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TRIB Tribus Enterprises

Filed: 14 Jul 20, 8:00pm
 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended March 31, 2020

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 333-197642

 

 

TRIBUS ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

 

Washington

 

82-1104757

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

3155 Haas Drive, Englewood, OH

 

45322

(Address of principal executive offices)

 

(Zip Code)

 

Registrant's telephone number: (509) 992-4743

 

 

Securities registered under Section 12(b) of the Act: None

 

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

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

 

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

 

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 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 ☒

 

The number of shares of Common Stock, $0.001 par value, outstanding on July 14, 2020 was 7,360,858 shares.

 

 

 

 

TRIBUS ENTERPRISES, INC.

FOR THE FISCAL YEAR ENDED

MARCH 31, 2020

 

Index to Report

on Form 10-K

 

PART I

Page

 

 

 

Item 1.

Business

2

Item 1A.

Risk Factors

3

Item 1B.

Unresolved Staff Comments

6

Item 2.

Properties

6

Item 3.

Legal Proceedings

6

 

 

 

PART II

 

 

 

 

Item 5.

Market for Registrant's Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

8

Item 6.

Selected Financial Data

10

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

10

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

13

Item 8.

Financial Statements and Supplementary Data

14

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

15

Item 9A (T)

Control and Procedures

15

Item 9B.

Other Information

16

 

 

 

PART III

 

 

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

17

Item 11.

Executive Compensation

19

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

20

Item 13.

Certain Relationships and Related Transactions, and Director Independence

20

Item 14.

Principal Accounting Fees and Services

20

 

 

 

PART IV

 

 

 

 

Item 15.

Exhibits, Financial Statement Schedules

21

 

 

 

 

FORWARD-LOOKING STATEMENTS

 

 

 

This Annual Report on Form 10-K contains forward-looking statements and involves risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows, and business prospects. These statements include, among other things, statements regarding:

 

 

o

 our ability to diversify our operations;

o

 our ability to implement our business plan;

o

 our ability to attract key personnel;

o

 our ability to operate profitably;

o

 our ability to efficiently and effectively finance our operations, and/or purchase orders;

o

 inability to achieve future sales levels or other operating results;

o

 inability to raise additional financing for working capital;

o

 inability to efficiently manage our operations;

o

 the inability of management to effectively implement our strategies and business plans;

o

 the unavailability of funds for capital expenditures and/or general working capital;

o

 the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;

o

 deterioration in general or regional economic conditions;

o

 changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;

o

 adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

 

as well as other statements regarding our future operations, financial condition and prospects, and business strategies. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Annual Report on Form 10-K, and in particular, the risks discussed under the heading "Risk Factors" in Part I, Item 1A and those discussed in other documents we file with the Securities and Exchange Commission. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

Throughout this Annual Report references to "we", "our", "us", "the Company", and similar terms refer to Tribus Enterprises, Inc.

 

 

1

 

PART I

 

ITEM 1. BUSINESS

 

General Business Development

 

The Company was formed on March 29, 2017 in the State of Washington.

 

Business Strategy

 

Upon incorporation, the Company entered into a share exchange agreement with Tribus Innovations, LLC (“Tribus Innovations”) and acquired all of the outstanding ownership interests of Tribus Innovations. Tribus Innovations was formed on December 1, 2015. The transaction was accounted for as a reverse merger and these financial statements present the historical financial information of Tribus Innovations from its inception and include the financial information of the Company from the completion of the share exchange agreement on March 29, 2017. The Company has realized limited revenues from its planned business activities. The membership interests of Tribus Innovations, LLC were all held by the officers and directors of Tribus Enterprises, Inc. The Company acquired 100% of the membership interests of Tribus Innovations, LLC in exchange for 2,600,000 of our common shares and 19,999,998 of our shares of Class A preferred stock. Tribus Innovations is currently a 100% owned subsidiary of the Company.

 

Tribus LLC was formed in December 2015 to develop, manufacture, and market a compelling product line of innovative ratcheting flare nut wrenches which have been issued a Patent under application number: 15/092,056 which was issued on September 17, 2019 under Patent Number 10,414,029. The initial product line uses traditional manufacturing methods of metal forging, subtractive manufacturing (CNC milling), additive manufacturing (3D printing), and plastic injection molding. Tribus LLC has made several plastic resin prototypes in 2016.

 

Tribus has produced several wrenches already and is setting up the production line for full production this year.

 

 

Products

 

Tribus LLC’s ratcheting flare nut wrench addresses the market in a way that has never been done before; reducing the time it takes to turn inline fasteners.

 

•    Ease of Use – There are no buttons or switches. In order to reverse the tightening direction, simply remove the tool and rotate it 180°.

 

•    Learning Curve – This works the same as a standard open ended wrench but it has the ability to ratchet, saving valuable time. There will be a very short and slight learning curve as the users will simply need to remove the tool off the fastener and line up the open slots to remove the tool completely off the line.

 

•    Heavy Torque application – Due to the design of the pawls that engage into the ratchet, it has at least 4x more contact surfaces than standard ratcheting wrenches. This will translate to much more application of torque.

 

•    Convenience in tight spaces – Pawls have been designed along with corresponding grooves in the ratchet so users can maximize ratchet pitch. It will only take 2°- 4° to get the ratchet to click. This is crucial in tight spaces where there is very little room to swing the ratchet.

 

Tribus Innovations’ ratcheting flare nut wrench will be produced for sale in the hand tool industry. Historically there have been limited designs in the ratcheting flare nut wrench sales market such as; Gear Wrench part number 89100 (UPC 099575891007) and the traditional non-ratcheting flare nut wrench. These designs do not allow for small incremental movement in confined spaces, whereas Tribus Innovations’ version of the ratcheting flare nut wrench breaks new ground in this market.

 

2

 

Employees

 

As of March 31, 2020, we have three employees and have three additional persons who are non-employee contractors. We consider our relations with our subcontractors to be good.

 

Available Information

 

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended. All of our reports are able to be reviewed through the SEC's Electronic Data Gathering Analysis and Retrieval System (EDGAR) which is publicly available through the SEC's website (http://www.sec.gov).

 

We intend to furnish to our stockholders annual reports containing financial statements audited by our independent certified public accountants and quarterly reports containing reviewed unaudited interim financial statements for the first three-quarters of each fiscal year. You may contact the Securities and Exchange Commission at (800) SEC-0330 or you may read and copy any reports, statements or other information that we file with the Securities and Exchange Commission at the Securities and Exchange Commission's public reference room at the following location:

 

 

Public Reference Room

100 F. Street N.W.

Washington, D.C. 2054900405

Telephone: (800) SEC-0330

 

 

 

 

 

ITEM 1A. RISK FACTORS

 

Risks Relating to the Early Stage of our Company

 

We are at a very early operational stage and our success is subject to the substantial risks inherent in the establishment of a new business venture.

 

The implementation of our business strategy is in a very early stage. Our business and operations should be considered to be in a very early stage and subject to all of the risks inherent in the establishment of a new business venture. Accordingly, our intended business and operations may not prove to be successful in the near future, if at all. Any future success that we might enjoy will depend upon many factors, several of which may be beyond our control, or which cannot be predicted at this time, and which could have a material adverse effect upon our financial condition, business prospects and operations and the value of an investment in our company.

 

We have a very limited operating history and our business plan is unproven and may not be successful.

 

Our company was formed in March 2017 and we have recently begun full scale operations. We have limited sales and we have not proven that our business model will allow us to generate a profit.

 

3

 

We have suffered operating losses since inception and we may not be able to achieve profitability.

 

We had an accumulated deficit of $3,718,479 as of March 31, 2020 and we expect to continue to incur significant set up expenses in the foreseeable future related to the completion of development and commercialization of our sites. As a result, we are sustaining substantial operating and net losses, and it is possible that we will never be able to sustain or develop the revenue levels necessary to attain profitability.

 

We may have difficulty raising additional capital, which could deprive us of necessary resources.

 

We expect to continue to devote significant capital resources to fund set up and marketing. In order to support the initiatives envisioned in our business plan, we will need to raise additional funds through public or private debt or equity financing, collaborative relationships or other arrangements. Our ability to raise additional financing depends on many factors beyond our control, including the state of capital markets, the market price of our common stock and the development or prospects for development of competitive technology by others. Because our common stock is not listed on a major stock market, many investors may not be willing or allowed to purchase it or may demand steep discounts. Sufficient additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock.

 

We may raise additional capital during 2021 but we do not have any firm commitments for funding. If we are unsuccessful in raising additional capital, or the terms of raising such capital are unacceptable, we may have to modify our business plan and/or significantly curtail our planned activities and other operations.

 

The novel COVID-19 pandemic is having and will likely continue to have negative effects on our business and results of operations.

 

On March 11, 2020, the World Health Organization characterized COVID-19 as a global pandemic. We are monitoring the situation closely and our response to the COVID-19 pandemic continues to evolve. Our current principal responsive measures include implementing a mandatory work from home policy for most employees, restricting airplane travel, rescheduling marketing efforts, and product market launches, and updating our planning for future events in recognition of the fact that business purchasing the products we manufacture and distribute are experiencing, and will likely continue to experience, substantially declining revenue. We are also evaluating the impact of the pandemic on our supply chain as compared to product demand. We actively monitor COVID-19-related developments and may take further actions that alter our business operations as may be required by federal, state, or local authorities or that we determine are in the best interests of our employees, customers, vendors, and stockholders. The effects of these operational modifications will be reflected in current and future reporting periods.

 

The duration and magnitude of the COVID-19 pandemic impacts on our business operations and overall financial performance is unknown at this time and will depend on numerous circumstances outside our control or the ability of anyone to predict accurately. The secondary and tertiary unpredictable economic effects on our business and on the worldwide economy could be ruinous. The probability of reoccurrences of virus outbreaks is high and may continue for many months, likely resulting in further government-ordered lockdowns, stay-home, or shelter-in-place orders, and social distancing; restrictions on travel; and other widespread measures. We cannot predict the effect of these circumstances on us and our vendors, customers, and community; the global economy and political conditions; and the health of our employees, contractors, and their families; all of which will affect how quickly and to what extent normal economic and operating activities can resume. Even after the COVID-19 pandemic has subsided, we may continue to experience an adverse effect on our business as a result of its global economic impact, including any resulting and ongoing recession. All of these circumstances likely exert similar hardships on those with which we deal, such as vendors, shippers, distributors, and customers. As a result, we have made adjustments to, and will need to continue to adjust, our business and expenditures in an effort to correlate our activities with business exigencies. These adjustments may include restrictions of executive and employee travel, hiring freezes or delays, and limitations on marketing and other expenditures. The ultimate financial impact and duration of all of the foregoing cannot now be predicted and may well exceed our expectations or our ability to cope with them.

 

4

 

There are substantial doubts about our ability to continue as a going concern and if we are unable to continue our business, our shares may have little or no value.

 

The company’s ability to become a profitable operating company is dependent upon its ability to generate revenues and/or obtain financing adequate to fulfill its research and market introduction activities, and achieving a level of revenues adequate to support our cost structure has raised substantial doubts about our ability to continue as a going concern. We may attempt to raise additional equity capital by selling shares and, if necessary, through one or more private placement or public offerings. However, the doubts raised, relating to our ability to continue as a going concern, may make our shares an unattractive investment for potential investors. These factors, among others, may make it difficult to raise any additional capital. Proceeds from this offering may not be sufficient for the Issuer to continue to finance its operations

 

Failure to effectively manage our growth could place strains on our managerial, operational and financial resources and could adversely affect our business and operating results.

 

Our growth has placed, and is expected to continue to place, a strain on our managerial, operational and financial resources. Further, if our business grows, we will be required to manage multiple relationships. Any further growth by us, or an increase in the number of our strategic relationships will increase this strain on our managerial, operational and financial resources. This strain may inhibit our ability to achieve the rapid execution necessary to implement our business plan, and could have a material adverse effect upon our financial condition, business prospects and operations and the value of an investment in our company.

 

Risks Relating to Our Business

 

We have limited sales and marketing experience, which increases the risk that our business will fail.

 

Our officers, who will be responsible for marketing our products to potential users, have only nominal sales and marketing experience. Further, we have budgeted only minimal amounts toward sales and marketing efforts over the next 12 months, which by industry standards is a very limited amount of capital with which to launch our effort. Given the relatively small marketing budget and limited experience of our officers, there can be no assurance that such efforts will be successful. Further, if our initial efforts to create a market for our products are not successful, there can be no assurance that we will be able to attract and retain qualified individuals with marketing and sales expertise to attract customers to our website. www.TribusUSA.com. Our future success will depend, among other factors, upon whether our products can be sold at a profitable price and the extent to which consumers acquire, adopt, and continue to use them. There can be no assurance that our products will gain wide acceptance in its targeted markets or that we will be able to effectively market our products.

 

We may not be able to execute our business plan or stay in business without additional funding.

 

Our ability to generate future operating revenues depends in part on whether we can obtain the financing necessary to implement our business plan. We will likely require additional financing through the issuance of debt and/or equity in order to establish profitable operations, and such financing may not be forthcoming. As widely reported, the global and domestic financial markets have been extremely volatile in recent months. If such conditions and constraints continue or if there is no investor appetite to finance our specific business, we may not be able to acquire additional financing through credit markets or equity markets. Even if additional financing is available, it may not be available on terms favorable to us. At this time, we have not identified or secured sources of additional financing. Our failure to secure additional financing when it becomes required will have an adverse effect on our ability to remain in business.

 

5

 

Our auditor has raised substantial doubts about our ability to continue as a going concern and if we are unable to continue our business, our shares may have little or no value.

 

The company’s ability to become a profitable operating company is dependent upon its ability to generate revenues and/or obtain financing adequate to fulfill its research and market introduction activities, and achieving a level of revenues adequate to support our cost structure has raised substantial doubts about our ability to continue as a going concern. We plan to attempt to raise additional equity capital by selling shares in this offering and, if necessary, through one or more private placement or public offerings. However, the doubts raised, relating to our ability to continue as a going concern, may make our shares an unattractive investment for potential investors. These factors, among others, may make it difficult to raise any additional capital.

 

We will need to achieve commercial acceptance of our product to generate revenues and achieve profitability.

 

We cannot predict when significant commercial market acceptance for our products will develop, if at all, and we cannot reliably estimate the projected size of any such potential market. If markets fail to accept our products, we may not be able to generate revenues from the commercial application of our technologies. Our revenue growth and achievement of profitability will depend substantially on our ability to introduce new products that are accepted by customers. If we are unable to cost-effectively achieve acceptance of our products by customers, or if the associated products do not achieve wide market acceptance, our business will be materially and adversely affected.

 

We are a small company with limited resources relative to our competitors and we may not be able to compete effectively.

 

The product marketing services of our competitors have longer operating histories, greater resources and name recognition, and a larger base of customers than we have. As a result, these competitors will have greater credibility with our potential customers. They also may be able to adopt more aggressive pricing policies and devote greater resources to the development, promotion, and sale of their products than we may be able to devote to our products. Therefore, we may not be able to compete effectively and our business may fail.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

 

None.

 

ITEM 2. PROPERTIES

 

We currently lease office space at 155 Haas Drive, Englewood, OH 45322 as our principal offices. We believe these facilities are in good condition, but that we may need to expand our leased space as our business efforts increase.

 

ITEM 3. LEGAL PROCEEDINGS

 

There were two lawsuits in Montgomery County, Ohio involving Tribus. The first is Tribus Enterprises, Inc. v. Dynamic Machine Works, LLC, et al., Montgomery County common Pleas Case No. CV 1393 (“Tribus Lawsuit”). The second is Dynamic Machine Works, LLC v Clark Trost, et al., Montgomery County Common Pleas Case No. 2019 CV 1753 (“Trost Lawsuit”). There has also been additional litigation threatened by Dynamic Machine Works, LLC (“DMW”)

 

A.            Tribus Lawsuit

 

Tribus filed the Tribus Lawsuit against DMW on April 1, 2019 and filed an amended complaint against DMW and one of its owners, Nathan Hake, on May 15, 2019. Those complaints assert numerous claims against DMW and Hake arising from their manufacturing relationship. Tribus’s claims against DMW are for breach of contract, unjust enrichment, and promissory estoppel. Tribus’s claims against Hake are for unjust enrichment, fraud, promissory estoppel, conversion, and tortious interference.

 

6

 

Tribus’s claims in the Tribus Lawsuit allege that Hake and DMW misrepresented their expertise and ability in order to obtain the contract to manufacture Tribus’s wrenches. DMW then received $402,000 from Tribus as part of that contract, and ultimately failed to produce any functional wrenches. Tribus’s claims saught the return of the $402,000 paid to DMW, together with any equipment and tooling purchased by Tribus or with Tribus’s funds that continues to be held by DMW or Hake. Tribus derecognized the deposit assets associated with this $402,000 during the year ended March 31, 2020 as the probability of recovery became less certain.

 

DMW had filed counterclaims against Tribus in the Tribus Lawsuit. DMW has sued Tribus for breach of contract, promissory estoppel/detrimental reliance, breach of ND/NCA, theft of trade secrets, tortious interference with prospective and actual business relationships, unjust enrichment, conversion, breach of duty of loyalty or fiduciary duty, unfair competition, deceptive trade practices, and breach of lease agreement.

 

DMW’s claims against Tribus primarily assert that Tribus stole DMW’s confidential information and trade secrets. Namely, the programming and manufacturing process for the wrenches. DMW also asserts that it was Tribus who breached the contract with DMW. DMW’s counterclaims against Tribus center on Tribus’s decision to terminate its relationship with DMW and enter into an agreement with Clark Trost for the manufacture of the wrenches instead. Trost had been an independent contractor hired by DMW to help DMW manufacture Tribus’s wrenches. DMW’s counterclaims request judgement in excess of $2 million. 

  

The Tribus Lawsuit was filed primarily to compel the return of nearly $1.2 million in manufacturing equipment purchased or leased by Tribus and being held at DMW’s facility in Englewood, Ohio. That objective was largely accomplished with the return of the vast majority of the equipment on April 24th, 2019, following a motion for temporary restraining order and preliminary injunction filed on Tribus’s behalf. Certain miscellaneous pieces of equipment were not returned however.

  

On September 14, 2019, the United States Bankruptcy Court for the Southern District of Ohio issued an order denying Nathan Hake a discharge in bankruptcy, and his bankruptcy proceedings have now concluded. As a result, Tribus is entitled to continue pursuing its claims against Hake personally in the Tribus Lawsuit.

 

On December 11, 2019, the trial court denied DMW’s motion to stay the Tribus Lawsuit and compel arbitration. The deadline to appeal that decision has now passed, and was not appealed. In addition, the trial court granted Tribus’s motion to consolidate the Tribus Lawsuit and the Trost Lawsuit. Consequently, the Tribus Lawsuit and the Trost Lawsuit are now proceeding as a single lawsuit.

 

On December 16, 2019, counsel for DMW filed a motion to withdraw as counsel from both the Tribus Lawsuit and the Trost Lawsuit, citing lack of payment by DMW and a separate, unrelated conflict. On January 23, 2020, the trial court granted that motion to withdraw, leaving DMW and Hake without counsel of record in either lawsuit.

 

None of the above actions name the officers or directors of Tribus individually.

 

B.            Trost Lawsuit

 

In addition to its counterclaims against Tribus, DMW filed a separate lawsuit against Clark Trost and two companies he owns, Trost Technologies, Inc. and CNC Holsters, LLC (collectively “Trost”). Tribus has signed and engagement letter with McNamee & McNamee, PLL agreeing to be responsible for the attorneys’ fees and costs of representing Trost in the Trost Lawsuit as well.

 

7

 

DMW’s claims against Trost are for breach of ND/NCA, theft of trade secrets, tortious interference with prospective and actual business relations, unjust enrichment, conversion, breach of duty of loyalty or fiduciary duty, unfair competition, deceptive trade practices, and breach of oral sub-lease agreement. DMW’s complaint in the Trost Lawsuit seeks damages in excess of $2 million.

 

The crux of DMW’s claims in the Trost Lawsuit mirror its counterclaims in the Tribus Lawsuit. In essence, DMW maintains that Tribus and Trost conspired to steal the programming and manufacturing information for Tribus’s wrenches----which DMW claims to be its confidential information and trade secrets----to terminate their relationships with DMW and enter into business together to manufacture the wrenches without DMW.

 

In addition to substantial motion practice, DMW filed a motion for temporary restraining order and preliminary injunction, seeking to prevent Trost from doing any business with Tribus. The motion for temporary restraining order and preliminary injunction was referred to a magistrate for decision. In Ohio, a judge can refer a matter to a magistrate for decision, but a magistrate’s decision is not effective until it is adopted by the judge. Following a magistrate’s decision, any party is permitted to file objections to that decision with the judge, and the judge must then perform an independent review of the record of proceedings before the magistrate before deciding whether to adopt or reject the magistrate’s decision.

 

An evidentiary hearing was held on DMW’s motion on May 13, 2019, and June 26, 2019. On August 6, 2019, the magistrate issued a decision in favor of DMW, which was later amended in another magistrate’s decision dated August 27, 2019. Trost filed objections to the magistrate’s.

 

The Company settled each lawsuit on June 19, 2020 and required a cash settlement totaling $140,750 to be paid by Tribus to DMW. In exchange for the cash payment, the Company was able to recover all materials in DMW’s possession and was provided clear rights to utilize the intellectual property developed throughout the prior relationship with DMW. This amount was accrued for during the year ended March 31, 2020.

 

ITEM 4 – MINE SAFETY DISCLOSURES

 

Not applicable.

 

PART II

 

ITEM 5.

MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASE OF EQUITY SECURITIES

 

Market Information

 

Our common stock is not yet quoted. Without an active public trading market, a stockholder may not be able to liquidate their shares. If a market does develop, the price for our securities may be highly volatile and may bear no relationship to our actual financial condition or results of operations. Factors we discuss in this report, including the many risks associated with an investment in our securities, may have a significant impact on the market price of our common stock.

 

8

 

The ability of individual stockholders to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state.

 

Holders of Common Stock

 

As of March 31, 2020, we had 119 stockholders of record of the 7,360,858 common shares outstanding.

 

Dividends

 

The payment of dividends is subject to the discretion of our Board of Directors and will depend, among other things, upon our earnings, our capital requirements, our financial condition, and other relevant factors. We have not paid or declared any dividends upon our common stock since our inception and, by reason of our present financial status and our contemplated financial requirements, do not anticipate paying any dividends upon our common stock in the foreseeable future.

 

We have never declared or paid any cash dividends. We currently do not intend to pay cash dividends in the foreseeable future on the shares of common stock. We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common stockholders will be payable when, as and if declared by our Board of Directors, based upon the Board's assessment of:

 

our financial condition;

earnings;

need for funds;

capital requirements;

prior claims of preferred stock to the extent issued and outstanding; and

other factors, including any applicable laws.

 

Therefore, there can be no assurance that any dividends on the common stock will ever be paid.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

We currently do not maintain any equity compensation plans.

 

Recent Sales of Unregistered Securities

 

During the year ended March 31, 2020, the Company accepted stock subscriptions to issue a total of 176,000 shares of common stock at $0.25 per share resulting in total cash proceeds of $44,000.

 

During the year ended March 31, 2020, the Company issued a total of 2,544,375 shares of Series B Convertible Preferred Stock for total cash proceeds of $1,664,000. Of this amount, 1,138,625 shares of Series B Convertible Preferred Stock was issued to related parties for total cash proceeds of $820,550. Additionally, the Company paid approximately $170,00 to a related party as a finders’ fee in conjunction with the sale of equity investments.

 

During the year ended March 31, 2019, the Company accepted stock subscriptions to issue a total of 281,200 shares of common stock at $0.25 per share resulting in total cash proceeds of $70,300. Of this total, one subscription for 4,000 shares of common stock for cash proceeds of $1,000 was from a related party.

 

During the year ended March 31, 2019, the Company issued a total of 358,125 shares of Series B Convertible Preferred Stock for total cash proceeds of $286,501. All proceeds from and issuances of Series B Convertible Preferred Stock were to a related party.

 

9

 

ITEM 6. SELECTED FINANCIAL DATA

 

Not applicable.

 

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Except for the historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this report. Our actual results or actions may differ materially from these forward-looking statements for many reasons, including the risks described in "Risk Factors" and elsewhere in this annual report. Our discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes and with the understanding that our actual future results may be materially different from what we currently expect.

 

Going Concern

 

The future of our company is dependent upon its ability to obtain financing and upon future profitable operations. Management has plans to seek additional capital through a private placement and public offering of its common stock, if necessary. Our auditors have expressed a going concern opinion which raises substantial doubts about the Issuers ability to continue as a going concern.

 

RESULTS OF OPERATIONS

 

Tribus was formed to manufacture, and market products researched and developed by Tribus Innovation, LLC (“Tribus LLC”) its wholly owned subsidiary.

 

Tribus LLC was formed in December 2015 to develop, manufacture, and market a compelling product line of innovative ratcheting flare nut wrenches which have been issued a Patent under application number: 15/092,056 which was issued on September 17, 2019 under Patent Number 10,414,029. The initial product line uses traditional manufacturing methods of metal forging, subtractive manufacturing (CNC milling), additive manufacturing (3D printing), and plastic injection molding. Tribus LLC has made several plastic resin prototypes in 2016.

 

Tribus has produced several wrenches already and is setting up the production line for full production this year.

 

Market Initial Wrench Product

 

The intention of this tool is to serve a couple of very specific markets. Our early ideas were to have imperial and metric sets of these tools that would service automobile brake systems (brake lines and compression fittings), as well as automotive transmissions (transmission lines and compression fittings). However, we found other markets that appeared self-evident by simply showing our network of friends the plastic resin tools that we 3D printed. The cable installation industry could potentially issue all installation fleet members a 7/16” version of this tool. An instance occurred where a plumber requested several specific sizes of these tools. Air conditioning repair men have inquired about the tool as well. Additionally, a 7/8” version of this tool would be ideal for the scaffold building industry.

 

10

 

The tool that Tribus LLC has invented is unique. There is no competition in the space of ratcheting flare nut wrenches. Every brake shop in the country will want a set of these in both metric and imperial. Careful consideration was written into the patent language to allow for multiple configurations of this tool. Tribus, LLC designed a variety of versions and different configurations, such as an indexing head that allows for speed wrenching, or angled heads to offset the handle from the work surface.

 

We find ourselves in a rather unique position with no existing competitors. We also believe in the power of disruptive technology. Our goals are to create and own the market. We have several ideas as to how we can accomplish this.

 

An aggressive sales and marketing branch of the business will be created. The marketing department will create and support the value messaging that coincides with our business philosophy about the tool. The marketing department will also exaggerate the pain points of tools that compare to ours. The marketing department will additionally create all the necessary content needed for our sales department.

 

The company founders have come to a decision about how to get our product into the market and ultimately into the hands of our consumers. We have decided that as a startup company, we need to have direct sales but work on establishing relationships with regional fleet mechanic shops, nationwide distributors and retail buyers. Ideally, we would like to have distribution deals in place with companies like Matco Tools, Cornwell Tools, and Mac Tools. Eventually, Tribus Innovations would be thrilled to have a deal in place with nationwide retailers like AutoZone, Costco, Pep Boys and even Ace Hardware.

 

In short, successfully reaching our revenue goals will require direct sales in the Pacific Northwest region while simultaneously building relationships with nationwide distributors and retail buyers. We will capitalize on low hanging fruit first. Our outside sales team will visit small mechanics’ shops and show them the value of our tool in person. Eventually, the outside sales team will be working on more sophisticated and larger companies that have franchise locations throughout the region.

 

The marketing team and our inside sales team will be working hand in hand to develop relationships over the phone with private mechanics’ shops, regional fleet mechanic shops, large regional franchise mechanics’ shops, tool distributors and retail buyers. The inside sales group will literally be on the phone with all these potential customers and their job will be to do the cold calls and generate sales leads and set aside all the rejections. Occasionally, we are sure that a small percentage of cold calls could lead to a direct sale on the spot. However, the sales leads that the inside sales team generate shall be passed to the outside sales team.

 

The outside sales team will use the qualified sales leads to simply arrange appointments and do a product demonstration and develop a relationship. Private mechanic shops and smaller customers will be expected to have a short sales cycle. Larger customers like regional franchise mechanics’ shops and large retail buyers would require longer sales cycles.

 

We have many preorders from people who have stopped into our office, sales presentations that we have done and the directors of the company going and stopping at mechanics shops to generate interest in the product.

 

Liquidity and Capital Resources

 

As of March 31, 2020, we had current assets totaling $175,842 consisting of $150,741 of cash, $9,590 of inventory and $15,511 of prepaid expenses. Current liabilities totaled $1,227,300 as of March 31, 2020. As of March 31, 2019, we had current assets of $455,981 and current liabilities totaling $437,680.

 

We have no material commitments for the next twelve months other than those discussed in Note 6 and Note 8 to the financial statements. We will also require additional capital to meet our liquidity needs. The Company anticipates its cash needs to be approximately $50,000 monthly to fund operations for the next twelve months.

 

11

 

In summary, our cash flows were as follows:

 

  

Fiscal Year Ended

March 31,

 
  

2020

  

2019

 

Net cash used in operating activities

 $(1,064,759) $(987,440)

Net cash used in investing activities

  (21,633)  (34,425)

Net cash provided by financing activities

  1,203,163   141,877 

Net (decrease) increase in cash

  116,771   (879,988)

Cash, beginning of year

  33,970   913,958 

Cash, end of year

 $150,741  $33,970 

 

GOING CONCERN

 

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. These conditions raise substantial doubt about the company’s ability to continue as a going concern.

 

Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the Business paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.  

 

During the next year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with research and development. The Company may experience a cash shortfall and be required to raise additional capital.

 

Historically, it has mostly relied upon internally generated funds and funds from the sale of shares of stock to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse affect upon it and its shareholders.  

 

Operating activities

 

Net cash used in operating activities was $1,064,759 for the year ended March 31, 2020, as compared to $987,440 used in operating activities for the same period in 2019.

 

Investing Activities

 

Net cash used in investing activities was $21,633 during the year ended March 31, 2020, consisting solely of the purchase of equipment, compared to $34,425 during the year ended March 31, 2019.

 

12

 

Financing activities

 

Net cash provided by financing activities for the year ended March 31, 2020 was $1,203,163 as compared to $141,877 for the same period of 2019.

 

Since inception, we have financed our cash flow requirements through issuance of common stock and related party advances and loans. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of listings or some form of advertising revenues. Additionally, we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. In the future we need to generate sufficient revenues from sales in order to eliminate or reduce the need to sell additional stock or obtain additional loans. There can be no assurance we will be successful in raising the necessary funds to execute our business plan.

 

We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth.

 

To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop and upgrade our website, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

 

Off-balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements and does not anticipate entering into any such arrangements in the foreseeable future.

 

Critical Accounting Policies

 

The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the results we report in our financial statements, which we discuss in Note 1 to the consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.

 

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

This item is not applicable as we are currently considered a smaller reporting company.

 

13

 

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 

 

TRIBUS ENTERPRISES, INC.

 

CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

 

Consolidated Balance Sheets

F-2

Consolidated Statements of Operations

F-3

Consolidated Statement of Changes in Stockholders’ Equity

F-4

Consolidated Statements of Cash Flows

F-5

Notes to Consolidated Financial Statements

F-6 - F-15

 

14

 

 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and Shareholders of Tribus Enterprises, Inc.

 

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Tribus Enterprises, Inc. (“the Company”) as of March 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the two year period then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company does not have significant cash or other assets and does not have an established source of revenue to cover its operating costs. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

 

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

 

We have served as the Company’s auditor since 2018.

 

Spokane, Washington

July 14, 2020

 

F-1

 

 

TRIBUS ENTERPRISES, INC.

CONSOLIDATED BALANCE SHEETS

 

  

March 31,

 
  

2020

  

2019

 

ASSETS

 

Current assets

        

Cash

 $150,741  $33,970 

Inventory

  9,590   - 

Deposits, current

  -   402,000 

Prepaid expenses

  15,511   20,011 

Total current assets

  175,842   455,981 
         

Deposits

  41,337   41,337 

Right of use asset, operating leases

  157,117   - 

Equipment, net of accumulated depreciation of $552,435 and $194,226, respectively

  1,265,559   1,061,675 
         

Total assets

 $1,639,855  $1,558,993 
         

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Current liabilities

        

Accounts payable and accrued liabilities

 $415,070  $108,249 

Interest payable

  61,938   23,612 

Accrued rent

  -   8,027 

Deferred revenue

  3,814   814 

Operating lease liability, current

  66,206   - 

Financing lease liability, current (Note 7)

  340,303   214,529 

Loans payable, current (Note 6)

  339,969   82,449 

Total current liabilities

  1,227,300   437,680 
         

Operating lease liability, net of current portion

  90,730   - 

Financing lease liability, net of current portion (Note 7)

  382,254   667,053 

Loans payable, net of current portion (Note 6)

  26,027   14,057 
         

Total liabilities

  1,726,311   1,118,790 
         

Commitments and contingencies

  -   - 
         

Stockholders' equity

        

Series A convertible preferred stock, $0.001 par; 20,000,000 authorized; 19,999,998 issued and outstanding at March 31, 2020 and 2019, respectively

  20,000   20,000 

Series B convertible preferred stock, $0.001 par; 5,000,000 authorized; 3,910,000 and 1,365,625 issued and outstanding at March 31, 2020 and 2019, respectively

  3,910   1,366 

Common stock, $0.001 par value; 100,000,000 authorized; 7,360,858 and 7,184,858 issued and outstanding at March 31, 2020 and 2019, respectively

  7,361   7,185 

Additional paid in capital

  3,600,752   1,818,694 

Accumulated deficit

  (3,718,479)  (1,407,042)

Total stockholders' equity

  (86,456)  440,203 
         

Total liabilities and stockholders' equity

 $1,639,855  $1,558,993 

 

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

 

F-2

 

 

TRIBUS ENTERPRISES, INC.

CONSOLDIATED STATEMENTS OF OPERATIONS

 

  

Year ended March 31,

 
  

2020

  

2019

 

Revenue

 $33,737  $- 

Cost of goods sold

  249,264   - 

Gross margin

  (215,527)  - 
         

Operating expenses

        

Employee costs

  287,681   236,326 

Professional fees

  308,893   89,165 

General and administrative

  338,960   106,707 

Facilities

  94,711   77,518 

Research and development

  82,002   1,140 

Depreciation expense

  256,343   180,595 

Total operating expenses

  1,368,590   691,451 
         

Net loss from operations

  (1,584,117)  (691,451)
         

Other income (expense)

        

Other income

  55,919   16,208 

Other expense

  (542,750)  - 

Loss on sale of equipment

  (1,752)  - 

Interest expense

  (238,737)  (138,400)

Total other income (expense)

  (727,320)  (122,192)
         

Income tax

  -   - 

Net and comprehensive loss

 $(2,311,437) $(813,643)
         

Net loss per share, basic and diluted

 $(0.32) $(0.11)
         

Weighted average shares outstanding, basic and diluted

  7,280,137   7,094,559 

 

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

 

F-3

 

 

TRIBUS ENTERPRISES, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

 

  

Series A Convertible Preferred Stock

  

Series B Preferred Stock

  

Common Stock

  

Additional Paid

  

Accumulated

  

 

 
  

Shares

  

Amount

  

Shares

  

Amount

  

Shares

  

Amount

   In Capital  Deficit  Total 

Balance, March 31, 2018

  19,999,998  $20,000   1,007,500  $1,008   6,903,658  $6,904  $1,462,533  $(593,399) $897,046 
                                     

Preferred stock issued for cash

  -   -   358,125   358   -   -   286,142   -   286,500 

Common stock issued for cash

  -   -   -   -   281,200   281   70,019   -   70,300 

Net loss, year ended March 31, 2019

  -   -   -   -   -   -   -   (813,643)  (813,643)

Balance, March 31, 2019

  19,999,998   20,000   1,365,625   1,366   7,184,858   7,185   1,818,694   (1,407,042)  440,203 
                                     

Series B preferred stock issued for cash

  -   -   2,544,375   2,544   -   -   1,661,456   -   1,664,000 

Common stock issued for cash

  -   -   -   -   176,000   176   43,824   -   44,000 

Shareholder cash contribution

  -   -   -   -   -   -   3,040   -   3,040 

Shareholder forgiveness of wages payable

  -   -   -   -   -   -   73,738   -   73,738 

Net loss, year ended March 31, 2020

  -   -   -   -   -   -   -   (2,311,437)  (2,311,437)

Balance, March 31, 2020

  19,999,998  $20,000   3,910,000  $3,910   7,360,858  $7,361  $3,600,752  $(3,718,479) $(86,456)

 

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

 

F-4

 

 

TRIBUS ENTERPRISES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

  

Year ended March 31,

 
  

2020

  

2019

 

Cash flows from operating activities

        

Net loss

 $(2,311,437) $(813,643)

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

     

Depreciation

  419,096   180,595 

Loss on sale of equipment

  1,751   6,307 

Impairment recorded on deposits

  402,000   - 

Changes in operating assets and liabilities:

        

Prepaid expenses

  4,500   (20,011)

Deposits

  -   (440,897)

Accounts payable and accrued liabilities

  380,558   75,583 

Interest payable

  47,811   23,612 

Deferred rent

  (2,448)  200 

Deferred revenue

  3,000   814 

Inventory

  (9,590)  - 

Net cash used in operating activities

  (1,064,759)  (987,440)
         

Cash flows from investing activities

        

Purchase of equipment

  (21,633)  (58,840)

Sale of equipment

  -   24,415 

Net cash used in investing activities

  (21,633)  (34,425)
         

Cash flows from financing activities

        

Repayments of financing leases

  (168,510)  (272,946)

Payments on operating lease liability

  (50,423)  - 

Proceeds from loans payable

  -   100,000 

Repayments of loans payable

  (288,944)  (41,978)

Shareholder cash contribution

  3,040   - 

Proceeds from sale of common stock

  44,000   70,300 

Proceeds from the sale of series B preferred stock

  1,664,000   286,501 

Net cash provided by financing activities

  1,203,163   141,877 
         

Cash, beginning of period

  33,970   913,958 

Net change in cash

  116,771   (879,988)

Cash, end of period

 $150,741  $33,970 
         

Supplemental cash flow information

        

Cash paid for interest

 $190,926  $114,788 

Cash paid for income taxes

 $-  $- 
         

Supplemental disclosure of non-cash financing activities

        

Financing leases entered into for purchase of equipment

 $-  $1,154,528 

Loan entered into for purchase of equipment

 $564,398  $11,451 

Forgiveness of accrued wages by related parties

 $73,738  $- 

 

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

 

F-5

 

TRIBUS ENTERPRISES, INC.

Notes to Consolidated Financial Statements

March 31, 2020

 

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

A summary of significant accounting policies of Tribus Enterprises, Inc. (the “Company”) is presented to assist in understanding the Company’s consolidated financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying consolidated financial statements. These consolidated financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.

 

Organization, Nature of Business and Trade Name

 

The Company was incorporated in the State of Washington on March 29, 2017 for the purpose of developing, designing, manufacturing and distributing hand tools. Upon incorporation, the Company entered into a share exchange agreement with Tribus Innovations, LLC (“Tribus Innovations”) and acquired all of the outstanding ownership interests of Tribus Innovations. Tribus Innovations was formed on December 1, 2015. The transaction was accounted for as a reverse merger and these financial statements present the historical financial information of Tribus Innovations from its inception and include the financial information of the Company from the completion of the share exchange agreement on March 29, 2017.

 

Basis of Presentation and Use of Estimates

 

The preparation of consolidated 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 at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented.

 

Cash and Cash Equivalents

 

For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents. There were no cash equivalents as of March 31, 2020 or 2019.

 

 Principles of Consolidation

 

 The Company prepares its consolidated financial statements on the accrual basis of accounting. The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, both of which have a fiscal year end of March 31. All intercompany accounts, balances and transactions have been eliminated in the consolidation.

 

Revenue and Cost Recognition

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, for revenue recognition. Adoption of ASC 606 did not have a significant impact on our financial statements. Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration expected to be received in exchange for those products. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

 

The Company offers a limited lifetime warranty for manufacturing defects only on product sold. Due to sales recently occurring, the Company is unable to reasonably estimate future costs that will be incurred under its lifetime warranty program on revenue recognized as of March 31, 2020. However, the Company anticipates the amounts associated with revenues recognized as of March 31, 2020 to be immaterial to the financial statements.

 

The Company recognized revenues of $33,737 during the year ended March 31, 2020.

 

F-6

 

TRIBUS ENTERPRISES, INC.

Notes to Consolidated Financial Statements

March 31, 2020

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Fair Value of Financial Instruments

 

The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

 

Level 1 – Quoted prices in active markets for identical assets or liabilities.

 

Level 2 – Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

 

The Company’s valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data.

 

In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments.

 

Capital Stock

 

The Company has authorized one hundred million (100,000,000) shares of common stock with $0.001 par value and twenty five million (25,000,000) shares of preferred stock with $0.001 par value. Of the 25,000,000 authorized shares of preferred stock, 20,000,000 are designated as series A convertible stock and 5,000,000 designated as series B convertible stock.

 

Income Taxes

 

The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes.

 

F-7

 

TRIBUS ENTERPRISES, INC.

Notes to Consolidated Financial Statements

March 31, 2020

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Basic Net Loss Per Share

 

Basic net loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.

 

At March 31, 2020 and 2019, the Company had 19,999,998 and 19,999,998 shares of series A convertible preferred stock and 3,910,000 and 1,365,625 shares of series B convertible stock outstanding, respectively. Each share of series A convertible preferred stock is convertible to 10 shares of common stock at the discretion of the board of directors and each share of series B convertible preferred stock is convertible to 4 shares of common stock at the option of the stockholder. The outstanding preferred stock as of March 31, 2020 and 2019 represented 215,639,980 and 205,462,480 new dilutive common shares if converted at the applicable rates. The effects of these notes have been excluded as the conversion would be anti-dilutive due to the net loss incurred in each period presented.

 

Advertising Costs

 

The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred $310 and $148 of such costs during the years ended March 31, 2020 and 2019, respectively.

 

Recently Issued Accounting Pronouncements

 

Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future financial statements.

 

Related Parties

 

The Company follows subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related party transactions.

 

Pursuant to Section 850-10-20 the related parties include (a) affiliates of the registrant; (b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15, to be accounted for by the equity method by the investing entity; (c) trusts for the benefit of employees, such as pension and profit-sharing trusts that are managed by or under the trusteeship of management; (d) principal owners of the Company; (e) management of the Company; (f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and (g) Other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.

 

F-8

 

TRIBUS ENTERPRISES, INC.

Notes to Consolidated Financial Statements

March 31, 2020

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Related Parties (continued)

 

The financial statements include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of financial statements is not required in those statements. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. 

 

Property and equipment

 

Property and equipment are stated at cost less accumulated depreciation. The Company provides for depreciation using the straight-line method over the estimated useful lives of the related assets, which range from three to five years. Maintenance and repair costs are expensed as they are incurred while renewals and improvements which extend the useful life of an asset are capitalized. At the time of retirement or disposal of property and equipment, the cost and related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is reflected in the consolidated results of operations. Refer to Note 3 – Equipment.

 

Inventory

 

The Company carries inventory at cost and recognizes the cost of each through cost of goods sold as product is shipped to customers. The value of inventory is carried at the cost of raw materials purchased to manufacture the finished goods, direct labor associated with manufacturing and certain overhead related to the manufacturing facility and equipment. The Company had inventory balances of $9,590 and $0, all of which was raw materials, as of March 31, 2020 and 2019, respectively.

 

During the year ended March 31, 2020, the Company wrote off $211,163 of inventory as scrap costs. The scrap was incurred as early production yielded undesirable results. Due to the cost of scrap materials incurred during the year ended March 31, 2020, gross margins were negative for the period.

 

 

NOTE 2 – GOING CONCERN

 

The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs which raises substantial doubt around its ability to continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully execute its plans and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.  During the next year, the Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with research and development. The Company may experience a cash shortfall and be required to raise additional capital. Historically, it has mostly relied upon internally generated funds and funds from the sale of shares of stock to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.

 

F-9

 

TRIBUS ENTERPRISES, INC.

Notes to Consolidated Financial Statements

March 31, 2020

 

 

NOTE 3 – EQUIPMENT

 

The Company had equipment net of accumulated depreciation of $1,265,559 and $1,061,675 as of March 31, 2020 and 2019, respectively, consisting of:

 

  

March 31,

 
  

2020

  

2019

 

Machinery

 $1,754,501  $1,192,798 

Computers

  21,784   18,606 

Furniture and Equipment

  6,512   6,083 

Leasehold Improvements

  975   975 

Vehicles

  34,222   37,439 

Total

  1,817,994   1,255,901 

Less: accumulated depreciation

  (552,435)  (194,226)

Net carrying value

 $1,265,559  $1,061,675 

 

During the year ended March 31, 2020, the Company sold a vehicle having a book value of $21,215 for $19,964 resulting in a net loss on the sale of equipment of $1,751. During the year ended March 31, 2019, the Company sold equipment with a net book value of $30,722 for cash proceeds of $24,415 resulting in a loss recognized on the disposal of equipment totaling $6,307.

 

 

NOTE 4 – INCOME TAXES

 

The Company did not provide any current or deferred U.S. federal income tax provision or benefit for the year ended March 31, 2020 or 2019 due to the operating losses experienced during the years ended March 31, 2020 and 2019. When it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. The Company provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward period. Effective December 22, 2017 a new tax bill was signed into law that reduced the federal income tax rate for corporations from 35% to 21%. The new bill reduced the blended tax rate for the Company from 35.47% to 21.47%. The change in blended tax rate reduced the 2017 net operating loss carry forward deferred tax assets by approximately $6,700. 

 

The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the years ended March 31, 2020 or 2019 applicable under FASB ASC 740. We did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All tax returns for the Company remain open.

 

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented are as follows:

 

F-10

 

TRIBUS ENTERPRISES, INC.

Notes to Consolidated Financial Statements

March 31, 2020

 

NOTE 4 – INCOME TAXES (CONTINUED)

 

  

March 31,

 
  

2020

  

2019

 

Income tax provision at the federal statutory rate

  21.00%  21.00%

Washington state business and occupancy tax rate, net of federal benefit

  0.47%  0.47%

Combined tax rate

  21.47%  21.47%

Deferred tax rate changes - US income tax reform

  -%  -%

Change in valuation allowance

  (21.47%)  (21.47%)

Effect on operating losses

  0.00%  0.00%

 

Changes in net deferred tax assets consist of the following:

 

  

March 31,

 
  

2020

  

2019

 

Net operating loss carry forward

 $496,266  $174,689 

Valuation allowance

  (496,266)  (174,689)

Net deferred tax asset

 $-  $- 

 

Federal net operating losses incurred prior to the year ended March 31, 2017 are subject to certain limitations and begin to expire in 2037. Net federal operating loss carry forwards incurred after the year ended March 31, 2017 may be carried forward indefinitely. This carry forward may be limited upon the consummation of a business combination under IRC Section 381.

 

 

NOTE 5 – CURRENT DEPOSITS

 

During the year ended March 31, 2019, the Company made total advances to a third-party manufacturer of $402,000 in exchange for a discount from the negotiated purchase price of future inventory units. The deposits allowed the Company to receive a discount of approximately $2.46 per unit from the originally agreed upon purchase price on the first 163,415 individual units of inventory manufactured when purchases begin.

 

During the year ended March 31, 2020, the Company entered into a legal dispute with the third-party manufacturer. Among other claims, the Company is seeking a return of the deposits made totaling $402,000. While the dispute is unresolved as of the date the financial statements were issued, the Company has fully reserved against the deposits resulting in an other expense of $402,000 during the year ended March 31, 2020.

 

F-11

 

TRIBUS ENTERPRISES, INC.

Notes to Consolidated Financial Statements

March 31, 2020

 

 

NOTE 6 – CAPITAL STOCK

 

Authorized

 

The Company is authorized to issue up to 20,000,000 shares of $0.001 par value Series A Preferred Stock, 5,000,000 shares of $0.001 par value Series B Preferred Stock and 100,000,000 shares of $0.001 par value Common Stock.

 

The holders of the Series A Preferred Stock are entitled to 10 votes for each share held. Each share of Series A Preferred Stock is convertible into 10 shares of Common Stock at the discretion of the Company’s directors. In the event that there is a change of control transaction, each share of Series A Preferred Stock is convertible into 10 shares of Common Stock at the option of the holder. The holders of the Series A Preferred Stock are entitled to participate in dividends. Dividends are non-cumulative and are at the discretion of the Company’s directors.

 

The holders of the Series B Preferred Stock are entitled to 4 votes for each share held. Each share of Series B Preferred Stock is convertible into 4 shares of Common Stock at the discretion of the stockholder. The holders of the Series B Preferred Stock are entitled to participate in dividends. Dividends are non-cumulative and are at the discretion of the Company’s directors.

 

Issued

 

During the year ended March 31, 2020, the Company accepted stock subscriptions to issue a total of 176,000 shares of common stock at $0.25 per share resulting in total cash proceeds of $44,000.

 

During the year ended March 31, 2020, the Company issued a total of 2,544,375 shares of Series B Convertible Preferred Stock for total cash proceeds of $1,664,000. Of this amount, 1,138,625 shares of Series B Convertible Preferred Stock was issued to related parties for total cash proceeds of $820,550. Additionally, the Company paid approximately $170,000 to a related party as a finders’ fee in conjunction with the sale of equity investments. The related party in this transaction is the controlling party of the entities holding the Series B Preferred shares.

 

During the year ended March 31, 2019, the Company accepted stock subscriptions to issue a total of 281,200 shares of common stock at $0.25 per share resulting in total cash proceeds of $70,300. Of this total, one subscription for 4,000 shares of common stock for cash proceeds of $1,000 was from a related party.

 

During the year ended March 31, 2019, the Company issued a total of 358,125 shares of Series B Convertible Preferred Stock for total cash proceeds of $286,501. All proceeds from and issuances of Series B Convertible Preferred Stock were to a related party.

 

There were 19,999,998; 3,910,000 and 7,360,858 shares of Series A Convertible Preferred Stock, Series B Preferred Stock and Common Stock issued and outstanding as of March 31, 2020.

 

There were 19,999,998; 1,365,625 and 7,184,858 shares of Series A Convertible Preferred Stock, Series B Preferred Stock and Common Stock issued and outstanding as of March 31, 2019.

 

F-12

 

TRIBUS ENTERPRISES, INC.

Notes to Consolidated Financial Statements

March 31, 2020

 

 

NOTE 7 – OPERATING LEASES

 

On March 23, 2017, the Company entered into a lease agreement for the rent of warehouse space that terminates on April 30, 2022 which was amended on May 20, 2017. Additionally, on March 12, 2019, the Company entered into an additional lease for the rent of warehouse space that terminates on March 31, 2022.

 

In February 206, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes guidance in ASC 840, Leases, which the Company adopted for the year ended March 31, 2020 under the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application Results and disclosure requirements for reporting periods beginning after March 31, 2019 are presented under Topic 842 while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting under Topic 840.

 

On April 1, 2019, the Company recorded a right of use asset and operating lease liability totaling $207,359 using an imputed interest rate of 25% on its operating leases, equal to the approximate weighted average interest rate imputed on the Company’s existing financing leases. During the year ended March 31, 2020, the Company made total principal payments on operating leases of $50,423. There was a total operating lease liability of $156,936 as of March 31, 2020 of which $66,206 was current and $90,730 was long term.

 

The leases require future minimum payments as shown below:

 

Year ending March 31,

 

2021

 $98,207 

2022

  99,725 

2023

  4,321 

Total payments

  202,253 

Less: imputed interest

  (48,317

)

Operating lease liability, total

 $156,936 

 

On November 5, 2018, the Company entered into an agreement to sublet a portion of its office space on a month to month basis. The sublease will continue on a month to month basis until the sublessor provides notice to execute a long term lease or will have the option to assume the Company’s lease. The sublease required monthly rental payments of $5,700 with the first month being prorated accordingly. This agreement expired during the year ended March 31, 2020.

 

On May 8, 2019, the Company entered into a separate sublease agreement whereby it will sublet a portion of its space for a period of twelve months commencing on May 1, 2019. The sublease requires a prorated amount of rent total $1,800 for May 2019 followed by eleven monthly payments of $4,100 through April 2020.

 

The Company records sublease payments received as other income in the statement of operations resulting in other income of $45,900 being recognized during the year ended March 31, 2020. The Company has not been released from its obligations under the master lease and accounts for rental income from subleases on a straight line basis monthly.

 

 

NOTE 8 – LOANS PAYABLE

 

During the year ended March 31, 2019, the Company entered into a loan in order to acquire a vehicle. The loan was repayable over five years at $541 per month, was secured by the vehicle and bears interest at 0%. Management determined that the fair value of the loan was not significantly different from its face value and therefore no discount has been recorded. During the year ended March 31, 2020, the Company sold the vehicle for the remaining balance on the loan resulting in a balance due of $0 as of March 31, 2020.

 

On July 27, 2018, the Company entered into a loan agreement to borrow $100,000. The loan carries an interest rate of 24.37%, is payable over twelve months and due on July 27, 2019. There was $0 and $65,464 of principal due as of March 31, 2020 and March 31, 2019, respectively.

 

F-13

 

TRIBUS ENTERPRISES, INC.

Notes to Consolidated Financial Statements

March 31, 2020

 

NOTE 8 – LOANS PAYABLE (CONTINUED)

 

During the year ended March 31, 2019, the Company entered into a loan in order to acquire equipment.  The loan is repayable over twelve months at $954 per month, is secured by the equipment and bears interest at 0%.  Management determined that the fair value of the loan was not significantly different from its face value and therefore no discount has been recorded. There was $0 and $10,497 due as of March 31, 2020 and March 31, 2019, all of which was current.

 

On various dates during the year ended March 31, 2020, the Company entered into five separate verbal loan agreements to purchase equipment totaling $501,077, each with no stated interest rate. The Company recorded the loans using an imputed interest rate of 6.59% per annum, equal to the interest rate associated with other recent borrowings on assets.

 

 

The first of five loans was for equipment valued at $270,604 and required $27,990 down with six monthly payments of $5,000 and a balloon payment of $221,910 unless otherwise negotiated prior to maturity. During the year ended March 31, 2020, the Company renegotiated the note to require monthly payments of $5,000 until paid in full, removing the balloon payment.

 

The second of five loans was for equipment valued at $24,163 and required $2,500 down with six monthly payments of $1,000 and a balloon payment of $16,395 unless otherwise negotiated prior to maturity. This loan was repaid in full during the year ended March 31, 2020.

 

The third of the of five loans was for equipment valued at $36,884 and requires monthly payments of $5,000 until paid in full unless otherwise negotiated prior to maturity. This loan was repaid in full during the year ended March 31, 2020.

 

The fourth of five loans was for equipment valued at $137,040 and required $5,000 down with 6 monthly payments of $1,000 and a balloon payment of $126,040 unless otherwise negotiated prior to maturity. During the year ended March 31, 2020, the Company renegotiated the note to require monthly payments of $5,000 until paid in full, removing the balloon payment.

 

The fifth of five loans was for equipment valued at $32,386 and required $6,477 down with 3 monthly payments of $6,477 and one payment of $6,478 unless otherwise negotiated prior to maturity. This loan was repaid in full during the year ended March 31, 2020.

 

On June 1, 2019, the Company entered into a loan to borrow $34,222 to purchase a vehicle. As part of the agreement, the Company traded in its existing vehicle for total consideration of $19,464 resulting in a net loss recorded on the asset of $1,751. The loan carries interest at a rate of 6.59% per annum and matures in September 2025. As of March 31, 2020, there was a total of $30,826 due of which $4,799 was current.

 

Total loans outstanding at March 31, 2020 were $365,996 of which $339,969 was current and $26,027 was long term.

 

F-14

 

TRIBUS ENTERPRISES, INC.

Notes to Consolidated Financial Statements

March 31, 2020

 

 

 

NOTE 9 – FINANCING LEASES PAYABLE

 

In February 206, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes guidance in ASC 840, Leases, which the Company adopted for the year ended March 31, 2020 under the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application Results and disclosure requirements for reporting periods beginning after March 31, 2019 are presented under Topic 842 while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting under Topic 840.

 

The Company accounts for financing leases in accordance with ASC 842. During the year ended March 31, 2019, the Company entered into seven separate long-term leases for equipment that grants the Company the option to purchase the underlying asset at lease termination that the Company is reasonably certain to exercise. The Company determined these were financing leases based on the reasonable certainty the Company will exercise its right to purchase the underlying assets and capitalized the net present value of the leases which totaled $1,162,240 as equipment. The leases require total monthly payments of $34,171.

 

As of March 31, 2020, there was a total of $975,506 of future payments due through August 2023 of which $252,949 are financing charges leaving a total principal balance of $722,557. Of the total principal balance due, $340,303 was current and $382,254 was long term as of March 31, 2020.

 

Future annual payments required under the financing leases through termination are as follows:

 

  

Principal

  

Interest

  

Total

 

Year ended March 31,

            

2021

 $340,303  $192,584   532,887 

2022

  259,302   50,165   309,467 

2023

  113,600   9,937   123,537 

2024

  9,352   263   9,615 

Total

 $722,557  $252,949  $975,506 

 

 

NOTE 10 – LEGAL PROCEEDINGS

 

During the year ended March 31, 2020, the Company was a party to two separate lawsuits which were settled in June 2020. As part of the settlement, the Company paid a total cash amount of $140,750 which was included in accounts payable and accrued liabilities as of March 31, 2020.

 

 

NOTE 11 – SUBSEQUENT EVENTS

 

The Company has evaluated all events occurring subsequent to the balance sheet date through the date of filing and identified the following events requiring disclosure.

 

During the three months ended June 30, 2020, the Company repaid six outstanding loans and financing leases with cash payments totaling $845,150.

 

On March 11, 2020, the World Health Organization characterized COVID-19 as a global pandemic. We are monitoring the situation closely and our response to the COVID-19 pandemic continues to evolve. We have taken measures to mitigate the impact on our business operations and overall financial performance, which continue to evolve. We are also constantly evaluating and responding to the impact of the pandemic on our supply chain as compared to product demand. In addition, we actively monitor COVID-19-related developments and may take further actions that alter our business operations as may be required by federal, state, or local authorities or that we determine are in the best interests of our employees, customers, vendors, and stockholders. The effects of these operational modifications will be reflected in current and future reporting periods.

 

F-15

 

 

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

ITEM 9A (T). CONTROLS AND PROCEDURES

 

Our Principal Executive Officer Kendall Bertagnole and Principal Financial Officer, Kendall Bertagnole, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the year end covered by this Report. Based on that evaluation, they have concluded that, as of March 31, 2020, our disclosure controls and procedures are designed at a reasonable assurance level and are not effective to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Management's Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control, as is defined in the Securities Exchange Act of 1934. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. There are inherent limitations in the effectiveness of any system of internal controls, including the possibility of human error and overriding of controls. Consequently, an effective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.

 

Our internal control over financial reporting includes policies and procedures that: (i) pertain to maintaining records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements in accordance with generally accepted accounting principles and the receipts and expenditures of company assets are made and in accordance with our management and directors authorization; and (iii) provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

 

Management has undertaken an assessment of the effectiveness of our internal control over financial reporting based on the framework and criteria established in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO-2013"). Based upon this evaluation, management concluded that our internal control over financial reporting was not effective as of March 31, 2020.

 

15

 

Based on that evaluation, management concluded that, during the period covered by this report, such internal controls and procedures were not effective due to the following material weakness identified:

 

Lack of appropriate segregation of duties,

 

Lack of control procedures that include multiple levels of supervision and review, and

 

There is an overreliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material, nonstandard transactions.

 

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only the management's report in this annual report.

 

Implemented or Planned Remedial Actions in response to the Material Weaknesses

 

We will continue to strive to correct the above noted weakness in internal control once we have adequate funds to do so. We believe appointing a director who qualifies as a financial expert will improve the overall performance of our control over our financial reporting.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the year ended March 31, 2020 that materially affect, or are reasonably likely to materially affect, our internal control over financial reporting.

 

The Company’s management, including the chief executive officer and principal financial officer, do not expect that its disclosure controls or internal controls will prevent all errors or all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

 

 

ITEM 9B. OTHER INFORMATION

 

None.

 

16

 

PART III

 

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 

Directors and Executive Officers

 

The names of our director and executive officers as of March 31, 2020 and their ages, positions, and biographies are set forth below. Our executive officers are appointed by, and serve at the discretion of, our board of directors.

 

 

Executive Officers

 

OUR MANAGEMENT

   

Name

Age

Position

Kendall Bertagnole

35

President, CEO & Director

 

 

Directors, Executive Officers, Promoters and Control Persons

 

Kendall Bertagnole President-CEO-Director – Former electrical construction service Building Information Modeling specialist. His duties included fully coordinating 3D virtual models of commercial buildings to resolve coordination interferences between different disciplines to ultimately be able to pre-fabricate electrical designs off-site saving costly rework and downtime onsite. Mr. Bertagnole was a Project Manager for Merit Electric for 3-1/2 years from September 2013 to February 2017 and before that a Project Manager for Casper Electric for 6 years from February 2007 to September 2013. Associates of Science – Drafting & Design – Casper College, B.A., DeVry University – Technical Management

 

Family Relationships

 

There are no family relationships among any of our officers or directors.

 

Indemnification of Directors and Officers

 

Our Articles of Incorporation and Bylaws both provide for the indemnification of our officers and directors to the fullest extent permitted by Washington

 

Limitation of Liability of Directors

 

Pursuant to the Colorado Statutes, our Articles of Incorporation exclude personal liability for our Directors for monetary damages based upon any violation of their fiduciary duties as Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director's liability under federal or applicable state securities laws. We have agreed to indemnify our directors against expenses, judgments, and amounts paid in settlement in connection with any claim against a Director if he acted in good faith and in a manner he believed to be in our best interests.

 

17

 

Election of Directors and Officers

 

Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the Board of Directors following the next annual meeting of stockholders and until their successors have been elected and qualified.

 

Involvement in Certain Legal Proceedings

 

No Executive Officer or Director of the Corporation has been the subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him/her from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.

 

No Executive Officer or Director of the Corporation has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding which is currently pending.

 

No Executive Officer or Director of the Corporation is the subject of any pending legal proceedings.

 

Audit Committee and Financial Expert

 

We do not have an Audit Committee. Our director performs some of the same functions of an Audit Committee, such as: recommending a firm of independent certified public accountants to audit the annual financial statements; reviewing the independent auditor's independence, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. The Company does not currently have a written audit committee charter or similar document.

 

We have no financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our start-up operations, we believe the services of a financial expert are not warranted.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires our executive officers and directors, and persons who beneficially own more than ten percent of an issuer's common stock, which has been registered under Section 12 of the Exchange Act, to file initial reports of ownership and reports of changes in ownership with the SEC. Based upon a review of the copies of such forms furnished to us and written representations from our executive officers and Directors, we believe that as of the date of this filing they were all current in their filings.

 

Corporate Governance

 

Nominating Committee

 

We do not have a Nominating Committee or Nominating Committee Charter. Our Board of Directors performs some of the functions associated with a Nominating Committee. We have elected not to have a Nominating Committee in that we are an initial-stages operating company with limited operations and resources.

 

18

 

ITEM 11. EXECUTIVE COMPENSATION

 

Summary Compensation

 

Summary Compensation Table

 

The following table sets forth certain information concerning the annual compensation of our Chief Executive Officer and our other executive officers during the last two fiscal years.

 

Summary Compensation Table. The following table sets forth certain information concerning the annual compensation of our Chief Executive Officer and our other executive officers during the last two fiscal years.

 

(a)
Name and
Principal
Position

(b)
Year

 

(c)
Salary*

  

(d)
Bonus

  

(e)
Stock
Awards

  

(f)
Option
Awards

  

(g)

Non-equity
incentive
plan
compensation

  

(h)

Nonqualified
deferred
compensation
earnings

  

(i)
All Other
Compensation

  

(j)
Total
Compensation

 

Kendall Bertagnole, President & Director

2019

 $56,881                          $56,881 
 

2020

 $68,750                             

 *Salary is based on wages earned during the period, regardless of when cash was paid. There were total accrued wages of $76,725 as of March 31, 2020.

 

Outstanding Equity Awards at Fiscal Year End. There were no outstanding equity awards as of March 31, 2020.

 

Board Committees

 

We do not currently have any committees of the Board of Directors. Additionally, due to the nature of our intended business, the Board of Directors does not foresee a need for any committees in the foreseeable future.

 

19

 

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 

The following table sets forth, as of March 31, 2020, certain information with respect to the beneficial ownership of shares of our common stock by: (i) each person known to us to be the beneficial owner of more than five percent (5%) of our outstanding shares of common stock, (ii) each director or nominee for director of our Company, (iii) each of the executives, and (iv) our directors and executive officers as a group. Unless otherwise indicated, the address of each shareholder is c/o our company at our principal office address:

 

Beneficial Owner

Address

 

Number of

Common Shares

Beneficially

Owned (*)

  

Percent of
Class (**)

  

Number of
Preferred Shares
Beneficially
Owned (*)

  

Percent of

Class (**)

 

Tribus Innovations LLC ***

3808 N. Sullivan Rd. Building 13-D Spokane Valley, WA 99216

  2,600,000   35.3

%

  0   0 

Kendall Bertagnole

3808 N. Sullivan Rd. Building 13-D Spokane Valley, WA 99216

  0   0

%

  6,666,666   33.3

%

Bret Baker and Jordan Baker

2207 E. Chattaroy Rd., Chattaroy, WA 99003

  833,333   11.3

%

  0   0 

Wayne Tenny Lamoreaux
and Jennifer Johnson Lamoreaux

17009 E. Daybreak Lane, Spokane Valley, WA 99016

  875,000   11.9

%

  0   0 

All Directors and Officers as a Group (3 persons)

  0   0

%

  6,666,666   33.3

%

 

(*)     Beneficial ownership is determined in accordance with the rules of the SEC which generally attribute Beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities. Unless otherwise indicated, voting and investment power are exercised solely by the person named above or shared with members of such person’s household. This includes any shares such person has the right to acquire within 60 days.

 

(**)     Percent of class is calculated on the basis of the number of common shares outstanding on March 31, 2020 (7,360,858)

 

Changes in Control

 

There are no arrangements, known to the Company, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Director Independence

 

We currently do not have any independent directors, as the term "independent" is defined in Section 803A of the NYSE Amex LLC Company Guide. Since the OTC Markets does not have rules regarding director independence, the Board makes its determination as to director independence based on the definition of "independence" as defined under the rules of the New York Stock Exchange ("NYSE") and American Stock Exchange ("Amex").

 

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 

(1) AUDIT FEES

 

The audit fees charged by FRUCI & ASSOCIATES II, PLLC for years ended March 31, 2020 and 2019 were $18,250 and $5,000, respectively.

 

(2) AUDIT-RELATED FEES

 

None.

 

(3) TAX FEES

 

None.

 

20

 

(4) ALL OTHER FEES

 

None.

 

(5) AUDIT COMMITTEE POLICIES AND PROCEDURES

 

We do not have an audit committee.

 

(6) If greater than 50 percent, disclose the percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees.

 

Not applicable.

 

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a)

1.

The financial statements listed in the "Index to Financial Statements" at page 30 are filed as part of this report.

 

2.

Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

 

3.

Exhibits included or incorporated herein: See index to Exhibits.

 

 (b) Exhibits

 

 

 

 

Incorporated by reference

Exhibit

Number

Exhibit Description

Filed

herewith

Form

Period

ending

Exhibit

Filing date

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

X

 

 

 

 

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

X

    

32

Certification Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act

X

 

 

 

 

       
101.INSXBRL Instance     
101.SCHXBRL Taxonomy Extension Schema     
101.CALXBRL Taxonomy Extension Calculation     
101.DEFXBRL Taxonomy Extension Definition     
101.LABXBRL Taxonomy Extension Labels     
101.PREXBRL Taxonomy Extension Presentation     

 

21

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Tribus Enterprises, Inc.

 

By:

Kendall Bertagnole, CEO

Date: July 14, 2020

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature

Title

Date

 

 

 

/s/ Kendall Bertagnole

Principal Executive Officer and Director

July 14, 2020

Kendall Bertagnole

 

 

   
   
/s/ Kendall Bertagnole  

 Kendall Bertagnole

 Principal Financial Officer

 July 14, 2020

 

22