The accompanying notes are an integral part of
these consolidated financial statements.
The accompanying notes are an integral part of
these consolidated financial statements.
The accompanying notes are an integral part of
these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – NATURE OF BUSINESS AND BASIS
OF PRESENTATION
Sipup Corporation (the “Company”)
is a Nevada Corporation incorporated on October 31, 2012. For additional information see subsequent events
Merger Transaction
On June 2, 2019, the Company
completed the acquisition of Enlightened Capital Ltd., an Israeli company with offices at Bnei-Brak, Israel (“Enlightened”)
whereby Enlightened became a direct and wholly owned subsidiary of the Company. As consideration, the Company issued to Enlightened’s
shareholders 18,000,000 common Stock, par value $0.001 per share.
Enlightened is engaged, in
the field of green energy and is licensed to internationally trade in Certified Emission Reductions, also known as carbon credits (“CERs”),
as issued by the UN until 2040. .
The transaction was accounted
for as a reverse asset acquisition in accordance with generally accepted accounting principles in the United States of America (“GAAP”).
Under this method of accounting, Enlightened was deemed to be the accounting acquirer for financial reporting purposes. This determination
was primarily based on the facts that, immediately following the Merger: (i) Enlightened’s stockholders owned a substantial majority
of the voting rights in the combined company. As a result of the Recapitalization Transaction, the shareholders of Enlightened received
the largest ownership interest in the Company, and Enlightened was determined to be the “accounting acquirer” in the Recapitalization
Transaction. As a result, the historical financial statements of the Company were replaced with the historical financial statements of
Enlightened. The number of shares prior to the reverse capitalization have been retroactively adjusted based on the equivalent number
of shares received by the accounting acquirer in the Recapitalization Transaction.
Going concern
The accompanying financial
statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets
and the liquidation of liabilities in the normal course of business. As of November 30, 2019, the Company has an accumulated deficit of
$214,295 from operations and has earned no revenues to cover its operating costs. The Company intends to fund future operations through
equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements
for the year ending November 30, 2019.
The ability of the Company
to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, and
development of its business plan. In response to these problems, management intends to raise additional funds through public or private
placement offerings.
These factors, among others,
raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
The financial statements were
prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP).
Basis of Presentation
The Company maintains its
accounting records on an accrual basis in accordance with generally accepted accounting principles in the United States of America (“U.S.
GAAP”). These financial statements are presented in US dollars.
Use of estimates in the preparation of consolidated
financial statements
The preparation of financial
statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts
of expenses during the reporting periods. Actual results could differ from those estimates. As applicable to these financial statements,
the most significant estimates and assumptions relate to the going concern assumptions and stock based compensation.
Cash and cash equivalents, and Restricted cash
Cash equivalents are short-term
highly liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted as
to withdrawals or use that are readily convertible to cash with maturities of three months or less as of the date acquired. The Company
maintains its cash balances at credit-worthy financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”)
up to $250,000.
Earnings per Share
The Company computes net loss
per share in accordance with ASC 260, “Earnings Per Share” ASC 260 requires presentation of both basic and diluted earnings
per share (“EPS”) on the face of the income statement. Basic EPS is calculated by dividing the profit or loss attributable
to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted EPS is determined
by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding for the
effects of all potential dilutive common shares, which comprise options granted to employees. As November 30, 2019, the Company had no
potentially dilutive shares.
Income Taxes
Income taxes are accounted
for in accordance with ASC Topic 740, “Income Taxes.” Under the asset and liability method, deferred tax assets and liabilities
are recognized for the future consequences of differences between the financial statement carrying amounts of existing assets and liabilities
and their respective tax bases (temporary differences). Deferred tax assets and liabilities are measured using tax rates expected to apply
to taxable income in the years in which those temporary differences are recovered or settled. Valuation allowances for deferred tax assets
are established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Stock based compensation
The Company accounts for equity
instruments issued to employees in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation
payments to be recognized in the financial statements based on the fair value using an option pricing model. ASC 718 requires forfeitures
to be estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates.
Equity instruments granted
to non-employees are accounted for in accordance with ASC 505, Equity. The final measurement date for the fair value of equity instruments
with performance criteria is the date that each performance commitment for such equity instrument is satisfied or there is a significant
disincentive for non-performance.
Fair Value of Financial Instruments
The Company measures assets
and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which
represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly
transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing
an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value
on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.
The following are the hierarchical
levels of inputs to measure fair value:
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-
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Level 1: Quoted prices in active markets for identical instruments.
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-
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Level 2: Other significant observable inputs (including quoted
prices in active markets for similar instruments);
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-
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Level 3: Significant unobservable inputs (including assumptions
in determining the fair value of certain investments).
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Recent Accounting Pronouncements
In
June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No.
2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. In November
2018, FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”, which amends
the scope and transition requirements of ASU 2016-13. Topic 326 requires a financial asset (or a group of financial assets) measured at
amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on
relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that
affect the collectability of the reported amount. Topic 326 will originally become effective for the Company beginning January 1, 2020,
with early adoption permitted, on a modified retrospective approach. As a smaller reporting company, the effective date for the Company
has been delayed until fiscal years beginning after December 15, 2022, in accordance with ASU 2019-10, although early adoption is still
permitted. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation.
In December 2019, the FASB
issued ASU 2019-12, Income Taxes (Topic 740): “Simplifying the Accounting for Income Taxes.” The amendments in this ASU simplify
the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of
the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effective for fiscal years beginning after
December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early adoption is permitted, including
adoption in any interim period for which financial statements have not yet been issued. This standard is not expected to have a material
impact to the Company’s consolidated financial statements after evaluation.
The Company has implemented
all new accounting pronouncements that are in effect and that could impact its consolidated financial statements and does not believe
that there are any other new accounting pronouncements that have been issued, but are not yet effective, that might have a material impact
on the consolidated financial statements of the Company.
NOTE 3 – LOAN FROM STOCKHOLDER
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As of year ended,
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November 30,
2019
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November 30,
2018
|
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Loan from shareholder (*)
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$
|
144,126
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|
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$
|
141,405
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Loan from related party (**)
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14,020
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|
|
|
-
|
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$
|
158,146
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$
|
141,405
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(*) The loan is unsecured, bears annual
2.56% interest and has no repayment term. This loan is repayable on demand
(**) The loan is unsecured, bears no
interest and has no repayment term. This loan is repayable on demand
NOTE 4 – STOCKHOLDERS’ DEFICIT
Common stock
During March 2019, the Company
issued Adi Zim Holdings Ltd. (“Adi”) 644,000 restricted shares of the Company’s common stock in consideration for remittance
of $100,000 for purposes of paying outstanding Company obligation to third parties.
During April 2019, the Company
and Rosario Capital Ltd. (“Rosario”) have entered into additional service agreement, pursuant to which Rosario is providing
to the Company certain financial advisory and other services. In consideration of any and all Rosario's Services, the Company has issued
to Rosario 900,000 restricted shares of common stock. The service agreement will be terminated on December 31, 2020. The fair value of
the restricted shares as of the date of issuance was $144,000 using the share price on the day of issuance. During the year ended November
30, 2019 the Company recorded $43,200 as professional fees.
NOTE 5 – INCOME TAXES
a.
Provision for income taxes
No provision
for income taxes was required for the year ended November 30, 2019 and 2018 due to net losses
in these periods.
b.
In accordance with ASC 740-10, the components of deferred income taxes are as follows:
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As of November 30,
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2019
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|
2018
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|
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Net operating losses carryforwards
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$
|
45,002
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|
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$
|
33,475
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|
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Less valuation allowance
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(45,002
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)
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(33,475
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)
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Net deferred tax assets
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$
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-
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$
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-
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The Company provided a valuation
allowance equal to the deferred income tax assets for period ended November 30, 2019 because
it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.
As of November
30, 2019, the Company had approximately $214,295 in tax loss carryforwards that can be utilized future periods to reduce taxable
income and expire by the year 2038.
The Company did not identify
any material uncertain tax positions. The Company did not recognize any interest or penalties for unrecognized tax benefits. The federal
income tax returns of the Company are subject to examination by the IRS, generally for three years after they are filed.
NOTE 6 – RELATED PARTY TRANSACTION
The following transactions
were carried out with related parties:
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As of November 30,
|
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|
|
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2019
|
|
|
2018
|
|
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General and administrative expenses
|
|
$
|
43,200
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|
|
$
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-
|
|
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Interest on shareholder’s loan
|
|
|
6,090
|
|
|
|
6,932
|
|
For additional information please refer to Note
3.
NOTE 7 – SUBSEQUENT EVENTS
(i) During
December 2020 the company, in consideration of the advance of $50,000 for purposes of paying outstanding Company obligation to third parties,
the Company issued to Adi Zim and Rosario Capital Ltd. its unsecured convertible promissory note in the principal amount of $50,000 (the
“Note”), which note shall be convertible into shares of the Company’s common stock at a rate equal to $0.1 per share,
and upon (and subject to) the conversion of the Note as therein provided, the shares of Company stock issuable upon such conversion shall
be validly issues, fully paid and non-assessable.
(ii) On April 25, 2021, the
Company entered into a Stock Exchange Agreement with VeganNation Services Ltd., a company formed under the laws of the State of Israel
(“VeganNation”) and the shareholders of VeganNation pursuant to which VeganNation would become a wholly owned subsidiary of
the Company, and the shareholders of VeganNation would receive an aggregate of 23,562,240 shares of common stock of the Company. The transaction
is subject to customary closing conditions.
VeganNation is, a leading
global plant-based company building an all-encompassing conscious consumer ecosystem, connecting and empowering plant-based and sustainable
businesses and individuals. Management of the Company believes that the growth of sustainable and plant-based consumer goods presents
a unique opportunity to participate in the fastest growing lifestyle globally.
In connection with the proposed
transaction, the VeganNation stockholders are expected to receive comon stock of Sipup that will be equal to approximately 50% of the
issued and outstanding common stock of the Company at the closing of the proposed merger, on a fully diluted basis. Following the closing
of the proposed merger, VeganNation will effect a change in the Company’s Board of Directors and management