UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20212022
☐TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 333-239640000-56453
BIO LAB NATURALS,
LIMITLESS X HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware | 81-1034163 | |
(State of Incorporation) | (IRS Employer ID Number) |
9454 Wilshire Blvd. #300, Beverly Hills, CA 90212
(Address of Principal Executive Offices)
(855) 413-7030
(Registrant’s Telephone number)
7400 E. Crestline Circle, Suite 130, Greenwood Village, CO 80111
(Address of principal executive offices)
(720) 273-0433
(Registrant’s Telephone number)
__________________________________
(Former Address and Telephone Number phone of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||
|
| N/A | N/A | N/A |
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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the 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 for 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 | ☒ |
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 to Section 7(a)(2)(B)13(a) of the SecuritiesExchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes | ☐ | No |
|
Indicate the number of shareshares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of November 1, 2021,August 12, 2022, there were 10,753,504108,893,460 shares of the registrant’s common stock, $0.0001 par value, issued and outstanding, not including shares reserved for conversion of notes.
TABLE OF CONTENTS
i
1
LIMITLESS X HOLDINGS INC.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
LIMITLESS X HOLDINGS INC.
Bio Lab Naturals, Inc. and SubsidiaryUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
Consolidated Balance Sheets
September 30, | December 31, | |||||||
Assets | 2021 | 2020 | ||||||
Current assets | (Unaudited) | (Audited) | ||||||
Cash | $ | 17,358 | $ | 69,065 | ||||
Due from other | 4,850 | 0— | ||||||
Net property on operating lease | 110,001 | 0— | ||||||
Deposits | 61,785 | 10,000 | ||||||
Total current assets | 193,994 | 79,065 | ||||||
Equipment | ||||||||
Equipment, net of accumulated depreciation, $17,323 and | ||||||||
$35,291, respectively | 68,645 | 167,672 | ||||||
| ||||||||
Total assets | $ | 262,639 | $ | 246,737 | ||||
| ||||||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 76,257 | $ | 17,126 | ||||
Deposit | 66,000 | 0— | ||||||
Note payable | 35,000 | 0— | ||||||
Note payable, related party | 30,000 | 0— | ||||||
Total current liabilities | 207,257 | 17,126 | ||||||
Total liabilities | 207,257 | 17,126 | ||||||
| ||||||||
Commitments and Contingencies | 0— | 0— | ||||||
| ||||||||
Stockholders' Equity | ||||||||
Preferred shares, $0.0001 par value, 5,000,000 shares authorized; | ||||||||
Class A Convertible, deemed par value $0.04 per share; 500,000 | ||||||||
shares issued and outstanding at September 30, 2021 and | ||||||||
December 31, 2020 | 50 | 50 | ||||||
Common shares, $0.0001 par value, 200,000,000 shares authorized; | ||||||||
10,803,504 and 10,753,504 shares issued and outstanding, | ||||||||
respectively at September 30, 2021 and December 31, 2020 | 1,080 | 1,075 | ||||||
Additional paid in capital | 35,749,833 | 35,672,338 | ||||||
Retained (deficit) | (35,695,581 | ) | (35,443,852 | ) | ||||
Total stockholders' equity | 55,382 | 229,611 | ||||||
| ||||||||
Total liabilities and stockholders' equity | $ | 262,639 | $ | 246,737 | ||||
|
June 30, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash | $ | 1,782,380 | $ | 78,856 | ||||
Accounts receivables, net of allowance for doubtful accounts of $0 and $0, respectively | 272,019 | 322,499 | ||||||
Holdback receivables | 1,501,182 | 162,226 | ||||||
Prepaid | 4,667 | - | ||||||
Inventories, net | 1,949,055 | 1,875,146 | ||||||
Total current assets | 5,509,303 | 2,438,727 | ||||||
Non-Current Assets: | ||||||||
Operating lease right-of-use asset, net | 158,109 | 224,202 | ||||||
Equipment, net | 34,329 | - | ||||||
Other assets | 97,596 | 10,985 | ||||||
Total non-current assets | 290,034 | 235,187 | ||||||
Total assets | $ | 5,799,337 | $ | 2,673,914 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 1,545,144 | $ | 215,176 | ||||
Current portion of operating lease liabilities | 136,245 | 132,200 | ||||||
Royalty payable | 232,121 | - | ||||||
Refunds payable | 316,462 | 207,599 | ||||||
Chargebacks payable | 205,874 | 100,350 | ||||||
Income tax payable | 22,906 | 22,906 | ||||||
Note payable | 35,000 | - | ||||||
Current portion of loan payables to shareholder | 3,520,000 | 28,802 | ||||||
Current portion of note payables to related parties | 276,681 | - | ||||||
Total current liabilities | 6,290,433 | 707,033 | ||||||
Loan payables to shareholder, less current portion | 202,028 | 21,198 | ||||||
Note payables to related parties, less current portion | 40,929 | - | ||||||
Operating lease liabilities, less current portion | 23,222 | 92,195 | ||||||
Total liabilities | 6,556,612 | 820,426 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ Equity | ||||||||
Preferred Stock - $0.0001 par value; 5,000,000 authorized shares; 500,000 shares issued and outstanding and 500,000 shares issued and outstanding at June 30, 2022 and December 31, 2021 | 50 | 50 | ||||||
Common Stock- $0.0001 par value; 200,000,000 authorized shares; 108,893,460 shares issued and outstanding and 9,000,000 shares issuable and 104,893,504 shares issued and outstanding and 11,910,000 shares issuable at June 30, 2022 and December 31, 2021, respectively | 11,789 | 11,680 | ||||||
Additional paid-in-capital | 4,954,767 | 1,837,094 | ||||||
Retained earnings | (5,723,881 | ) | 4,664 | |||||
Total stockholders’ equity | (757,275 | ) | 1,853,488 | |||||
Total liabilities and stockholders’ equity | $ | 5,799,337 | $ | 2,673,914 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
LIMITLESS X HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months | For the six months | |||||||
ended June 30, | ended June 30, | |||||||
2022 | 2022 | |||||||
Sales | ||||||||
Net sales | $ | 13,374,528 | $ | 21,694,584 | ||||
Rentals | 5,000 | 5,000 | ||||||
Total net sales | 13,379,528 | 21,699,584 | ||||||
Cost of sales | ||||||||
Cost of sales | 4,683,631 | 6,861,584 | ||||||
Cost of sales - other | 358 | 358 | ||||||
Depreciation | 3,613 | 3,613 | ||||||
Total cost of sales | 4,687,602 | 6,865,555 | ||||||
Gross profit | 8,691,926 | 14,834,029 | ||||||
Operating expenses: | ||||||||
General and administrative | 1,182,811 | 1,577,299 | ||||||
Advertising and marketing | 12,012,857 | 17,256,535 | ||||||
Stock compensation for services | 1,117,782 | 1,117,782 | ||||||
Royalty fees | 232,121 | 232,121 | ||||||
Professional fees | 180,271 | 180,271 | ||||||
General and administrative expenses - other | 18,645 | 18,645 | ||||||
Consulting fees, related party | 32,500 | 32,500 | ||||||
Rent | 37,136 | 80,393 | ||||||
Payroll and payroll taxes | 63,249 | 133,671 | ||||||
Total operating expenses | 14,877,372 | 20,629,217 | ||||||
Loss from operations | (6,185,446 | ) | (5,795,188 | ) | ||||
Other income (expense) | ||||||||
Interest expense | (13,108 | ) | (13,108 | ) | ||||
Other income | 57,756 | 57,756 | ||||||
Gain on disposal of assets | 28,397 | 28,397 | ||||||
Total other income (expense), net | 73,045 | 73,045 | ||||||
Loss before income taxes | (6,112,401 | ) | (5,722,143 | ) | ||||
Income tax provision | (75,552 | ) | 6,402 | |||||
Net loss | $ | (6,036,849 | ) | $ | (5,728,545 | ) | ||
Net loss per common share - basic and diluted | $ | (0.11 | ) | $ | (0.18 | ) | ||
Weighted average number of common shares | 54,960,142 | 32,081,427 |
The accompanying notes are an integral part of Contentsthese unaudited condensed consolidated financial statements.
Bio Lab Naturals, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
Revenues | ||||||||
Sales | $ | 0— | $ | 21,000 | ||||
Rentals | 27,000 | 0— | ||||||
Total revenues | 27,000 | 21,000 | ||||||
| ||||||||
Cost of sales | ||||||||
Cost of sales - other | 1,971 | 25,580 | ||||||
Depreciation - rental | 2,895 | 0— | ||||||
Depreciation | 3,760 | 8,783 | ||||||
Total cost of sales | 8,626 | 34,363 | ||||||
| ||||||||
Gross profit | 18,374 | (13,363 | ) | |||||
| ||||||||
Operating expenses | ||||||||
Consulting fees, related party | 15,000 | 0— | ||||||
General and administrative expenses - other | 5,184 | 15,966 | ||||||
Professional fees | 17,226 | 28,385 | ||||||
Total operating expenses | 37,410 | 44,351 | ||||||
| ||||||||
Loss from operations | (19,036 | ) | (57,714 | ) | ||||
| ||||||||
Other (expense) | ||||||||
Interest expense, related party | (750 | ) | 0— | |||||
Interest expense | (875 | ) | 0— | |||||
Total other (expense) | (1,625 | ) | 0— | |||||
| ||||||||
Loss before income taxes | (20,661 | ) | (57,714 | ) | ||||
| ||||||||
Income taxes | 0— | 0— | ||||||
| ||||||||
Net loss | $ | (20,661 | ) | $ | (57,714 | ) | ||
| ||||||||
Net loss per common share - basic and diluted | * | * | ||||||
| ||||||||
Weighted average number of common shares | 10,778,229 | 10,753,504 | ||||||
| ||||||||
* Net loss is less than $0.01 per share. |
LIMITLESS X HOLDINGS INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Common Stock | Additional | Total | ||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Issuable | Pain-In | Retained | Stockholder’s | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||||||||
Balance at March 31, 2022 (unaudited) | 500,000 | $ | 50 | 104,893,504 | $ | 10,489 | 11,910,000 | $ | 1,191 | $ | 1,837,094 | $ | 312,968 | $ | 2,161,792 | |||||||||||||||||||||
Issuance of common stock | - | - | 2,910,000 | 291 | (2,910,000 | ) | (291 | ) | 2,000,000 | - | 2,000,000 | |||||||||||||||||||||||||
Issuance of common stock for services | - | - | 1,089,956 | 109 | - | - | 1,117,673 | - | 1,117,782 | |||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | (6,036,849 | ) | (6,036,849 | ) | |||||||||||||||||||||||||
Balance at June 30, 2022 (unaudited) | 500,000 | $ | 50 | 108,893,460 | 10,889 | 9,000,000 | 900 | $ | 4,954,767 | $ | (5,723,881 | ) | $ | (757,275 | ) |
Common Stock | Additional | Total | ||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | Issuable | Pain-In | Retained | Stockholder’s | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||||||||||||||
Balance at December 31, 2021 | 500,000 | $ | 50 | 104,893,504 | $ | 10,489 | 11,910,000 | $ | 1,191 | $ | 1,837,094 | $ | 4,664 | $ | 1,853,488 | |||||||||||||||||||||
Issuance of common stock | - | - | 2,910,000 | 291 | (2,910,000 | ) | (291 | ) | 2,000,000 | - | 2,000,000 | |||||||||||||||||||||||||
Issuance of common stock for services | - | - | 1,089,956 | 109 | - | - | 1,117,673 | - | 1,117,782 | |||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | (5,728,545 | ) | (5,728,545 | ) | |||||||||||||||||||||||||
Balance at June 30, 2022 (unaudited) | 500,000 | $ | 50 | 108,893,460 | $ | 10,889 | 9,000,000 | $ | 900 | $ | 4,954,767 | $ | (5,723,881 | ) | $ | (757,275 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Bio Lab Naturals, Inc. and SubsidiaryLIMITLESS X HOLDINGS INC.
Consolidated Statements of OperationsUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
Revenues | ||||||||
Sales | $ | 125,870 | $ | 21,000 | ||||
Rental | 56,000 | 0— | ||||||
Total revenues | 181,870 | 21,000 | ||||||
| ||||||||
Cost of sales | ||||||||
Purchases | 113,335 | 0— | ||||||
Cost of sales - other | 16,000 | 36,639 | ||||||
Depreciation - rental | 5,790 | 0— | ||||||
Depreciation | 11,281 | 25,681 | ||||||
Total cost of sales | 146,406 | 62,320 | ||||||
| ||||||||
Gross profit | 35,464 | (41,320 | ) | |||||
| ||||||||
Operating expenses | ||||||||
Consulting fees, related party | 112,500 | 39,500 | ||||||
Consulting fees | 0— | 13,860 | ||||||
General and administrative expenses - other | 16,432 | 28,984 | ||||||
Professional fees | 81,423 | 85,401 | ||||||
Total operating expenses | 210,355 | 167,745 | ||||||
| ||||||||
Loss from operations | (174,891 | ) | (209,065 | ) | ||||
| ||||||||
Other (expense) | ||||||||
Interest expense, related party | (1,750 | ) | 0— | |||||
Interest expense | (2,042 | ) | (251 | ) | ||||
(Loss) on disposal of assets | (73,046 | ) | 0— | |||||
Total other (expense) | (76,838 | ) | (251 | ) | ||||
| ||||||||
Loss before income taxes | (251,729 | ) | (209,316 | ) | ||||
| ||||||||
Income taxes | 0— | 0— | ||||||
| ||||||||
Net loss | $ | (251,729 | ) | $ | (209,316 | ) | ||
| ||||||||
Net loss per common share - basic and diluted | $ | (0.02 | ) | $ | (0.02 | ) | ||
| ||||||||
Weighted average number of common shares | 10,765,935 | 9,388,570 |
For the six months | ||||
ended June 30, | ||||
2022 | ||||
Cash flows from operating activities: | ||||
Net loss | $ | (5,728,545 | ) | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Depreciation | 3,613 | |||
Common stock issued for professional fees | 1,117,782 | |||
Changes in assets and liabilities: | ||||
Accounts receivables, net | 50,480 | |||
Holdback receivables | (1,338,956 | ) | ||
Inventories, net | (73,909 | ) | ||
Other assets | (91,278 | ) | ||
Accounts payable and accrued expenses | 1,264,794 | |||
Refunds payable | 108,863 | |||
Royalty payable | 232,121 | |||
Chargebacks payable | 105,524 | |||
Net cash used in operating activities | (4,349,511 | ) | ||
Cash flows from investing activities: | ||||
Proceeds from disposition of asset | 28,397 | |||
Net cash provided by financing activities | 28,397 | |||
Cash flows from financing activities: | ||||
Proceeds from borrowings from related parties | 317,610 | |||
Proceeds from borrowings from shareholder | 3,672,028 | |||
Proceeds from borrowing | 35,000 | |||
Proceeds from issuance of common stock | 2,000,000 | |||
Net cash provided by financing activities | 6,024,638 | |||
Net increase in cash | 1,703,524 | |||
Cash – beginning of period | 78,856 | |||
Cash – end of period | $ | 1,782,380 | ||
Supplemental disclosures of cash flow information | ||||
Cash paid during the periods for: | ||||
Interest | $ | 833 | ||
Income taxes | $ | - |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Bio Lab Naturals, Inc. and Subsidiary
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)
Class A Convertible Preferred $0.0001 Par Value | Common Shares $0.0001 Par Value | Additional Paid-in | Accumulated | Total Stockholders' | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | (Deficit) | Equity | ||||||||||||||||||||||
BALANCES, December 31, 2020 | 500,000 | $ | 50 | 10,753,504 | $ | 1,075 | $ | 35,672,338 | $ | (35,443,852 | ) | $ | 229,611 | |||||||||||||||
Issuance of shares for services, related party | — | — | 50,000 | 5 | 77,495 | — | 77,500 | |||||||||||||||||||||
Net loss for the period | — | — | — | — | — | (251,729 | ) | (251,729 | ) | |||||||||||||||||||
BALANCES, September 30, 2021 | 500,000 | $ | 50 | 10,803,504 | $ | 1,080 | $ | 35,749,833 | $ | (35,695,581 | ) | $ | 55,382 |
The accompanying notes are an integral part of these financial statements.
Bio Lab Naturals, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30, | ||||||||
2021 | 2020 | |||||||
OPERATING ACTIVITIES | ||||||||
Net loss | $ | (251,729 | ) | $ | (209,316 | ) | ||
Adjustment to reconcile net loss to net cash flows used | ||||||||
in operating activities | ||||||||
Depreciation | 17,071 | 25,681 | ||||||
Issuance of common shares for services, related party | 77,500 | 12,500 | ||||||
Loss on disposition of asset | 73,046 | 0— | ||||||
Changes in: | ||||||||
Accounts receivable - net | 0— | 13,000 | ||||||
Deposits | (51,785 | ) | (12,500 | ) | ||||
Accounts payable and accrued liabilities | 59,131 | (12,444 | ) | |||||
Net cash (used in) operating activities | (76,766 | ) | (183,079 | ) | ||||
| ||||||||
INVESTING ACTIVITIES | ||||||||
Acquisition of property on operating lease | (115,791 | ) | 0— | |||||
Acquisition of property | 0— | (32,426 | ) | |||||
Proceeds from disposition of asset | 9,850 | 0— | ||||||
Net cash provided by investing activities | (105,941 | ) | (32,426 | ) | ||||
| ||||||||
FINANCING ACTIVITIES | ||||||||
Funds from sales of common shares | 0— | 262,000 | ||||||
Funds from deposit | 66,000 | 0— | ||||||
Funds from loans, net of repayment | 35,000 | 6,730 | ||||||
Funds from loan related party, net of repayment | 30,000 | 0— | ||||||
Net cash provided by financing activities | 131,000 | 268,730 | ||||||
| ||||||||
Net (decrease) in cash | (51,707 | ) | 53,225 | |||||
Cash at beginning of period | 69,065 | 69,527 | ||||||
Cash at end of period | $ | 17,358 | $ | 122,752 | ||||
| ||||||||
Supplemental Schedule of Cash Flow Information: | ||||||||
Interest paid | $ | 1,083 | $ | 251 | ||||
Income taxes paid | $ | 0— | $ | 0— | ||||
| ||||||||
Supplemental Schedule of Non-Cash Flow Information | ||||||||
Issuance of shares for debt | $ | 0— | $ | 10,000 |
The accompanying notes are an integral part of these financial statements.
BIO LAB NATURALS,
LIMITLESS X HOLDINGS INC. AND SUBSIDIARY
Notes to Consolidated Financial StatementsNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
Note 1 – Organization and History
Vyta Corp (the “Company”“Vvta”) was incorporated in Nevada in June 1996. On August 20, 2010, itVvta changed its state of incorporation to Delaware and on November 5, 2010 it changed its name to Bio Lab Naturals, Inc. On August 20, 2010, the Company executed a redomicile merger with its wholly owned subsidiary Vyta Corp (Delaware), as result of the merger the Company’s corporate domicile moved from Nevada to Delaware.(“Bio Lab”).
Prior to 2011, the Company was involved in various business activities and since then the Company has been seeking a business opportunity.
Effective December 31, 2019, the CompanyBio Lab entered into a Reorganization Agreement with Prime Time Live, Inc. (“PTL”), a Colorado corporation, (“PTL”), whereby PTL merged with a newly formed wholly owned subsidiary of the Company, andBio Lab, with the subsidiary being the survivor, in exchange for the CompanyBio Lab issuing one share of its common stock for each share of PTL’s 5,500,000 issued and outstanding shares of common stock. As a result, PTL became a wholly owned subsidiary of Bio Lab.
As previously reported on a Current Report on Form 8-K filed with the Securities and Exchange Commission on May 13, 2022, Bio Lab entered into a Share Exchange Agreement (the “Agreement”) with Limitless X, Inc., a Nevada corporation (“LimitlessX”), and its 11 shareholders (the “LimitlessX Acquisition”) on May 11, 2022 (the “Merger”). The parties completed and closed the LimitlessX Acquisition on May 20, 2022 by issuing an aggregate of 97,000,000 shares to the LimitlessX shareholders (the “Closing”). According to the terms of the Agreement, Bio Lab is obligated to issue an additional 9,000,000 shares of common stock to the LimitlessX shareholders pro rata to their interests in approximately six months from Closing as part of the Limitless Acquisition. Concurrently with the LimitlessX Acquisition, Jaspreet Mathur, the founder and principal shareholder of LimitlessX, also purchased from Helion Holdings LLC, 500,000 shares of Bio Lab’s Class A Preferred Convertible Stock, which at all times have a number of votes equal to 60% of all the issued and outstanding shares of common stock of Bio Lab.
On June 10, 2022, Bio Lab changed its name to Limitless X Holdings, Inc. (“Limitless”).
The Merger was accounted for as a “reverse merger” following the completion of the transaction. For accounting purposes, LimitlessX was deemed to be the accounting acquirer in the transaction and, consequently, the transaction was treated as a recapitalization of Bio Lab. Accordingly, LimitlessX’s assets, liabilities, and results of operations became the historical financial statements of the registrant. No step-up in basis or intangible assets or goodwill was recorded in this transaction.
Limitless is a lifestyle brand, focused in the health and wellness industry. Limitless provides nutritional supplements, cutting edge wellness studies, and interactive training videos. The mission of Limitless is to provide businesses within its industry a turnkey solution to sell products both online and in retail stores. Limitless also provides its own groundbreaking products and wellness videos that fit nearly every person regardless of age or current health conditions. Limitless teams includes sales, marketing, user interface design (UI), user experience design (UX), fulfillment, customer support, labeling, product manufacturing, consulting, retailing, and payment processing, among others.
Note 2 – Summary of Significant Accounting Policies
Principles of Consolidation and Reporting
The accompanying consolidated financial statements include the accounts of Bio Lab Naturals,Limitless X Holdings Inc. (a holding company) and its wholly owned subsidiary.operating subsidiaries, Limitless X, Inc., and Prime Time Live, Inc. (collectively, the “Company”). All intercompany balances have been eliminated during consolidation.
Use of Estimates in the Preparation of Consolidated Condensed Financial Statements
The preparation of consolidated condensed financial statements in conformity with generally accepted accounting principles in the United States(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, andstatements. Estimates also affect the reported amounts of revenuesrevenue and expenses during the reporting periods.period. Actual results could differ from those estimates. Significant estimates include the fair value of assets and liabilities, income taxes and the valuation allowances related to accounts receivable, deferred tax assets and contingencies.
Cash and Cash Equivalents
The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents include demand deposits carried at cost which approximates fair value. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”).
Concentration of Credit Risk
The Company offers its services to a small number of clients. This risk of non-payment by these clients is considered minimal and the Company does not generally obtain collateral for sales. The Company continually monitors the credit standing of its clients.
Accounts Receivable, net
Accounts receivable, net consists primarily of trade receivables, net of allowances for doubtful accounts. The Company sells its products for cash or on credit terms, which are established in accordance with local and industry practices and typically require payment within 30 days of delivery. The Company estimates its allowance for doubtful accounts and the related expected credit loss based upon the Company’s historical credit loss experience, adjusted for asset-specific risk characteristics, current economic conditions, and reasonable forecasts. Accounts receivables are written off when determined to be uncollectible. The Company did not require and did not have an allowance for doubtful accounts.
Holdback Receivables
The Company records accounts receivable atuses a third-party payment processor for its customers. When such customers make a purchase, payments are delivered directly to the third-party payment processor and the net realizable value. This value includes an appropriate allowance for uncollectible accountsamount is distributed to reflect any loss anticipated on the accounts receivable balances and is charged to other income (expense) inCompany.
Distributions from the statements of operations. Management calculates this allowancethird-party payment processor are based on itsseveral criteria, such as return and chargeback history, of write-offs,associated risk for the level of past-due accounts based on the contractual terms of the receivables,specific business vertical, average transaction amount, and the Company’s relationships with, and the economic status of, its clients. At September 30, 2021 and December 31, 2020,so on. In order to mitigate processing risks, there are no allowance for uncollectible accounts.policies regarding reserve requirements and payment in arrears in place.
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 2021
Leases
Capital Leases
The Company followstotal holdback receivables balance reflects the provisions of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and incremental direct costs directly related to lease origination activity are expensed.
New lease transactions can be structured as direct financing leases that are non-cancelable "net" leases, contain "hell-or-high-water" provisions under which the lessee must make all lease payments regardless of any defects in the property, and which require the lessee to maintain, service and insure the property against casualty loss and pay all property,10% reserve on gross sales and other taxes. The re-lease of property that has come off lease may be accountedadditional reserves by the third-party processor for as a sales-type lease or as an operating lease, depending on the terms of the re-lease. Leased property that comes off leaseadditional returns and is re-marketed through a sale to the lessee or a third party is accounted for as sale of leased property.chargebacks.
For leases that qualify as direct financing leases, the aggregate lease payments receivable and estimated residual value, if any,
Inventories, net
Inventories are recorded net of unearned income as net investment in leases. The unearned income is recognized as direct finance income on an internal rate of return method calculated to achieve a level yield on the Company’s investment over the lease term. There are no costs or expenses related to direct financing leases since lease income is recorded on a net basis.
For leases that qualify as sales-type leases, the Company recognizes profit or loss at lease inception to the extent the fair value of the property leased differs from the Company's carrying value. The difference between the discounted value of the aggregate lease payments receivable and the property cost, less the discounted value of the residual, if any, and any initial direct costs is recorded as sales-type lease income. For balance sheet purposes, the aggregate lease payments receivable and estimated residual value, if any, are recorded net of unearned income as net investment in leases. Unearned income is recognized as direct finance income over the lease term on an internal rate of return method.
The residual value is an estimate for accounting purposes of the fair value of the lease property at lease termination. The estimates are reviewed periodically to ensure reasonableness, however, the amounts the Company may ultimately realize could differ from the estimated amounts.
The Company has no leases that qualify as capital leases at and during the three and nine months ended September 30, 2021.
Operating Leases
Lease contracts which do not meet the criteria of capital leases are accounted for as operating leases. Property on operating leases is recordedvalued at the lower of cost or fairnet realizable value and depreciated on a straight-linefirst-in, first-out basis, overadjusted for the estimated useful lifevalue of inventory that is determined to be excess, obsolete, expired, or unsaleable. Inventories primarily consisted of finished goods.
Advertising and Marketing
Advertising and marketing costs are charged to expense as incurred. Advertising and marketing costs were approximately $12,012,857 and $17,256,535 for the property. Rental income is recorded on a straight-line basis overthree and six months ended June 30, 2022 and are included in operating expenses in the lease term. See Note 5 – Leases.accompanying statement of income.
Equipment
Equipment is recorded at cost and consists of screen video and related equipment. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation of equipment is over the estimated useful life of five to ten years using the straight-line method for consolidated financial statement purposes. At September 30, 2021 and December 31, 2020, there were capitalized costs of $68,645 and $ $167,672, respectively.
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Machinery and equipment | $ | 37,463 | $ | - | ||||
Total | 37,463 | - | ||||||
Less: accumulated depreciation | (3,134 | ) | - | |||||
Total equipment, net | $ | 34,329 | $ | - |
Depreciation expense for the three and six months ended SeptemberJune 30, 20212022 was $3,613 and 2020 was $3,760 and $8,783, respectively and for the nine months ended September 30, 2021 and 2020 was $11,281 and $25,681,$3,613, respectively.
During the ninesix months ended SeptemberJune 30, 2021,2022, the Company sold a used screen for $14,700 and as a result reported a loss of $16,497 and a gain of $28,397 on the dispositiondisposal of assetassets.
Revenue Recognition
Company recognizes revenue when performance obligations under the terms of a contract with its customer are satisfied. The Company has determined that fulfilling and delivering products is a single performance obligation. Revenue is recognized at the point in time when the Company has satisfied its performance obligation and the customer has obtained control of the products. This generally occurs when the product is delivered to or picked up by the customer based on applicable shipping terms, which is typically within 15 days. Revenue is measured as the amount of $73,046.consideration expected to be received in exchange for fulfilled product orders,
8
TableWhile customers generally have a right to return defective or non-conforming products, past experience has demonstrated that product returns have been immaterial. Customer remedies for defective or non-conforming products may include a refund or exchange. As a result, the right of Contentsreturn is estimated and recorded as a reduction in revenue at the time of sale, if necessary.
BIO LAB NATURALS, INC. AND SUBSIDIARYThe Company’s customer contracts identify product quantity, price, and payment terms. Payment terms are granted consistent with industry standards. Although some payment terms may be more extended, the majority of the Company’s payment terms are less than 30 days. As a result, revenue is not adjusted for the effects of a significant financing component. Amounts billed and due from customers are classified as Accounts Receivables on the Balance Sheet.
Notes to Consolidated Financial Statements
September 30, 2021
Revenue recognition
The Company followsutilizes third-party contract manufacturers for the provisionsmanufacture of ASU No. 2014 - 09, its products. The Company has evaluated whether it is the principal or agent in these relationships. The Company has determined that it is the principal in all cases, as it retains the responsibility for fulfillment and risk of loss, as well as for establishing the price.
In accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, (Topic 606), using the full retrospective transition method. The Company’s adoption of ASU 2014 - 09 did not have a material impact on the amount and timing of revenue recognized in its consolidated financial statements.
Under ASU 2014 - 09, the Company recognizes revenue when controlhas elected the practical expedient to expense the incremental costs to obtain a contract, because the amortization period would be less than one year, and the practical expedient for shipping and handling costs. Shipping and handling costs incurred to deliver products to customers are accounted for as fulfillment activities, rather than a promised service, and as such are included in Cost of Goods Sold in the promised servicesStatements of Operations.
Cost of Goods Sold
Cost of goods sold includes the cost of inventory sold during the period net of allowances, as well as, distribution, and, shipping and handling costs. The amount shown is transferrednet of various rebates from third-party vendors in the form of payments.
Refunds Payable
If customers are not satisfied for any reason, they may request a full refund, processed to clients, in an amount that reflects the considerationoriginal form of payment, within 30 days from the order date. If the order has already been shipped, the Company expects to be entitled to in exchange for those services.charges a 20% restocking fee.
The Company derives its revenues from
As of June 30, 2022 and December 31, 2021, refunds payable were $316,462 and $207,599, respectively.
Chargebacks Payable
Once customers successfully dispute chargebacks with the rendering of entertainment rental services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its contracts:
Identify the contract with a client;
Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to performance obligations in the contract; and
Recognize revenue as the performance obligation is satisfied.
Impairment of Long-Lived Assets
In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the ASC,payment processor, the Company assessesreturns such funds to the recoverabilitypayment processor to return to the customer.
As of the carrying value of its long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.June 30, 2022 and December 31, 2021, chargebacks payable were $205,874 and $100,350, respectively.
Other Comprehensive Loss
The Company has no material components of other comprehensive loss and accordingly, net loss is equal to comprehensive loss for the period.
Income Taxes
The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the accounting bases and the tax bases of the Company’s assets and liabilities. The deferred tax assets and liabilities are computed using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.
The Company's deferred income taxes include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, basedstandard on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.
The Company has adopted ASC guidance regarding accounting for uncertainty in income taxes. Thistaxes addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under that guidance, clarifies the accounting for income taxes by prescribingCompany may recognize the minimum recognition thresholdtax benefit from an incomeuncertain tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whetheronly if it is more likely than not that the income tax position will be sustained on examination by taxing authorities based uponon the technical merits upon examination byof the taxing authorities. If the incomeposition. The tax position
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 2021
is expected to meet the more likely than not criteria, the benefit recordedbenefits recognized in the consolidated financial statements equalsfrom such a position are measured based on the largest amountbenefit that ishas a greater than 50% likely to belikelihood of being realized upon its ultimate settlement. At September 30, 2021 and December 31, 2020, there were no uncertain tax positions that required accrual.
Goodwill
In accordance with generally accepted accounting principles,GAAP, goodwill cannot be amortized, however, it must be tested annually for impairment. This impairment test is calculated at the reporting unit level. The goodwill impairment test has two steps. The first identifies potential impairments by comparing the fair value of a reporting unit with its book value, including goodwill. If the fair value of the reporting unit exceeds the carrying amount, goodwill is not impaired and the second step is not necessary. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount. If the implied goodwill is less than the carrying amount, a write-down is recorded. Management tests goodwill each year for impairment, or when facts or circumstances indicate impairment has occurred. See Note 4 – Fair Value Measurements.
Loss
Earnings (Loss) per Share
The Company calculates earnings per share in accordance with Financial Accounting Standards Board (“FASB”) ASC 260, Earnings Per Share, which requires a dual presentation of basic and diluted earnings per share. Basic net lossearnings per common share of stock is calculated by dividing net loss available to common stockholders byare computed using the weighted-averageweighted average number of common shares outstanding during each period. Diluted net loss per common share is calculated by dividing net loss by the weighted-average number offiscal year. The Company did not have any dilutive common shares outstanding, including the effect of other dilutive securities. The Company’s had no potentially dilutive securities issued as of and duringfor the three and ninesix months ended SeptemberJune 30, 2021 and 2020.2022.
Equity Based Payments
The Company recognizes compensation cost for equity-based awards based on estimated fair value of the award and records capitalized cost or compensation expense over the requisite service period.
Off-Balance Sheet Arrangements
Concentrations of Credit Risk
As part
Financial instruments that potentially subject the Company to concentrations of credit risk are accounts receivable and other receivables arising from its normal business activities. The Company has a diversified customer base. The Company controls credit risk related to accounts receivable through credit approvals, credit limits, and monitoring procedures. The Company routinely assesses the financial strength of its ongoing business,customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for un-collectible accounts and, as a consequence, believes that its accounts receivable related credit risk exposure beyond such allowance is limited.
Operating Lease
In accordance with ASC 842, Leases, the Company has not participateddetermines whether an arrangement contains a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been establishedexchange for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.consideration. For the period through September 30, 2021,identified leases, the Company has not been involveddetermines whether it should be classified as an operating or finance lease. Operating leases are recorded in any unconsolidated SPE transactions.
Subsequent Events
The Company evaluates events and transactions after the balance sheet date but beforeas: right-of-use asset (“ROU asset”) and operating lease liability. ROU asset represents the consolidated financial statements are issued.
Note 3 – Going Concern and Managements’ Plan
The Company’s consolidated financial statementsright to use an underlying asset for the nine months ended September 30, 2021 have been prepared on a going concern basis, which contemplateslease term and lease liability represents the realization ofCompany’s obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the settlement of liabilities in the normal course of business. The Company reported a net loss for the three and nine months ended September 30, 2021 of $20,661 and $251,729, respectively and an accumulated deficit of $39,695,581 at September 30, 2021.
The Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern within one year after thecommencement date of the issuancelease and measured based on the present value of these consolidated financial statements.lease payments over the lease term. The future success ofROU asset also includes deferred rent liabilities. The Company’s lease arrangement generally do not provide an implicit interest rate. As a result, in such situations the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company includes options to extend or terminate the lease when it is dependent on its ability to attract additional capital and ultimately, upon its ability to develop future profitable operations. There can be no assurance that the Company will be successful in
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 2021
obtaining such financing, orreasonably certain that it will attain positive cash flow from operations. However, management believesexercise that actions presently being takenoption in the measurement of its ROU asset and liability. Lease expense for the operating lease is recognized on a straight-line basis over the lease term. The Company has a lease agreement with lease and non-lease components, which are accounted for as a single lease component.
Recent Accounting Pronouncements
In December 2019, FASB issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which amends existing guidance related to raise additional capital as more fully disclosed in these consolidatedthe accounting for income taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. This ASU is effective for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the effects adoption of this guidance will have on the financial statements providesand does not expect that the opportunity for the Companyadoption of this ASU will be material to continue as a going concern.its financial statements.
Note 43 – Fair Value Measurements
The Company applies the authoritative guidance applicable to allutilizes ASC 820-10, Fair Value Measurement and Disclosure, for valuing financial assets and liabilities required to be measured and reported on a fairrecurring basis. Fair value basis,is defined as well as to non-financial assets and liabilities measured at fair value on a non-recurring basis, including impairments of long-lived assets. The fair value of an assetthe exit price, or liability is the amount that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants atas of the measurement date. The Companyguidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when measuring fair value.available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputinputs are inputs that reflect the Company’s assumptions of whatabout the factors market participants would use in valuing the asset or liability based onliability. The guidance establishes three levels of inputs that may be used to measure fair value:
Level 1. | Observable inputs such as quoted prices in active markets; |
Level 2. | Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
Level 3. | Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. |
The Company’s financial instruments consisted of cash, operating lease right-of-use assets, net, accounts payable and accrued expenses, notes payables, and operating lease liabilities. The estimated fair value of cash, operating lease right-of-use assets, net, and operating lease liabilities approximate its carrying amount due to the information available in the circumstances.short maturity of these instruments.
Note 4 – Commitments and Contingencies
Financial and non-financial
Commitments
Operating lease ROU assets and liabilities are classified withinrecognized at commencement date based on the valuation hierarchy based uponpresent value of lease payments over the lowest levellease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of input thatinterest in arrangements is significant tonot readily determinable and the fairCompany utilizes its incremental borrowing rate in determining the present value measurement.of lease payments. The Company’s policyincremental borrowing rate is to recognize transfersa hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance and other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities and are recognized in and out of the fair value hierarchy as of the end of the reporting period in which the eventobligation for those payments is incurred. Our lease terms may include options to extend or change in circumstances causedterminate the transfer. lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
The Company has consistently appliedlease agreements with lease and non-lease components. The Company has elected to account for these lease and non-lease components as a single lease component.
In accordance with ASC 842, the valuation techniques discussed belowcomponents of lease expense were as follows:
For the six months ended June 30, | 2022 | |||
Operating lease expense | $ | 69,054 | ||
Total lease expense | $ | 69,054 |
In accordance with ASC 842, other information related to leases was as follows:
For the six months ended June 30, | 2022 | |||
Operating cash flows from operating leases | $ | 67,890 | ||
Cash paid for amounts included in the measurement of lease liabilities | $ | 67,890 | ||
Weighted-average remaining lease term—operating leases | 1.7 Years | |||
Weighted-average discount rate—operating leases | 3 | % |
In accordance with ASC 842, maturities of operating lease liabilities as of June 30, 2022 were as follows:
Operating | ||||
Year ending: | Lease | |||
2022 (remaining six months) | $ | 69,248 | ||
2023 | 93,236 | |||
2024 | - | |||
2025 | - | |||
2026 | - | |||
Total undiscounted cash flows | $ | 162,484 | ||
Reconciliation of lease liabilities: | ||||
Weighted-average remaining lease terms | 1.7 Years | |||
Weighted-average discount rate | 3 | % | ||
Present values | $ | 159,467 | ||
Lease liabilities—current | 136,245 | |||
Lease liabilities—long-term | 23,222 | |||
Lease liabilities—total | $ | 159,467 | ||
Difference between undiscounted and discounted cash flows | $ | 3,017 |
Contingencies
From time to time, the Company may be involved in all periods presented. The hierarchycertain legal actions and claims arising in the normal course of business. Management is organized into three levels basedof the opinion that such matters will be resolved without material effect on the reliabilityCompany’s financial condition or results of the inputs as follows:operations.
Level 1: Quoted prices in active markets for identical assets or liabilities; or
Level 2: Quoted prices in active markets for similar assets and liabilities and inputs, quoted prices for identical or similar assets or liabilities in markets that are not active and model-derived valuations whose inputs or significant value drivers are observable; or
Level 3: Unobservable pricing inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.
The Company did not measure the financial or non-financial assets and liabilities at September 30, 2021 as there was no event or significant change within the valuation hierarchy during the nine months ended September 30, 2021.
Note 5 – Net property on operating leasesDebt
Note payable
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
March 1, 2021 ($35,000) | $ | 35,000 | $ | - | ||||
Total note payable | 35,000 | - | ||||||
Less - current portion | (35,000 | ) | - | |||||
Total note payable, less current portion | $ | - | $ | - |
The following table provides future minimum payments as of June 30, 2022:
The Company’s rental income consists of the income derived from an operating lease on a semi-truck video screen unit commencing on April 5,
For the years ended | Amount | |||
2022 (remaining six months) | $ | 35,000 | ||
2023 | - | |||
2024 | - | |||
2025 | - | |||
2026 | - | |||
Thereafter | - | |||
Total | $ | 35,000 |
March 1, 2021 for a period of twelve month at a total lease amount of $119,000 payable at the rate of $9,000 per month with an initial lease payment of $20,000. The lessee has the option to purchase the unit in the amount of $116,000 at the expiration of the lease. During the three and nine months ended September 30, 2021, the Company recognized rental income in the amount of $27,000 and $56,000. respectively.– $35,000
At September 30, 2021, there were net property on operating lease capitalized costs of $110,001 and during the three and nine months ended September 30, 2021, the Company recognized depreciation expense of $2,895 and $5,790, respectively.
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 2021
Note 6 – Debt
Promissory Notes
On March 1, 2021, an individual loaned the CompanyPrime Time Live, Inc. $35,000 in exchange for an unsecured promissory note that included interest at the rate of ten percent (10%)10% per annum on the unpaid principal balance with anyall unpaid principal and interest due on or before March 1, 2022. The maturity date was extended to December 31, 2022. Interest is due and payable on the 1stfirst day of each month. At SeptemberJune 30, 2021, the Company2022, Prime Time Live, Inc. owes $35,000 in principal and accrued interest of $292.
Related Party
On March 1, 2021, an affiliate of an officer of the Company, loaned the Company $30,000 in exchange$292 and $292 for an unsecured promissory note that included interest at the rate of ten percent (10%) per annum on the unpaid principal balance with any unpaid principal and interest due on or before March 1, 2022. At September 30, 2021, the Company owes $30,000 in principal and accrued interest of $250 and during the three and ninesix months ended SeptemberJune 30, 2021 incurred interest expense of $750 and $1,750, respectively.2022.
Note 76 – Stockholders’ Equity
Preferred SharesStock
Class A Convertible
At SeptemberJune 30, 20212022 and December 31, 2020,2021, there are a total of 500,000 shares of Class A Convertible shares of preferred stock (“Class A”) issued and outstanding. The Class A shares provide that when voting as a single class, the shares shall have the votes and the voting power at all times to beof at least 60% of the voting power of the Company. Further, the holders of the Class A shares at their discretion and subject to a change of control and toor listing of the qualification by application tocommon stock of the Company on either NASQADthe NASDAQ or NYSE Emerging Markets,stock exchanges, can convert their one share of Class A into two shares of the Company'sCompany’s common stock, subject to adjustment. In addition, the holder of the shares of Class A is entitled to a liquidation preference of the Company senior to all other securities of the Company.
Common SharesStock
The Company’s capitalcommon stock at SeptemberJune 30, 20212022 consists of 200,000,000 authorized shares of $0.0001 par value common stock. At SeptemberJune 30, 20212022 and December 31, 2020,2021, there werewas a total of 10,803,504 and 10,753,504 shares of common stock issued and outstanding, respectively.outstanding.
During
Common Stock and Recapitalization
As a result of reverse merger and LimitlessX being the nine months ended September 30, 2021,acquirer, the Company issued 50,000 shares ofretrospectively restated its common stock in exchange for services valued at $77,500 or $1.55 per share. See Note 9 – Related Party Transactions.as if the transaction occurred beginning of the period. The following is the reconciliation of retrospectively restated common stock:
December 31, 2021 | ||||||||||||
Issued | Issuable | Total | ||||||||||
Common stock – Limitless X Inc. – as original | 48,500,000 | 1,500,000 | 50,000,000 | |||||||||
Common stock split (1 to 1.94) – Limitless X Inc. | 45,590,000 | 1,410,000 | 47,000,000 | |||||||||
Common stock issuable (additional stock split) – Limitless X Inc. | - | 9,000,000 | 9,000,000 | |||||||||
Common stock (Bio Lab) – prior to reverse merger | 10,803,504 | - | 10,803,504 | |||||||||
Total as of December 31, 2021 – as retrospectively restated | 104,893,504 | 11,910,000 | 116,803,504 |
Note 87 – Equity Based Payments
The Company accounts for equity-based payment accruals under authoritative guidance as set forth in the Topics of the ASC. The guidance requires all equity-based payments to employees and non-employees, including grants of employee and non-employee stock options and warrants, to be recognized in the consolidated financial statements based at their fair values.
20142020 Stock Incentive Plan
Effective January 15, 2020, the Company’sCompany adopted its 2020 Stock Option and Award Plan (the “2020 Stock Incentive Plan”). Under the 2020 Stock Incentive Plan, the Board of Directors may grant options or purchase rights to purchase common stock to officers, employees, and other persons who provide services to the Company or any related company. The participants to whom awards are granted, the type of awards granted,
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
September 30, 2021
the number of shares covered for each award, and the purchase price, conditions and other terms of each award are determined by the Board of Directors, except that the term of the options shall not exceed 10ten years. A total of 2 million2,000,000 shares of the Company’s common stock are subject tois reserved for the 2020 Stock Incentive Plan. The shares issued for the 2020 Stock Incentive Plan may be either treasury or authorized and unissued shares. During the ninesix months ended SeptemberJune 30, 2022 and 2021, the Company granted no options under the 2020 Stock Incentive Plan.
Note 98 – Related Party Transactions
Equity for Services
During the nine months ended September 30, 2021, the Company issued 50,000 shares of its common stock to an officer/director in exchange for services valued at $77,500.
During the nine months ended September 30, 2020, the Company issued 100,000 shares of its common stock to two of its board members in exchange for services valued at $12,500.
Consulting Fees
During the three and six months ended SeptemberJune 30, 2021, the Company incurred consulting fees in the total amount of $15,000 to an officer and an affiliate of one of its officers.
During the nine months ended September 30, 2021 and 2020,2022, the Company incurred consulting fees in the amount of $112,500$17,500 and $39,500, respectively$32,500 to officersan officer and an officer of one of its affiliates.
13
Royalty Payables
Limitless Performance Inc. (“LPI”), SMILZ INC. (“Smiles”), DIVATRIM INC. (“Divatrim”), and AMAROSE INC. (“Amarose”) are all companies owned by a shareholder of the Company.
● | On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with LPI for the Company to distribute LPI products and for payments to LPI for its product designs and distribution rights. The Company shall pay to LPI from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks, and other such allowances. |
On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with Smiles for the Company to distribute Smiles products and for payments to Smiles for its product designs and distribution rights. The Company shall pay to Smiles from time to time royalty payments equal to 4.00% of |
● | On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with Divatrim for the Company to distribute Divatrim products and for payments to Smiles for its product designs and distribution rights. The Company shall pay to Divatrim from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks, and other such allowances. |
● | On December 1, 2021, the Company entered into a manufacturing and distributorship license agreement with Amarose for the Company to distribute Amarose products and for payments to Smiles for its product designs and distribution rights. The Company shall pay to Amarose from time to time royalty payments equal to 4.00% of gross sales, excluding returns, chargebacks, and other such allowances. |
Effective April 1, 2022, the Company shall pay all earned royalties to LPI, Smiles, Divatrim, and Amarose beginning on June 15, 2022. As of June 30, 2022, the royalty payable is in the amount of $232,121.
Note payables to shareholder
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
December 6, 2021 ($50,000) | $ | 50,000 | $ | 50,000 | ||||
February 11, 2022 ($150,000) | 150,000 | - | ||||||
May 8, 2022 ($550,000) | 550,000 | - | ||||||
May 9, 2022 ($1,100,000) | 1,100,000 | - | ||||||
May 16, 2022 ($450,000) | 450,000 | - | ||||||
June 1, 2022 ($500,000) | 500,000 | - | ||||||
June 30, 2022 ($922,028) | 922,028 | - | ||||||
Total loan payables to shareholder | 3,722,028 | 50,000 | ||||||
Less - current portion | (3,520,000 | ) | (28,802 | ) | ||||
Total loan payables to shareholder, less current portion | $ | 202,028 | $ | 21,198 |
The following table provides future minimum payments as of June 30, 2022:
For the years ended | Amount | |||
2022 (remaining six months) | $ | 2,484,747 | ||
2023 | 1,237,281 | |||
2024 | - | |||
2025 | - | |||
2026 | - | |||
Thereafter | - | |||
Total | $ | 3,722,028 |
December 6, 2021 – $50,000
On December 6, 2021, Limitless X Inc. (“Limitless X”) executed the standard loan documents required for securing a loan of $50,000 from a shareholder. As of June 30, 2022 and December 31, 2021, the balance is $50,000 and $50,000, respectively.
Pursuant to that certain Loan Authorization and Agreement, Limitless X borrowed an aggregate principal amount of $50,000, with proceeds to be used for working capital purposes. Beginning on June 1, 2022, the loan requires a payment of $4,303 per month which includes principal and interest with an interest rate of 6%. The total balance of principal and interest of $51,640 is due on May 1, 2023.
February 11, 2022 – $150,000
On February 11, 2022, Limitless X executed standard loan documents required for securing a loan of $150,000 from a shareholder. As of June 30, 2022, the balance is $150,000.
Pursuant to that certain Loan Authorization and Agreement, Limitless X borrowed an aggregate principal amount of $150,000, with proceeds to be used for working capital purposes. Beginning on June 1, 2022, the loan requires a payment of $12,910 per month which includes principal and interest with an interest rate of 6%. The total balance of principal and interest of $154,920 is due on May 1, 2023.
May 8, 2022 – $550,000
On May 8, 2022, Limitless X executed standard loan documents required for securing a loan of $550,000 from a shareholder. As of June 30, 2022, the balance is $550,000.
Pursuant to that certain Loan Authorization and Agreement, Limitless X borrowed an aggregate principal amount of $550,000, with proceeds to be used for working capital purposes. Beginning on June 1, 2022, the loan requires a payment of $47,337 per month which includes principal and interest with an interest rate of 6%. The total balance of principal and interest of $568,038 is due on May 1, 2023.
May 16, 2022 – $1,100,000
On May 16, 2022, Limitless X executed standard loan documents required for securing a loan of $1,100,000 from a shareholder. As of June 30, 2022, the balance is $1,100,00.
Pursuant to that certain Loan Authorization and Agreement, Limitless X borrowed an aggregate principal amount of $1,100,000, with proceeds to be used for working capital purposes. Interest began accruing at the rate of 8.5% on June 17, 2022.
May 18, 2022 – $450,000
On May 8, 2022, Limitless X executed standard loan documents required for securing a loan of $450,000 from a shareholder. As of June 30, 2022, the balance is $550,000.
Pursuant to that certain Loan Authorization and Agreement, Limitless X borrowed an aggregate principal amount of $450,000, with proceeds to be used for working capital purposes. Interest began accruing at the rate of 8.5% on June 19, 2022.
June 1, 2022 – $500,000
On June 1, 2022, Limitless X executed standard loan documents required for securing a loan of $500,000 from a shareholder. As of June 30, 2022, the balance is $500,000.
Pursuant to that certain Loan Authorization and Agreement, Limitless X borrowed an aggregate principal amount of $500,000, with proceeds to be used for working capital purposes. Beginning on August 1, 2022, the loan requires a payment of $43,494 per month which includes principal and interest with an interest rate of 8%. The total balance of principal and interest of $521,931 is due on July 1, 2023.
June 30, 2022 – $922,028
On June 30, 2022, Limitless X executed standard loan documents required for securing a loan of $922,028 from a shareholder. As of June 30, 2022, the balance is $922,028.
Pursuant to that certain Loan Authorization and Agreement, Limitless X borrowed an aggregate principal amount of $922,028, with proceeds to be used for working capital purposes. Beginning on August 1, 2022, the loan requires a payment of $80,206 per month which includes principal and interest with an interest rate of 8%. The total balance of principal and interest of $962,469 is due on August 1, 2023.
Note payables to related parties
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
April 1, 2022 ($237,610) | $ | 237,610 | $ | - | ||||
May 10, 2022 ($12,500) | 12,500 | - | ||||||
May 10, 2022 ($12,500) | 12,500 | - | ||||||
May 10, 2022 ($20,000) | 20,000 | - | ||||||
May 31, 2022 ($5,000) | 5,000 | - | ||||||
May 31, 2022 ($15,000) | 15,000 | - | ||||||
June 9, 2022 ($15,000) | 15,000 | - | ||||||
Total note payables to related parties | 317,610 | - | ||||||
Less - current portion | (276,681 | ) | - | |||||
Total note payables to related parties, less current portion | $ | 40,929 | $ | - |
The following table provides future minimum payments as of June 30, 2022:
For the years ended | Amount | |||
2022 (remaining six months) | $ | 276,681 | ||
2023 | 40,929 | |||
2024 | - | |||
2025 | - | |||
2026 | - | |||
Thereafter | - | |||
Total | $ | 317,610 |
April 1, 2022 – $237,610
On April 1, 2022, Limitless X executed standard loan documents required for securing a loan of $237,610 from Emblaze One, a company owned by a shareholder. As of June 30, 2022, the balance is $237,610.
Pursuant to that certain Loan Authorization and Agreement, Limitless X borrowed an aggregate principal amount of $237,610, with proceeds to be used for working capital purposes. Beginning on September 1, 2022, the loan requires a payment of $20,669 per month which includes principal and interest with an interest rate of 8%. The total balance of principal and interest of $248,032 is due on August 1, 2023.
May 10, 2022 ($12,500)
On May 10, 2022, a related party of the Company loaned Prime Time Live, Inc. $12,500 in exchange for a promissory note that included interest at the rate of 10% per annum on the unpaid principal balance with all unpaid principal and interest due on or before May 10, 2023. Interest began accruing at the rate of 10% on May 10, 2022.
May 10, 2022 ($12,500)
On May 10, 2022, a related party of the Company loaned Prime Time Live, Inc. $12,500 in exchange for a promissory note that included interest at the rate of 10% per annum on the unpaid principal balance with all unpaid principal and interest due on or before May 10, 2023. Interest began accruing at the rate of 10% on May 10, 2022.
May 10, 2022 ($20,000)
On May 10, 2022, a related party of the Company loaned Prime Time Live, Inc. $20,000 in exchange for a promissory note that included interest at the rate of 10% per annum on the unpaid principal balance with all unpaid principal and interest due on or before May 10, 2023. Interest began accruing at the rate of 10% on May 10, 2022.
May 31, 2022 ($5,000)
On May 31, 2022, a related party of the Company loaned Prime Time Live, Inc. $5,000 in exchange for a promissory note that included interest at the rate of 10% per annum on the unpaid principal balance with all unpaid principal and interest due on or before May 31, 2023. Interest began accruing at the rate of 10% on May 31, 2022.
May 31, 2022 ($15,000)
On May 31, 2022, a related party of the Company loaned Prime Time Live, Inc. $15,000 in exchange for a promissory note that included interest at the rate of 10% per annum on the unpaid principal balance with all unpaid principal and interest due on or before May 31, 2023. Interest will began accruing at the rate of 10% on May 31, 2022.
June 9, 2022 ($15,000)
On May 10, 2022, a related party of the Company loaned Prime Time Live, Inc. $15,000 in exchange for a promissory note that included interest at the rate of 10% per annum on the unpaid principal balance with all unpaid principal and interest due on or before May 10, 2023. Interest began accruing at the rate of 10% on May 10, 2022.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements and Associated Risks.
This Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will, “expect,” “believe,” “anticipate,” “estimate,” “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances, and failure to successfully develop business relationships.
INTRODUCTION
BasedAs previously reported on our financial history since inception, our auditor has expressed substantial doubta Current Report on Form 8-K filed with the Securities and Exchange Commission on May 13, 2022, the registrant, Bio Lab Naturals, Inc. (“Bio Lab”), entered into a Share Exchange Agreement (the “Agreement”) with Limitless X, Inc., a Nevada corporation (“LimitlessX”), and its 11 shareholders (the “LimitlessX Acquisition”) on May 11, 2022 (the “Merger”). The parties completed and closed the LimitlessX Acquisition on May 20, 2022 by issuing an aggregate of 97,000,000 shares to the LimitlessX shareholders (the “Closing”). According to the terms of the Agreement, Bio Lab is obligated to issue an additional 9,000,000 shares of common stock to the LimitlessX shareholders pro rata to their interests in approximately six months from Closing as part of the Limitless Acquisition. Concurrently with the LimitlessX Acquisition, Jaspreet Mathur, the founder and principal shareholder of LimitlessX, also purchased from Helion Holdings LLC, 500,000 shares of Bio Lab’s Class A Preferred Convertible Stock, which at all times have a number of votes equal to our ability60% of all the issued and outstanding shares of common stock of Bio Lab.
On June 10, 2022, Bio Lab changed its name to continueLimitless X Holdings, Inc.
The Merger was accounted for as a going concern. As reflected“reverse merger” following the completion of the transaction. For accounting purposes, LimitlessX was deemed to be the accounting acquirer in the accompanyingtransaction and, consequently, the transaction was treated as a recapitalization of Bio Lab. Accordingly, LimitlessX’s assets, liabilities, and results of operations became the historical financial statements as of September 30, 2021, we had an accumulated deficit totaling $35,695,581. This raises substantial doubts about our ability to continue as a going concern.the registrant.
Our plan of operations for the next 12 months is as follows:RESULTS OF OPERATION
The Company has been continuing its business and has experienced rentals during the three months ended September 30, 2021 of $27,000. Also, management has now been able to reconnect with event services business relationships and the normal demand for the event services business. Therefore, the Company now expects, without any new or additional steps, additional revenues to be generated during the fourth quarter of 2021 and continued operational status.
Results of HISTORICAL Operations
For the Three Months Ended SeptemberJune 30, 20212022 Compared to the Three Months Ended September 30, 2020March 31, 2022
DuringWe were incorporated in the State of Nevada on September 27, 2021. Consequently, we did not have any activity for the six and three months ended June 30, 2021.
Our sales increased by 60.8% to $5.0 million for the three months ended SeptemberJune 30, 2021 and 2020 we recognized total revenues of $27,000 and $21,000, respectively. The Company expects2022 as compared to generate revenues in the fourth quarter of 2021 and$8.3 million for the next 12 months.three months ended March 31, 2022. Sales increase was due to increase in operating activity and marketing.
Gross profit for the three months ended SeptemberJune 30, 20212022 was $18,374$8.7 million compared to gross loss of ($13,363)$6.1 million for the three months ended September 30, 2020.March 31, 2022. The increase in gross profit of $31,737 pertained primarily$2.6 million was due to decrease in cost of sales of $25,737 and an increase in revenues of $6,000.operating activity and marketing.
During the three months ended SeptemberJune 30, 2021,2022, we recognized $37,410$14.9 million in operating expenses compared to $44,351$5.8 million for the three months ended September 30, 2020. The change results primarily from a decrease in professional fees for the current period of $11,159 and general and administrative expenses – other of $10,782 offset by an increase in consulting fees, related party of $15,000.
For the Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020
During the nine months ended September 30, 2021 and 2020 we recognized total revenues of $181,870 and $21,000, respectively. The Company expects to generate revenues in the fourth quarter of 2021 and for the next 12 months.
Gross profit for the nine months ended September 30, 2021 was $35,464 compared to gross loss of ($41,320) for the nine months ended September 30, 2020. The increase in gross profit of $76,784 pertained primarily to an increase in purchases of $113,335, a decrease in cost of sales of $20,639 and a decrease in depreciation of $8,610 offset by an increase in related revenues of $161,870.
During the nine months ended September 30, 2021, we recognized $210,355 in operating expenses compared to $167,745 for the nine months ended September 30, 2020.March 31, 2022. The increase of $42,610 results$9.0 million was primarily from an increase in consulting fees of $71,640, along with a decrease in professional fees of $3,978advertising and generalmarket and administrative expenses – other of $12,552stock compensation for the current period.services.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
During the ninesix months ended SeptemberJune 30, 2021, the Company2022, net cash used $76,766 in funds towards its operational activities.operating activities was $4,349,511. The Company recognized acash used in operating activities was primary due to net loss and timing of $251,729 which was adjusted for such non-cash items as $17,071settlement of depreciation, $77,500 in issuance of common shares for services from a related partyassets and $73,046 from a loss on the disposition of an asset. During the nine months ended September 30, 2020, the Company used $183,079 in funds towards its operational activities. The Company recognized a net loss of $209,316 which was adjusted for such non cash items as $25,681 of depreciation and $12,500 is issuance of common shares for services from a related party.liabilities including stock compensation expenses.
Investing Activities
Net cash provided by investing activities for the six months ended June 30, 2022 was $28,397. During the ninesix months ended SeptemberJune 30, 2021, the Company used $105,914 in its investing activities comprised of acquisition of property on a net le3ase in the amount of $115,791 offset2022, $28,397 was provided by proceeds from the disposition of an asset in the amount of $9,850. During the nine months ended September 30, 2020, the Company used $32,426 towards acquisition of property.asset.
Financing Activities
DuringNet cash provided by financing activities for the ninesix months ended SeptemberJune 30, 2021, the Company2022 was provided $131,000$6,024,638. This amount was incurred by increased borrowings from its financing activities comprised of fundsrelated parties and shareholders and proceeds from a deposit on a sale contract in the amount of $66,000 as well as $65,000 in loans, net of repayments. During the nine months ended September 30, 2020, the Company was provided $268,730 from its financing activities comprised of funds from the saleissuance of common shares in the amount of $262,000 and $6,730 in loans, net of repayments.stock.
In order for us to continue as a going concern, we will need to obtain additional debt or equity financing and look for companies with cash flow positive operations that we can acquire. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to acquire cash flow positive operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet all our future obligations. Most of our existing financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to significantly reduce or cease operations.
Going Concern
We have approximately $3,000 in cash as of October 27, 2021 and have incurred operating losses and limited cash flows from operations since inception. As of September 30, 2021, we had an accumulated deficit of $(35,695,581) and we will require additional working capital to fund operations through 2021 and beyond.
These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements included in this Form 10-Q do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern. The audited financial statements included in the Company’s Form 10-K for the year ended December 31, 2020 have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result if we cease to continue as a going concern.
Based on our financial history since inception, in their report on the financial statements for the period ended December 31, 2020, our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern. There is no assurance that any revenue will be realized in the future.
There can be no assurance that we will have adequate capital resources to fund planned operations or that any additional funds will be available to us when needed or at all, or, if available, will be available on favorable terms or in amounts required by us. If we are unable to obtain adequate capital resources to fund operations, we may be required to delay, scale back or eliminate some or all of our operations, which may have a material adverse effect on our business, results of operations and ability to operate as a going concern.
Short Term
On a short-term basis, we have not generated revenues sufficient to cover our growth-oriented operations plan. Based on prior history, we may continue to incur losses until such a time that our revenues are sufficient to cover our operating expenses and growth-oriented operations plan. As a result, we may need additional capital in the form of equity or loans, none of which is committed as of this filing.
Capital Resources
We have only common stock as our capital resource, and our assets, cash and receivables.
We have no material commitments for capital expenditures within the next year, however, as operations are expanded substantial capital will be needed to pay for expansion and working capital.
Need for Additional Financing
We have limited funds, and such funds may not be adequate to carry out our business plan in the event production industry. Our ultimate success depends upon our ability to raise additional capital. We are investigating the availability, sources, and terms that might govern the acquisition of additional capital.
We have no commitment at this time for additional capital. If we need additional capital, we have no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to us. If not available, our operations will be limited to those that can be financed with our existing capital.
Off Balance Sheet Arrangements
None.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period 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 or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer/officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.
Management has carried out an evaluation of the effectiveness of the design and operation of our Company’s disclosure controls and procedures. Due to[Based on the lack of personnelevaluation, our Chief Executive Officer and outside directors, management acknowledgesPresident and Chief Financial Officer concluded that there are deficiencies in these controls and procedures. The Company anticipates that with further resources, the Company will expand both management and the board of directors with additional officers and independent directors in order to provide sufficientour disclosure controls and procedures.procedures [are operating effectively] [have certain deficiencies].
Changes in Internal Control Over Financial Reporting
There were noWe recently hired a new Chief Financial Officer and have new management. We anticipate that our management, including our Chief Financial Officer, and our independent registered public accounting firm, will discuss the status of our financial controls and procedures and determine what changes are necessary to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with U.S. GAAP. We anticipate that a number of changes in our internal control over financial reporting (as definedcontrols and procedures will be made in Rule 13a-15(f) or 15d-15(f)) during the quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.ensuing periods.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Our Current Report on Form 8-K, filed with the SEC, on May 26, 2022, describes important risk factors that could cause our business, financial condition, results of operations, and growth prospects to differ materially from those indicated or suggested by forward-looking statements made in this Quarterly Report on Form 10-Q or presented elsewhere by management from time to time. There have been no material changes with respect toin the risk factors previously disclosedthat appear in the Company’sour Current Report on Form 10-K for the year ended December 31, 2020, filed with the Securities8-K. Additional risks and Exchange Commission on March 1, 2021.uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
31.1 | Certification of Chief Executive Officer Pursuant to Rule | |
31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 | |
32.1 | Certification of Chief Executive Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | ||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as an Inline XBRL document and included in Exhibit 101) |
SIGNATURES
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.
(Registrant) | ||
Dated: | By: | /s/ |
(Chief Executive Officer, Principal Executive | ||
Officer) | ||
Dated: August 15, 2022 | By: | |
/s/ | ||
(Chief Financial Officer, Principal Accounting | ||
Officer) |
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