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 April 30, 2014

 

or

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________ to______________

 

Commission file number 333-187669

 

ALPHALA CORP.

(Exact name of registrant as specified in its charter)

 

Nevada		68-0682594
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

203 – 29 Gervais Drive Toronto, Ontario, Canada		M3C 1Y9
(Address of principal executive offices)		(Zip Code)

 

(416) 444-4427

(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 and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes [  ] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer [  ]	Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [  ] No [  ]

 

APPLICABLE ONLY TO CORPORATE ISSURS:

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 250,800,000 as of June 19, 2014

 

 

 

TABLE OF CONTENTS

 

			Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements		1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		4
Item 4.	Controls and Procedures		5
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings		6
Item 1A.	Risk Factors		6
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		6
Item 3.	Defaults Upon Senior Securities		6
Item 4.	Mine Safety Disclosures		6
Item 5.	Other Information		6
Item 6.	Exhibits		6

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

ALPHALA CORP.

(A DEVELOPMENT STAGE COMPANY)

Condensed Financial Statements

(UNAUDITED)

 

TABLE OF CONTENTS

 

		Page
CONDENSED UNAUDITED FINANCIAL STATEMENTS
Condensed Balance Sheets at April 30, 2014 and January 31, 2014		F - 1
Condensed Statements of Operations for the three month periods ended April 30, 2014 and 2013 and the period from February 9, 2012 (Inception) to April 30, 2014		F - 2
Condensed Statements of Changes in Stockholders’ Equity (Deficit) for the Period from February 9, 2012 (Inception) to April 30, 2014		F - 3
Condensed Statements of Cash Flows for the three month periods ended April 30, 2014 and 2013 and the period from February 9, 2012 (Inception) to April 30, 2014		F - 4
Notes to Condensed Unaudited Financial Statements		F - 5

 

  

ALPHALA CORP.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED BALANCE SHEETS

(UNAUDITED)

 

		April 30, 2014				January 31, 2014
ASSETS
Current Assets
Cash		$	3,859			$	3,919
Prepaid expenses			333				2,333
Income taxes receivable			264				264
Total current assets			4,456				6,516
Total assets		$	4,456			$	6,516
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities
Due to related party		$	3,723			$	-
Accounts payable			11,118				-
Total current liabilities			14,841				-
Total liabilities			14,841				-
Stockholders’ Equity (Deficit)
Common stock, $0.001 par value, 750,000,000 shares authorized; 250,800,000 shares issued and outstanding			250,800				250,800
Additional paid-in-capital			(215,400	)			(215,400	)
Deficit accumulated during development stage			(45,785	)			(28,884	)
Total stockholders’ equity (deficit)			(10,385	)			6,516
Total liabilities and stockholders’ equity (deficit)		$	4,456			$	6,516

 

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

 

 

ALPHALA CORP.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

		For the three months ended April 30, 2014				For the three months ended April 30, 2013				For the period from inception (February 9, 2012) to April 30, 2014
Revenues		$	-			$	-			$	2,475
Operating expenses
General and administrative			16,901				7,249				48,260
Total operating expenses			16,901				7,249				48,260
Net loss		$	(16,901	)		$	(7,249	)		$	(45,785	)
Loss per share – Basic and Diluted		$	(0.00	)*		$	(0.00	)*
Weighted Average Shares-Basic and Diluted			250,800,000				250,800,000

 

* denotes a loss of less than $(0.01) per share.

 

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

 

 

ALPHALA CORP.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

 

		Number of common shares				Amount				Additional paid-in capital				Deficit accumulated during development stage				Total stockholders’ equity
Balance - February 9, 2012 (Inception)			-			$	-			$	-			$	-			$	-
Common shares issued for cash at $0.001 per share			180,000,000				180,000				(174,000	)			-				6,000
Common shares issued for cash at $0.01 per share			70,800,000				70,800				(47,200	)			-				23,600
Net income for the period			-				-				-				1,408				1,408
Balance - January 31, 2013			250,800,000			$	250,800			$	(221,200	)		$	1,408			$	31,008
Forgiveness of loan from shareholder			-				-				5,800				-				5,800
Net loss for the year			-				-				-				(30,292	)			(30,292	)
Balance - January 31, 2014			250,800,000			$	250,800			$	(215,400	)		$	(28,884	)		$	6,516
Net loss for the period			-				-				-				(16,901	)			(16,901	)
Balance – April 30, 2014			250,800,000			$	250,800			$	(215,400	)		$	(45,785	)		$	(10,385	)

 

As retroactively restated for a 29 for one dividend declared on April 14, 2014.

 

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

 

  

ALPHALA CORP.

(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		For the three months ended April 30, 2014				For the three months ended April 30, 2013				For the period from inception (February 9, 2012) to April 30, 2014
Operating Activities
Net loss		$	(16,901	)		$	(7,249	)		$	(45,785	)
Changes in non-cash working capital items:
Prepaid expenses			2,000				-				(333	)
Income tax receivable			-				-				(264	)
Due to related party			3,723				-				3,723
Accounts payable			11,118				-				11,118
Income tax payable			-				(264	)			-
Net cash provided by (used in) operating activities			(60	)			(7,513	)			(31,541	)
Investing Activities
Net cash provided by (used in) investing activities			-				-				-
Financing Activities
Proceeds from issuance of common stock			-				-				29,600
Proceeds from loan from shareholder			-				-				5,800
Net cash provided by financing activities			-				-				35,400
Change in cash			(60	)			(7,513	)			3,859
Cash at beginning of the period			3,919				31,560				-
Cash at end of the period		$	3,859			$	24,047			$	3,859
Supplemental cash flow information:
Cash paid for:
Interest		$	-			$	-			$	-
Taxes		$	-			$	-			$	264
Non-Cash Financing activities
Forgiveness of related party loan		$	-			$	-			$	5,800

 

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

 

 

ALPHALA CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM
FEBRUARY 9, 2012 (INCEPTION) TO APRIL 30, 2014

(UNAUDITED)

 

NOTE 1 – ORGANIZATION AND BUSINESS OPERATIONS

 

Organization and Description of Business

 

ALPHALA CORP. (the “Company”) was incorporated under the laws of the State of Nevada on February 9, 2012 (Inception) and plans to commence operation in the distribution of teeth whitening products. The Company is in the development stage as defined under Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 915-205 “Development-Stage Entities”. For the period from Inception on February 9, 2012 through April 30, 2014 the Company has accumulated losses of $45,785.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles as promulgated in the United States of America (“U.S. GAAP”) and the instructions from Regulation S-X and do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim period(s), and to make the financial statements not misleading, have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim period(s) are not necessarily indicative of operations for a full year.

 

Cash and Cash Equivalents

 

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

 

The Company’s bank accounts are deposited in insured institutions. The funds are insured up to $250,000. At April 30, 2014 and January 31, 2014, the Company’s bank deposits did not exceed the insured amounts.

 

Basic and Diluted Income (Loss) Per Share

 

The Company computes loss per share in accordance with ASC 260, “Earnings per Share”, which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. No potentially dilutive debt or equity instruments were issued of outstanding during the three month periods ended April 30, 2014 or 2013.

 

Income Taxes

 

The Company accounts for income taxes pursuant to ASC 740, “Income Taxes”. Under ASC 740, deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

 

ALPHALA CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM
FEBRUARY 9, 2012 (INCEPTION) TO APRIL 30, 2014

(UNAUDITED)

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Income Taxes (continued)

 

ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. Under ASC 740, the impact of an uncertain tax position on the income tax return may only be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. At April 30, 2014 and January 31, 2014, there were no unrecognized tax benefits.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC 605, “Revenue Recognition”. ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectibility is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectibility of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company will defer any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

 

Advertising Costs

 

The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expense of $0 during the three month periods ended April 30, 2014 and 2013.

 

Recent Accounting Pronouncements

 

Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on the Company’s condensed financial statements.

 

Fair Value of Financial Instruments

 

ASC 820, “Fair Value Measurements and Disclosures”, establishes a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.

 

These tiers include:

 

Level 1: defined as observable inputs such as quoted prices in active markets;

 

Level 2: defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

 

Level 3: defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

 

The carrying amounts of financial assets and liabilities, such as cash, prepaid expenses, income taxes receivable, accounts payable and due to related party approximate their fair values because of the short maturity of these instruments.

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

 

ALPHALA CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM
FEBRUARY 9, 2012 (INCEPTION) TO APRIL 30, 2014

(UNAUDITED)

 

NOTE 3 – GOING CONCERN

 

The accompanying condensed unaudited financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred a loss since Inception (February 9, 2012) resulting in an accumulated deficit of $45,785 as of April 30, 2014, and further losses are anticipated in the development of its business. Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern.

 

The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/ or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

 

NOTE 4 – COMMON STOCK

 

Common Stock

 

The Company has 750,000,000 shares of common stock authorized with a par value of $0.001 per share.

 

On October 22, 2012, the Company issued 180,000,000 shares of its common stock for total proceeds of $6,000.

 

During the period from October 29, 2012 to December 4, 2012, the Company issued 70,800,000 shares of its common stock for total proceeds of $23,600.

 

On April 11, 2014, the holders of a majority of the Company’s issued and outstanding common stock approved an increase in its authorized capital from 75,000,000 shares of common stock, par value $0.001, to 750,000,000 shares of common stock, par value $0.001 (the “Authorized Capital Increase”). The purpose of the Authorized Capital Increase was to reorganize the Company’s capital structure in connection with the stock dividend described below. The Company formally effected the Authorized Capital Increase on April 11, 2014 by filing a Certificate of Amendment with the Nevada Secretary of State.

 

On April 14, 2014, the Company’s sole director approved a stock dividend of 29 authorized but unissued shares of common stock on each one (1) pre-dividend issued and outstanding share of the Company’s common stock. On May 1, 2014, the Company received approval from the Financial Industry Regulatory Authority (FINRA) to effect the stock dividend by way of a forward split, and on the same date, the Company’s shareholders of record on April 25, 2014 received the dividend. As a result of the stock dividend, the Company’s issued and outstanding common stock increased from 8,360,000 (pre-dividend) shares to 250,800,000 (post-dividend) shares. All references to common stock have been reflected retroactively.

 

As at April 30, 2014 and January 31, 2014, 250,800,000 shares of common stock were issued and outstanding.

 

Additional paid in Capital

 

From February 9, 2012 (Inception) through January 31, 2014, the Company’s former sole director and principal shareholder loaned the Company a total of $5,800 to pay for incorporation costs and operating expenses. The loan was non-interest bearing, due upon demand and unsecured. Effective January 31, 2014, the Company’s former sole director and principal shareholder forgave repayment of the $5,800 outstanding loan balance which was credited to additional paid in capital at that time.

 

 

ALPHALA CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM
FEBRUARY 9, 2012 (INCEPTION) TO APRIL 30, 2014

(UNAUDITED)

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note.

 

From February 9, 2012 (inception) through January 31, 2014, the Company’s former sole director and principal shareholder loaned the Company a total of $5,800 to pay for incorporation costs and operating expenses. The loan was non-interest bearing, due upon demand and unsecured. Effective January 31, 2014, the Company’s former sole director and principal shareholder forgave repayment of the $5,800 outstanding loan balance which was credited to additional paid in capital at that time.

 

As at April 30, 2014, the Company owed $3,723 to its sole director and principal shareholder for expense reimbursements. The loan is non-interest bearing, unsecured and has no specific repayment terms.

 

NOTE 6 – INCOME TAXES

 

During the period from February 9, 2012 (Inception) through January 31, 2013, the Company recognized a taxable profit of $1,760, accrued a tax liability of $352 and paid $264 tax in respect of this liability during the twelve months ended January 31, 2014.

 

During the twelve months ended January 31, 2014, the Company incurred taxable losses of $30,644. $1,760 of these losses can be carried back to offset the $1,760 taxable profits arising in the period from February 9, 2012 (Inception) through January 31, 2013 and accordingly the Company is entitled to a refund of the $264 of tax paid in respect of this period and to recognize a full credit for the $352 tax liability provided for in the prior period. The remaining balance of $28,884 unrelieved tax losses are potentially available to offset taxable profits the Company may generate in the future.

 

During the three months ended April 30, 2014 the Company incurred further tax losses of $16,901 increasing the total available tax losses potentially available to offset taxable profits the Company may generate in the future to $45,785. The net operating loss carry forward will expire between 2033 and 2034. This carry forward may be limited upon the consummation of a business combination under IRC Section 381.

 

When it is more likely than not that a tax asset cannot be realized through future income, the Company must record an allowance against any future potential future tax benefit. The Company provided a full valuation allowance against the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that it will not earn income sufficient to realize the deferred tax assets during the carry forward periods.

 

The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the three month periods ended April 30, 2014 and 2013 as defined under ASC 740, “Accounting for Income Taxes”. The Company did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of the accumulated deficit on the balance sheet.

 

 

ALPHALA CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS

FOR THE THREE MONTH PERIODS ENDED APRIL 30, 2014 AND 2013 AND THE PERIOD FROM
FEBRUARY 9, 2012 (INCEPTION) TO APRIL 30, 2014

(UNAUDITED)

 

NOTE 7 – SUBSEQUENT EVENT

 

On June 10, 2014, the Company entered into a non-binding letter of intent with FV Pharma Inc., a private Ontario, Canada corporation (“FV Pharma”), and all the holders of the Class B non-voting shares of FV Pharma (the “Shares”), pursuant to which the Company agreed to acquire 100% of the Shares from such holders in exchange for the allotment and issuance of 150,000,000 restricted shares of the Company’s common stock (the “Transaction”). The Transaction is expected to take the form of a share exchange with the result that FV Pharma will become a partially owned subsidiary of the Company, and is subject to certain closing conditions. FV Pharma has applied to Health Canada to become a licensed commercial producer of marijuana under the Government of Canada’s new Marihuana for Medical Purposes Regulations (the “MMPR”).

 

The Company has evaluated all other subsequent events through the date of issuance of the accompanying condensed unaudited financial statements on June 19, 2014 and other than as disclosed above, the Company did not have any material recognizable subsequent events.

 

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report contains forward-looking statements. All statements other than statements of historical fact are “forward-looking statements”, including any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by any forward-looking statements.

 

These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements.

 

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

 

The following discussion of our financial condition and results of operations is based upon our financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements, including the notes thereto, that appear elsewhere in this quarterly report. The discussion of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.

 

As used in this quarterly report, the terms “we”, “us” and “our” mean Alphala Corp. and all dollar amounts refer to U.S. dollars, unless otherwise indicated.

 

Overview

 

We were incorporated under the laws of the State of Nevada on February 9, 2012 and are a development stage company that plans to engage in the distribution of teeth whitening strips in Latvia. Our registration statement on Form S-1 was declared effective by the Securities and Exchange Commission on June 14, 2013. To date, our business operations have been primarily limited to the development of a business plan, the completion of private placements for the offer and sale of our common stock and the signing of the sales distribution agreement with Aldent LLC, a private Latvian company (“Aldent”), dated January 14, 2013 (the “Sales Distribution Agreement”). On January 23, 2013 we filled Aldent’s first orders and recognized $2,475 in gross profit from the sale transaction.

 

On June 10, 2014, we entered into a non-binding letter of intent (the “LOI”) with FV Pharma Inc., a private Ontario, Canada corporation (“FV Pharma”), and all the holders of the Class B non-voting shares of FV Pharma (the “Shares”), pursuant to which we agreed to acquire 100% of the Shares from such holders in exchange for the allotment and issuance of 150,000,000 restricted shares of our common stock (the “Transaction”). The Transaction is expected to take the form of a share exchange with the result that FV Pharma will become our partially owned subsidiary, and is subject to certain closing conditions, including the completion of satisfactory due diligence by the parties, the negotiation of satisfactory transaction documentation, the approval of the Transaction by the respective our sole director and the board of directors of FV Pharma and the delivery to us of audited financial statements of FV Pharma for its two most recent fiscal years.

 

The LOI also contemplates that upon the completion of the Transaction the management of FV Pharma will become our management and that we will change our name to more accurately reflect our new line of business.

 

 

FV Pharma has applied to Health Canada to become a licensed commercial producer of marijuana under the Government of Canada’s new Marihuana for Medical Purposes Regulations (the “MMPR”). The company’s application is in the personal security checks stage of the process, and an in-depth review verification of the application must still occur before Health Canada conducts a pre-license inspection of its proposed facility, located in Cobourg, Ontario. If successful, FV Pharma will receive a license to produce marijuana for medical purposes under the MMPR.

 

We cannot state with certainty whether we will successfully close the Transaction or achieve profitable operations. As of April 30, 2014 we had minimal assets and had generated limited revenues.

 

Our Corporate History

 

On April 11, 2014, the holders of a majority of our issued and outstanding common stock approved an increase in our authorized capital from 75,000,000 shares of common stock, par value $0.001, to 750,000,000 shares of common stock, par value $0.001 (the “Authorized Capital Increase”). The purpose of the Authorized Capital Increase was to reorganize our capital structure in connection with the stock dividend described below. We formally effected the Authorized Capital Increase on April 11, 2014 by filing a Certificate of Amendment with the Nevada Secretary of State.

 

On April 14, 2014, our sole director approved a stock dividend of 29 authorized but unissued shares of our common stock on each one (1) issued and outstanding share of our common stock. On May 1, 2014, we received approval from the Financial Industry Regulatory Authority (FINRA) to effect the stock dividend by way of a forward split, and on the same date, our shareholders of record on April 25, 2014 received the dividend. As a result of the stock dividend, our issued and outstanding common stock increased from 8,360,000 (pre-dividend) shares to 250,800,000 (post-dividend) shares. All references to our common stock in this quarterly report have been reflected retroactively.

 

Results of Operations

 

Revenues

 

We did not generate any revenues during the three months ended April 30, 2014 or 2013. Since our inception on February 2, 2009 we have generated $2,475 in revenues, all of which was attributable to a single purchase and sale transaction with Aldent. Our ability to generate any revenues during the next 12 months is uncertain.

 

Expenses

 

During the three months ended April 30, 2014, we incurred $16,901 in operating expenses, all of which were general and administrative in nature. These included $13,933 in professional fees, $2,625 in transfer agent fees and $343 in miscellaneous expenses and interest and bank charges. During the same period in the prior year, we incurred $7,249 in operating expenses, all of which were general and administrative in nature. The increase in our operating expenses between the two years was primarily attributable to our transition from a private to a public company and our associated reporting requirements under applicable securities laws.

 

Net Loss

 

During the three months ended April 30, 2014, we incurred a net loss of $16,901, whereas during the same period in the prior year we incurred a net loss of $7,249 due to the factors described above.

 

Liquidity and Capital Resources

 

As of April 30, 2014, we had $3,859 in cash, $4,456 in total assets, $14,841 in total liabilities, a working capital deficit of $10,385 and an accumulated deficit of $45,785.

 

 

During the three months ended April 30, 2014, we used $60 in net cash on operating activities as we incurred a loss of $16,901, which was largely offset for cash flow purposes by an increase in our accounts payable of $11,118, an increase in the balance due to related party of $3,723 and a decrease in prepaid expenses of $2,000. During the same period in the prior year, we used $7,513 in net cash on operating activities, substantially all of which was attributable to our net loss for the period.

 

We did not generate or use any funds in investing activities during the three months ended April 30, 2014 or 2013.

 

We did not engage in any financing activities during either of the three month periods ended April 30, 2014 or 2013.

 

Our plans for the next 12 months are uncertain due to our current financial condition; however, we intend to raise additional funds through public or private placement offerings. If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time we do not have a commitment from any broker-dealer to provide us with financing. There is no assurance that any financing will be available to us or if available, on terms that will be acceptable to us. In the absence of such financing, we may be forced to cease or significantly curtail our operations.

 

Going Concern

 

Our financial statements have been prepared on a going concern basis, which contemplates, among other things, that we will continue to realize our assets and satisfy our liabilities in the normal course of business. As at April 30, 2014, we had a working capital deficit of $10,385 and an accumulated deficit of $45,785. We intend to fund our operations through equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital and other cash requirements for the next 12 months.

 

Our ability to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue our operations and the attainment of profitable operations. These factors raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Significant Accounting Policies

 

Advertising Costs

 

Our policy regarding advertising is to expense advertising when incurred. We incurred advertising expense of $0 during the three months periods ended April 30, 2014 and 2013.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not required.

 

 

Item 4. Controls and Procedures

 

Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2014. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in rules and forms of the SEC.

 

Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this annual report, none of our directors, officers or affiliates is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

 

Item 1A. Risk Factors

 

Not applicable.

 

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

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

The following documents are filed as a part of this quarterly report.

 

Exhibit Number		Exhibit Description
3.1		Articles of Incorporation filed with the Nevada Secretary of State on February 9, 2012 (1)
3.2		Bylaws (1)
3.3		Certificate of Amendment filed with the Nevada Secretary of State on April 11, 2014 (2)
10.1		Sales Distribution Agreement with Aldent LLC dated January 14, 2013 (1)
31.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Presentation Linkbase

 

(1)	Included as an exhibit to our registration statement on Form S-1 filed with the SEC on April 2, 2013.
(2)	Included as an exhibit to our current report on Form 8-K filed with the SEC on April 15, 2014.

 

 

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.

 

Date: June 19, 2014	ALPHALA CORP.
	By:	/s/ Shaikh M. Shami
		Shaikh M. Shami
		President, Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Secretary, Treasurer, Director