Note 2. Liquidity and Management Plans

The Company’s consolidated financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. For the fiscal years ended April 30, 2017 and 2016, the Company has incurred losses in the amounts of approximately $1,915,000 and $1,221,000, respectively.

The Company raised approximately $753,000 from financing activities in the fiscal year 2017 (See note 3). The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

The Company took steps to mitigate these factors by completing the merger with USG. The merger lowered the Company’s potential cash exposure. As a result, as of the date of the issuance of these financial statements, the Company believes its current cash position and current cash position of USG will sustain operations for the foreseeable future through a year and a day from the issuance of these consolidated financial statements.