc. from August 2019 to January 2015. He was also employed by Epson Precision Philippines Inc. as Staff Engineer in 2008. Mr. Guillermo obtained a Bachelor of Science in Mechanical Engineering from Tarlac State University in April 2007. Given Mr. Guillermo’s managerial, and, technical expertise within the Philippines and the United States gained by his work with international companies, the company believes that Mr. Guillermo’s background and experience make him well suited to serve as our principal officer and sole director. Geoff Norman has served as the Company’s Secretary and Treasurer since September 13, 2017. Since August 2014 he has been a teacher at Trinity High School in Louisville, Kentucky. Prior to August 2014 Mr. Norman acted as the Executive Director of the Salvation Army Boys and Girls Clubs in Louisville, Kentucky between 2007 and 2013 and was the Club Director of the boys and Girls Club of Franklin/Williamson County from 2003 to 2007. Mr. Norman received his Bachelor of Science from the University of British Columbia in 1993 and his college diploma from Langara Community College in 1998. Mr. Norman has demonstrated his leadership qualities and developed excellent communication skills and is an asset to the Company. 13 Table of Contents Director Independence Our board of directors is currently composed of one member, Reymund Guillermo, who does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. Involvement in Legal Proceedings To our knowledge, there have been no material legal proceedings during the last ten years that would require disclosure under the federal securities laws that are material to an evaluation of the ability or integrity of any of our directors or executive officers. Potential Conflicts of Interest We are not aware of any current or potential conflicts of interest with Mr. Guillermo or Mr. Norman or other business interests and his involvement with CocoLuv Inc. ITEM 11. EXECUTIVE COMPENSATION Summary Compensation Table CocoLuv Inc. has made no provisions for paying cash or non-cash compensation to its officers and sole director. No salaries are being paid at the present time, and none will be paid unless and until our operations generate sufficient cash flows. The table below summarizes all compensation awarded to, earned by, or paid to our named executive officer for all services rendered in all capacities to us for the years ended May 31, 2021 and May 31, 2020. 14 Table of Contents Summary Compensation of Named Executive Officers Name and Principal Position Fiscal Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) All Other Compensation ($) Total ($) Reymund Guillermo President, Chief Executive Officer, Chief Financial Officer 2021 - - - - - 0 Reymund Guillermo 2020 - - - - - 0 Geoff Norman Secretary/Treasuere 2021 - - - - - 0 Geoff Norman 2020 - - - - - 0 Outstanding Equity Awards at Fiscal Year End We did not pay any salaries in 2021 and 2020. None of our executive officer(s) received any equity awards, including, options, restricted stock, performance awards or other equity incentives during the years ended May 31, 2021 and 2020 for CocoLuv Inc. Employment Contracts At this time, CocoLuv Inc. has not entered into any employment agreements with its officers and sole director. If there is sufficient cash flow available from our future operations, the company may enter into employment agreements with our sole officer and director or future key staff members. Stock Awards Plan The company has not adopted a Stock Awards Plan but may do so in the future. The terms of any such plan have not been determined. Director Compensation The Board of Directors of the Company has not adopted a stock option plan. The company has no plans to adopt it but may choose to do so in the future. If such a plan is adopted, this may be administered by the board or a committee appointed by the board (the “Committee”). The committee would have the power to modify, extend or renew outstanding options and to authorize the grant of new options in substitution therefore, provided that any such action may not impair any rights under any option previously granted. CocoLuv Inc. may develop an incentive-based stock option plan for its officers and directors and may reserve up to 10% of its outstanding shares of common stock for that purpose. 15 Table of Contents The table below summarizes all compensation awarded to, earned by, or paid to our directors for all services rendered in all capacities to us for the years ended May 31, 2021 and May 31, 2020. DIRECTOR COMPENSATION Name Fees Earned or Paid in Cash ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Non-Qualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Reymund Guillermo 0 0 0 0 0 0 0 Board Committees We have not formed an Audit Committee, Compensation Committee or Nominating and Corporate Governance Committee as of the filing of this Annual Report. Our Board of Directors performs the principal functions of an Audit Committee. We currently do not have an audit committee financial expert on our Board of Directors. We believe that an audit committee financial expert is not required because the cost of hiring an audit committee financial expert to act as one of our directors and to be a member of an Audit Committee outweighs the benefits of having an audit committee financial expert at this time. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information with respect to the beneficial ownership of our voting securities by (i) each director and named executive officer, (ii) all executive officers and directors as a group; and (iii) each shareholder known to be the beneficial owner of 5% or more of the outstanding common stock of the Company as of May 31, 2021. Beneficial ownership is determined in accordance with the rules of the SEC. Generally, a person is considered to beneficially own securities: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, and (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days (such as through exercise of stock options or warrants). For purposes of computing the percentage of outstanding shares held by each person or group of persons, any shares that such person or persons has the right to acquire within 60 days of May 31, 2021 are deemed to be outstanding but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership. Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership Common Stock (1) Directors and Officers No. of Shares % of Class Reymund Guillermo 50,000,000 77 % President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors; San Antonio, Gerona Tarlac, Philippines, 2302 All officers and directors as a group 50,000,000 77 % (1) Based on 64,900,000 shares of common stock issued and outstanding as of May 31, 2021. 16 Table of Contents ITEM 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Transactions with Related Persons During the year ended May 31, 2021 the CEO, Reymund Guillermo, paid expenses of $52,841 on behalf of the Company and accrued CEO management fees of $7,500 for the period. Total amount owed to the CEO as of May 31, 2021 is $81,398 (May 31, 2020- $28,557). The amounts due to related party are unsecured and non- interest-bearing with no set terms of repayment. On May 20, 2020, the founding shareholder of the Company returned 150,000,000 (pre-split 3,000,000) restricted shares of common stock to treasury and the shares were subsequently cancelled by the Company. The shares were returned to treasury for $0.000000066 per share for a total consideration of $10 to the shareholder. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Fees paid to Auditors Audit Fees For the year ended May 31, 2021, audit fees were $8,500. For the year May 31, 2020, audit fees were $11,600. The SEC requires that before our independent registered public accounting firm is engaged by us to render any auditing or permitted non-audit related service, the engagement be either: (i) approved by our Audit Committee or (ii) entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided that the policies and procedures are detailed as to the particular service, the Audit Committee is informed of each service, and such policies and procedures do not include delegation of the Audit Committee’s responsibilities to management. We do not have an Audit Committee. Our Board pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees paid during 2021 and 2020 were pre-approved by our Board. 17 Table of Contents PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES Please see the “Exhibit Index,” which is incorporated herein by reference, following the signature page for a list of our exhibits. 18 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. CocoLuv Inc. Dated: August 27, 2021 By: /s/ Reymund Guillermo Reymund Guillermo President and Director Principal Executive Officer Principal Financial Officer Principal Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Date /s/ Reymund Guillermo August 27, 2021 Reymund Guillermo President and Director Principal Executive Officer Principal Financial Officer Principal Accounting Officer 19 Table of Contents EXHIBIT INDEX 3.1 Articles of Incorporation [1] 3.2 By-Laws Inc. [2] 31.1 Certification of Chief Executive Officer pursuant to Rule 13(a)-14(a)/15(d)-14(a) of the Securities Act of 1934 31.2 Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a)/15(d)-14(a) of the Securities Act of 1934 * 32.1 Certification of Chief Executive Officer Executive Officer under Section 1350 as Adopted pursuant Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer under Section 1350 as Adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ** 101 Interactive data files pursuant to Rule 405 of Regulation S-T. [1] Incorporated by reference from the Company’s S-1 filed with the Commission on August 28, 2018. [2] Incorporated by reference from the Company’s S-1 filed with the Commission on August 28, 2018. * Included in Exhibit 31.1 20 Table of Contents COCOLUV INC. FINANCIAL STATEMENTS May 31, 2021 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2 BALANCE SHEETS F-3 STATEMENTS OF OPERATIONS F-4 STATEMENT OF STOCKHOLDER’S (DEFICIT) F-5 STATEMENTS OF CASH FLOWS F-6 NOTES TO FINANCIAL STATEMENTS F-7 F-1 Table of Contents MICHAEL GILLESPIE & ASSOCIATES, PLLC CERTIFIED PUBLIC ACCOUNTANTS 10544 ALTON AVE NE SEATTLE, WA 98125 206.353.5736 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors Cocoluv Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Cocoluv Inc. as of May 31, 2021 and the related statements of operations, changes in stockholders’ deficit and cash flows for the periods then ended, and the related notes (collectively referred to as “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of May 31, 2021 and the results of its operations and its cash flows for the period then ended, in conformity with accounting principles generally accepted in the United States of America. The financial statements of the company, as of May 31, 2020, were audited by other auditors whose report dated August 31, 2020, expressed an unqualified opinion on those statements. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Going Concern As described further in Note 1 to the financial statements, the Company has incurred losses each year from inception through May 31, 2021 and expects to incur additional losses in the future. We determined the Company’s ability to continue as a going concern is a critical audit matter due to the estimation and uncertainty regarding the Company’s future cash flows and the risk of bias in management’s judgments and assumptions in estimating these cash flows. Our audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following, among others: We reviewed the Company’s working capital and liquidity ratios, operating expenses, and uses and sources of cash used in management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one year from the financial statement issuance date. This testing included inquiries with management, comparison of prior period forecasts to actual results, consideration of positive and negative evidence impacting management’s forecasts, the Company’s financing arrangements in place as of the report date, market and industry factors and consideration of the Company’s relationships with its financing partners. Going Concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, although the Company has limited operations it has yet to attain profitability. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /S/ MICHAEL GILLESPIE & ASSOCIATES, PLLC We have served as the Company’s auditor since 2021. Seattle, Washington August 27, 2021 F-2 Table of Contents COCOLUV INC. BALANCE SHEETS May 31, 2021 May 31, 2020 ASSETS CURRENT ASSETS Cash $ 352 $ 494 Prepaid 20,000 - TOTAL CURRENT ASSETS $ 20,352 $ 494 LIABILITIES AND STOCKHOLDER’S (DEFICIT) CURRENT LIABILITIES Accounts payable 4,206 6,500 Due to related party 81,398 28,557 TOTAL CURRENT LIABILITIES 85,604 35,057 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ (DEFICIT) - Common stock Authorized 200,000,000 shares of common stock, $0.001 par value, Issued and outstanding 64,900,000 shares of common stock (May 31, 2020 – 64,900,000) 64,900 64,900 Additional paid in capital (46,010 ) (46,010 ) Accumulated deficit (84,142 ) (53,453 ) TOTAL STOCKHOLDERS’ (DEFICIT) (65,252 ) (34,563 ) TOTAL LIABILITIES AND STOCKHOLDER’S (DEFICIT) $ 20,352 $ 494 The accompanying notes are an integral part of these financial statements. F-3 Table of Contents COCOLUV INC. STATEMENTS OF OPERATIONS For the year ended May 31, 2021 For the year ended May 31, 2020 REVENUE $ - $ - OPERATING EXPENSES General and administrative $ 6,189 $ 4,652 Professional fees 24,500 31,800 TOTAL OPERATING EXPENSES (30,689 ) (36,452 ) NET LOSS (30,689 ) (36,452 ) NET LOSS PER COMMON SHARE – BASIC AND DILUTED $ (0.00 ) $ (0.00 ) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED 64,950,000 196,794,536 The accompanying notes are an integral part of these financial statements. F-4 Table of Contents COCOLUV INC. STATEMENT OF STOCKHOLDER’S EQUITY (DEFICIT) FOR YEARS ENDED MAY 31, 2020 AND MAY 31, 2021 Common Stock Additional Number of shares Amount Paid-in Capital Accumulated Deficit Total Balance, May 31, 2018 200,000,000 $ 200,000 $ (196,000 ) $ (1,710 ) $ 2,290 Net loss for the period from inception through May 31, 2019 - - - (15,291 ) (15,291 ) Balance, May 31, 2019 200,000,000 $ 200,000 $ (196,000 ) $ (17,001 ) $ (13,001 ) Shares issued for cash – at $0.001 14,900,000 14,900 - - 14,900 Shares Cancelled- at $0.000000066 (150,000,000 ) (150,000 ) 149,990 - (10 ) Net loss for the year ending May 31, 2020 - - - (36,452 ) (36,452 ) Balance, May 31, 2020 64,900,000 $ 64,900 $ (46,010 ) $ (53,453 ) $ (34,563 ) Net loss for the year ending May 31, 2021 - - - (30,689 ) (30,689 ) Balance, May 31, 2021 64,900,000 $ 64,900 $ (46,010 ) $ (84,142 ) $ (65,252 ) May 20, 2020, the Company approved a special resolution to undertake a forward split of the common stock of the Company on a basis of 50 new common shares for 1 old common share The accompanying notes are an integral part of these financial statements. F-5 Table of Contents COCOLUV INC. STATEMENTS OF CASH FLOWS For the year ending May 31, 2021 For the year ending May 31, 2020 CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period $ (30,689 ) $ (36,452 ) Adjustments to reconcile net loss to net cash used in operating activities Expenses paid by related party 52,841 19,874 Changes in operating assets and liabilities Prepaid (20,000 ) - Accounts payable (2,294 ) 1,798 NET CASH USED IN OPERATING ACTIVITIES (142 ) (14,780 ) CASH FLOWS FROM INVESTING ACTIVITIES - - CASH FLOWS FROM FINANCING ACTIVITIES Advances from related party - 330 Payment of purchase common stock - (10 ) Proceeds on sale of common stock - 14,900 NET CASH PROVIDED BY FINANCING ACTIVITIES - 15,220 NET INCREASE IN CASH (142 ) 440 CASH, BEGINNING OF PERIOD 494 54 CASH, END OF PERIOD $ 352 $ 494 SUPPLEMENTAL CASH FLOW INFORMATION AND NONCASH INVESTING AND FINANCING ACTIVITIES: Cash paid during the period for: Interest $ - $ - Income taxes $ - $ - The accompanying notes are an integral part of these financial statements. F-6 Table of Contents COCOLUV INC. NOTES TO FINANCIAL STATEMENTS MAY 31, 2021 (Audited) NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION CocoLuv Inc. was incorporated in the State of Nevada as a for-profit Company on September 13, 2017 and established a fiscal year end of May 31. The Company intends to manufacture market and sell a product line of 5 hair care products derived from Virgin Coconut Oil. The initial 5 products will be 3 for women and 2 for men. Going concern To date the Company has generated no revenues from its business operations and has incurred operating losses since inception of $84,142. As at May 31, 2021, the Company has a working capital deficit of $65,252. The Company will require 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. As of May 31, 2021, the Company has issued 50,000,000 founders shares for net proceeds of $3,990 and 14,900,000 private placement shares for net proceeds of $14,900 to the Company. 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. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements present the balance sheet, statements of operations, stockholders’ equity and cash flows of the Company. These financial statements are presented in the United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States. 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. Commitments and Contingencies On September 26, 2018 the Company signed a lease for office space in San Francisco, California. The term of the lease is for one year and is then renewed on a month to month basis. Current monthly rent is $108 per month. 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. Fair Value of Financial Instruments The carrying amount of the Company’s financial assets and liabilities approximates their fair values due to their short term maturities. Loss per Common Share The basic loss per share is calculated by dividing the Company’s net loss available to common shareholders by the weighted average number of common shares during the year. The diluted loss per share is calculated by dividing the Company’s net 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 share is the same as basic loss per share due to the lack of dilutive items in the Company. As of May 31, 2021, there were no common stock equivalents outstanding. F-7 Table of Contents COCOLUV INC. NOTES TO FINANCIAL STATEMENTS MAY 31, 2021 (Audited) NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Income Taxes The Company follows the 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 follows ASC 718-10, “Stock Compensation”, which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718-10 is a revision to SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and its related implementation guidance. ASC 718-10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options. As at May 31, 2021 the Company had not adopted a stock option plan nor had it granted any stock options. Accordingly no stock-based compensation has been recorded to date. Recent Accounting Pronouncements The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements. NOTE 3 – COMMON STOCK The Company’s capitalization is 200,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued. Total shares issued and outstanding as of May 31 is 64,900,000. On September 30, 2017, the Company issued 200,000,000 (4,000,000 pre-split) common shares at $0.00002 per share to the sole director and President of the Company. The Company received net proceeds of $4,000 in payment of the shares. Between August 2019 and April, 2020 the Company sold 14,900,000 (298,000 pre-split) shares of its common stock at $0.001 for $14,900 net proceeds to the Company. On May 20, 2020, the founding shareholder of the Company returned 150,000,000 (pre-split 3,000,000) restricted shares of common stock to treasury and the shares were subsequently cancelled by the Company. The shares were returned to treasury for $0.000000066 per share for a total consideration of $10 to the shareholder. On May 20, 2020, the directors of the Company approved a special resolution to undertake a forward split of the common stock of the Company on a basis of 50 new common shares for 1 old common share. All references in these financial statements to number of common shares, price per share and weighted average number of shares outstanding prior to the 50:1 forward split have been adjusted to reflect the stock split on a retroactive basis, unless otherwise noted. NOTE 4 – PREPAID EXPENSES As of May 31, 2021, the prepaid balance on our Balance Sheets is as follows; Deposit re: Deposit Trust Company (DTC) - $20,000 F-8 Table of Contents COCOLUV INC. NOTES TO FINANCIAL STATEMENTS MAY 31, 2021 (Audited) NOTE 5 – RELATED PARTY TRANSACTIONS During the year ended May 31, 2021 the CEO, Reymund Guillermo, paid expenses of $52,841 on behalf of the Company and accrued CEO management fees of $7,500 for the period. Total amount owed to the CEO as of May 31, 2021 is $81,398 (May 31, 2020- $28,557). The amounts due to related party are unsecured and non- interest-bearing with no set terms of repayment. On May 20, 2020, the founding shareholder of the Company returned 150,000,000 (pre-split 3,000,000) restricted shares of common stock to treasury and the shares were subsequently cancelled by the Company. The shares were returned to treasury for $0.000000066 per share for a total consideration of $10 to the shareholder. NOTE 6 – INCOME TAXES A reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax expense as reported is as follows: May 31, 2021 May 31, 2020 Net loss before income taxes per financial statements $ (30,689 ) $ (35,453 ) Income tax rate 21 % 21 % Income tax recovery (6,445 ) (7,655 ) Non-deductible -- -- Valuation allowance change 6,445 7,655 Provision for income taxes $ – $ - The significant component of deferred income tax assets at May 31, 2021, is as follows: May 31, 2021 May 31, 2020 Net operating loss carry-forward $ 17,670 $ 11,225 Valuation allowance (17,670 ) (11,225 ) Net deferred income tax asset $ – $ - The amount taken into income as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide a full valuation allowance against all available income tax loss carry forwards. The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management’s judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income. As of May 31, 2021, and 2020, the Company has no unrecognized income tax benefits. The Company’s policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the year ended May 31, 2021 and 2020 and no interest or penalties have been accrued as of May 31, 2021 and 2020. As of May 31, 2021, and 2020, the Company did not have any amounts recorded pertaining to uncertain tax positions. The tax years from 2017 and forward remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities. NOTE 7 – SUBSEQUENT EVENTS During August 2021, the CEO paid expenses of $5,000 and on behalf of the Company. The amounts due to related party are unsecured and non- interest-bearing with no set terms of repayment. F-9