UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q
_________________
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 2017 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
_________________FORZA INNOVATIONS, INC.
GENESYS INDUSTRIES, INC.
_________________
30-0852686 | ||
(State or Other Jurisdiction | (Commission | (I.R.S. Employer |
of Incorporation or Organization) | File Number) | Identification No.) |
1914 24th Ave E Palmetto, Florida 34221406 9th Avenue
, Suite 210, San Diego, California 92101
(Address of Principal Executive Offices) (Zip Code)
941-722-3600(702
) 205-2064
(Registrant’s telephone number, including area code)
_________________(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None.
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
Large | ☐ | Accelerated | ☐ | |||
Non-accelerated | ☒ | Smaller | ☒ | |||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Act.)
Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of January 26, 2018,April 25, 2024, the issuer had 17,555,000 shares of its common stock issued and outstanding.
1 |
FORZA INNOVATIONS INC.
TABLE OF CONTENTS
PART I | ||
Item 1. | Condensed Unaudited Financial Statements | 3 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. | Controls and Procedures | |
PART II | ||
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. | Defaults Upon Senior Securities | |
Item 4. | Mining Safety Disclosures | |
Item 5. | Other Information | |
Item 6. | Exhibits | |
Signatures |
2 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENESYS INDUSTRIES,FORZA INNOVATIONS INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172023
4 | |
5 | |
6 | |
Consolidated Statements of Cash Flows for the six months ended December 31, | |
Notes to the |
3 |
FORZA INNOVATIONS INC.
CONSOLIDATED BALANCE SHEETS
GENESYS INDUSTRIES, INC. CONDENSED BALANCE SHEETS (Unaudited) | ||||||||
December 31, 2017 | June 30, 2017 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 10,190 | $ | 20,844 | ||||
Total current assets | 10,190 | 20,844 | ||||||
Website development, net | 206 | 514 | ||||||
Leasehold improvements, net | 15,727 | — | ||||||
Deposit | 7,500 | — | ||||||
Total assets | $ | 33,623 | $ | 21,358 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 524 | $ | 701 | ||||
Accrued rent, related party | 10,000 | — | ||||||
Accrued interest, related party | 243 | — | ||||||
Due to related party | 37,748 | 6,190 | ||||||
Total current liabilities | 48,515 | 6,891 | ||||||
Total liabilities | 48,515 | 6,891 | ||||||
Stockholders' equity (deficit): | ||||||||
Class B Preferred stock, $0.001 par value, 25,000,000 shares authorized; 10,000,000 and 10,000,000 issued and outstanding, respectively | 10,000 | 10,000 | ||||||
Common stock, $0.001 par value, 100,000,000 shares authorized; 17,555,000 and 17,545,000 shares issued and outstanding, respectively | 17,555 | 17, 545 | ||||||
Additional paid-in capital | 44,945 | 43,955 | ||||||
Accumulated deficit | (87,392 | ) | (57,033 | ) | ||||
Total stockholders' equity (deficit) | (14,892 | ) | 14,467 | |||||
Total liabilities and stockholders' equity | $ | 33,623 | $ | 21,358 |
December 31, 2023 | June 30, 2023 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 1,214 | $ | — | ||||
Total current assets | 1,214 | — | ||||||
Machinery and equipment, net | 72,186 | 91,404 | ||||||
Deposit | — | — | ||||||
Total long term assets | 72,186 | 91,404 | ||||||
Total Assets | $ | 73,400 | $ | 91,404 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 110,374 | $ | 110,792 | ||||
Accrued interest | 358,681 | 284,092 | ||||||
Convertible notes payable, net of discount of $26,452 and $256,653, respectively | 2,027,715 | 1,787,069 | ||||||
Derivative liability | 1,792,058 | 2,475,446 | ||||||
Loan payable | 22,729 | 22,729 | ||||||
Due to related party | 19,306 | 19,306 | ||||||
Total current liabilities | 4,330,863 | 4,699,434 | ||||||
Total liabilities | 4,330,863 | 4,699,434 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity (deficit): | ||||||||
Class B Preferred stock, $ | par value, shares authorized, issued and outstanding10,000 | 10,000 | ||||||
Common stock, $ | par value, shares authorized; and shares issued and outstanding, respectively1,890,551 | 1,421,744 | ||||||
Common stock to be issued | 26,531 | 26,531 | ||||||
Additional paid-in capital | 4,535,744 | 4,884,639 | ||||||
Accumulated deficit | (10,720,289 | ) | (10,950,944 | ) | ||||
Total stockholders' deficit | (4,257,463 | ) | (4,608,030 | ) | ||||
Total Liabilities and Stockholders' Deficit | $ | 73,400 | $ | 91,404 |
The accompanying notes are an integral part of these unaudited condensedconsolidated financial statements.
4 |
FORZA INNOVATIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
GENESYS INDUSTRIES, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||||||||||||||||||
For the Three Months Ended December 31, | For the Six Months Ended December 31, | For the Three months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Revenue | $ | 1,357 | $ | — | $ | 1,557 | $ | 1,357 | $ | 7,756 | $ | 31,615 | $ | 39,989 | $ | 60,598 | ||||||||||||||||
Cost of revenue | 733 | — | 733 | 698 | 14 | 20,760 | 1,442 | 26,200 | ||||||||||||||||||||||||
Gross Margin | 624 | — | 824 | 659 | ||||||||||||||||||||||||||||
Gross margin | 7,742 | 10,855 | 38,547 | 34,398 | ||||||||||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||||||
General & administrative expenses | 13,558 | 80,254 | 29,067 | 143,584 | ||||||||||||||||||||||||||||
Advertising and marketing | — | 12,415 | — | 29,517 | ||||||||||||||||||||||||||||
Compensation expense | 6,860 | 165,208 | 15,180 | 350,004 | ||||||||||||||||||||||||||||
Professional fees | 3,875 | 3,875 | 8,375 | 8,125 | 4,659 | 76,198 | 13,159 | 159,140 | ||||||||||||||||||||||||
General & administrative expenses | 15,002 | 1,768 | 22,565 | 2,559 | ||||||||||||||||||||||||||||
Stock based compensation | — | 108,769 | — | 297,444 | ||||||||||||||||||||||||||||
Total operating expenses | 18,877 | 5,643 | 30,940 | 10,684 | 25,077 | 442,844 | 57,406 | 979,689 | ||||||||||||||||||||||||
Loss from operations | (18,253 | ) | (5,643 | ) | (30,116 | ) | (10,025 | ) | (17,335 | ) | (431,989 | ) | (18,859 | ) | (945,291 | ) | ||||||||||||||||
Other expense: | ||||||||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||||||
Interest expense | (243 | ) | — | (243 | ) | — | (65,853 | ) | (21,244 | ) | (126,812 | ) | (80,389 | ) | ||||||||||||||||||
Total other expense | (243 | ) | — | (243 | ) | — | ||||||||||||||||||||||||||
Loss on issuance of convertible debt | (6,137 | ) | (46,750 | ) | (6,137 | ) | (85,083 | ) | ||||||||||||||||||||||||
Loss on conversion of debt | (10,800 | ) | (155,441 | ) | (44,106 | ) | (176,281 | ) | ||||||||||||||||||||||||
Change in fair value of derivatives | 1,080,596 | 5,161 | 676,231 | (578 | ) | |||||||||||||||||||||||||||
Gain on conversion of debt | — | — | 4,507 | — | ||||||||||||||||||||||||||||
Loss on disposal of assets | (13,968 | ) | — | (13,968 | ) | — | ||||||||||||||||||||||||||
Debt discount amortization | (87,747 | ) | (199,679 | ) | (240,201 | ) | (400,323 | ) | ||||||||||||||||||||||||
Early payment penalty | — | (12,150 | ) | — | (12,150 | ) | ||||||||||||||||||||||||||
Total other income (expense) | 896,091 | (430,103 | ) | 249,514 | (754,804 | ) | ||||||||||||||||||||||||||
Loss before income taxes | (18,496 | ) | (5,643 | ) | (30,359 | ) | (10,025 | ) | ||||||||||||||||||||||||
Income (loss) before income taxes | 878,756 | (862,092 | ) | 230,655 | (1,700,095 | ) | ||||||||||||||||||||||||||
Provision for income taxes | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net Loss | $ | (18,496 | ) | $ | (5,643 | ) | $ | (30,359 | ) | $ | (10,025 | ) | ||||||||||||||||||||
Net Income (Loss) | $ | 878,756 | $ | (862,092 | ) | $ | 230,655 | $ | (1,700,095 | ) | ||||||||||||||||||||||
Net Loss Per Common Share, basic & diluted | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||||||||||||||||||||
Net income (loss) per common share, basic & diluted | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.01 | ) | ||||||||||||||||||||||
Weighted Common Shares Outstanding, basic & diluted | 17,555,000 | 17,000,000 | 17,555,000 | 17,000,000 | ||||||||||||||||||||||||||||
Weighted common shares outstanding, basic | 1,812,295,162 | 533,855,996 | 1,651,851,927 | 425,035,657 | ||||||||||||||||||||||||||||
Weighted common shares outstanding, diluted | 10,424,245,162 | 533,855,996 | 10,263,801,927 | 425,035,657 |
The accompanying notes are an integral part of these unaudited condensedconsolidated financial statements.
5 |
FORZA INNOVATIONS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
GENESYS INDUSTRIES, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) | ||||||||
For the Six Months Ended December 31, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net Loss | $ | (30,359 | ) | $ | (10,025 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Amortization expense | 308 | 309 | ||||||
Depreciation expense | 166 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Other assets | (7,500 | ) | — | |||||
Accounts payable | (177 | ) | (6,839 | ) | ||||
Accruals, related party | 10,243 | — | ||||||
Net cash used in operating activities | (27,319 | ) | (16,555 | ) | ||||
Cash flows from investing activities: | ||||||||
Leasehold improvements | (15,893 | ) | — | |||||
Net cash used in investing activities | (15,893 | ) | — | |||||
Cash flows from financing activities: | ||||||||
Advances from a related party | 31,558 | 1,800 | ||||||
Proceeds from the sale of common stock | 1,000 | 16,900 | ||||||
Net cash provided by financing activities | 32,558 | 18,700 | ||||||
Net change in cash | (10,654 | ) | 2,145 | |||||
Cash, beginning of period | 20,844 | 100 | ||||||
Cash, end of period | $ | 10,190 | $ | 2,245 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for interest | $ | — | $ | — | ||||
Cash paid for taxes | $ | — | $ | — |
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2023 AND 2022
(Unaudited)
Common Shares | Common Stock | Preferred Shares | Preferred Stock | Paid in Capital | Common stock to be Issued | Accumulated Deficit | Total | |||||||||||||||||||||||||
Balance, June 30, 2023 | 1,421,744,158 | $ | 1,421,744 | $ | 10,000 | $ | 4,884,639 | $ | 26,531 | $ | (10,950,944 | ) | $ | (4,608,030 | ) | |||||||||||||||||
Shares issued for conversion of debt | 378,806,557 | 378,807 | — | — | (285,895 | ) | — | — | 92,912 | |||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (648,101 | ) | (648,101 | ) | ||||||||||||||||||||||
Balance, September 30, 2023 | 1,800,550,715 | 1,800,551 | 10,000 | 4,598,744 | 26,531 | (11,599,045 | ) | (5,163,219 | ) | |||||||||||||||||||||||
Shares issued for conversion of debt | 90,000,000 | 90,000 | — | — | (63,000 | ) | — | — | 27,000 | |||||||||||||||||||||||
Net income | — | — | — | — | — | — | 878,756 | 878,756 | ||||||||||||||||||||||||
Balance, December 31, 2023 | 1,890,550,715 | $ | 1,890,551 | $ | 10,000 | $ | 4,535,744 | $ | 26,531 | $ | (10,720,289 | ) | $ | (4,257,463 | ) | |||||||||||||||||
Common Shares | Common Stock | Preferred Shares | Preferred Stock | Paid in Capital | Common stock to be Issued | Accumulated Deficit | Total | |||||||||||||||||||||||||
Balance, June 30, 2022 | 220,009,575 | $ | 220,009 | $ | 10,000 | $ | 4,611,790 | $ | 26,231 | $ | (6,195,238 | ) | $ | (1,327,208 | ) | |||||||||||||||||
Shares issued for conversion of debt | 74,714,953 | 74,715 | — | — | 280,337 | — | — | 355,052 | ||||||||||||||||||||||||
Fair value of warrants granted | — | — | — | — | 188,675 | — | — | 188,675 | ||||||||||||||||||||||||
Shares issues – related party | 100,000 | — | — | (100,000 | ) | — | — | — | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (838,003 | ) | (838,003 | ) | ||||||||||||||||||||||
Balance, September 30, 2022 | 394,724,528 | 394,724 | 10,000 | 4,980,802 | 26,231 | (7,033,241 | ) | (1,621,484 | ) | |||||||||||||||||||||||
Shares issued for conversion of debt | 385,434,463 | 385,435 | — | — | 99,663 | — | — | 485,098 | ||||||||||||||||||||||||
Fair value of warrants granted | — | — | — | — | 108,769 | — | — | 108,769 | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (862,092 | ) | (862,092 | ) | ||||||||||||||||||||||
Balance, December 31, 2022 | 780,158,991 | $ | 780,159 | $ | 10,000 | $ | 5,189,234 | $ | 26,231 | $ | (7,895,333 | ) | $ | (1,889,709 | ) |
The accompanying notes are an integral part of these unaudited condensedconsolidated financial statements.
6 |
FORZA INNOVATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended December 31, | |||||
2023 | 2022 | ||||
Cash flows from operating activities: | |||||
Net Income (Loss) | $ | 230,655 | $ | (1,700,095) | |
Adjustments to reconcile net income (loss) to net cash used by operating activities: | |||||
Depreciation and amortization | 5,250 | 32,322 | |||
Debt discount amortization | 240,201 | 400,323 | |||
Loss on issuance of convertible debt | — | 85,083 | |||
Change in fair value of derivatives | (676,231) | 578 | |||
Loss on conversion of debt | 44,106 | 176,281 | |||
Gain on conversion of debt | (4,507) | — | |||
Loss on issuance of convertible debt | 6,137 | — | |||
Loss on disposal of assets | 13,968 | — | |||
Fair value of warrants granted with debt issuance | — | 297,444 | |||
Changes in operating assets and liabilities: | |||||
Prepaids | — | 5,130 | |||
Accounts payable and accrued liabilities | (418) | 67,573 | |||
Accrued interest | 126,813 | 75,839 | |||
Net cash used by operating activities | (14,026) | (559,522) | |||
Cash flows from investing activities: | |||||
Purchase of property and equipment | — | (82,305) | |||
Loans receivable | — | (18,750) | |||
Net cash used by investing activities | — | (101,055) | |||
Cash flows from financing activities: | |||||
Repayment of related party loans | — | (100) | |||
Proceeds from convertible debt | 15,240 | 446,280 | |||
Repayment of convertible debt | — | (30,000) | |||
Net cash provided by financing activities | 15,240 | 416,180 | |||
Net change in cash | 1,214 | (244,397) | |||
Cash, beginning of period | — | 295,914 | |||
Cash, end of period | $ | 1,214 | $ | 51,517 | |
Supplemental disclosure of cash flow information: | |||||
Cash paid for interest | $ | — | $ | — | |
Cash paid for taxes | $ | — | $ | — | |
Supplemental non-cash disclosure: | |||||
Common stock issued for conversion of principal and interest | $ | 57,019 | $ | 381,717 |
GENESYS INDUSTRIES,The accompanying notes are an integral part of these consolidated financial statements.
7 |
FORZA INNOVATIONS INC.
NOTES TO CONDENSEDUNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172023
(Unaudited)
NOTE 1 - NATURE OF OPERATIONS
Genesys Industries,Forza Innovations Inc. (the “Company”), was incorporated on December 9, 2014, under the laws of the State of Florida. Genesys Industries is a diversified multi-industry manufacturer of complex metal components and products. We serve all general industrial markets such as Aerospace, Automotive, Construction, Commercial, Food Processing, Firearms, Industrial, Maritime, Medical, Railroad, Oil and Gas, Packaging, Telecom, Textiles, Pulp Paper, Transportation and many more. We are a vertically integrated precision Computer Numerical Control (“CNC”) manufacturing and fabrication company with core emphasis on product design, engineering and precision manufacturing of complex components and products.
The Company’s headquarters are in Palmetto, Florida. The Company has adopted its fiscal year endacquired the ownership and rights to be June 30.certain late developmental stage products, including the J4 Sport, J4 X and J4 Fitbelt. These products are wearable back compression devices, used to relax, warmup, loosen, or relax stiff & sore muscles. The therapeutic application of heat causes a change in temperature of the soft tissues which decreases joint stiffness and relieves inflammation.
On March 1, 2022, the Company entered into a Share Exchange Agreement (the “Agreement”) with Sustainable Origins Inc. (“Sustainable”), whereby the Company acquired 100% of the shares of Sustainable in exchange for shares of the Company’s common stock and a cash payment of $ and the payment of certain initial expenses, thereby making Sustainable a wholly-owned subsidiary of the Company. Sustainable is in the business of used cooking oil recycling and has recently entered into an asset purchase agreement with Oil Industries, Inc. of North Carolina to acquire certain assets related to the used cooking oil business. The Company valued the shares of common stock at $, the closing stock price on the effective date of the agreement, for a valuation of $22,800. At the time of acquisition Sustainable had no operations. As such the Company fully impaired the $22,800. As of December 31, 2023, the shares have not yet been issued to Sustainable.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensedunaudited financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at December 31 2017, 2023 and for the related periods presented have been made. The results for the six months ended December 31 2017, 2023 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2017,2023, filed with the Securities and Exchange Commission.Commission
Use of estimatesEstimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.`
Cash Equivalents
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents as of December 31, 2023 and June 30, 2023.
Principles of Consolidation
The accompanying consolidated financial statements for the three and six months ended December 31, 2023 and 2022, include the accounts of the Company and its wholly owned subsidiary, Sustainable Origins. All material inter-company transactions have been eliminated in consolidation.
Property, Plant and Equipment
Property and equipment are carried at the lower of cost or net realizable value. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations.
Derivative Financial Instruments
The Company evaluates its convertible notes to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
8 |
Revenue Recognition
Fair Value of Financial Instruments
The Company follows paragraph 605-15-25825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable amates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.
The following table classifies the Company’s asset measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2023 and June 30, 2023:
Schedule of fair value hierarchy | |||||||||||||
December 31, 2023 | |||||||||||||
Description | Level 1 | Level 2 | Level 3 | ||||||||||
Derivative | $ | — | $ | — | $ | 1,792,058 | |||||||
Total | $ | — | $ | — | $ | 1,792,058 | |||||||
June 30, 2023 | |||||||||||||
Derivative | $ | — | $ | — | $ | 2,475,446 | |||||||
Total | $ | — | $ | — | $ | 2,475,446 |
Revenue Recognition
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:
• | Identification of a contract with a customer; |
• | Identification of the performance obligations in the contract; |
• | Determination of the transaction price; |
• | Allocation of the transaction price to the performance obligations in the contract; and |
• | Recognition of revenue when or as the performance obligations are satisfied. |
Revenue is recognized when the right of return exists. The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when allcontrol of the following criteriapromised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Shipping and handling activities associated with outbound freight after control over a product has transferred to a customer are met: (i) The seller's priceaccounted for as a fulfillment activity and recognized as revenue at the point in time at which control of the goods transfers to the buyer is substantially fixed or determinablecustomer. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the date of sale, (ii) The buyer has paid the seller, or the buyer is obligated to pay the sellerperiod between customer payment and the obligationtransfer of goods or services is not contingent on resaleexpected to be one year or less.
Net income (loss) per common share is computed pursuant to section 260-10-45 of the product. IfFASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the buyer does not pay at timeweighted average number of saleshares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the buyer's obligationperiod. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of December 31, 2023, there are warrants to paypurchase up to shares of common stock, options to purchase up to shares of common stock and approximately (7.659 Bil) dilutive shares of common stock from convertible notes payable. As of December 31, 2022, there are warrants to purchase up to shares of common stock, options to purchase up to shares of common stock and approximately dilutive shares of common stock from convertible notes payable. As of December 31, 2022, the Company’s diluted loss per share is contractually or implicitly excused until the buyer resellssame as the product, then this condition is not met., (iii) The buyer's obligationbasic loss per share, as the inclusion of any potential shares would have had an anti-dilutive effect due to the seller would not be changed in the event of theft or physical destruction or damage of the product, (iv) The buyer acquiring the product for resale has economic substance apart from that provided by the seller. This condition relates primarily to buyers that exist on paper, that is, buyers that have little or no physical facilities or employees. It prevents entities from recognizing sales revenue on transactions with parties that the sellers have established primarily for the purpose of recognizing such sales revenue, (v) The seller does not have significant obligations for future performance to directly bring about resale of the product by the buyer, and (vi) The amount of future returns can be reasonably estimated if necessary.Company generating a loss.
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Reclassifications
Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the three and six months ended December 31, 2017.Recent Accounting Pronouncements
Recently issued accounting pronouncements
The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 - GOING CONCERN
The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the accompanying financial statements,of December 31, 2023, the Company has had minimallimited revenue hasand an accumulated deficit of $87,392 and net cash used in operations of $27,319 for the six months ended December 31, 2017. These conditions raise substantial doubt about its ability to continue as a going concern.$10,720,289.
While the Company is attempting to execute its development strategy, the Company’s cash position may not be sufficient to support the Company’s daily operations without significant financing. While the Company believes in the viability of its strategy to produce sales volume and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.
NOTE 4 - PROPERTY &– LOANS RECEIVABLE
On October 4, 2022, the Company entered into a Secured Loan Agreement with Team Moving Forward Recovery Group LLC (“Team”), whereby the Company loaned $15,000 to Team. The loan was to be repaid by December 3, 2022. The loan bears interest at 3% and is currently in default. The Company has established a reserve account to fully reserve for this receivable; therefore, the receivable is presented on the balance sheet at $0.
On January 23, 2023, the Company entered into a Secured Loan Agreement with Denver Dumpster LLC (“Denver”), whereby the Company had loaned $31,250 to Denver. The loan was to be repaid by April 30, 2023, unless an agreement to acquire Denver was entered into, which did not occur. The loan bears interest at 3% and is currently in default. The Company has established a reserve account to fully reserve for this receivable; therefore, the receivable is presented on the balance sheet at $0.
NOTE 5 – MACHINERY AND EQUIPMENT
Long lived assets, including property and equipment and certain intangible assets to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets and certain identifiable intangibles to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Property and Equipment and intangible assets are first recorded at cost. Depreciation and/or amortization is computed using the straight-line method over the estimated useful lives of the various classes of assets as follows between three and five years. Leasehold improvements are being depreciated over ten years, and the building over twenty years.
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Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
Assets stated at cost, less accumulated amortization consisted of the following:
December 31, 2017 | June 30, 2017 | |||||||
Website development | $ | 1,850 | $ | 1,850 | ||||
Less: accumulated amortization | (1,644 | ) | (1,336 | ) | ||||
Fixed assets, net | $ | 206 | $ | 514 |
Amortization expense
Amortization expense forDuring the six months ended December 31, 20172023, the Company wrote of certain property and 2016 was $308equipment no longer in use, resulting in a loss on disposal of $13,968.
Property and $309, respectively.
Assetsequipment stated at cost, less accumulated depreciation consisted of the following:
Property, Plant & Equipment | ||||||||
December 31, 2023 | June 30, 2023 | |||||||
Machinery and Equipment | $ | 66,838 | $ | 88,387 | ||||
Office Equipment | 3,097 | 3,097 | ||||||
Vehicles | 38,122 | 38,122 | ||||||
Less: accumulated depreciation | (35,871 | ) | (38,202 | ) | ||||
Property and equipment, net | $ | 72,186 | $ | 91,404 |
December 31, 2017 | June 30, 2017 | |||||||
Leasehold Improvements | $ | 15,893 | $ | — | ||||
Less: accumulated depreciation | (166 | ) | — | |||||
Fixed assets, net | $ | 15,727 | $ | — |
Depreciation expense
Depreciation expense for the six months ended December 31, 20172023 and 20162022 was $166 $ 5,250 and $0,$32,322, respectively.
NOTE 6 – CONVERTIBLE NOTES PAYABLE
During the period ended December 31, 2023, the Company issued, paid and or converted the following new convertible promissory notes.
Schedule of convertible promissory notes | ||||||||||||||||||||||||
Note Holder | Date | Maturity Date | Interest Rate | Balance June 30, 2023 | Additions | Conversions | Balance December 31, 2023 | |||||||||||||||||
ONE44 Capital LLC (2) | 1/13/2022 | 1/13/2023 | 10 | % | $ | 122,400 | $ | — | $ | — | $ | 122,400 | ||||||||||||
Mast Hill Fund, L.P. (3) | 1/20/2022 | 1/20/2023 | 12 | % | $ | 302,312 | $ | — | $ | — | $ | 302,312 | ||||||||||||
ONE44 Capital LLC (2) | 3/22/2022 | 3/22/2023 | 10 | % | $ | 120,000 | $ | — | $ | — | $ | 120,000 | ||||||||||||
Coventry Enterprises, LLC (1) | 6/3/2022 | 6/3/2023 | 10 | % | $ | 576,000 | $ | — | $ | — | $ | 576,000 | ||||||||||||
1800 Diagonal Lending LLC (4) | 7/26/2022 | 7/26/2023 | 10 | % | $ | 48,700 | $ | — | $ | (4,795 | ) | $ | 43,905 | |||||||||||
Mast Hill Fund, L.P. (5) | 9/19/2022 | 9/19/2023 | 12 | % | $ | 290,000 | $ | — | $ | — | $ | 290,000 | ||||||||||||
1800 Diagonal Lending LLC (4) | 11/11/2022 | 11/11/2023 | 10 | % | $ | 44,250 | $ | — | $ | — | $ | 44,250 | ||||||||||||
Mast Hill Fund, L.P. (6) | 12/16/2022 | 12/16/2022 | 12 | % | $ | 133,000 | $ | 5,240 | $ | — | $ | 138,240 | ||||||||||||
Mast Hill Fund, L.P. (7) | 1/13/2023 | 12/16/2022 | 12 | % | $ | 347,060 | $ | — | $ | — | $ | 347,060 | ||||||||||||
Coventry Enterprises, LLC (8) | 5/12/2023 | 5/12/2024 | 10 | % | $ | 60,000 | $ | — | $ | — | $ | 60,000 | ||||||||||||
1800 Diagonal Lending LLC (9) | 11/16/2023 | 11/1/2024 | 10 | % | $ | — | $ | 10,000 | $ | — | $ | 10,000 | ||||||||||||
Total | $ | 2,043,722 | $ | 15,240 | $ | (4,795 | ) | $ | 2,054,167 | |||||||||||||||
Less debt discount | $ | (256,653 | ) | $ | (26,452 | ) | ||||||||||||||||||
Convertible notes payable, net | $ | 1,787,069 | — | $ | 2,027,715 |
Conversion Terms
(1) | Convertible only upon an event of default. 90% of the lowest trading price for 10 days prior to conversion date. |
(2) | 60% of the lowest trading price for 20 days, including conversion date. |
(3) | Convertible only upon an event of default. Conversion would then be $0.10. |
(4) | 61% of the lowest trading price for 15 days prior to conversion date. |
(5) | Convertible at $0.0015 |
(6) | Convertible at $0.0007 |
(7) | Convertible at $0.0003 |
(8) | Monthly payments of $9,428.57. Convertible only upon an event of default. Conversion would then be 90% of the lowest trade during the 30 days prior to conversion. | |
(9) | 61% of the lowest trading price for 10 days prior to conversion date. |
Total accrued interest on the above convertible notes as of December 31, 2023 and June 30, 2023, is $337,170 and $263,154, respectively.
A summary of the activity of the derivative liability for the notes above is as follows:
Schedule of derivative liability | ||||
Balance at June 30, 2022 | 662,982 | |||
Increase to derivative due to new issuances | 806,026 | |||
Decrease to derivative due to conversions | (376,682 | ) | ||
Derivative loss due to mark to market adjustment | 1,383,120 | |||
Balance at June 30, 2023 | $ | 2,475,446 | ||
Increase to derivative due to new issuances | 16,137 | |||
Decrease to derivative due to conversions | (23,294 | ) | ||
Derivative loss due to mark to market adjustment | (676,231 | ) | ||
Balance at December 31, 2023 | $ | 1,792,058 |
A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy as of December 31, 2023, is as follows:
Schedule of fair value hierarchy | ||||||||
Inputs | December 31, 2023 | Initial Valuation | ||||||
Stock price | $ | $– | ||||||
Conversion price | $ | 0.0001 - 0.00018 | $0.0006 - 0.0049 | |||||
Volatility (annual) | % – % | % - % | ||||||
Risk-free rate | % | % -% - % | ||||||
Dividend rate | ||||||||
Years to maturity | .25 – .88 | 1 |
NOTE 7 - NOTE PAYABLE
NOTEOn November 5, – LINES OF CREDIT
2017, to fund its working capital requirements the Company obtained a Special Line of Credit (“LOC”) also recognized as a Blanket Secured Promissory Note for the total draw down amount of up to $500,000, from Twiga Capital Partners, LLC (“TCP”), an entity controlled by the Company’s former sole officer and largest stockholder, Shefali Vibhakar. This Note is secured by all of the assets of the Company in accordance with the Security Agreement by and between the Company and the Holder dated as of November 5, 2017. The Company has established a lineLOC bears interest at 5% per annum and is due on demand. On January 21, 2021, TCP assigned all of credit with a commercial bankits rights, title and interest in the amount debt to Front Row Seating Inc. On September 28, 2021, $100,000 of $50,000. This is a revolving business linethe note was converted into shares of credit (BLOC) and bears a fixed interest rate of 7%. The company has also established a corporate business credit card for use in travel related purposes. That line of credit is established at $20,000. The company has also established a Bank Term Loan Facility in the approximate amount of $200,000.
Total consolidated revolving credit available under all credit arrangements is approximately $270,000. There have been no draw downs on the line of credit or the term loan ascommon stock. As of December 31, 2017.
NOTE 6 - STOCKHOLDERS’ EQUITY
Common stock
Common stock includes 100,000,000 shares authorized at a par value of $0.001.
Between January 24, 20172023 and March 31, 2017,June 30, 2023, the Company sold 545,000 owed $22,729 and $22,729 of principal and $21,512 and $20,940 of accrued interest, respectively.
NOTE 8 – COMMON STOCK
During Q1 FY 2024, Mast Hill converted $36,024 of accrued interest into shares of common stock at $0.10 a share under the terms stock.
During Q1 FY 2024, 1800 Diagonal converted $4,795 of its most recent offering. Asprincipal into shares of March 31, 2017, $10,000 had not yet been collected therefore has been debited to stock subscription receivable. The funds were collected on April 3, 2017.common stock.
During Q2 FY 2024, Coventry converted $16,200 of accrued interest into shares of common stock.
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NOTE 9 – PREFERRED STOCK
On September 20, 2017,7, 2022, the Company sold 10,000 filed with the Secretary of State of the State of Wyoming, an Articles of Amendment (the “Amendment”) designating the terms, preferences and rights of the shares of the Company's previously authorized Class B Preferred Stock. Each share of Class B Preferred Stock entitles the holder thereof to ten thousand votes per share on all matters to be voted on by the holders of the Company’s common stock to a third party for total cash proceeds of $1,000.
Preferred stock
Preferred stock includes 25,000,000and is convertible into shares of authorizedthe Company's common stock at a par value of $0.001. Preferred stock includes 25,000,000the same rate. With respect to rights on liquidation, dissolution or winding up, shares of Class B authorized at a par value of $0.001. The Preferred Stock constitutes a convertible stock in which (1) one Preferred Share is convertible into (5) five Common Shares. The Preferred Stock holders are entitled to voterank on any matters on whichparity with the Company's common stock holders are entitled to vote.stock.
NOTE 710 - RELATED PARTY TRANSACTIONS
On November 5, 2017, to fund its working capital requirementsMr. Forzani has advanced the Company obtained a Special Line of Credit (“LOC”) also recognized as a Blanket Secured Promissory Notefunds for general operating expenses, the total draw down amount of up to $500,000, from Twiga Capital Partners, LLC (“TCP”), an entity controlled by the Company’s sole officer and largest stockholder, Shefali Vibhakar. This Note is secured by all of the assets of the Company in accordance with the Security Agreement by and between the Company and the Holder dated as of Nov 5th, 2017. The LOC bears interest at 5% per annum and is due on demand.
As of December 31, 2017, and June 30, 2017, the Company owed $37,748 and $6,190, respectively in loans payable to its President & CEO. The loans were received to pay for certain operating expenses. Theyadvances are unsecured, non-interest bearing and due on demand. As of December 31, 2023 and June 30, 2023, the Company owes Mr. Forzani $19,306 and $19,306, respectively.
NOTE 11– STOCK OPTIONS
On November 15, 2017, this note was assignedAugust 3, 2021, the Company granted options to TCP.Johnny Forzani, CEO, options to Geoff Stanbury, director, and options to Tom Forzani, Director. The note will become partoptions were issued pursuant the Company’s 2021 Equity Award Plan. The options are exercisable at $, are immediately vested and expire in two years.
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A summary of the status of the Company’s outstanding balance due understock options and changes during the newly established line of credit.period is presented below:
Schedule of Stock Options Outstanding | ||||||||||||
Stock Options | Options | Weighted Average Exercise Price | Aggregate Intrinsic Value | |||||||||
Options outstanding at June 30, 2023 | 1,000,000 | $ | — | |||||||||
Granted | — | — | — | |||||||||
Exercised | (1,000,000 | ) | $ | — | ||||||||
Expired | $ | — | ||||||||||
Options outstanding at December 31, 2023 | — | $ | — | — | ||||||||
Options exercisable at December 31, 2023 | — | $ | — | $ | — |
NOTE 12 – WARRANTS
During November 2017, TCP advancedOn September 23, 2022, the Company, $24,058 underclosed a Securities Purchase Agreement (the “Purchase Agreement”) with Mast Hill Fund, L.P., a Delaware limited partnership (“Mast Hill”), dated as of September 19, 2022, pursuant to which the LOC. AsCompany issued Mast Hill a convertible promissory note in the principal amount of $290,000 (the “Note”), a five-year warrant to purchase up to 100,000,000 shares of common stock at a price of $per share (the “First Warrant”) and a warrant to purchase up to 100,000,000 shares of common stock at a price of $per share (the “Second Warrant”). The second warrant is only exercisable upon an “Event of Default” as defined in the Note.
Using the fair value calculation, the relative fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $188,675, accounted for in additional paid in capital and debt discount to be amortized over the term of the loan.
On December 31, 2017,16, 2022, the outstanding principleCompany, closed a Securities Purchase Agreement (the “Purchase Agreement”) with Mast Hill, pursuant to which the Company issued Mast Hill a convertible promissory note in the principal amount of $233,000 (the “Note”), a five-year warrant to purchase up to 155,000,000 shares of common stock at a price of $per share (the “First Warrant”) and interesta warrant to purchase up to 100,000,000 shares of common stock at a price of $per share (the “Second Warrant”). The second warrant is $37,748 only exercisable upon an “Event of Default” as defined in the Note.
Using the fair value calculation, the relative fair value between the debt issued and $243, respectively.
NOTE 8 – COMMITMENTS
the warrants was calculated to determine the warrants recorded equity amount of $108,769, accounted for in additional paid in capital and debt discount to be amortized over the term of the loan.
On November 1st, 2017,January 13, 2023, the Company, entered intoclosed a lease agreementSecurities Purchase Agreement (the “Purchase Agreement”) with TCPMast Hill, pursuant to lease certain premises locatedwhich the Company issued Mast Hill a convertible promissory note in Floridathe principal amount of $347,000 (the “Note”), a five-year warrant to purchase up to 347,000,000 shares of common stock at a price of $ per share (the “First Warrant”) and a warrant to purchase up to 148,000,000 shares of common stock at a price of $ per share (the “Second Warrant”). The second warrant is only exercisable upon an “Event of Default” as defined in the Note.
Using the fair value calculation, the relative fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $126,066, accounted for in additional paid in capital and debt discount to be effective from November 1, 2017 to November 1, 2027. This 8,000 square feet premises will be used byamortized over the Company for plant and offices. Monthly rent of $7,500 is to be paid on the first of each month. No payment is due for the first four monthsterm of the lease. loan.
A $7,500 deposit is required and was loaned to the Company by TCP. The $7,500 has been added to the balance due under the line of credit with TCP. Per the termssummary of the leasestatus of the CompanyCompany’s outstanding stock options and changes during the period is required to maintain rent and general liability insurance. As of December 31, 2017, the Company is still in the process of acquiring a policy and is covered by the lessor until one is finalized.presented below
Schedule of warrant outstanding | ||||||||||||
Warrants | Warrants | Weighted Average Exercise Price | Aggregate Intrinsic Value | |||||||||
Warrants outstanding at June 30, 2022 | 1,950,000 | $ | 0.44 | — | ||||||||
Granted | $ | — | ||||||||||
Exercised | $ | — | ||||||||||
Expired | $ | — | ||||||||||
Warrants outstanding at June 30, 2023 | 951,950,000 | $ | 0.004 | — | ||||||||
Granted | $ | — | ||||||||||
Exercised | — | $ | — | |||||||||
Expired | — | $ | — | |||||||||
Warrants outstanding at December 31, 2023 | 951,950,000 | $0.003 | — | |||||||||
Warrants exercisable at December 31, 2023 | $ | $ |
Future minimum rental payments are as follows:
Years ending June 30, | ||||
2018 | $ | 30,000 | ||
2019 | 90,000 | |||
2020 | 90,000 | |||
2021 | 90,000 | |||
2022 | 90,000 | |||
Thereafter | 450,000 | |||
Total | $ | 840,000 |
Schedule of range of exercise prices | ||||||||||||||
Range of Exercise Prices | Number Outstanding December 31, 2023 | Weighted Average Remaining Contractual Life | Weighted Average Exercise Price | |||||||||||
$- | 951,950,000 | years | $ | 0.003 |
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NOTE 913 - SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10)ASC 855-10 management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued on January 26, 2018 and has determined that it does not have anyhas no material subsequent events to disclose in these unaudited consolidated financial statements.statements other than the following.
Subsequent to December 31, 2023, Mast Hill loaned the Company $5,760. The amount is to be applied to the Convertible Promissory note dated December 16, 2022.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our unaudited financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.
Forward Looking Statements
Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:
• | our future operating results; |
• | our business prospects; |
• | our contractual arrangements and relationships with third parties; |
• | the dependence of our future success on the general economy; |
• | our possible future financings; and |
• | the adequacy of our cash resources and working capital. |
These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.
Cautionary Statement:
Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, in future filings by the Company with the Securities and Exchange Commission, in the Company’s press releases and in oral statements made with the approval of an authorized executive officer that are not historical or current facts are “forward-looking statements.” These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. These risks and uncertainties are described in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022, as well as other filings the Company makes with the Securities and Exchange Commission. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made and are not predictions of actual future results. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Plan of Operations
The Company has acquired the ownership and rights to certain late developmental stage products, including the J4 Sport, J4 X and J4 Fitbelt. These products are wearable back compression devices, used to relax, warmup, loosen, or relax stiff & sore muscles. The therapeutic application of heat causes a change in temperature of the soft tissues which decreases joint stiffness and relieves inflammation.
We have recently successfully completed our first acquisition of “Sustainable Origins” which is an eco-friendly ESG company, that converts used cooking oil to reusable biodiesel. This acquisition is part of our ongoing strategic plan for future revenue and expansion. While our primary focus will always be revolving around the innovation of wearable technology, these projects will take time to market. We want to align ourselves with like-minded Entrepreneurs that will mesh well with our team and collective interest. Having the ability to acquire companies current operations to generate steady revenue streams, will also help aid in financing the production of “WarmUp” and other products we will develop.
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Genesys Industries is a diversified multi-industry manufacturer of complex metal components and products. We serve all general industrial markets such as Aerospace, Automotive, Construction, Commercial, Food Processing, Industrial, Maritime, Medical, Railroad, Oil and Gas, Packaging, Telecom, Textiles, Pulp Paper, Transportation and many more. We are a vertically integrated precision cnc manufacturing and fabrication company with core emphasis on product design, engineering and precision manufacturing of complex components and products.
Results of Operation for the Three Months Ended December 31, 20172023 Compared to the Three Months December 31, 2022
Revenues and 2016Cost of Revenue
Revenues
ForWe earned revenues of $7,756 during the three months ended December 31, 2017, we earned revenue of $1,357,2023, compared to $0$31,615 for the same period in 2022. Our cost of revenue was $14 during the three months ended December 31, 2023, compared to $20,760l for the same period in 2022.
Operating Expenses from Continuing Operations
Operating expenses from continuing operations for the three months ended December 31, 2016.
Operating Expenses
The Company incurred total operating2023 and 2022, consisted of general and administrative expenses of $18,877 during$13,558 and $80,254, respectively. During the three months ended December 31, 2017, compared to $5,643 in the prior period. In the current period our expenses have increased due to lease expense2023, we incurred $nil of $10,000 as well as additional advertising and marketing expense.
Net Loss
Net lossexpenses compared to $12,415 for the same period in 2022. We also had $6,860 of compensation expense for the three months ended December 31, 2017 was $18,4962023, compared to $5,643$165,208 for the same period in 2022. We incurred $4,659 in professional fees for the three months ended December 31, 2016. The increase2023, compared to $76,198 for the same period in 2022. Stock based compensation was $nil for the three months ended December 31, 2023, compared to $108,769 in 2022.
Net Loss from Continuing Operations
Our net loss is duefrom continuing operations for the three months ended December 31, 2023 was $17,335 compared to an increase in lease expense and other general and administrative costs. In addition, we incurred $243 of interest expense in$431,989 for the currentprior period.
Results of Operation for the Six Months Ended December 31, 20172023 Compared to the Six Months Ended December 31, 2022
Revenues and 2016Cost of Revenue
Revenues
ForWe earned revenues of $39,989 during the six months ended December 31, 2017, we earned revenue of $1,557,2023, compared to $1,357$60,598 for the same period in 2022. Our cost of revenue was $1,442 during the six months ended December 31, 2023, compared to $26,200 for the same period in 2022.
Operating Expenses from Continuing Operations
Operating expenses from continuing operations for the six months ended December 31, 2016.
Operating Expenses
The Company incurred total operating2023 and 2022, consisted of general and administrative expenses of $30,940 during$29,067 and $143,584, respectively. During the six months ended December 31, 2017, compared to $10,684 in the prior period. In the current period our expenses have increased due to lease expense2023, we incurred $nil of $10,000 as well as additional advertising and marketing expense.
Net Loss
Net lossexpenses compared to $29,517 for the same period in 2022. We also had $15,180 of compensation expense for the six months ended December 31, 2017 was $30,3592023, compared to $10,025$350,004 for the same period in 2022. We incurred $13,159 in professional fees for the six months ended December 31, 2016. The increase2023, compared to $159,140 for the same period in 2022. Stock based compensation was $nil for the six months ended December 31, 2023, compared to $297,444 in 2022.
Net Loss from Continuing Operations
Our net loss is duefrom continuing operations for the six months ended December 31, 2023 was $18,859 compared to an increase in lease expense and other general and administrative costs. In addition, we incurred $243 of interest expense in$945,291 for the currentprior period.
Liquidity and Capital Resources
As reflected in the accompanying financial statements, the Company has an accumulated deficit of $87,392$10,720,289 at December 31, 2017,2023, and had a net lossgain from continuing operations of $30,359 and net cash used in operating activities of $27,319$230,655 for the six months ended December 31, 2017. 2023.
We used $15,893 inFor the six months ended December 31, 2017,2023, we used $14,026 of cash in operating activities, compared to $559,522 for leasehold improvements.the six months ended December 31, 2022.
We used net cash of $nil in investing activities for the six months ended December 31, 2023 compared to $101,055 in 2022.
Net cash received from financing activities for the six months ended December 31, 20172023 was $32,558$15,240 compared to $18,700 for the six months ended December 31, 2016.
Currently, we expect to incur an estimated negative cash flow per month$416,180 provided by financing activities in the amountprior period. In the current period we received $446,280 from the issuance of approximately $2,500 when considering the anticipated marketing costs associated with offering our services for sale together with general administrative expenses, offset by any revenue earned.convertible debt.
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We believe that our principal difficulty in our inability to successfully implement our plan and attain profits has been the lack of available capital to commence, operate and expand our business. We believe we need a minimum of approximately $300,000 in additional working capital to be utilized for development and launching of our operations for as well as funding the business development efforts to identify, qualify and acquire new customers, with the balance for working capital and general and administrative expense. As of the date of this filing we have no other commitment from any investor or investment-banking firm to provide us with the necessary funding and there can be no assurances we will obtain such funding in the future. Failure to obtain this additional financing will have a material negative impact on our ability to generate profits in the future. To such end, our auditor has indicated in its report on our financial statements for the year ended June 30, 2017 that our lack of revenues raise substantial doubt about our ability to continue as a going concern.
Critical Accounting Estimates and Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 1 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.
We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled. Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.
Off-Balance Sheet Arrangements
We have not entered into 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 and would be considered material to investors.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable to smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, they concluded that our disclosure controls and procedures were effective for the quarterly period ended December 31, 2017.
2023.
In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.
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Changes in Internal Controls
Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended December 31, 20172023, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are not presently any material pending legal proceedings to which the Company is a party or as to which any of our property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINING SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS
Part I Exhibits
Part II Exhibits
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema Document |
101.CAL | XBRL Taxonomy Calculation Linkbase Document |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB | XBRL Taxonomy Label Linkbase Document |
101.PRE | XBRL Taxonomy Presentation Linkbase Document |
SIGNATURES
In accordance withPursuant to the requirements of the Securities Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Forza Innovations Inc. | |
Date: April 29, 2024 | /s/ Johnny Forzani |