RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

12 Months Ended

Jul. 31, 2023

Accounting Changes and Error Corrections [Abstract]

RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

NOTE 5 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

July 31, 2023 Restatement

Subsequent to the Company's filing of its Annual Report on Form 10-K for the year ended July 31, 2023, with the Securities and Exchange Commission on February 16, 2024, and amended on May 8, 2024, the Company performed an evaluation of its accounting in relation to intangible assets subject to amortization. Management determined that the Original and Amended Form 10-K do not give effect to certain expenses identified. Accordingly, the Company restates its consolidated financial statements in this Form 10-K as outlined further below. Upon review of the Company's previously filed 10-K, the following errors were discovered and recorded:

1. In accordance with ASU No. 2016-13, the Company has re-evaluated its measurement of credit losses pertaining to its accounts receivable and noted that its allowance for uncollectable accounts should be increased by $98,900 as of July 31, 2022. The Balance Sheet has been updated to properly reflect such impairment as of July 31, 2023.

2. The Company evaluated its intangible assets with indefinite lives as of July 31, 2023 and deemed it appropriate to impair all assets relating to the telecommunications industry that would be divested following the agreement with Viper Networks, as detailed in Note 2 and Note 18. The Balance Sheet has been updated to properly reflect such impairment as of July 31, 2023. There has been no effect on the Statement of Operations, Statement of Changes in Stockholder Equity (Deficit), or the Statement of Cash Flows for the year ended July 31, 2023.

3. Amortization expense associated with two intangible assets, software and customer contracts, had not been amortized in accordance with ASC 350-30-35. The Statement of Operations and the Statement of Cash Flows for the period ended July 31, 2023 have been updated to properly reflect the amortization expense of intangible assets.

The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated balance sheets for the year ended July 31, 2023:

		July 31,								July 31,
		2023			Adjustments					2023
										(as restated)
ASSETS
Current Assets
Cash and cash equivalents	$	66,688		$	-				$	66,688
Accounts receivable, net		238,820			(98,900	)	(1	)		139,920
Security deposits		7,316			-					7,316
Prepaid expenses		18,675			-					18,675
Total current assets		331,499			(98,900	)				232,599
Property and equipment, net		89,712			-					89,712
Intangible assets, net		7,406,827			(3,988,034	)	(2,3	)		3,418,793
Total assets	$	7,828,038		$	(4,086,934	)			$	3,741,104
Current Liabilities
Accounts payable and accrued expenses	$	1,205,995		$	-				$	1,205,995
Notes payable		92,694			-					92,694
Convertible notes payable		612,000			-					612,000
Convertible notes payable - related parties		738,600			-					738,600
Warrant liabilities		195,750			-					195,750
Unissued Stock		105,925			-					105,925
Deferred revenue		172,900			-					172,900
Current liabilities from discontinued operations		545,994			-					545,994
Total current liabilities		3,669,858			-					3,669,858
Total liabilities	$	3,669,858		$	-				$	3,669,858
Commitments and contingencies
Stockholders' Equity
Common stock, $0.001 par value, 250,000,000 shares authorized 62,205,947 and 61,565,841 shares issued; 60,452,612 and 59,812,506 shares outstanding at July 31, 2023 and 2022, respectively	$	62,206		$	-				$	62,206
Additional paid-in capital		27,808,440			-					27,808,440
Accumulated deficit		(23,712,466	)		(4,086,934	)	(1,2,3	)		(27,799,400	)
Total Stockholder's Equity		4,158,180			(4,086,934	)				71,246
Total Liabilities and Stockholders' Equity	$	7,828,038		$	(4,086,934	)			$	3,741,104

The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated statements of operations for the year ended July 31, 2023:

	For the Year Ended
	July 31, 2023			Adjustments					July 31, 2023
		(As Filed)								(As Amended)
Revenues	$	3,256,611		$	-				$	3,256,611
Costs and expenses:
Cost of sales		2,426,456			-					2,426,456
Selling, general and administrative expenses		1,359,339			-					1,359,339
Depreciation expense		60,283			657,577		(3	)		717,860
Total operating expenses		3,846,078			657,577					4,503,655
Operating loss		(589,467	)		(657,577	)				(1,247,044	)
Other income (expense)
Other income		262,259			-					262,259
Interest expense		(20,618	)		-					(20,618	)
Warrant adjustment to fair value		(145,725	)		-					(145,725	)
Financing expenses		(255,532	)		-					(255,532	)
Change in fair value of warrant liabilities		18,000			-					18,000
Other expenses		(175,559	)		-					(175,559	)
Total other expenses		(317,175	)		-					(317,175	)
Income (loss) Before Discontinued Operations		(906,642	)		(657,577	)	(3	)		(1,564,219	)
Income (loss) From Discontinued Operations		(1,013,600	)		-					(1,013,600	)
Net loss	$	(1,920,242	)	$	(657,577	)			$	(2,577,819	)
Weighted average number of common shares outstanding - basic and diluted		62,205,947			-					62,205,947
Loss per share- basic and diluted
Continuing operations		(0.01	)		-					(0.03	)
Discontinued operations		(0.02	)		-					(0.01	)
Total	$	(0.03	)	$	-				$	(0.04	)

The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated statements of cash flow for the year ended July 31, 2023:

		July 31,								July 31,
		2023		Adjustments						2023
		(As Filed)								(As Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(1,920,242	)	$	(657,577	)	(3	)	$	(2,577,819	)
Loss from discontinued operations		1,013,600			-					1,013,600
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense		60,283			657,577		(3	)		717,860
Warrant adjustment to fair value		(18,000	)		-					(18,000	)
Noncash interest expense		227,872			-					227,872
Write-down of intangible assets		57,875			-					57,875
Changes in operating assets and liabilities:					-
Accounts receivable		(21,986	)		-					(21,986	)
Security deposits		3,766			-					3,766
Prepaid expenses		(3,929	)		-					(3,929	)
Accounts payable		(117,821	)		-					(117,821	)
Deferred revenue		(148,174	)		-					(148,174	)
Net cash used in operating activities - continuing operations		(866,756	)		-					(866,756	)
Net cash provided by (used in) operating activities - discontinued operations		230,050			-					230,050
Net cash used in operating activities		(636,706	)		-					(636,706	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(12,650	)		-					(12,650	)
Net cash used in operating activities - continuing operations		(12,650	)		-					(12,650	)
Net cash used in operating activities - discontinued operations		-			-					-
Net cash used in investing activities		(12,650	)		-					(12,650	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable		(168,284	)		-					(168,284	)
Proceeds from notes payable		401,418			-					401,418
Net cash provided by financing activities - continuing operations		233,134			-					233,134
Net cash provided by financing activities - discontinued operations		-			-					-
Net cash used in financing activities		233,134			-					233,134
Effect of foreign currency on cash		-			-					-
Net increase (decrease) in cash		(416,222	)		-					(416,222	)
Cash, beginning of period		482,910			-					482,910
Cash, end of period	$	66,688			-				$	66,688
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
Cash paid for interest	$	20,618		$	-				$	20,618
Cash paid for taxes	$	1,415		$	-				$	1,415
Shares issued for debt conversion	$	244,311		$	-				$	244,311

July 31, 2022 Restatement

Subsequent to the Company's filing of its Annual Report on Form 10-K for the year ended July 31, 2023, with the Securities and Exchange Commission on February 8, 2023 and amended on May 8, 2024, the Company performed an evaluation of its accounting in relation to intangible assets subject to amortization. Management determined that the Original and Amended Form 10-K do not give effect to certain expenses identified. Accordingly, the Company restates its consolidated financial statements in this Form 10-K as outlined further below. Upon review of the Company's previously filed 10-K, the following errors were discovered and recorded:

1. In accordance with ASU No. 2016-13, the Company has re-evaluated its measurement of credit losses pertaining to its accounts receivable and noted that its allowance for uncollectable accounts should be increased by $98,900 as of July 31, 2022. The Balance Sheet has been updated to properly reflect such impairment as of July 31, 2022.

2. The Company evaluated its intangible assets with indefinite lives as of July 31, 2022 and deemed it appropriate to impair all assets relating to the telecommunications industry that would be divested following the agreement with Viper Networks, as detailed in Note 2 and Note 18. The Balance Sheet has been updated to properly reflect such impairment as of July 31, 2022. There has been no effect on the Statement of Operations, Statement of Changes in Stockholder Equity (Deficit), or the Statement of Cash Flows for the year ended July 31, 2022.

3. Amortization expense associated with two intangible assets, software and customer contracts, had not been amortized in accordance with ASC 350-30-35. The Statement of Operations and the Statement of Cash Flows for the period ended July 31, 2022 have been updated to properly reflect the amortization expense of intangible assets.

The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated balance sheets for the year ended July 31, 2022:

		July 31,								July 31,
		2022			Adjustments					2022
										(as restated)
ASSETS
Current Assets
Cash and cash equivalents	$	482,910		$	-				$	482,910
Accounts receivable, net		216,834			(98,900	)	(1	)		117,934
Security deposits		11,082			-					11,082
Prepaid expenses		14,746			-					14,746
Total current assets		725,572			(98,900	)				626,672
Property and equipment, net		137,345			-					137,345
Intangible assets, net		7,464,702			(3,330,457	)	(2,3	)		4,134,245
Assets from discontinued operations		1,243,960			-					1,243,960
Total assets	$	9,571,579		$	(3,429,357	)			$	6,142,222
Current Liabilities
Accounts payable and accrued expenses	$	1,342,287		$	-				$	1,342,287
Notes payable		198,965			-					198,965
Convertible notes payable, net		597,128			-					597,128
Convertible notes payable - related parties		518,600			-					518,600
Warrant liabilities		213,750			-					213,750
Deferred revenue		321,074			-					321,074
Current liabilities from discontinued operations		546,304			-					546,304
Total current liabilities		3,738,108			-					3,738,108
Total liabilities	$	3,738,108		$	-				$	3,738,108
Commitments and contingencies
Stockholders' Equity
Common stock, $0.001 par value, 250,000,000 shares authorized 62,205,947 and 61,565,841 shares issued; 60,452,612 and 59,812,506 shares outstanding at July 31, 2023 and 2022, respectively	$	61,566		$	-				$	61,566
Additional paid-in capital		27,564,129			-					27,564,129
Accumulated deficit		(21,792,224	)		(3,429,357	)	(1,2,3	)		(25,221,581	)
Total Stockholder's Equity		5,833,471			(3,429,357	)				2,404,114
Total Liabilities and Stockholders' Equity	$	9,571,579		$	(3,429,357	)			$	6,142,222

 

The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated statements of operations for the year ended July 31, 2022:

	For the Year Ended
	July 31, 2022			Adjustments					July 31, 2022
		(As Filed)								(As Amended)
Revenues	$	2,602,115		$	-				$	2,602,115
Costs and expenses:
Cost of sales		2,022,190			-					2,022,190
Selling, general and administrative expenses		1,062,163			98,900		(1	)		1,161,063
Depreciation expense		65,487			371,171		(3	)		436,658
Total operating expenses		3,149,840			470,071					3,619,911
Operating loss		(547,725	)		(470,071	)				(1,017,796	)
Other income (expense)
Interest expense		(89,926	)		-					(89,926	)
Impairment expense		-			(2,959,286	)	(2	)		(2,959,286	)
Warrant adjustment to fair value		(125,025	)		-					(125,025	)
Financing expenses		(635,812	)		-					(635,812	)
Change in fair value of warrant liabilities		57,000			-					57,000
Other expenses		(12,040	)		-					(12,040	)
Total other expenses		(805,803	)		(2,959,286	)				(3,765,089	)
Net loss	$	(1,353,528	)	$	(3,429,357	)	(1,2,3	)	$	(4,782,885	)
Weighted average number of common shares outstanding - basic and diluted		61,565,841			-					61,565,841
Loss per share- basic and diluted		(0.08	)		-					(0.08	)

The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated statements of cash flows for the year ended July 31, 2022:

		July 31,								July 31,
		2022		Adjustments						2022
		(As Filed)								(As Restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(1,353,528	)	$	(3,429,357	)	(1,2,3	)	$	(4,782,885	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation expense		65,487			371,171		(3	)		436,658
Warrant adjustment to fair value		(57,000	)		-					(57,000	)
Noncash interest expense		454,908			-					454,908
Write-down of intangible assets		-			2,959,286		(2	)		2,959,286
Changes in operating assets and liabilities:					-
Accounts receivable		68,172			98,900		(1	)		167,072
Prepaid expenses		62			-					62
Accounts payable		434,151			-					434,151
Deferred revenue		21,874			-					21,874
Net cash used in operating activities - continuing operations		(365,874	)		-					(365,874	)
Net cash provided by (used in) operating activities - discontinued operations		(86,081	)		-					(86,081	)
Net cash used in operating activities		(451,955	)		-					(451,955	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(46,893	)		-					(46,893	)
Net cash used in operating activities - continuing operations		(46,893	)		-					(46,893	)
Net cash used in operating activities - discontinued operations		-			-					-
Net cash used in investing activities		(46,893	)		-					(46,893	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable		(61,300	)		-					(61,300	)
Proceeds from notes payable		965,452			-					965,452
Net cash provided by financing activities - continuing operations		904,152			-					904,152
Net cash provided by financing activities - discontinued operations		-			-					-
Net cash used in financing activities		904,152			-					904,152
Effect of foreign currency on cash		-			-					-
Net increase (decrease) in cash		405,304			-					405,304
Cash, beginning of period		77,606			-					77,606
Cash, end of period	$	482,910			-				$	482,910
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:
Cash paid for interest	$	11,587		$	-				$	11,587
Cash paid for taxes	$	2,040		$	-				$	2,040

The specific explanations for the July 31, 2023 and 2022 items noted above in the restated financial statements are as follows:

1. Per review of its accounts receivable balance, the Company has deemed it appropriate to reserve a total of $98,900 in its allowance for uncollectible accounts.

2. Following a divestiture of the telecommunications subsidiaries, as described in Note 18, the Company impaired all intangible assets with indefinite lives that contributed to the Company's conduction of business in this sector as of July 31, 2022.

3. After reexamination of the useful lives of the Company's intangible assets, it has been determined that a portion of such assets are subject to amortization and should be segregated and such amortization expensed.