UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended: June 30, 20212022

 

¨o 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: 000-52140

 

Imperalis Holding Corp.

(Exact name of registrant as specified in its charter)

Nevada20-5648820
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)(I.R.S. Employer Identification No.Number)

11411 Southern Highlands Pkwy, Suite 240, Las Vegas, NV89141(949)444-5464
(Address of principal executive offices)(Zip Code)(Registrant’s telephone number, including area code)

 

30 N Gould Street, Suite 11023, Sheridan, WY82801

(Address of principal executive offices, Zip Code)

(888)662-8444

(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 classTrading Symbol(s)Name of each exchange on which registered
N/AN/AN/A

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ☐o

 

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted 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 such files). Yes ☒x No ☐o

 

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” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

☐o Large accelerated Filer☐o Accelerated Filer
☒x Non-accelerated Filer☒x Smaller reporting company
 ☐x 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. o

 

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

 

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 143,037,383161,704,695 shares of common stock as of September 14, 2021.August 1, 2022.

 

 

  
Table of Contents

TABLE OF CONTENTS

 

  Page
 PART I – FINANCIAL INFORMATION 
   
Item 1.Condensed Consolidated Financial Statements (Unaudited)3
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations411
Item 3.Quantitative and Qualitative Disclosures About Market Risk614
Item 4.Controls and Procedures615
   
 PART II – OTHER INFORMATION 
  
Item 1.Legal Proceedings716
Item 1A.Risk Factors716
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds716
Item 3.Defaults Upon Senior Securities716
Item 4.Mine Safety Disclosures716
Item 5.Other Information716
Item 6.Exhibits716

2
Table of Contents

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

Our financial statements included in this Form 10-Q are as follows:

Page
F-1Condensed Consolidated Balance Sheets as June 30, 2021 and December 31, 2020 (unaudited);
F-2Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 (unaudited);
F-3Condensed Consolidated Statements of Changes in Stockholders' Deficit for the six months ended June 30, 2021 and 2020 (unaudited);
F-4Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited);
F-5Notes to Unaudited Condensed Financial Statements.

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended June 30, 2021 are not necessarily indicative of the results that can be expected for the full year.

3
Table of Contents

Imperalis Holding Corp.

Condensed Consolidated Balance Sheets

(Unaudited)

  June 30, 2021 December 31, 2020
ASSETS       
Current Assets       
Cash $15,963  $29,006
Inventory  10,926   10,926
Total Current Assets  26,889   39,932
        
Other Assets:       
Property and Equipment - net $1,748   2,323
Intangible Assets  7,000   7,000
Total Other Assets  8,748   9,323
TOTAL ASSETS $35,637   $49,255
        
LIABILITIES AND STOCKHOLDERS' DEFICIT       
LIABILITIES       
Current Liabilities       
Accrued Expenses $7,716  $9,078
Accounts Payable 11,865  —  
Convertible Notes Payable, net  58,625   78,000
Shareholder Loan  7,729   14,785
Total Current Liabilities  85,935   101,863
        
TOTAL LIABILITIES  85,935   101,863
        
        
STOCKHOLDERS' DEFICIT       
Preferred E Stock       
Preferred E par value $0.001 a share; 20,000 shares authorized; 0 shares issued and outstanding on June 30, 2021 and December 31, 2020  —    —  
Common Stock       
Common Stock: par value $0.001 a share; 200,000,000 shares authorized: 143,037,383 and 133,702,938 shares issued and outstanding on June 30, 2021 and December 31, 2020  143,036   133,702
Additional Paid-in Capital  6,015,011   5,932,373
Accumulated Deficit  (6,208,345)  (6,118,683)
Total Stockholders' Deficit  (50,298)  (52,608)
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT $35,637   $49,255

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements

F-1
Table of Contents

 

Imperalis Holding Corp.

Condensed Consolidated Statements of OperationsBalance Sheets
 

(Unaudited)

                
   Three Months Ended  Six Months Ended
  June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
         
Revenues  $—    $ 30  $ —    $ 30
Operating Expenses               
                
Rent  1,428   1,428   2,856   2,856
General & Administration  13,994   1,579   35,548   2,729
Depreciation  —     —     575   —  
Owners Compensation  —     —     25,000   —  
Total Operating Expenses  15,422   3,007   63,979   5,585
Loss from Operations  (15,422)  (2,977)  (63,979)  (5,555)
                
Other Income (Expenses)               
Interest Income  —     7   2   15
Gain on forgiveness of debt  —     10,000   —    10,000
Interest Expense  (13,130)  (19,393)   (25,685)  (38,893)
Total Other Income (Expenses)  (13,130)  (9,386)   (25,683)  (28,878)
                
Loss Before Income Taxes  (28,552)  (12,363)   (89,662)  (34,433)
                
Provision for Income Taxes  —     —     —     —  
                
Net Loss $ (28,552) $ (12,363)  $ (89,662) $ (34,433)
                
                
Net loss per share-basic and diluted $ (0.00)  $ (0.00)  $ (0.00) $ (0.00)
                
Weighted average shares outstanding basic and diluted  143,036,383   134,702,938   141,422,091   134,702,938

  June 30,
2022		  December 31,
2021		 
  (Unaudited)    
Assets      
Current assets:      
Cash and cash equivalents $3,859  $15,009 
Cash and cash equivalents held in Trust Account  -   6,769 
Other receivables  11,150   - 
Total current assets  15,009   21,778 
         
Total assets $15,009  $21,778 
         
Liabilities and stockholders' deficit        
Current liabilities:        
Accounts payable $-  $4,225 
Accounts payable - related party  14,777   - 
Accrued interest  6,430   3,676 
Accrued interest - related party  5,528   451 
Convertible notes payable, net  45,000   42,083 
Total current liabilities  71,735   50,435 
         
Convertible notes payable, net - related party $101,529  $101,529 
Total liabilities  173,264   151,964 
         
Commitments and contingencies  -   - 
Stockholders' deficit:        

Preferred E Stock, par value $0.001 a share; 20,000 shares authorized: 0

shares issued and outstanding

  -   - 
         

Common Stock, par value $0.001 a share; 200,000,000 shares
authorized: 161,704,695 shares issued and outstanding at June 30, 2022 and
December 31, 2021

  161,703   161,703 
Additional paid-in capital  6,034,941   6,034,941 
Accumulated deficit  (6,354,899)  (6,326,830)
Total stockholders' deficit  (158,255)  (130,186)
         
Total liabilities and stockholders' deficit $15,009  $21,778 

 

The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements

 

F-23
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Imperalis Holding Corp.Corp

Condensed Consolidated StatementStatements of Changes in Stockholders’ Equity (Deficit)Operations

(Unaudited)

                    
  Common Stock      
                    SharesAmount Additional Paid-In Capital Accumulated Deficit Total Stockholders' Deficit
           
Balance at December 31, 2020  133,702,938  $133,702  $5,932,373  $(6,118,683) $(52,608)
                    
Common stock issued for conversion of convertible note and accrued interest  9,284,445  9,284  37,138  —     46,422
                    
Beneficial conversion feature  —     —     45,000   —     45,000
                    
Net loss for period  —    —     —    $(61,110) $(61,110)
                    
Balance at  March 31, 2021 142,987,383  $142,986  $6,014,511  $(6,179,793) $(22,296)
                    
Common stock issued for services  50,000   50   500   —     550
                    
Net loss for period  —     —     —    $(28,552) $(28,552)
                    
Balance at June 30, 2021 

 

143,037,383  $143,036  $6,015,011  $(6,208,345) $(50,298)

 

 

                    
   Common Stock      
  Shares Amount Additional Paid-In  Capital Accumulated Deficit Total Stockholders' Deficit
                    
Balance at December 31, 2019  133,702,938  $133,702  $5,932,373  $(6,072,405) $(6,330)
                    
Net loss for period  —     —     —     (22,070)  (22,070)
                    
Balance at March 31, 2020 $133,702,938  $133,702  $5,932,373  $(6,094,475) $(28,400)
                    
Net loss for period  —     —     —     (12,363)  (12,363)
                    
Balance at June 30, 2020 $133,702,938  $133,702  $5,932,373  $(6,106,838)  $(40,763)

                 
  Three Months ended
June 30,		  Six Months ended
June 30,		 
             
  2022  2021  2022  2021 
Revenues $-  $-  $-  $- 
Cost of sales  -   -   -   - 
Gross profit  -   -   -   - 
Operating expenses:                
Rent  -   1,428   -   2,856 
General and administration  7,677   13,994   17,322   35,548 
Depreciation  -   -   -   575 
Owner’s compensation  -   -   -   25,000 
Total operating expenses  7,677   15,422   17,322   63,979 
                 
Operations loss  (7,677)  (15,422)  (17,322)  (63,979)
                 
Other income (expense)                
Interest income  -   -   -   2 
Amortization of debt discount  -   

(11,250

)  (2,917)  (20,625)
Interest expense - related party  (2,538)  -   (5,076)  - 
Interest expense  (1,125)  (1,880)  (2,754)  (5,060)
Total other income (expense)  

(3,663

)  

(13,130

)  

(10,747

)  

(25,683

)
                 
Loss before income taxes $(11,340) $(28,552) $(28,069) $(89,662)
Provision for income taxes  -   -   -   - 
                 
Net loss $(11,340) $(28,552) $(28,069) $(89,662)
                 
Net loss per share-basis and diluted $0.00  $0.00  $0.00  $0.00 
                 

Weighted average shares outstanding

basic and diluted

  161,704,695   143,036,383   161,704,695   141,422,091 

 

The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements

 

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Imperalis Holding Corp.

Condensed Consolidated StatementStatements of Cash FlowsChanges in Stockholders’ Deficit

(Unaudited)

        
  June 30, 2021 June 30, 2020
OPERATING ACTIVITIES       
Net loss $(89,662) $ (34,433)
        
Adjustments to reconcile net loss to net cash used in operating activities       
Depreciation  575   —   
Amortization of debt discount  20,625   37,333
Common stock issued for services  550   —  
Gain on settlement of debt  —      (10,000)
        
Changes in operating assets and liabilities       
Increase in accrued expenses  5,060   1,560
Increase in accounts payable  11,865   —  
Net Cash Used in Operating Activities  (50,987)  (5,450)
        
INVESTING ACTIVITIES       
Purchase of property and equipment  —      (850)
Net Cash Used in Investing Activities  —      (850)
        
FINANCING ACTIVITIES       
Proceeds from convertible notes payable  45,000   —  
Repayment on notes payable  —     (34,000)
Proceed from shareholder loan  —     24,879
Repayments on shareholder loan  (7,056)  —  
Net Cash Provided by Financing Activities  37,944   (9,121)
        
Net Decrease in Cash  (13,043)  (15,511)
Cash at Beginning of Period  29,006   60,800
Cash at End of Period $15,963  $45,289
        
        
        
Supplemental cash flow information       
Cash paid for interest  $—    $ —  
Cash paid for income taxes  $—    $ —  
        
Non-cash investing and financing activities       
Common Stock issued for conversion of convertible note payable and accrued interest  $46,422    $—  

                 
  Common Stock          
  Shares  Amount  Additional
Paid-In Capital		  

Accumulated

Deficit

  

Total

Stockholders'

Deficit

 
                
Balance at December 31, 2021  161,704,695  $161,703  $6,034,941  $(6,326,830) $(130,186)
                     
Common stock issued for conversion of convertible note and accrued interest                    
Common stock issued for conversion of convertible note and accrued interest, (in shares)                    
Beneficial conversion feature                    
Common stock issued for services                    
Common stock issued for services (in shares)                    
Net loss for period  -   -   -   (16,729)  (16,729)
                     
Balance at March 31, 2022  161,704,695  $161,703  $6,034,941  $(6,343,559) $(146,915)
                     
Net loss for period  -   -   -   (11,340)  (11,340)
                     
Balance at June 30, 2022  161,704,695  $161,703  $6,034,941  $(6,354,899) $(158,255)

                  
  Common Stock          
  Shares  Amount  Additional
Paid-In Capital		  

Accumulated

Deficit

  

Total

Stockholders'

Deficit

 
                
Balance at December 31, 2020  133,702,938  $133,702  $5,932,373  $(6,118,683) $(52,608)
                     

Common stock issued for

conversion of convertible note and

accrued interest

  9,284,445   9,284   37,138   -   46,422 
                     
Beneficial conversion feature  -   -   45,000   -   45,000 
                     
Net loss for period  -   -   -   (61,110)  (61,110)
                     
Balance at March 31, 2021  142,987,383  $142,986  $6,014,511  $(6,179,793) $(22,296)
                     
Common stock issued for services  50,000   50   500   -   550 
                     
Net loss for period  -   -   -  $(28,552) $(28,552)
                     
Balance at June 30, 2021  143,037,383  $143,036  $6,015,011  $(6,208,345) $(50,298)

The accompanying notes are an integral part of thethese unaudited condensed consolidated financial statements

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Imperalis Holding Corp.

Condensed Consolidated Statement of Cash Flows

(Unaudited)

         
  For the Six Months Ended June 30, 
  2022  2021 
Cash flows from operating activities:      
Net loss $(28,069) $(89,662)

Adjustments to reconcile net loss to net cash used in operating activities:

        
Depreciation  -   575 
Amortization of debt discount  2,917   20,625 
Common stock issued for services      550 
Changes in operating assets and liabilities        
Increase in other receivables  (11,150)  - 
Increase in accrued interest - related party  5,076   - 
Increase in accrued interest  2,755   5,060 
Increase in accounts payable - related party  14,777   - 
Decrease in accounts payable  (4,225)  11,865 
Net cash used in operating activities  (17,919)  (50,987)
         
Cash flows from financing activities:        
Proceeds from convertible notes payable  -   45,000 
Repayment on stockholder loan  -   (7,056)
Net cash provided by financing activities:  -   37,944 
       - 
Net decrease in cash and cash equivalents  (17,919)  (13,043)
Cash at beginning of period  21,778   29,006 
Cash at end of period $3,859  $15,963 
         
Supplemental cash flow information        
Cash paid for interest $-  $- 
Cash paid for income taxes $-  $- 
         
Non-cash investing and financing activities        

Common stock issued for conversion of convertible note payable and accrued interest

 $-  $46,422 

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

6

Imperalis Holding Corp.

Notes to Unaudited Condensed Consolidated Financial Statements

Three and Six Months Ended June 30, 20212022 and 2020 2021

NOTENote 1 – Description of Business, Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

Imperalis Holding Corp. (the “Company” or “IMHC”), a Nevada corporation formed on April 5, 2005, is a Holdingholding company headquartered in Sheridan, Wyoming.at 11411 Southern Highlands Pkwy, Suite 240, Las Vegas, NV 89141. The Company seeks to acquire businesses with high growth potential in diverse industries to multiply rates of return through synergism and consolidating management and accounting information systems.

 

with the acquisition of CannaCure, as discussed below, the Company is currently developing a lineup of personal care products containing Cannabidiol (CBD). The Company offers CBD-based lotions and oils to the consumer markets. the productsalso holds three subsidiaries whose operations are all-natural, cruelty-free products that aim to provide an alternative to synthetic personal care products.

Recapitalization and Reorganization

On April 29, 2019, we closed a Share Exchange Agreement (the “Agreement”) withcurrently dormant, CannaCure Sciences, Inc., a Wyoming corporation, (“CannaCure”). Under the Agreement, we acquired all of the issuedThe Crypto Currency Mining Company, a Wyoming corporation, and outstanding capital stock of CannaCure in exchange for issuance to the former shareholders of CannaCure, onDollar Shots Club, Inc., a pro rata basis, of 60,000,000 shares of newly issued common stock. Our President, CEO, and majority shareholder, Vincent Andreula, is also the President of CannaCure and was a 50% shareholder of CannaCure prior to the acquisition. The acquisition of CannaCure was not accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. The transaction was accounted for as common control transaction due to the related party and common control relationships held between Mr. Andreula, the Company and CannaCure. The assets and liabilities of CannaCure transferred over to the Company at their historical values which were insignificant.Nevada corporation.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited financial statements for the year ended December 31, 20202021 included with our Form 10-12G10-K filed with the SEC on April 13, 2021.7, 2022.

In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements for the interim period have been included.

Basis of Consolidation

The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses, and cash flows of the Imperalis Holding Corp., CannaCure Sciences Inc., The Crypto Currency Mining Company and Dollar Shots Club, Inc. The operations of CannaCure Sciences Inc., The Crypto Currency Mining Company and Dollar Shots Club, Inc. are currently dormant. All intercompany accounts and transactions have been eliminated in consolidation. The results of subsidiaries acquired during the respective periods are included in the consolidated statements of operations from the effective date of the acquisition.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results could differ from those estimates. Significant estimates inherent in the preparation of the accompanying consolidated financial statements include accounting for depreciation and amortization, intangible assets, business combinations, equity transactions, and contingencies.

Cash

The Company considers all highly liquid accounts with an original maturity date of three months or less to be cash equivalents. The Company maintains bank accounts in USU.S. banks which, at times, may exceed federally insured limits. The Company has not experienced any losses on such accounts and believes it is not exposed to any significant risk on bank deposit accounts.

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Net Income (Loss) per Share

In accordance with ASCAccounting Standards Codification (“ASC”) 260, Earnings Per Share, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common stock outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock had been issued and if the additional shares of common stock were dilutive. The Company hashad 18,143,200 20,991,730and 16,750,000 18,143,200of potential common stock equivalents outstanding as of June 30, 2022 and 2021, and 2020respectively, related to convertible notes payable and accrued interest, respectively.interest.

Stock-Based Compensation

The Company accounts for stock-based transactions in which the Company receives services from employees, non-employees, directors or others in exchange for equity instruments based on the fair value of the award at the grant date in accordance with ASC 718 – Compensation-Stock Compensation. Compensation.

7
 

Income Taxes

The Company has adopted ASC 740, Income Taxes(“ASC 740”), which requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed on the straight-line method. The depreciation and amortization methods are designed to amortize the cost of the assets over their estimated useful lives, in years, of the respective assets as follows:

Equipment5-7 years

Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the sale of its Retail products by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

Through CannaCure, we are developing a lineup of personal care products containing Cannabidiol (CBD). We currently offer CBD-based lotions and oils to the consumer markets. Our products are all-natural, cruelty-free products that aim to provide an alternative to synthetic personal care products.

The Company receives orders for its retail products directly from its customers. The retail products are all-natural skin care, hair care and wellness products. We have multiple body butters including body butters for eczema, hair regrowth oils for men and women and multiple body scrubs with various salts, sugars, oils and butters. Revenues are recognized based on the agreed upon sales or transaction price with the customer when control of the promised goods are transferred to the customer. The transfer of goods to the customer and satisfaction of the Company’s performance obligation will occur either at the time when products are shipped or when the products arrive and are received by the customer. No discounts were offered by the Company. The Company does not provide an estimate for returns as there is no anticipation for any returns in the normal course of business.

Impairment of Long-lived Assets

The Company analyzes its long-lived assets for potential impairment. Impairment losses are recorded on long-lived assets when indicators of impairment are present and undiscounted cash flows estimated to be held and used are adjusted to their estimated fair value, less estimated selling expenses. During the six months ended June 30, 20212022 and 2020,2021, the Company recognized 0 impairment of fixed assets and intangibles.

New Accounting Pronouncements

Certain new accounting pronouncements that have been issued are not expected to have a material effect on the Company’s financial statements.

Inventory

Inventory is valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. Inventory on the balance sheet consists of various CBD oils, body scrubs and packaging.

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Reclassification

Certain account balances from prior periods have been reclassified in these financial statements to conform to current period classifications.

NOTENote 2 – EquityOther Receivable

Other receivable of $11,150 at June 30, 2022 represented amounts due from Vincent Andreula, the former Chief Executive Officer of the Company in accordance with the sales purchase agreement.

Note 3 – Equity

Preferred Stock

The Company has authorized the issuance of up to 20,000shares of $$0.001par value Series E Preferred Stock. The Series E Preferred Stock is preferred as to dividends and liquidation over common stock, has a liquidation value of $$1,000per share, and has a dividend rate of 12% 12% of liquidation value per year. As of June 30, 20212022 and December 31, 2020,2021, there are 0were no Series E Preferred Stock issued or outstanding.

Common Stock

On January 13, 2021 and February 22, 2021, the Company issued a totalan aggregate of 9,284,445shares of common stock upon conversion of an outstanding convertible note with a principal balance of $$40,000 and $6,422 and $6,422of accrued interest. The Company did not engage in any general solicitation or advertising in connection with the issuance of the note, and the noteholder was an accredited investor within the meaning of Rule 501. The issuance of these shares was exempt from registration pursuant to Rule 506 under Regulation D.

On April 1, 2021, the Company issued 50,000 shares of common stock as payment for professional services rendered. Based upon the fair value of the shares issued, wethe Company recorded a general and administration expense of $$550. The Company did not engage in any general solicitation or advertising in connection with the issuance of these shares. The issuance of these shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act. 

NOTE 3Note 4 – Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred recurring net losses, has negative working capital and operations have not provided cash flows. Additionally, the Company does not currently have sufficientany revenue producing operations to cover its operating expenses and meet its current obligations. In view of these matters, there is substantial doubt about the Company’s ability to continue as a going concern. The Company intends to finance its future development activities and its working capital needs largely through the sale of equity securities with some additional funding from other sources, including term notes until such time as funds provided by operations are sufficient to fund working capital requirements. The condensed consolidated financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Note 5 – NOTE 4Accounts Payable – Related Party Transactions

IMHC is a wholly owned subsidiary of BitNile, Inc and BitNile, Inc is a wholly owned subsidiary of BitNile Holdings, Inc. During the six months period ended June 30, 2020, the Company’s officer, Vincent Andreula, loaned2022, BitNile Holdings, Inc. made vendor payments on behalf of IMHC amounting to the Company $34,000 and $9,121 was repaid. The $34,000 was used to pay and settle $44,000 of outstanding notes payable with non-related parties (see Note 5) and the $10,000 was forgiven by the note holder and recorded as a gain on forgiveness of debt.$14,777.

During the six months ending June 30, 2021, the Company made stockholder repayments of $$7,056. As of June 30, 2021 and December 31, 2020,2021, the balance due to the Company’s officers was $$7,729 niland $14,785, respectively.. These loans arewere unsecured, non-interest bearing and due on demand.

NOTE 5Note 6 – Notes Payable and Convertible Notes Payable

Convertible Notes Payable – Related Party

On August 29, 2018,Digital Power Lending, LLC (“DPL”) is a wholly owned subsidiary of Ault Alliance, Inc. Ault Alliance, Inc. and the Company received $4,500 loan from Wexford Industries, Ltd. The loan had a one year term and an interest rateare subsidiaries of 8% per annum. The Note was retired on June 11, 2020BitNile Holdings, Inc. Darren Magot, who serves as partthe chief executive officer of the settlement discussed below.Company, is also the chief executive officer of Ault Alliance, Inc. As a result, DPL is deemed a related party.

On October 1, 2018,December 15, 2021, the Company received $15,000 loan from Wexford Industries, Ltd. The loan had a one year term andentered into an interest rate of 8% per annum. The Note was retired on June 11, 2020 as part of the settlement discussed below.

On October 2, 2018,exchange agreement with DPL, pursuant to which the Company received $2,500 loan from Wexford Industries, Ltd. The loan hadissued a one year term and an interest rateconvertible note  to DPL, in the principal amount of $8%101,529 per annum. The Note was retired on June 11, 2020 as part of the settlement discussed below.

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On October 12, 2018, the Company received $10,000 loan from Blackridge Holdings, Inc. The loan had a one year term and an interest rate of 8% per annum. The Note was retired on June 11, 2020 as part of the settlement discussed below.

On November 20, 2018, the Company received $12,000 loan from Wexford Industries, Ltd. The loan had a one year term and an interest rate of 8% per annum. The Note was retired on June 11, 2020 as part of the settlement discussed below.

On June 11, 2020, each of the outstanding loans due to Wexford Industries, Ltd. and Blackridge Holdings, Inc. were settled and paid in full, in exchange for the promissory notes  issued to DPL in the aggregate principal amount of $100,000, which promissory notes had accrued interest of $1,529 as of the closing date. The convertible note accrues interest at 10% per annum, is due on December 15, 2023, and the principal, together with any accrued but unpaid interest on the amount of principal, is convertible into shares of the Company’s common stock at DPL’s option at a single paymentconversion price of $0.01 per share.

During the six months period ended June 30, 2022 and 2021, interest expense – related party amounted to $34,0005,076 and $nil, respectively. At both June 30, 2022 and December 31, 2021, the total outstanding principal balance on the convertible notes payable – related party was $101,529.

As of June 30, 20212022 and December 31, 2020,2021, the outstanding principal balance andconvertible notes payable – related party had accrued interest on the above mentioned notes payable was of $$05,528 and $$0451, respectively.

Convertible Notes Payable

On May 22, 2019, the Company received a $20,000 loan from Intermarket Associates, LLC. The Loan had a one yearterm and interest at a rate of 10% per annum. Principal and interest payments will accrue until conversion of Promissory Note. This note is convertible to common stock at a price of $0.005 per share. The convertible note payable resulted in a beneficial conversion feature of $20,000 which was recorded as a debt discount. The discount is being amortized through the maturity dates. The note matured on May 22, 2020and is currently in default.

On July 5, 2019, the Company received a $40,000 loan from GCEF Opportunity Fund, LLC. The Loan had a one yearterm and interest at a rate of 10% per annum. Principal and interest payments will accrue until conversion of Promissory Note. The convertible note payable resulted in a beneficial conversion feature of $40,000 which was recorded as a debt discount. The discount is being amortized through the maturity dates. On January 13,February 3, 2021 and February 22, 2021, this note and $6,422 of accrued interest were converted into a total 9,284,445 shares of common stock (see Note 2).

On October 18, 2019, the Company received an $18,000 loan from Intermarket Associates, LLC. The Loan had a one yearterm and interest at a rate of 10% per annum. Principal and interest payments will accrue until conversion of Promissory Note. The convertible note payable resulted in a beneficial conversion feature of $18,000 which was recorded as a debt discount. The discount is being amortized through the maturity dates. This note is convertible to common stock at a price of $0.005 per share. The note matured on October 18, 2020and is currently in default.

During the six months ended June 30,January 14, 2021, the Company received $45,000 $25,000 and $20,000, respectively, of financing from an investorOpportunity Fund, LLC under a Convertible Promissory Note (the “Note”). The Note allows for advances up to maximum amount of $75,000,$75,000, bears interest at eight percent (8%(8%) per annum, and iswas due one yearfrom the date of issue. An Amendment to the Note dated May 11, 2022 but effective as of January 14, 2022 extended the maturity to January 14, 2024. The Note is convertible at a conversion price of $0.005 $0.005 per share, with conversions limited such that no conversions will be allowed to the extent that, following such conversion, the noteholder would become the beneficial owner of more than 9.99% of the Company’s common stock.stock. The convertible note payable resulted in a beneficial conversion feature of $45,000 $45,000, which was recorded as a debt discount. The discount is beingwas amortized through the original maturity date.

On October 18, 2019, the Company received an $18,000 loan from Intermarket Associates, LLC. The Loan had a one year term and interest at a rate of 10% per annum. Principal and interest payments accrued until repayment or conversion of the convertible note. The convertible note payable resulted in a beneficial conversion feature of $18,000, which was recorded as a debt discount. The discount was amortized through the maturity dates.date. This note was convertible to common stock at a price of $0.005 per share. The note matured on October 18, 2020 and was settled on December 7, 2021.

On July 5, 2019, the Company received a $40,000 loan from GCEF Opportunity Fund, LLC. The Loan had a one year term and interest at a rate of 10% per annum. and interest payments accrued until conversion of the convertible note. The convertible note payable resulted in a beneficial conversion feature of $40,000, which was principal recorded as a debt discount. The discount was amortized through the maturity date. On January 13, 2021 and February 22, 2021, this note and $6,422 of accrued interest were converted into an aggregate of 9,284,445 shares of common stock (see Note 2).

On May 22, 2019, the Company received a $20,000 loan from Intermarket Associates, LLC. The Loan had a one year term and interest at a rate of 10% per annum. Principal and interest payments accrued until repayment or conversion of the promissory note. This note was convertible to common stock at a price of $0.005 per share. The convertible note payable resulted in a beneficial conversion feature of $20,000, which was recorded as a debt discount. The discount was amortized through the maturity date. The note matured on May 22, 2020 and was settled on December 7, 2021.

During the six monthsmonth period ended June 30, 20212022 and 2020, amortization expense of $20,625 and $37,333 was amortized to2021, interest expense amounted to $2,754 and $5,060, respectively. During the six month period ended June 30, 2022 and 2021, amortization of debt discount amounted to $2,917 and $20,625, respectively. As of June 30, 2022 and December 31, 2021, the total outstanding principal balance on the convertible notes payable was $83,000 $45,000 and $42,083, respectively, and the remaining unamortized debt discount was $24,375. As of December 31, 2020, the total outstanding principal balance on the convertible notes payable was $78,000 $nil and the remaining unamortized debt discount was $0.$2,917, respectively. As of June 30, 20212022 and December 31, 2020,2021, the convertible notes payable had accrued interest of $7,716 $6,430 and $9,078,$3,676, respectively.

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NOTE 6Note 7 – Subsequent Events

In accordance with ASC 855, “SubsequentSubsequent Events”, the Company has analyzed its operations subsequent to June 30, 2021 through2022 to the date whenthese financial statements were issued and has there are no significantdetermined that it does not have any material subsequent events that require disclosure.to disclose in these financial statements.

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ITEM 2. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

OverviewPlan of Operations

Imperalis Holding Corp. (the “Company” or “IMHC”)The Company has no operations from a continuing business other than the expenditures related to running the Company and has no revenue from continuing operations as of the date of this Quarterly Report.

On March 20, 2022, BitNile Holdings, Inc. (NYSE American: NILE), acts as a diversified holding company for(“BitNile”) and its subsidiary TurnOnGreen, Inc., an electronic vehicle (“EV”) charging and power solutions company (“TurnOnGreen”), entered into a securities purchase agreement (the “SPA”) with Imperalis, whereby TurnOnGreen will, upon closing, become a subsidiary of Imperalis (the “Acquisition”). Upon completion of the Acquisition, which is contingent upon the completion of an audit of TurnOnGreen and each party’s satisfaction or waiver of certain customary closing conditions set forth in the SPA, Imperalis will change its name to TurnOnGreen and, through an upstream merger whereby the current TurnOnGreen shall cease to exist, have two operating subsidiary, CannaCure Sciences,subsidiaries, TOG Technologies Inc. (“CannaCure”). Through CannaCure, we are developing a lineupand Digital Power Corporation. Promptly following the closing of personal care products containing Cannabidiol (CBD). We currently offer CBD-based lotions and oilsthe Acquisition, Imperalis will dissolve its three dormant subsidiaries. Subsequent to the consumer markets. Our products are all-natural, cruelty-free productsAcquisition, should it close, BitNile will assist TurnOnGreen in pursuing an uplisting to the Nasdaq Capital Market, subject to Nasdaq’s seasoning rules and other criteria for listing. BitNile anticipates that aimstockholders of BitNile will in due course receive a dividend of securities of TurnOnGreen. BitNile expects to providedistribute to BitNile stockholders approximately 140 million of its common shares and an alternativeequal number of warrants to synthetic personal care products. We hold two additional subsidiaries whose operations are currently dormant, The Crypto Currency Mining Company,purchase such shares of TurnOnGreen at the time of the record date to be set therefor, subject to regulatory approval and compliance with US federal securities laws. Upon the closing of the Acquisition, TurnOnGreen will continue to be led by its Chief Executive Officer, Amos Kohn and its Chief Revenue Officer, Marcus Charuvastra.

Management intends, should the Acquisition not close, to explore and identify business opportunities within the U.S., including a Wyoming Corporation, and Dollar Shots Club, Inc., a Nevada corporation.

Since ourpotential acquisition of CannaCure, we have been focused on identifying relationships and pursuing opportunities to developan operating entity through a business in developing, marketing and selling CBD-based personal care and cosmetic products. CBD is derived from industrial hemp. Industrial hemp is defined as plants with less than 0.3% of the psychoactive compound THC found in cannabis plants. High quality raw materials made from hemp are essential to produce the isolates and distillates used to produce CBD products.reverse merger, asset purchase, or similar transaction. Our Chief Executive Officer has a degree of experience in business consulting and reverse mergers, though no assurances can be given that he can identify and implement a viable business strategy or that any such strategy will primarily oversee productresult in revenues or profits. Our ability to effectively identify, develop and implement a viable plan for our business may be hindered by risks and uncertainties which are beyond our control, including without limitation, the continued negative effects of the coronavirus pandemic on the U.S. and global economies.

We do not currently engage in any business activities that provide revenue or cash flow. During the next 12-month period we anticipate incurring costs in connection with the Acquisition or, should the Acquisition not be consummated, in investigating, evaluating, negotiating and consummating the potential acquisition of a suitable target company, as well as filing all requisite Securities and Exchange Commission (“SEC") reports.

Given our limited capital resources, we may consider an acquisition of an entity that has recently commenced operations, is a developing company or is otherwise in need of additional funds for the development manufacturing, testing, salesof new products or services or expansion into new markets, or is an established business experiencing financial or operating difficulties and marketingis in need of additional capital. Alternatively, a transaction may involve the acquisition of, or merger with, an entity that desires access to the U.S. capital markets.

Any target business that is selected may be financially unstable or in the early stages of development. In such event, we expect to be subject to numerous risks inherent in the business and operations of a financially unstable or early-stage entity. In addition, we may effect an acquisition with an entity in an industry characterized by a high level of risk or in which our management has limited experience, and, though our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.

Our management anticipates that we will likely only be able to effect one acquisition due to our limited capital. This lack of diversification will likely pose a substantial risk in investing in the Company for the indefinite future because it will not permit us to offset potential losses from one venture or operating territory against gains from another. The risks we face will likely be heightened to the extent we acquire a business operating in a single industry or geographical region.

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Based upon our current operations, we do not have sufficient working capital to fund our operations over the next 12 months. If we are able to close a reverse merger, it is likely we will need capital as a condition of closing that acquisition. Because of the uncertainties, we cannot be certain as to how much capital we need to raise or the type of securities we will be required to issue. In connection with a reverse merger, we will be required to issue a controlling block of our CBD-based health and cosmetic products. The Company has asecurities to the target’s stockholders which will be very little prior experiencedilutive. Additional issuances of equity or convertible debt securities will result in this rapidly evolving segment.

We seekdilution to our current stockholders. Further, such securities might have rights, preferences, or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of an emerging worldwide trend to utilize the production of industrial hempprospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

We anticipate that we will incur operating losses in consumer products. Hemp is being used today in cosmetics and nutritional supplements where we intend to focus our efforts. The market for hemp-derived products is expected to increase substantially over the next five years,12 months, principally costs related to operating any target company that we may acquire and filing reports with the SEC. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. Such risks for us include, but are not limited to, an evolving and unpredictable business model, recognition of revenue sources, and the management of growth. To address these risks, we are endeavoringmust, among other things, develop, implement, and successfully execute our business and marketing strategy, respond to prepare the Company tocompetitive developments, and attract, retain, and motivate qualified personnel. There can be positioned as a significant player in the industry. We expect to realize revenue through our efforts, if successful, to sell wholesale and retail finished products to third parties. However, as we are in a start-up phase in a new business venture in a rapidly evolving industry, and many of our costs and challenges are new and unknown. In order to fund our activities,no assurance that we will needbe successful in addressing such risks, and the failure to raise additional capital either throughdo so could have a material adverse effect on our business prospects, financial condition, and results of operations.

Results of Operations

For the issuance of equity and/Three Months Ended June 30, 2022 and 2021

  June 30, 2022  June 30, 2021  Movement
($)		  Movement
(%)		 
             
Revenues -  -  -  - 
Cost of sales -  -  -  - 
Gross profit  -   -   -   - 
                 
Operating expenses                
Rent  -   1,428   (1,428)  (100%)
General and administration  7,677   13,994   (6,317)  (45%)
Depreciation  -   -   -   - 
Owner’s compensation  -   -   -   - 
Total operating expenses  7,677   15,422   (7,745)  (50%)
                 
Net loss from operations  (7,677)  (15,422)  7,745   (50%)
                 
Interest income  -   -   -   - 
Amortization of debt discount  -   

(11,250

)  

11,250

   

(100

 %)
Interest expense - related party  (2,538)  -   (2,538)  - 
Interest expense  (1,125)  

(1,180

)  

755

   (40%)
                 
Net loss before taxes  (11,340)  (28,552)  17,212   (60%)
Provision for income taxes  -   -   -   - 
                 
Net loss  (11,340)  (28,552)  17,212   (60%)

Revenue and Gross Profit

We had no revenue or the issuance of debt. In the event we are unsuccessful in raising sufficient additional capital to fund our efforts, we may need to curtail, abandon or delay our plans to enter into this segment.

Expected Changes in Number of Employees, Plant, and Equipment

We do not currently plan to purchase specific additional physical plant and significant equipment within the immediate future. We do not currently have specific plans to change the number of our employeesgross profit during the next twelve months.

Results of Operations

For the three and six months ended June 30, 20212022 and 20202021.

Operating Expenses

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Revenue

The Company had no revenue forDuring the three and six months ended June 30, 2021, compared to revenue2022, we had $7,677 in operating expenses consisting of $0legal fees, filing fees and $30 for the threeaccounting fees of $2,980, $2,947 and six months ended June 30, 2020,$1,750, respectively.

Operating Expenses

During By comparison, during the three months ended June 30, 2021, we had $15,422 in operating expenses consisting of rent in the amount of $1,428, general and administrative of $13,444, and stock-based compensation of $550. By comparison, during the three months ended June 30, 2020, we had $3,007 in operating expenses, consisting of rent in the amount of $1,428 and general and administrativestock-based compensation of $1,579. During the six months ended June 30, 2021, we had $63,979 in operating expenses, consisting of rent in the amount of $2,856, general and administrative expenses of $34,998, depreciation of $575, $25,000 in compensation and $550 in stock-based compensation. By comparison, during the six months ended June 30, 2020, we had $5,585 in operating expenses, consisting of $2,856 in rent and $2,729 in general and administrative expenses. Our operating expenses for the six months ended June 30, 2021 were higher than those experienced for the same period last year due to the professional fees involved in becoming an SEC reporting company and a one-time compensation payment made in early 2021.$550.

 

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Other Income and Expense

 

During the three months ended June 30, 2021, we had other expenses2022, amortization of $13,130, consistingdebt discount on convertible note payable decreased by $11,250, or 100%, because there was no amortization in the current period relative to a full three month amortization in the prior period.

Interest expense – related party consisted of interest expense. By comparison,expense on convertible note payable. Increase in interest expense by $2,538, or 100%, is mainly attributed to convertible note payable financing issued in December 2021.

Interest expense consisted of interest expense on note payable and convertible note payable. Decrease in interest expense by $755, or 40%, was mainly attributed to settlement of note payable and convertible notes payable that matured during 2021.

Net Loss

We realized a net loss of $11,340 for the three months ended June 30, 2020, we2022, compared to a net loss of $28,552 for the three months ended June 30, 2021, representing a decrease in net loss of $17,212, or 60%.

For the Six Months Ended June 30, 2022 and 2021

  June 30, 2022  June 30, 2021  Movement ($)  Movement (%) 
             
Revenues $-  $-  $-  $- 
Cost of sales  -   -   -   - 
Gross profit  -   -   -   - 
                 
Operating expenses                
Rent  -   2,856   (2,856)  (100%)
General and administration  17,322   35,548   (18,227)  (51%)
Depreciation  -   575   (575)  100%
Owner’s compensation  -   25,000   (25,000)  100%
Total operating expenses  

17,322

   63,979   (46,658)  (73%)
                 
Net loss from operations  (17,322)  (63,979)  46,658   (73%)
                 
Interest income  -   2   (2)  (100%)
Amortization of debt discount  (2,917)  (20,625)  17,708   (86%)
Interest expense - related party  (5,076)  -   (5,076)  (100%)
Interest expense  (2,754)  (5,060)  2,306   (46%)
                 
Net loss before taxes  (28,069)  (89,662)  61,593   (69%)
Provision for income taxes  -   -   -   - 
                 
Net loss $(28,069) $(89,662) $61,593   (69%)

Revenue and Gross Profit

We had $9,386no revenue or gross profit during the three and six months ended June 30, 2022 and 2021.

Operating Expenses

For the six months ended June 30, 2022, general and administration expenses consisted of accounting fees, legal fees and filing fees of $7,250, $5,860, and $4,212, respectively. These costs were mainly incurred in other income (expenses), consistingconnection with debt financing and SEC related filings. For the six months ended June 30, 2021, general and administration expenses consisted mainly of $10,000 from gain on settlementaccounting fees, legal fees and utilities of $7,250, $24,615 and $3,108, respectively. The legal fees were mainly incurred in connection with debt $7 in interest income and $19,393financing

Owner’s compensation incurred during the six months ended June 30, 2021 represented a one-time payment of interest expense. $25,000 to our former chief executive officer for services rendered.

During the six months ended June 30, 2021, we had $25,6832022, amortization of debt discount on convertible note payable decreased by $17,708, or 86%, because of partial amortization in other expenses, consistingthe current period relative to a full six month amortization in the prior period.

Interest expense – related party consisted of interest income of $2 offset byexpense on convertible note payable. Increase in interest expense by $5,076, or 100%, was mainly attributed to convertible note payable financing issued in December 2021.

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Interest expense consisted of $25,685. By comparison,interest expense on note payable and convertible note payable. Decrease in interest expense by $2,306, or 46%, was mainly attributed to settlement of note payable and convertible notes payable that matured during 2021.

Net Loss

We realized a net loss of $28,069 for the six months ended June 30, 2020, we had $28,878 in other expense, consisting of $15 in interest income and $10,000 in gain on forgiveness of debt, offset by $38,893 in interest expense.

Net Loss

During the three months ended June 30, 2021, we had2022, compared to a net loss of $28,552, compared to net loss of $12,363$89,662 for the three months ended June 30, 2020. During the six months ended June 30, 2021, we hadrepresenting a decrease in net loss of $89,662, compared to a net loss of $35,993 for the six months ended June 30, 2020.$61,593, or 69%.

 

Liquidity and Capital Resources

 

As of June 30, 2021,2022, we had cash$3,859 in our operating bank accounts. To date, our liquidity has been satisfied through proceeds received from issuance of note payables, convertible note payables and shareholder loans. Control of our company was sold on handDecember 16, 2021 to an activist investor who has a strong track record of $15,963raising public and inventory of $10,926, for total current assets of $26,889. Our total current liabilities as of June 30, 2021 were $85,935, consisting of net convertible notes payable inprivate debt. Based on the amount of $58,625, a loan payable to our CEO of $7,729, accounts payable of $11,865 and accrued expenses of $7,716. Our working capital deficit as of June 30, 2021 was $59,046.

Net cash used in operating activities for the six months ended June, 2021 was ($50,987), compared to net cash used in operating activities of $5,540 for the sixmonths ended June 30, 2020. Net cash used in investing activities for the six months ended June 30, 2021 was $0, compared to net cash used in investing activities of ($850) for the six months ended June 30, 2020. For the six months ended June 30, 2021, net cash provided by financing activities was $37,944, compared to net cash used in financing activities of ($9,121) during the six months ended June 30, 2020.

Historically, we have funded our operations through sales of equity, debt issuances and officer loans. We have no commitment from any investment banker or other traditional funding sources and, while we have had discussions with various potential funding sources, we have no definitive agreement with any third party to provide us with financing, either debt or equity, and there can be no assurancesforegoing, management believes that we will have sufficient working capital and borrowing capacity to meet our needs through the earlier of the consummation of an acquisition or one year from this filing. Over this time period, we will be ableusing our cash for paying existing accounts payable, identifying and evaluating prospective target companies, performing due diligence on prospective target companies, paying for travel expenditures, selecting the target company to raise additional funds,merge with or if we are successful, on favorable terms. The failure to obtainacquire, and structuring, negotiating and consummating the financing necessary to allow us to continue to implement our business plan will have a significant negative impact on our anticipated resultsacquisition of operations.the target company.

Off Balance Sheet Arrangements

As of June 30, 2021, there were no off balance sheet arrangements.

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Critical Accounting PoliciesEstimates

In December 2001, the SEC requested that all registrants list their most “criticalOur condensed consolidated financial statements are prepared in accordance with accounting polices”principles generally accepted in the Management Discussion and Analysis.United States. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the needprinciples we use require us to make estimates aboutand assumptions that affect the effectreported amounts of mattersassets and liabilities at the date of the financial statements and amounts of income and expenses during the reporting periods presented. We believe in the quality and reasonableness of our critical accounting policies; however, materially different amounts may be reported under different conditions or using assumptions different from those that are inherently uncertain. We do not believe that anywe have applied. The accounting policies currently fit this definition.that have been identified as critical to our business operations and to understanding the results of our operations pertain valuation allowances for deferred tax assets. The application of each of these critical accounting policies and estimates is discussed In Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, from which there have been no material changes.

Recently Issued Accounting Pronouncements

Our management has considered all recent accounting pronouncements issued since the last audit of our financial statements. Our management believes that these recent pronouncements will not have a material effect on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

ABecause we are a smaller reporting company, this section is not required to provide the information required by this Item.applicable.

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ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluationhave established disclosure controls and procedures designed 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 SEC rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Our principal executive officer and principal financial officer, with the assistance of other members of the Company’s management, have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) under the Exchange Act) as of June 30, 2021. Thisthe end of the period covered by this quarterly report. Based upon our evaluation, was carried out under the supervision and with the participationeach of our Chief Executive Officerprincipal executive officer and Chief Financial Officer, Vincent Andreula. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officerprincipal financial officer has concluded that as of June 30, 2021, our disclosure controls and procedures are not effective. There have been no changes in ourthe Company’s internal controlscontrol over financial reporting duringwas not effective as of the quarter ended June 30, 2021.

end of the period covered by this Quarterly Report on Form 10-Q

Management determined thatdue to the material weaknesses that resulted in controls being ineffective are primarily due to lack of resources and number of employees. Material weaknesses exist in the segregation of duties required for effective controls and various reconciliation and control procedures not regularly performed due to the lack of staff and resources.as described herein.

Disclosure controlsA material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (United States) Auditing Standard No. 2) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management has identified the following material weaknesses:

1.We do not have sufficient resources in our accounting function, which restricts our ability to perform sufficient reviews and approval of manual journal entries posted to the general ledger and to consistently execute review procedures over general ledger account reconciliations, financial statement preparation and accounting for non-routine transactions; and

2.Our primary user access controls (i.e., provisioning, de-provisioning, privileged access and user access reviews) to ensure appropriate authorization and segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate personnel were not designed and/or implemented effectively. We did not design and/or implement sufficient controls for program change management to certain financially relevant systems affecting our processes.

Planned Remediation

We are controls and other procedures that areimplementing measures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures orimprove our internal control over financial reporting will necessarily prevent all fraud andto remediate material error.   Further,weaknesses, including 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. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.following:

 6·Formalizing our internal control documentation and strengthening supervisory reviews by our management; and

·When there are business operations and cash to justify the additional expenses, adding additional accounting personnel and segregating duties amongst accounting personnel.

Management continues to work to improve its controls related to our material weaknesses, specifically relating to user access and change management surrounding our information technology systems and applications. Management will continue to implement measures to remediate material weaknesses, such that these controls are designed, implemented, and operating effectively. The remediation actions include: (i) enhancing design and documentation related to both user access and change management processes and control activities; and (ii) developing and communicating additional policies and procedures to govern the area of information technology change management.  

We are currently working to improve and simplify our internal processes and implement enhanced controls, as discussed above, to address the material weaknesses in our internal control over financial reporting and to remedy the ineffectiveness of our disclosure controls and procedures. These material weaknesses will not be considered to be remediated until the applicable remediated controls are operating for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Despite the existence of these material weaknesses, we believe that the condensed consolidated financial statements included in the period covered by this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. generally accepted accounting principles. 

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Changes in Internal Control over Financial Reporting

Except as detailed above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2022 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.

None.From time to time, we may be subject to legal proceedings. We are not currently a party to or aware of any proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

ITEM 1A. RISK FACTORS.

ABecause we are a smaller reporting company, this section is not required to provide the information required by this Item.applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES OR USE OF PROCEEDS.

None.

On April 1, 2021, we issued 50,000 shares of common stock as payment for professional services rendered. We Company did not engage in any general solicitation or advertising in connection with the issuance of these shares. The issuance of these shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act. 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Exhibit
No.

Number

Exhibit Description of Exhibit
31.13.1Articles of Incorporation, dated April 5, 2005. Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 filed April 13, 2021.
3.2Certificate of Amendment to the Articles of Incorporation, dated March 11, 2011. Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form 10 filed April 13, 2021.
3.3By-Laws. Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form 10 filed April 13, 2021.
31.1*Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002required by Rule 13a-14(a) or Rule 15d-14(a)
31.231.2*Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002required by Rule 13a-14(a) or Rule 15d-14(a)
32.132.1**Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 as adopted pursuant to Section 906of Chapter 63 of Title 18 of the Sarbanes-Oxley Act of 2002United States Code
101101.INS*Materials fromInline XBRL Instance Document – the Company’s Quarterly Report on Form 10-Q forinstance document does not appear in the quarter ended June 30, 2021 formattedInteractive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*Inline XBRL Taxonomy Extension Schema Document.
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Extensible Business Reporting Language (XBRL)Exhibit 101).

*Filed herewith.

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SIGNATURES

Pursuant to the requirements** This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant has duly caused this reportAnnual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Imperalis Holding Corp.
Date: September 17, 2021By: /s/ Vincent Andreula
Name:Vincent Andreula
Title:Chief Executive Officer,
Chief Financial Officer, and Director

Dated: August 1, 2022

 8IMPERALIS HOLDING CORP.
 
By: /s/ Darren Magot
Darren Magot
Chief Executive Officer
(Principal Executive Officer)
By: /s/ David J. Katzoff
David J. Katzoff
Chief Financial Officer
(Principal Financial and Accounting Officer)

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