UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-Q/A
Amendment No. 1
_________________
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
_________________
FORZA INNOVATIONS INC.
_________________
| Wyoming | 000-56131 | 30-0852686 |
| (State or Other Jurisdiction | (Commission | (I.R.S. Employer |
| of Incorporation or Organization) | File Number) | Identification No.) |
30 Forzani Way NW, Calgary, Alberta T3Z 1L5
(Address of Principal Executive Offices) (Zip Code)
(702) 205-2064
(Registrant’s telephone number, including area code)
Genesys Industries, Inc.
(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 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 ☒ 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” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
| Non-accelerated filer ☐ | Smaller reporting company ☒ |
| Emerging growth company ☐ |
| 1 |
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the 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 June 8, 2021, the issuer had 28,100,000 shares of its common stock issued and outstanding.
Explanatory Paragraph
This Amendment No. 1 on Form 10-Q/A (this “Amendment”) amends the Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2021, which the Registrant previously filed with the Securities and Exchange Commission (the “Commission”) on June 8, 2021. The Registrant is filing this Amendment to include the loan payable to Twiga Capital Partners, LLC. The loan was mistakenly removed as it was thought to have been included in the assets and liabilities that were spun out of the Registrant prior to the change of control. This loan is still a liability of the Registrant.
Except as set forth above, the Original Filing has not been amended, updated or otherwise modified. Other events occurring after the filing of the Form 10-Q/A or other disclosures necessary to reflect subsequent events have been addressed in our reports filed with the Commission subsequent to the filing of this Form 10-Q/A.
| 2 |
FORZA INNOVATIONS INC.
(formerly Genesys Industries, Inc)
TABLE OF CONTENTS
| PART I | |
| Item 1. Condensed Unaudited Consolidated Financial Statements | 5 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 14 |
| Item 4. Controls and Procedures | 14 |
| PART II | |
| Item 1. Legal Proceedings | 14 |
| Item 1A. Risk Factors | 14 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 14 |
| Item 3. Defaults Upon Senior Securities | 14 |
| Item 4. Mining Safety Disclosures | 14 |
| Item 5. Other Information | 15 |
| Item 6. Exhibits | 16 |
| Signatures | 17 |
| 3 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FORZA INNOVATIONS INC.
(formerly Genesys Industries, Inc)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2021
| Condensed Consolidated Balance Sheets as of March 31, 2021 (Restated) and June 30, 2020 (Unaudited) | 5 |
| Condensed Consolidated Statements of Operations for the three and nine months ended March 31, 2021 (Restated) and 2020 (Unaudited) | 6 |
| Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended March 31, 2021 (Restated) and 2020 (Unaudited) | 7 |
| Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2021 (Restated) and 2020 (Unaudited) | 8 |
| Notes to the Condensed Consolidated Financial Statements (Unaudited) | 9 |
| 4 |
FORZA INNOVATIONS INC.
(formerly Genesys Industries, Inc)
CONDENSED CONSOLIDATED BALANCE SHEETS
| March 31, 2021 | June 30, 2020 | |||||||
| ASSETS | (Unaudited)/(Restated) | |||||||
| Current assets: | ||||||||
| Cash | $ | 76 | $ | - | ||||
| Assets of discontinued operations | - | 261,254 | ||||||
| Total current assets | 76 | 261,254 | ||||||
| Machinery and equipment, net | 135,135 | - | ||||||
| Assets of discontinued operations | - | 586,984 | ||||||
| Total Assets | $ | 135,211 | $ | 848,238 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 35,000 | $ | - | ||||
| Accrued interest | 40,683 | 15,000 | ||||||
| Convertible note payable, net of discount of $0 and $12,500, respectively | 150,000 | 137,500 | ||||||
| Loan Payable | 122,729 | - | ||||||
| Due to related party | 9,440 | - | ||||||
| Liabilities of discontinued operations | - | 274,348 | ||||||
| Total current liabilities | 357,852 | 426,848 | ||||||
| Long term liabilities: | ||||||||
| Liabilities of discontinued operations | - | 360,980 | ||||||
| Total liabilities | 357,852 | 787,828 | ||||||
| Commitments and contingencies | — | — | ||||||
| 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; 28,100,000 and 18,100,000 shares issued and outstanding, respectively | 28,100 | 18,100 | ||||||
| Additional paid-in capital | 3,173,900 | 383,900 | ||||||
| Accumulated deficit | (3,434,641) | (351,590) | ||||||
| Total stockholders' (deficit) equity | (222,641) | 60,410 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 135,211 | $ | 848,238 | ||||
The accompanying notes are an integral part of these unaudited restated condensed consolidated financial statements.
| 5 |
FORZA INNOVATIONS INC.
(formerly Genesys Industries, Inc)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| (Restated) | (Restated) | |||||||||||||||
| Operating Expenses: | ||||||||||||||||
| General & administrative expenses | $ | 10,964 | $ | 6,300 | $ | 10,964 | $ | 27,605 | ||||||||
| Total operating expenses | 10,964 | 6,300 | 10,964 | 27,605 | ||||||||||||
| Loss from operations | (10,964 | ) | (6,300 | ) | (10,964 | ) | (27,605 | ) | ||||||||
| Other expense: | ||||||||||||||||
| Interest expense | (3,781 | ) | — | (15,125 | ) | — | ||||||||||
| Debt discount amortization | — | — | (12,500 | ) | — | |||||||||||
| Loss on asset acquisition – related party | (2,704,865 | ) | — | (2,704,865 | ) | — | ||||||||||
| Loss on disposition of assets and liabilities | (365,019 | ) | — | (365,019 | ) | — | ||||||||||
| Total other expense | (3,073,665 | ) | — | (3,097,509 | ) | — | ||||||||||
| Loss before income taxes | (3,084,629 | ) | (6,300 | ) | (3,108,473 | ) | (27,605 | ) | ||||||||
| Provision for income taxes | — | — | — | — | ||||||||||||
| Net loss from continuing operations | (3,084,629 | ) | (6,300 | ) | (3,108,473 | ) | (27,605 | ) | ||||||||
| Net income (loss) from discontinued operations | 8,713 | (129,232 | ) | 25,422 | (144,817 | ) | ||||||||||
| Net Loss | $ | (3,075,916 | ) | $ | (135,532 | ) | $ | (3,083,051 | ) | $ | (172,422 | ) | ||||
| Net Loss Per Common Share, basic & diluted from continuing operations | $ | (0.11 | ) | $ | (0.0 | ) | $ | (0.14 | ) | $ | (0.00 | ) | ||||
| Net Income (Loss) Per Common Share, basic & diluted from discontinued operations | $ | 0.00 | $ | (0.01 | ) | $ | 0.00 | $ | (0.01 | ) | ||||||
| Net Loss Per Common Share, basic & diluted | $ | (0.11 | ) | $ | (0.01 | ) | $ | (0.14 | ) | $ | (0.01 | ) | ||||
| Weighted Common Shares Outstanding, basic & diluted | 27,988,889 | 18,100,000 | 21,348,175 | 17,870,000 | ||||||||||||
The accompanying notes are an integral part of these unaudited restated condensed consolidated financial statements.
| 6 |
FORZA INNOVATIONS INC.
(formerly Genesys Industries, Inc)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2020 AND 2021
(Unaudited)
| Common Shares | Common Stock | Preferred Shares | Preferred | Common Stock to be Issued | Paid in Capital | Accumulated Deficit | Total | |||||||||||||||||||||||||
| Balance, June 30, 2019 | 17,870,000 | $ | 17,870 | 10,000,000 | $ | 10,000 | $ | — | $ | 101,130 | $ | (30,582 | ) | $ | 98,418 | |||||||||||||||||
| Common stock issued for services | 130,000 | 130 | — | — | — | 12,870 | — | 13,000 | ||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | 7,481 | 7,481 | ||||||||||||||||||||||||
| Balance, September 30, 2019 | 18,000,000 | 18,000 | 10,000,000 | 10,000 | — | 114,000 | (23,101 | ) | 118,899 | |||||||||||||||||||||||
| Common stock issued for services | 100,000 | 100 | — | — | — | 69,900 | — | 70,000 | ||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | (44,371 | ) | (44,371 | ) | ||||||||||||||||||||||
| Balance, December 31, 2019 | 18,100,000 | 18,100 | 10,000,000 | 10,000 | — | 183,900 | (67,472 | ) | 144,528 | |||||||||||||||||||||||
| Common stock issued for services | — | — | — | — | 16,500 | — | — | 16,500 | ||||||||||||||||||||||||
| Beneficial conversion feature | — | — | — | — | — | 200,000 | — | 200,000 | ||||||||||||||||||||||||
| Net loss | — | — | — | — | — | (135,532 | ) | (135,532 | ) | |||||||||||||||||||||||
| Balance, March 31, 2020 | 18,100,000 | $ | 18,100 | 10,000,000 | $ | 10,000 | $ | 16,500 | $ | 283,900 | $ | (203,004 | ) | $ | 225,496 | |||||||||||||||||
| Common Shares | Common Stock | Preferred Shares | Preferred | Paid in Capital | Accumulated Deficit | Total | ||||||||||||||||||||||
| Balance, June 30, 2020 | 18,100,000 | $ | 18,100 | 10,000,000 | $ | 10,000 | $ | 383,900 | $ | (351,590 | ) | $ | 60,410 | |||||||||||||||
| Net loss | — | — | — | — | — | 7,660 | 7,660 | |||||||||||||||||||||
| Balance, September 30, 2020 | 18,100,000 | 18,100 | 10,000,000 | 10,000 | 383,900 | (343,930 | ) | 68,070 | ||||||||||||||||||||
| Net loss | — | — | — | — | — | (14,795 | ) | (14,795 | ) | |||||||||||||||||||
| Balance, December 31, 2020 | 18,100,000 | 18,100 | 10,000,000 | 10,000 | 383,900 | (358,725 | ) | $ | 53,275 | |||||||||||||||||||
| Stock issued for asset acquisitions | 10,000,000 | 10,000 | — | — | 2,790,000 | — | 2,800,000 | |||||||||||||||||||||
| Net loss (Restated) | — | — | — | — | — | (3,075,916 | ) | (3,075,916 | ) | |||||||||||||||||||
| Balance, March 31, 2021 (Restated) | 28,100,000 | $ | 28,100 | 10,000,000 | $ | 10,000 | $ | 3,173,900 | $ | (3,434,641 | ) | $ | (222,641 | ) | ||||||||||||||
The accompanying notes are an integral part of these unaudited restated condensed consolidated financial statements.
| 7 |
FORZA INNOVATIONS INC.
(formerly Genesys Industries, Inc)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
| (Restated) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net Income | $ | (3,108,473 | ) | $ | (172,422 | ) | ||
| Less: net (income) loss from discontinued operations | (25,422 | ) | 144,817 | |||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Debt discount amortization | 12,500 | — | ||||||
| Loss on asset acquisition – related party | 2,704,865 | — | ||||||
| Loss on disposition of assets and liabilities | 365,019 | — | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable | 35,000 | — | ||||||
| Accrued interest | 40,487 | — | ||||||
| Operating cash flow from discontinued operations | 55,801 | 69,941 | ||||||
| Net cash provided by operating activities | 79,777 | 42,336 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | (40,000 | ) | — | |||||
| Investing cash flow from discontinued operations | (70,117 | ) | (158,886 | ) | ||||
| Net cash used in investing activities | (110,117 | ) | (158,886 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Advances from related party | 9,440 | — | ||||||
| Financing cash flow from discontinued operations | 2,497 | 80,040 | ||||||
| Net cash provided by financing activities | 11,937 | 80,040 | ||||||
| Net (decrease) increase in cash | (18,403 | ) | 39,893 | |||||
| Cash, beginning of period | 174,879 | 170,206 | ||||||
| Less: cash of discontinued operations, end of period | (156,400 | ) | (210,099 | ) | ||||
| Cash, end of period | 76 | 210,099 | ||||||
| Cash of continuing operations at end of period | $ | 76 | $ | — | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 12,203 | $ | 7,559 | ||||
| Cash paid for taxes | — | $ | — | |||||
| Supplemental disclosure of non-cash transaction: | ||||||||
| Common stock issued for assets | $ | 95,135 | $ | — | ||||
The accompanying notes are an integral part of these unaudited restated condensed consolidated financial statements.
| 8 |
FORZA INNOVATIONS INC.
(formerly Genesys Industries, Inc)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2021
(Unaudited)
NOTE 1 - NATURE OF OPERATIONS
Forza Innovations Inc. (the “Company”), was incorporated on December 9, 2014 under the laws of the State of Florida. The Company was a diversified multi-industry manufacturer of complex metal components and products. We serve all general industrial markets such as Aerospace, Automotive, Commercial, Food Processing, Industrial, Maritime, Medical, Railroad, Oil and Gas, Packaging, Telecom, Textiles, Robotics, Space Travel, 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.
On February 5, 2018, the Company formed Genesys Industries, LLC as a wholly owned subsidiary in the state of Missouri.
On January 21, 2021, Shefali Vibhakar, President of the Company closed a Share Purchase Agreement (the “Agreement”) that she entered into with Johnny Forzani to sell all of her 17,000,000 common shares and 10,000,000 preferred shares to Johnny Forzani for cash consideration of $177,000.
Further, as part of the Agreement, Ms. Vibhakar agrees to spin out all of the Company’s assets (except for certain machinery valued at $40,000 – which is subject to a separate purchase agreement) as well as all of the Company’s liabilities (except the Company’s note with Tangiers Capital, LLC). The value date of the assets and liabilities will be January 21, 2021.
On January 21, 2021, a change in control of the Company occurred pursuant to the Agreement. Mr. Forzani now has voting control over 93.9% of the Company’s issued and outstanding common stock.
On January 21, 2021, the Company received the resignation of Shefali Vibhakar as the Company’s President, Chief Executive Officer, Treasurer, Chief Financial Officer, Secretary and Director and appointed Johnny Forzani as its President, Chief Executive Officer, Treasurer, Chief Financial Officer and Secretary.
Effective January 21, 2021, the Company’s new address is 30 Forzani Way NW, Calgary, Alberta, Canada T3Z 1L5.
On February 17, 2021, the Company filed Articles of Continuance with the Secretary of State for the state of Wyoming. Accordingly, the Company transferred its state of formation from Florida to Wyoming and became a Wyoming entity.
On February 18, 2021, the Company filed a Certificate of Dissolution with the Secretary of State for the State of Florida, effectively dissolving the Company's existence in Florida.
As of March 31, 2021, Forza Innovations has moved out of the precision CNC manufacturing and fabrication business and has moved into the health-tech wearable performance business. 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.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated 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 March 31, 2021 and for the related periods presented have been made. The results for the nine months ended March 31, 2021 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, 2020, filed with the Securities and Exchange Commission
| 9 |
Use of estimates
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.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Genesys Industries, LLC, and been prepared in conformity with accounting principles generally accepted in the United States of America. All significant intercompany transactions and balances have been eliminated.
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.
Recently issued 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 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 of March 31, 2021, the Company has an accumulated deficit of $592,707. For the nine months ended March 31, 2021, and had a net loss of $241,117. Although the Company’s financial position is steadily improving our operations are still relatively new, circumstances may still occur that would raise substantial doubt about the Company’s ability to continue as a going concern.
While the Company is successfully executing its growth strategy, its cash position may not still be sufficient to support the Company’s daily operations without additional 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, PLANT & 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 between three and five years. Leasehold improvements are being depreciated over ten years, and the building over twenty years.
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.
| 10 |
Property, Plant and equipment stated at cost, less accumulated depreciation consisted of the following:
| March 31, 2021 | June 30, 2020 | |||||||
| Leasehold Improvements | $ | — | $ | 100,965 | ||||
| Machinery and Equipment | 135,135 | 353,888 | ||||||
| Real Property & Plant | — | 256,443 | ||||||
| Less: accumulated depreciation | — | (124,312 | ) | |||||
| Fixed assets, net | $ | 135,135 | $ | 586,984 | ||||
Depreciation expense
Depreciation expense for the nine months ended March 31, 2021 and 2020 was $54,925 and $49,553, respectively.
NOTE 5 – CONVERTIBLE DEBT
On January 2, 2020, the Company executed a 10% convertible promissory note in which it agreed to borrow up to $300,000. The note is convertible at a price per share equal to the lower of (a) the Fixed Conversion Price (which is fixed at a price equal to $0.30); or (b) 80% of the lowest trading price of the Company’s common stock during the 5 consecutive trading days prior to the date on which lender elects to convert all or part of the Note. The initial deposit of $125,000 was made on January 15, 2020 and included a $25,000 OID. As required by ASC 470-20-30-6 the Company recognized and measured the embedded beneficial conversion feature at the commitment date of $200,000 which was credited to paid in capital, a $150,000 debt discount and a $75,000 loss on the issuance of convertible debt. As of March 31, 2021, all of the debt discount has been amortized to interest expense.
NOTE 6 - NOTE PAYABLE
On November 5, 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 LOC bears interest at 5% per annum and is due on demand. On January 21, 2021, TCP assigned all of its rights, title and interest in the debt to Front Row Seating Inc. As of March 31, 2021 and June 30, 2020, the Company owed $122,729 and $122,729 of principal and $14,339 and $11,279 of accrued interest on the LOC, respectively.
NOTE 7 - STOCKHOLDERS’ EQUITY
On February 19, 2021, the Company filed a Definitive 14C in order to ratify the written consent received from one shareholder, holding 96.1% of our voting power to: (1) to amend the Company’s Articles of Incorporation, as amended (the “Articles”) to change our corporate name from Genesys Industries, Inc. to Forza Innovations Inc. (the “Name Change”); (2) to amend the Articles to increase the number of authorized shares of Class A Common Stock we may issue from 100,000,000 to 700,000,000 (the “Share Increase”); and, (3) to increase the number of the Company's total issued and outstanding shares of Class A Common Stock by conducting a forward stock split at the rate of 10 shares every 1 share currently issued and outstanding (the “Forward Split”). FINRA has reviewed the Company’s submission of the Name Change, the Share Increase and the Forward Split and is waiting to process as soon as the Company becomes current with its SEC filings.
Preferred stock
Preferred stock includes 25,000,000 shares of authorized at a par value of $0.001. Preferred stock includes 25,000,000 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 Stockholders are entitled to vote on any matters on which the common stock holders are entitled to vote.
NOTE 8 - RELATED PARTY TRANSACTIONS
On January 21, 2021, the Company entered into an acquisition agreement with Mr. Forzani to acquire all of the ownership and the rights to certain late developmental stage products, including the J4 Sport, J4 X and J4 Fitbelt in exchange for the issuance of 10,000,000 common shares. The shares were valued at $0.28, the closing stock price on the date of the agreement, for a total value of $2,800,000. The assets were valued at cost of $95,135, resulting in a loss on asset acquisition of $2,704,865. As a result of this acquisition, the Company is moving out of the precision CNC manufacturing and fabrication business and moving into the health-tech wearable performance business.
| 11 |
NOTE 9 – DISCONTINUED OPERATIONS
On January 21, 2021, Shefali Vibhakar, President of the Company closed a Share Purchase Agreement (the “Agreement”) that she entered into with Johnny Forzani to sell all of her 17,000,000 common shares and 10,000,000 preferred shares to Johnny Forzani for cash consideration of $177,000.
Further, as part of the Agreement, Ms. Vibhakar agrees to spin out all of the Company’s assets (except for certain machinery valued at $40,000 – which is subject to a separate purchase agreement) as well as all of the Company’s liabilities (except the Company’s note with Tangiers Capital, LLC). The value date of the assets and liabilities will be January 21, 2021.
| March 31, 2021 | June 30, 2020 | |||||||
| Current Assets of Discontinued Operations: | ||||||||
| Cash | $ | — | $ | 174,879 | ||||
| Accounts receivable | — | 86,375 | ||||||
| Total Current Assets of Discontinued Operations: | — | 261,254 | ||||||
| Machinery and equipment, net | — | 360,431 | ||||||
| Real property & plant, net | — | 226,553 | ||||||
| Total Non-Current Assets of Discontinued Operations: | $ | — | $ | 586,984 | ||||
| Current Liabilities of Discontinued Operations: | ||||||||
| Accounts payable and accrued liabilities | $ | — | $ | 48,868 | ||||
| Accrued interest, related party | — | 11,279 | ||||||
| Accrued compensation | — | 6,548 | ||||||
| Lines of credit | — | 37,547 | ||||||
| Loans payable | — | 47,377 | ||||||
| Due to related party | — | 122,729 | ||||||
| Total Current Liabilities of Discontinued Operations | — | 274,348 | ||||||
| Non-Current Liabilities of Discontinued Operations: | ||||||||
| Line of credit | — | 70,246 | ||||||
| Loans payable | — | 290,734 | ||||||
| Total Non-Current Liabilities of Discontinued Operations | $ | 360,98 | ||||||
In accordance with the provisions of ASC 205-20, Presentation of Financial Statements, we have separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets. The imcome and expenses have been reflected as discontinued operations in the consolidated Statements of Operations for the three and nine months ended March 31, 2021 and 2020, and consist of the following:
FORZA INNOVATIONS INC.
(formerly Genesys Industries, Inc)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended March 31, | For the Nine Months Ended March 31, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | 42,124 | $ | 163,782 | $ | 381,472 | $ | 438,656 | ||||||||
| Cost of revenue | 25,575 | 98,058 | 269,638 | 266,862 | ||||||||||||
| Gross Margin | 16,549 | 65,724 | 111,834 | 171,794 | ||||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional fees | — | 3,800 | — | 2,300 | ||||||||||||
| Payroll expense | 2,171 | 23,771 | 32,676 | 52,551 | ||||||||||||
| General & administrative expenses | 1,884 | 23,556 | 37,882 | 63,034 | ||||||||||||
| Total operating expenses | 4,055 | 51,127 | 70,558 | 117,885 | ||||||||||||
| Income from operations | 12,494 | 14,597 | 41,276 | 53,909 | ||||||||||||
| Total other expense | (3,781 | ) | (143,829 | ) | (15,854 | ) | (198,726 | ) | ||||||||
| Net income (loss) from discontinued operations | $ | 8,713 | $ | (129,232 | ) | $ | 25,422 | $ | (144,817 | ) | ||||||
NOTE 10 – RESTATMENT
Per ASC 250-10 Accounting Changes and Error Corrections, the March 31, 2021 financial statements are being restated to include the loan payable to Twiga Capital Partners, LLC. The loan was mistakenly removed as it was thought to have been included in the assets and liabilities that were spun out of the Company prior to the change of control.
March 31, 2021
| As Reported | Adjusted | As Restated | ||||||||||
| Balance Sheet: | ||||||||||||
| Cash | $ | 76 | $ | — | $ | 76 | ||||||
| Machinery and equipment, net | 135,135 | — | 135,135 | |||||||||
| Total Assets | $ | 135,211 | $ | — | $ | 135,211 | ||||||
| Accounts payable | $ | 35,000 | $ | — | $ | 35,000 | ||||||
| Accrued interest | 26,343 | 14,340 | 40,683 | |||||||||
| Convertible note payable | 150,000 | — | 150,000 | |||||||||
| Loan Payable | 122,729 | 122,729 | ||||||||||
| Due to related party | 9,440 | — | 9,440 | |||||||||
| Total current liabilities | 220,783 | 137,069 | 357,852 | |||||||||
| Class B Preferred stock | 10,000 | — | 10,000 | |||||||||
| Common stock, $ | 28,100 | — | 28,100 | |||||||||
| Additional paid-in capital | 3,173,900 | — | 3,173,900 | |||||||||
| Accumulated deficit | (3,297,527 | ) | (137,069 | ) | (3,434,641 | ) | ||||||
| Total stockholders' deficit | (85,572 | ) | (137,069 | ) | (222,641 | ) | ||||||
For the Nine Months Ended march 31, 2021
| As Reported | Adjustment | As Restated | ||||||||||
| General & administrative expenses | $ | 10,964 | $ | — | $ | 10,964 | ||||||
| Other expense: | ||||||||||||
| Interest expense | (15,125 | ) | — | (15,125 | ) | |||||||
| Debt discount amortization | (12,500 | ) | — | (12,500 | ) | |||||||
| Loss on asset acquisition – related party | (2,704,865 | ) | — | (2,704,865 | ) | |||||||
| Loss on disposition of assets and liabilities | (227,950 | ) | (137,069 | ) | (365,019 | ) | ||||||
| Total other expense | (2,960,440 | ) | (137,069 | ) | (3,097,509 | ) | ||||||
| Net loss from continuing operations | (2,971,404 | ) | (137,069 | ) | (3,108,473 | ) | ||||||
| Net income from discontinued operations | 25,422 | 25,422 | ||||||||||
| Net Loss | $ | (2,945,982 | ) | $ | (137,069 | ) | $ | (3,083,051 | ) | |||
NOTE 11 - SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it has no material subsequent events to disclose in these financial statements.
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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, 2020, 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
As of March 31, 2021, Forza Innovations has moved out of the precision CNC manufacturing and fabrication business and has moved into the health-tech wearable performance business. 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.
Results of Operation for the Three Months Ended March 31, 2021 and 2019
Revenues and Cost of Revenue
Due to the termination of our CNC manufacturing and fabrication business, we did not have any revenue or cost of revenue from continuing operations for the three months ended March 31, 2021 and 2020.
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Operating Expenses from Continuing Operations
Operating expenses from continuing operations for the three months ended March 31, 2021 and 2020, consisted of general and administrative expenses of $10,964 and $6,300, respectively, General and administrative expenses consisted primarily of accounting and audit fees.
Other Income from Continuing Operations
During the three months ended March 31, 2021, we incurred $3,781 of interest expense, recognized a $365,019 loss on the disposition of assets and liabilities and a loss of $2,704,865 on the acquisition of assets from a related party.
Net Loss from Continuing Operations
Our net loss from continuing operations for the three months ended March 31, 2021 was $3,084,629 compared to $6,300 for the prior period.
Results of Operation for the Nine Months Ended March 31, 2021 and 2020
Revenues and Cost of Revenue
Due to the termination of our CNC manufacturing and fabrication business, we did not have any revenue or cost of revenue from continuing operations for the nine months ended March 31, 2021 and 2020.
Operating Expenses from Continuing Operations
Operating expenses from continuing operations for the nine months ended March 31, 2021 and 2020, consisted of general and administrative expenses of $10,964 and $27,605, respectively, General and administrative expenses consisted primarily of accounting and audit fees.
Other Income from Continuing Operations
During the nine months ended March 31, 2021, we incurred $15,125 of interest expense, $12,500 of debt discount amortization, recognized a $365,019 loss on the disposition of assets and liabilities and a loss of $2,704,865 on the acquisition of assets from a related party.
Net Loss from Continuing Operations
Our net loss from continuing operations for the nine months ended March 31, 2021 was $3,108,473 compared to $27,605 for the prior period.
Liquidity and Capital Resources
As reflected in the accompanying unaudited financial statements, the Company has an accumulated deficit of $3,434,641 at March 31, 2021, and had a net loss from continuing operations of $3,108,473 for the nine months ended March 31, 2021.
Net cash used in investing activities from for the nine months ended March 31, 2021 and 2020 was $110,117 and $158,886, respectively, for the purchase of property and equipment.
Net cash received from financing activities for the nine months ended March 31, 2021 was $11,937 compared to $80,040 provided by financing activities in the prior period.
On January 2, 2020, the Company executed a 10% convertible promissory note in which it agreed to borrow up to $300,000. The note is convertible at a price per share equal to the lower of (a) the Fixed Conversion Price (which is fixed at a price equal to $0.30); or (b) 80% of the lowest trading price of the Company’s common stock during the 5 consecutive trading days prior to the date on which lender elects to convert all or part of the Note. The initial deposit of $125,000 was made on January 15, 2020 and included a $25,000 OID. As required by ASC 470-20-30-6 the Company recognized and measured the embedded beneficial conversion feature at the commitment date of $200,000 which was credited to paid in capital, a $150,000 debt discount and a $75,000 loss on the issuance of convertible debt. As of March 31, 2021, all of the debt discount has been amortized to interest expense.
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We believe that our principal difficulty in our inability to successfully implement our plan in full force and attain profits has been the lack of available capital to operate and expand our business. We believe that because our shareholders can’t deposit their shares and clear shares with certain broker dealers and clearing firms due to extreme FINRA and SEC regulatory burden, it has caused us to not be able to raise capital since we do not have an active trading market for our common stock. 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.
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 March 31, 2021.
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.
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 March 31, 2021, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.
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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
| No. | Description |
| 31.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act of 1934 Rule 13a-14(a) or 15d-14(a). |
| 32.1 | Certifications pursuant to Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. |
| 101.INS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema 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 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Forza Innovations, Inc. | |
| Date: September 16, 2021 | /s/ Johnny Forzani |
| Johnny Forzani | |
| President, Chief Financial Officer, Treasurer, Chief Financial Officer, Secretary (Principal Executive, Financial and Accounting Officer) |
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