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TRIB Tribus Enterprises

Filed: 16 Aug 21, 2:22pm

 

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

 

(Mark One) 

 

Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

 

For the quarterly period ended June 30, 2021

 

 

Transition Report under Section 13 or 15(d) of the Exchange Act

 

 

 

For the Transition Period from ________to __________

 

 

Commission File Number: 333-197642

Tribus Enterprises, Inc.

 (Exact Name of Registrant as Specified in its Charter)

 

Washington

82-1104757

(State of other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)

 

155 Haas Drive

 

Englewood, OH

45322

(Address of principal executive offices)

(Zip Code)

 

Registrant’s Phone: (509) 992-4743

 

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒      No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

 

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 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 Exchange Act).

Yes ☐ No

 

The number of shares of Common Stock, $0.001 par value, outstanding on August 16, 2021 was 35,983,858 shares.

 

 

 

 

 

TABLE OF CONTENTS

Page

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

11

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

13

Item 4.

Controls and Procedures

13

 

 

PART II – OTHER INFORMATION 

 

 

 

 

Item 1.

Legal Proceedings

13

Item 1A.

Risk Factors

13

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

13

Item 3.

Defaults Upon Senior Securities

14

Item 3A.

Off Balance Sheet Arrangements

14

Item 4.

Submission of Matters to a Vote of Security Holders

14

Item 5.

Other Information

14

Item 6.

Exhibits

14

 

 

 

 

ITEM 1. FINANCIAL STATEMENTS

 

 

TRIBUS ENTERPRISES, INC.

UNADUITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 

June 30, 2021

 

Condensed Consolidated Balance Sheets

1

Unaudited Condensed Consolidated Statements of Operations

2

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity

3

Unaudited Condensed Consolidated Statements of Cash Flows

4

Notes to Unaudited Condensed Consolidated Financial Statements

5 - 10

  

 

 

TRIBUS ENTERPRISES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS 

 

  June 30, 2021  March 31, 2021 
  (unaudited)  (audited) 
ASSETS 
Current assets        
Cash $902,120  $390,197 
Accounts Receivable (Note 5)  1,237  $3,374 
Inventory, net of inventory valuation of $28,960 and $3,891, respectively (Note 6)  428,270   403,951 
Prepaid expenses  270   270 
Deposits, current (Note 7)     100,000 
Total current assets  1,331,897   897,792 
         
Deposits  10,240   10,240 
Right of use asset, operating leases  75,404   93,929 
Equipment, net of accumulated depreciation of $409,631 and $368,180, respectively (Note 8)  2,877,562   1,625,022 
         
Total assets $4,295,103  $2,626,983 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY 
Current liabilities        
Accounts payable and accrued liabilities $332,784  $291,144 
Deferred revenue (Note 9)  4,050   12,249 
Operating lease liability, current (Note 10)  71,164   86,495 
Finance lease, current (Note 11)  137,905   137,213 
Loans payable, current (Note 12)  1,588,686   273,528 
Total current liabilities  2,134,589   800,629 
         
Operating lease liability, net of current portion (Note 10)     4,233 
Finance lease, net of current portion (Note 11)  75,698   110,435 
Loans payable, net of current portion (Note 12)  19,662   255,887 
Other Long-Term Liabilities  6,297   6,255 
         
Total liabilities  2,236,246   1,177,439 
         
Commitments and contingencies        
         
Stockholders’ equity        
Series A convertible preferred stock, $0.001 par; 20,000,000 authorized;  6,666,666 issued and outstanding at June 30, 2021 and March 31, 2021 (Note 13)  6,667   6,667 
Series B convertible preferred stock, $0.001 par; 5,000,000 authorized; 4,999,800 issued and outstanding at June 30, 2021 and March 31, 2021 (Note 13)  5,000   5,000 
Common stock, $0.001 par value; 100,000,000 authorized; 35,551,858 and 34,421,158 issued and outstanding at June 30, 2021 and March 31, 2021, respectively (Note 13)  35,552   34,421 
Additional paid in capital  7,309,403   6,249,834 
Accumulated deficit  (5,297,765)  (4,846,378)
Total stockholders’ equity  2,058,857   1,449,544 
         
Total liabilities and stockholders’ equity $4,295,103  $2,626,983 

 

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

 

1

 

 

TRIBUS ENTERPRISES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

         
  Three months ended June 30, 
  2021  2020 
Revenue $31,609  $7,454 
Cost of goods sold  246,342   77,568 
Gross margin  (214,733)  (70,114)
         
Operating expenses        
Employee costs  142,740   46,527 
Professional fees  51,823   10,998 
General and administrative  47,051   36,485 
Facilities  17,258   24,678 
Research and development     12,781 
Depreciation expense  3,945   79,987 
Total operating expenses  262,817   211,456 
         
Net loss from operations  (477,550)  (281,570)
         
Other income (expense)        
Other income/(expense), net  29,252   146,443 
Gain/(loss) on sale of equipment     (145,127)
Interest expense  (3,089)  (36,029)
Total other income (expense)  26,163   (34,713)
         
Income tax      
Net and comprehensive loss $(451,387) $(316,283)
         
Net loss per share, basic and diluted $(0.01) $(0.03)
         
Weighted average shares outstanding, basic and diluted  35,185,801   11,637,465 

 

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

 

2

 

 

TRIBUS ENTERPRISES, INC.

UNAUDITED CONDENSED 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, 2020  19,999,998  $20,000   3,910,000  $3,910   7,360,858  $7,361  $3,600,752  $(3,718,479) $(86,456)
Series B preferred stock issued for cash  0      739,800   740           517,120       517,860 
Common stock issued for cash  0            6,184,800   6,185   1,540,016       1,546,201 
Direct Incremental Costs                    (200,000)      (200,000)
Net loss, three months ended June 30, 2020                       (316,283)  (316,283)
Balance, June 30, 2020  19,999,998   20,000   4,649,800   4,650   13,545,658   13,546   5,457,888   (4,034,762)  1,461,322 
                                     
Balance, March 31, 2021  6,666,666  $6,667   4,999,800   5,000   34,421,158   34,421   6,249,834   (4,846,378)  1,449,544 
Common stock issued for cash  0            1,130,700   1,131   1,129,569      1,130,700 
Direct Incremental Costs                          (70,000)      (70,000)
Net loss, three months ended June 30, 2021                       (451,387)  (451,387)
Balance, June 30, 2021  6,666,666  $6,667   4,999,800  $5,000   35,551,858  $35,552  $7,309,403  $(5,297,765) $2,058,857 

 

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

 

3

 

 

TRIBUS ENTERPRISES, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

         
  Three months ended June 30, 
  2021  2020 
Cash flows from operating activities        
Net loss $(451,387) $(316,283)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation  59,976   99,250 
Inventory Allowance  25,069    
(Gain)/loss on sale of equipment     145,127 
Loan Forgiveness     (131,720)
Changes in operating assets and liabilities:        
Accounts receivable  2,137    
Prepaid expenses     (20,873)
Prepaid inventory      
Deposits, current  100,000    
Deposits     3,502 
Inventory  (49,388)  (22,185)
Accounts payable and accrued liabilities  41,640   (210,950)
Interest payable     (37,936)
Deferred rent     1,247 
Estimated Warranty Liability  42    
Deferred revenue  (8,199)  (3,814)
Sub lease security deposit     3,200 
Net cash used in operating activities  (280,110)  (491,435)
         
Cash flows from investing activities        
Purchase of equipment  (194,091)  (193,838)
Sale of equipment     370,000 
Net cash provided by (used in) investing activities  (194,091)  176,162 
         
Cash flows from financing activities        
Repayments of finance leases  (34,045)  (403,942)
Payments of operating lease liability  (19,564)  (14,958)
Repayments of loans payable  (31,382)  (385,090)
Proceeds from Loan Payable  24,719    
Proceeds from CARES Act Loan     14,304 
Forgiveness of CARES Act Loan  (14,304)   
Proceeds from sale of common stock  1,130,700   1,546,200 
Proceeds from the sale of series B preferred stock     517,860 
Payments of direct incremental costs associated with the sale of stock  (70,000)  (200,000)
Net cash provided by financing activities  986,124   1,074,374 
         
Cash, beginning of period  390,197   150,741 
Net change in cash  511,923   759,101 
Cash, end of period $902,120  $909,842 
         
Supplemental cash flow information        
Cash paid for interest $3,089  $73,965 
Cash paid for income taxes $  $ 
         
Supplemental disclosure of non-cash financing activities        
Finance leases entered into for purchase of equipment $  $ 
Loan entered into for purchase of equipment $1,099,900  $146,340 

 

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

 

4

 

 

TRIBUS ENTERPRISES, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2021

 

NOTE 1 – NATURE OF OPERATIONS AND ORGANIZATION

 

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.

 

Tribus Enterprises, Inc. was formed to develop, manufacture, and market a compelling product line of innovative ratcheting flare nut wrenches which have been issued a Patent Number 10,414,029. The Company’s ratcheting flare nut wrench product line, which includes line and O2/NOx sensor wrenches, are being sold in the hand tool industry. Historically there have been limited designs for the ratcheting flare nut wrench or the traditional non-ratcheting flare nut wrench. These designs do not allow for small incremental movement in confined spaces, whereas Tribus’ version of the ratcheting flare nut wrench breaks new ground in this market.

 

Due to the wide application of Tribus Tools, Tribus has extensive marketing opportunities. Currently, Tribus has been selling its tools through on-line sales that include Facebook and Google ads and tool trucks. In the latter part of our fiscal year, we started selling our O2/NOx Sensor wrench on Amazon. While these efforts generated modest sales to date, it has provided Tribus with the feedback and assurance that the tools are needed, wanted, and provide value to our customers.

 

During the quarter ending June 30, 2021, the Company focused most of its’ efforts implementing new equipment to expand operations while fine-tuning engineering product designs. As such, sales during the quarter were minimal as production was down for most of the quarter.

 

NOTE 2 – UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

The accompanying unaudited condensed consolidated interim financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the periods ended June 30, 2021 and for all periods presented herein, have been made.

 

Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s March 31, 2021 audited financial statements. The results of operations for the periods ended June 30, 2021 are not necessarily indicative of the operating results for the full year. These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Tribus Innovations LLC. All intercompany balances and transactions are eliminated on consolidation.

 

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.

 

NOTE 3 – 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 regarding 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 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. 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 operations. 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.

 

 

5

 

 

TRIBUS ENTERPRISES, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

June 30, 2021

 

NOTE 4 – REVENUE 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 the 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 lifetime warranty for manufacturing defects on products sold. The Company has estimated future costs that will be incurred under its lifetime warranty program based on its historical defect rate. The amount of estimated warranty liability was $3,097 and $3,055 as of June 30, 2021 and March 31, 2021, respectively.

 

The Company recognized revenues of $31,609 and $7,454 during the three months ended June 30, 2021 and 2020, respectively.

 

NOTE 5 - ACCOUNTS RECEIVABLE

 

Accounts receivable represents money due to the Company for products sold and delivered but not yet paid. The accounts receivable balance was $1,237 and $3,374 as of June 30, 2021 and March 31, 2021, respectively.

 

NOTE 6 - INVENTORY

 

The Company recognizes the cost of inventory through cost of goods sold as product is shipped to customers on an average cost basis. The value of inventory is carried at the lower of cost or market of raw materials purchased to manufacture the finished goods, direct labor associated with manufacturing and certain overhead related to the manufacturing facility.

 

As of June 30, 2021, the Company’s finished goods inventory balance was $97,566. This balance is recorded net of inventory valuation of $28,960 in order to bring the value of finished goods inventory to the lower of cost or market. In addition, the Company had $243,255 in work in process inventory, $50,126 in raw material inventory, $54,422 in tooling inventory and $11,861 in packaging inventory as of June 30, 2021.

 

As of March 31, 2021, the Company’s finished goods inventory balance was $26,887. This balance is recorded net of inventory valuation of $3,891 in order to bring the value of finished goods inventory to the lower of cost or market. In addition, the Company had $291,930 in work in process inventory, $30,842 in raw material inventory, $48,362 in tooling inventory and $9,821 in packaging inventory as of March 31, 2021.

 

NOTE 7 - CURRENT DEPOSITS

 

During the year ended March 31, 2021, the Company made a deposit of $100,000 on five new pieces of equipment. That equipment was subsequently delivered in April 2021. Thus the balance at June 30, 2021 was $0.

 

NOTE 8 – EQUIPMENT

 

Property and equipment are stated at cost. Depreciation is computed using the average cost method over the estimated useful lives of the assets, which range from 3 to 10 years. Leasehold improvements are amortized over the shorter of the useful life of the related assets or the lease term. Expenditures for repairs and maintenance are charged to expense as incurred. For assets sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any related gain or loss is reflected in income for the period.

 

As of June 30, 2021, the Company’s equipment net of accumulated depreciation was $2,877,562 and $1,625,022 as of March 31, 2021.

 

NOTE 9 - DEFERRED REVENUE

 

Deferred revenue represents revenues collected but not earned as of June 30, 2021. This is primarily composed of rent or sales revenue received in advance of goods or services being delivered. The balance of deferred revenue was $4,050 and $12,249 as of June 30, 2021 and March 31, 2021, respectively.

 

 

6

 

 

TRIBUS ENTERPRISES, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

June 30, 2021

 

NOTE 10 – OPERATING LEASES

 

In February 2016, 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 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.

 

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 capital leases. During the three months ended June 30, 2021, the Company made total principal payments on operating leases of $19,565. There was a total operating lease liability of $71,164 as of June 30, 2021 all of which was current.

 

Subsequent to June 30, 2021, the Company entered into a short-term lease for the rent of an additional warehouse that terminates on March 31, 2022. The future minimum payments associated with this lease are $32,645 and are included in the table below. The Company has elected not to apply the recognition requirements of ASC 842 because the lease is short-term. As such, the Company is not recording a right of use asset and operating liability for this lease. The lease payments will be recognized in net income on a straight-line basis over the lease term. As a result, the difference between the operating lease liability total reflected in the table below and the operating lease liability on the balance sheet relates to future minimum payments of this short-term lease.

 

The leases require future minimum payments as shown below:

 

Year Ending March 31,

  

 

2022

 

 

107,534

 

2023

 

 

4,321

 

 

 

 

111,855

 

Less imputed interest

 

 

(8,046

)

Operating lease liability, total

 

$

103,809

 

 

On May 8, 2019, the Company entered into a 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 of $1,800 for May 2019 followed by eleven monthly payments of $4,100 through April 2020. On May 28, 2020, a new sublease agreement was entered into for a period of 23 months commencing on June 1, 2020. The sublease requires monthly rental payments of $1,200.

 

On May 11, 2020, the Company entered into a separate sublease agreement whereby it will sublet a portion of its space for a period of 24 months commencing on May 1, 2020. The sublease requires monthly rental payments of $1,875. In addition, a verbal agreement was entered into on a month-to-month basis for additional space to sublet as needed for a monthly rental payment of $1,510.

 

The Company records sublease payments received as other income in the statement of operations. Sublease income of $13,755 and $8,378 was recognized during the three months ended June 30, 2021 and 2020, respectively. 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. As of June 30, 2021, the sublease did not impair the right of use asset recorded as part of the master lease agreement.

 

The subleases provide future income as shown below:

 

Year Ending March 31,

 

 

 

2022

 

 

27,675

 

2023

 

 

3,075

 

Other income from subleases, total

 

$

30,750

 

 

 

7

 

 

TRIBUS ENTERPRISES, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

June 30, 2021

 

NOTE 11 – 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. As of December 31, 2020, the Company had three outstanding 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 $347,512 as equipment. The leases require total monthly payments of $11,764.

 

As of June 30, 2021, there was a total of $217,702 of future payments due through April 2024 of which $4,099 are financing charges leaving a total principal balance of $213,603. Of the total principal balance due, $137,905 was current and $75,698 was long term as of June 30, 2021.

 

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

 

Year Ending March 31,

 

Principal

 

 

Interest

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

 

 

103,168

 

 

 

2,712

 

 

 

105,880

 

2023

 

 

105,773

 

 

 

1,221

 

 

 

106,994

 

2024

 

 

4,293

 

 

 

164

 

 

 

4,457

 

2025

 

 

369

 

 

 

2

 

 

 

371

 

 

 

$

213,603

 

 

$

4,099

 

 

$

217,702

 

 

As of March 31, 2021, there was a total of $252,996 of future payments due through April 2024 of which $5,348 are financing charges leaving a total principal balance of $247,648. Of the total principal balance due, $137,213 was current and $110,435 was long term as of March 31, 2021.

 

NOTE 12 – LOANS PAYABLE

 

As of June 30, 2021, the Company had outstanding three separate loan agreements and one loan that was forgiven during the period.

 

 

June 1, 2019, the Company entered into a loan to borrow $34,222 to purchase a vehicle. The loan carried interest at a rate of 6.59% per annum and matured in September 2025. On May 7, 2021, the Company refinanced this loan in the amount of $24,720. The new loan carries interest at 2.890% per annum and matures May 7, 2026.

 

On January 20, 2021, the Company entered into a short-term loan with a related party in the amount of $150,000. The agreement requires eleven monthly payments of $2,500 and the remaining balance due thereafter. The loan was secured by Company assets and by a personal guarantee by the CEO. The note bears an interest rate 4.017%.

 

On February 18, 2021, the Company entered into a verbal loan for equipment valued at $352,696. In April 2021 this verbal loan was modified to include an additional loan for equipment valued at $1,199,900. The combined loan requires twelve monthly payments of $42,000 with the balance due thereafter unless otherwise negotiated prior to maturity. The payments are due once the installation of the equipment has been completed. The loan has no interest.

 

On May 1, 2020, the Company received loan proceeds in the amount of $14,304 under the Program. The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight weeks as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. On June 16, 2021, the loan was fully forgiven.

 

Total loans outstanding as of June 30, 2021 were $1,608,348 of which $1,588,686 was current and $19,662 was long term.

 

Total loans outstanding as of March 31, 2021 were $529,415 of which $273,528 was current and $255,887 was long term.

 

 

8

 

 

TRIBUS ENTERPRISES, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

 June 30, 2021

 

NOTE 13 – 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 three months ended June 30, 2021, the Company accepted stock subscriptions to issue a total of 1,130,700 shares of common stock at $1.00 per share resulting in total cash proceeds of $1,130,700. Of this amount, 602,500 shares of common stock were issued to related parties for total cash proceeds of $602,500. Additionally, the Company paid approximately $70,000 to a related party as a finders’ fee in conjunction with the sale of equity investments. The finder’s fee is considered a direct incremental cost associated with the sale of the stock and as such is treated as a reduction to the proceeds and, accordingly as an offset to additional paid in capital.

 

 

9

 

 

TRIBUS ENTERPRISES, INC.

Notes to Unaudited Consolidated Condensed Financial Statements

June 30, 2021

 

NOTE 13 – CAPITAL STOCK (CONTINUED)

 

There were 6,666,666; 4,999,800 and 35,551,858 shares of Series A Convertible Preferred Stock, Series B Preferred Stock and Common Stock issued and outstanding as of June 30, 2021.

 

There were 6,666,666; 4,999,800 and 34,421,158 shares of Series A Convertible Preferred Stock, Series B Preferred Stock and Common Stock issued and outstanding as of March 31, 2021.

 

NOTE 14 – SUBSEQUENT EVENTS

 

Subsequent to June 30, 2021, the Company issued an additional 432,000 shares of common stock, 249,000 of which were sold to related parties. In addition, the Company entered into a short-term lease for additional warehouse space on July 27, 2021. The lease term ends March 31, 2022 and calls for monthly lease payments of $4,000.

 

 

10

 

 

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

 

FORWARD-LOOKING STATEMENTS

 

This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-Q which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); finding suitable merger or acquisition candidates; expansion and growth of the Company’s business and operations; and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether actual results or developments will conform with the Company’s expectations and predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by. the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.

 

These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as “believes,” “anticipates,” “expects,” “estimates,” “plans,” “may,” “will,” or similar terms. These statements appear in a number of places in this Filing and include statements regarding the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company’s financial condition or results of operations for its limited history; (ii) the Company’s business and growth strategies; and, (iii) the Company’s financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company’s limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change and competition.

 

Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.

 

General Business Development

 

Tribus Enterprises Inc. was formed on March 29, 2017 in the State of Washington. Throughout this report references to “we”, “our”, “us”, “the company”, “Tribus” and similar terms refer to Tribus Enterprises, Inc.

 

Upon incorporation, the Company entered into a share exchange agreement with Tribus Innovations, LLC and acquired all of the outstanding ownership interests of Tribus Innovations, LLC. Tribus Innovations, LLC 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, LLC from its inception and include the financial information of the Company from the completion of the share exchange agreement on March 29, 2017. 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, LLC is currently a 100% owned subsidiary of the Company.

 

Tribus was formed to develop, manufacture, and market a compelling product line of innovative ratcheting flare nut wrenches which have been issued a Patent 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.

 

Products

 

Tribus’ 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.

 

 

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Tribus’ ratcheting flare nut wrench product line, which includes line and O2/NOx sensor wrenches, are being sold in the hand tool industry. Historically there have been limited designs for the ratcheting flare nut and the traditional non-ratcheting flare nut wrench. These designs do not allow for small incremental movement in confined spaces, whereas Tribus’ version of the ratcheting flare nut wrench breaks new ground in this market.

 

Business/Marketing Strategy

 

Due to the wide application of Tribus Tools, Tribus has extensive marketing opportunities. Currently, Tribus has been selling its tools through on-line sales that include Facebook and Google ads and tool trucks. We also started selling our O2/NOx Sensor wrench on Amazon at the end of last year. While these efforts generated modest sales to date, it has provided Tribus with the feedback and assurance that the tools are needed, wanted, and provide value to our customers.

 

Liquidity and Capital Resources

 

As of June 30, 2021, Tribus had $1,331,897 in total current assets and total current liabilities of $2,134,589. Current assets consisted mainly of $902,120 of cash and $428,270 of inventory. Current liabilities consisted mainly of $332,784 of accounts payable and accrued liabilities, finance lease liabilities of $137,905, operating lease liabilities of $71,164 and current loans payable of $1,588,686.

 

Net cash used in operating activities was $280,110 compared to $491,435 for the three months ended June 30, 2021 and 2020, respectively. The majority of the difference relates to more cash being used for the payment of accounts payable and accrued liabilities during the three months ended June 30, 2020 compared to the same period in 2021.

 

Net cash used in investing activities was $194,091 compared to net cash provided by investing activities of $176,162 for the three months ended June 30, 2021 and 2020, respectively. The majority of the difference is related to the Company selling equipment in the three months ended June 30, 2020 which provided net cash in the amount of $370,000.

 

Net cash provided by financing activities was $986,124 and $1,074,374 for the three months ended June 30, 2021 and 2020, respectively. Compared to the three months ended June 30, 2021, more funds were raised from the sale of stock in 2020 which were partially offset by more payments of leases and loans during that same period.

 

Going Concern

 

The future of Tribus is dependent upon its ability to obtain financing and upon future profitable operations. Management is currently seeking additional capital through a private placement offering. See Note 3 to the financial statements for additional information.

 

Results of Operations

 

Tribus generated revenues totaling $31,609 during the three months ended June 30, 2021 and $7,454 during the three months ended June 30, 2020. Total operating expenses were $262,817 and $211,456 during the three months ended June 30, 2021 and 2020, respectively. Net loss for the three months ended June 30, 2021 was $477,550 compared to $281,570 for the same period in 2020.

 

 

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CRITICAL ACCOUNTING POLICIES

 

In Financial Reporting release No. 60, “CAUTIONARY ADVICE REGARDING DISCLOSURE ABOUT CRITICAL ACCOUNTING POLICIES” (“FRR 60”), the Securities and Exchange Commission suggested that companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our most critical accounting policies include: going concern, inventory, revenue recognition and finance leases payable. The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results we report in our financial statements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The Company is not exposed to market risk related to interest rates or foreign currencies.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”), as of March 31, 2020, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer), who concluded, that because of the material weakness in our internal control over financial reporting (“ICFR”) our disclosure controls and procedures were not effective as of March 31, 2021.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

While significant work is being done to improve the Company’s internal controls, there have been no significant changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the current quarter that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.   

 

PART II OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

There have been no material changes in the risk factors set forth in the Company’s Form 10K for the period ended March 31, 2021 filed July 12, 2021.

 

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

 

During the three months ended June 30, 2021, the Company accepted stock subscriptions to issue a total of 1,130,700 shares of common stock at $1.00 per share resulting in total cash proceeds of $1,130,700. Of this amount, 602,500 shares of common stock were issued to related parties for total cash proceeds of $602,500. 

 

 

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ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 3A. OFF BALANCE SHEET ARRANGEMENTS

 

None.

 

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

 

The following documents are included or incorporated by reference as exhibits to this report:

 

Exhibit
Number

 

Description

31.1

 

Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

 

Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

(b)     REPORTS ON FORM 8-K

 

None. 

 

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SIGNATURES

 

In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: August 16, 2021.

 

 

Tribus Enterprises, Inc.

 

Registrant

 

 

 

 

By:

 

 

Kendall Bertagnole 

 

 

Chief Executive Officer

 

 

 

 

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