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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended August 31, 2022

 

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

 

For the transition period from _____________ to ______________

 

Commission file number: 000-53274

 

 

BioPower Operations Corporation

(Exact name of registrant as specified in its charter)

 

Nevada   27-4460232
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)

 

20801 Biscayne Blvd., Suite 403

Aventura, FL

  33180
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: (786) 923-0272

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
N/A   N/A   N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ☐

 

As of December 2, 2022, the registrant had 45,625,000 shares of common stock outstanding.

 

 

 

 
 

 

BIOPOWER OPERATIONS CORPORATION

FORM 10-Q

 

TABLE OF CONTENTS

 

      PAGE NO.
PART I FINANCIAL INFORMATION F-1
       
  Item 1. Financial Statements (Unaudited) F-1
    Consolidated Balance Sheets as of August 31, 2022 and November 30, 2021 (Unaudited) F-1
    Consolidated Statements of Operations for the Three and Nine Months ended August 31, 2022 and 2021 (Unaudited) F-2
    Consolidated Statements of Cash Flows for the Nine Months Ended August 31, 2022 and 2021 (Unaudited) F-3
    Consolidated Statements of Changes in Stockholders’ Deficit for the Three and Nine Months Ended August 31, 2022 and 2021 (Unaudited) F-4
    Notes to the Unaudited Financial Statements F-5
       
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 3
       
  Item 3. Quantitative and Qualitative Disclosures About Market Risk 8
       
  Item 4. Controls and Procedures 8
       
PART II OTHER INFORMATION 9
       
  Item 1. Legal Proceedings 9
       
  Item 1A. Risk Factors 9
       
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 9
       
  Item 3. Defaults Upon Senior Securities 9
       
  Item 4. Mine Safety Disclosures 9
       
  Item 5. Other Information 9
       
  Item 6. Exhibits 10
       
  SIGNATURES 11

 

2
 

 

PART I: FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

BioPower Operations Corporation and Subsidiaries

Consolidated Balance Sheets

 

   August 31,   November 30, 
   2022   2021 
         
Assets          
Current assets          
Cash and cash equivlants  $15,109   $95,973 
Accounts receivable   331      
Inventory   12,893      
Prepaid expemses   32,204    - 
Total assets  $60,537   $95,973 
           
Liabilities and Stockholders’ Deficit          
Current liabilities          
Accounts payable and accrued expenses  $386,530   $563,967 
Accounts payable and accrued expenses - related party   2,154,680    1,530,668 
Deferred revenue   250,000      
Notes payable   130,671    130,671 
Convertible debt vsriable priced converstion, not of discount of $111,213   57,538      
Convertible debt   368,031    368,031 
Convertible debt - related parties,   399,447    399,447 
Notes payable Senior secured - related party   -    1,000,000 
Notes payable   193,667    193,667 
Notes payable - related parties   1,320,700    1,320,700 
Derivative liability   177,578    - 
Total current liabilities   5,438,842    5,507,151 
           
Commitments and Contingencies (Note 9)   -    - 
           
Stockholders’ deficit          
           
Preferred stock - Series A, $1.00 par value: 10,000 authorized, 0 and 1 shares issued and outstanding on May 31, 2022 and November 30, 2021, respectively   -    - 
Preferred stock - Series C, $.001 par value: 5,000,000 authorized, 900,000 and 0 shares issued and outstanding on August 31, 2022 and November 30, 2021, respectively   900    900 
Common Stock owed   125,000      
           
Common stock, $.0001 par value: 500,000,000 authorized; 45,625,000 and 45,000,000 issued and outstanding on August 31, 2022 and November 30, 2021, respectively   4,564    4,501 
Additional paid-in capital   4,303,889    4,140,411 
Accumulated deficit   (9,812,658)   (9,556,990)
Total stockholders’ deficit   (5,378,305)   (5,411,178)
Total liabilities and stockholders’ deficit  $60,537    95,973 

 

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

 

F-1
 

 

BioPower Operations Corporation and Subsidiaries

Consolidated Statements of Operations

 

    1    2    3    4 
   For the three Months Ended August 31,   For the nine months ended August 31, 
   2022   2021   2022   2021 
Revenue:                
Sale of Tokens   125,000    -    461,000    - 
Sale of Tokens - related party   -    -    110,700    - 
Total Revenue  $125,000   $-   $571,700   $- 
                     
Operating expenses                    
Selling, general and administrative expenses   403,452    201,396    767,320    209,477 
Total operating expenses   403,452    201,396    767,320    209,477 
                     
Income / (Loss) from operations   (278,452)   (201,396)   (195,620)   (209,477)
                     
Other expenses                    
Gsin on derivative   69,622         69,622      
Interest expense   (13,690)   (11,247)   (36,185)   (33,741)
Interest expense -related party   (21,190)   (35,545)   (93,485)   (73,923)
Total other expenses   34,742    (46,792)   (60,048)   (107,664)
                     
Net loss  $(243,710)  $(244,188)  $(255,668)  $(317,141)
                     
Net loss per common share: basic and diluted  $(0.01)  $(0.01)  $(0.01)  $(0.01)
                     
Weighted average common shares outstanding: basic and diluted   45,597,826    43,642,466    45,302,198    43,287,243 

 

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

 

F-2
 

 

BioPower Operations Corporation and Subsidiaries

Consolidated Statements of Cash Flows

 

    1    2 
   For the nine months ended August 31, 
   2022   2021 
Cash flows from operating activities          
Net loss  $(255,668)  $(317,141)
Adjustments to reconcile net loss to net cash used in operating activities          
Common stock issued for services   -    2,500 
Amortization of debt discount   49,538      
Gain on derivative   (69,622)     
Adjustments to reconcile net loss to net          
Changes in operating assets and liabilities          
Increase in accounts receivable   (331)   - 
Increase in prepaid expenses   (32,204)   - 
increase in inventory   (12,893)     
Accounts payable and accrued expenses   (177,437)   216,592 
Accounts payable and accrued expenses - related party   624,012    (20,678)
Deferred revenge   250,000      
Net cash used in operating activities   375,395    (118,727)
           
Cash flow from financing activities          
Convertible notes payable   168,750      
Repayment of Notes payable Senior secured - related party   (1,000,000)     
           
Proceeds from issuance of common stock   374,991    300,000 
Net cash provided by financing activities   (456,259)   300,000 
           
Net increase in cash and cash equivalents   (80,864)   181,273 
Cash and cash equivalents at beginning of period   95,973      
Cash and cash equivalents at end of period  $15,109   $181,273 
           
Supplemental disclosure of cash flow information:          
Cash paid for interest  $-   $- 
Cash paid for income taxes  $-   $- 
           
Supplemental disclosure of cash flow information:          
Conversion of Series A preferred stock to notes payable - related party  $-   $(1,000,000)
Common stock issued for accrued severance  $-   $37,500 
Common stock issued for accrued salary - related party  $-   $54,615 

 

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

 

F-3
 

 

BioPower Operations Corporation and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Deficit

For the Three and Nine Months Ended August 31, 2022 and 2021

(Unaudited)

 

         1          2          3          4     5     6     7  
   Preferred Series C   Preferred Stock   Common Stock payable   Common Stock   Additional         
   Shares   Par   Shares   Par   Shares   Par   Shares   Par   Paid-in   Accumulated     
   Outstanding   Amount   Outstanding   Amount   Issuable   Amount   Outstanding   Amount   Capital   Deficit   Total 
Balance May 31, 2021   -    1    -    -    -   $    -    43,107,680   $4,312   $4,746,884   $(9,188,619)  $(4,437,422)
                                                        
ales of preferred stock   -    -    900,000    900    -    -    -    -    299,100    -    300,000 
Conversion of preferred stock to notes payable - related party   -    (1)   -    -    -    -    -    -    (999,999)   -    (1,000,000)
Common stock issued for services   -    -    -    -    -    -    50,000    5    2,495    -    2,500 
Common stock issued for severance   -    -    -    -    -    -    750,000    75    37,425    -    37,500 
Common stock issued for accrued salary - related party   -    -    -    -    -    -    1,092,320    109    54,506    -    54,615 
Net loss, for three months ended August 31, 2021   -    -    -    -    -    -    -    -    -    (244,188)   (244,188)
Balance August 31, 2021   -   $-    -   $-    -   $-    45,000,000   $4,501   $4,140,411   $(9,432,807)  $(5,286,995)

 

   Outstanding   Amount   Outstanding   Amount   Issuable   Amount   Outstanding   Amount   Capital   Deficit   Total  
   Preferred Series C   Preferred Stock   Common Stock payable   Common Stock   Additional          
   Shares   Par   Shares   Par   Shares   Dollar   Shares   Par   Paid-in   Accumulated      
   Outstanding   Amount   Outstanding   Amount   Issuable   Amount   Outstanding   Amount   Capital   Deficit   Total  
Balance May 31, 2022    -   $     -    900,000   $900    -    -    45,625,000   $4,563   $4,390,339   $(9,568,948)  $(5,173,146)
Sale of common stock    -    -    -    -    500,000    125,000    -    -         -   125,000  
Derivative liability    0    -    -    -    -    -    -    -    (86,449)   -   (86,449 )
Net loss, for the three months ended August 31,2022    -    -    -    -    -    -    -    -    -    (243,710)  (243,710 )
Balance August 31, 2022    -   $-    900,000   $900    500,000   $125,000    45,625,000   $4,563   $4,303,890   $(9,812,658)  $(5,378,305 )

 

         1          2          3          4     5     6     7  
   Preferred Stock - Series A   Preferred Stock   Common Stock payable   Common Stock   Additional         
   Shares   Par   Shares   Par   Shares   Dollar   Shares   Par   Paid-in   Accumulated     
   Outstanding   Amount   Outstanding   Amount   Issuable   Amount   Outstanding   Amount   Capital   Deficit   Total 
Balance November 30, 2020   1    1    -    -    -   $-    43,107,680   $4,312   $4,746,884   $(9,115,666)  $(4,364,469)
Sales of preferred stock   -    -    900,000    900    -    -    -    -    299,100    -    300,000 
Conversion of Series A preferred stock to notes payable - related party   (1)   (1)   -    -    -    -    -    -    (999,999)   -    (1,000,000)
Common stock issued for services   -    -    -    -    -    -    50,000    5    2,495         2,500 
Common stock issued for accrued severance   -    -    -    -    -    -    750,000    75    37,425         37,500 
Common stock issued for accrued salary - related party   -    -    -    -    -    -    1,092,320    109    54,506         54,615 
Net loss, for nine months ended August 31, 2021   -    -    -    -    -    -    -    -    -    (317,141)   (317,141)
Balance August 31, 2021   1   $1    -   $-    -   $-    45,000,000   $4,501   $4,140,411   $(9,432,807)  $(5,286,995)
                                                        
Balance November 30, 2021   -   $-    900,000   $900    -   $-    45,000,000   $4,500   $4,140,411   $(9,556,990)  $(5,411,178)
Sale of common stock   -    -    -    -    500,000    125,000    625,000    63    249,928    -    374,991 
Derivative liability   -    -    -    -    -    -    -    -    (86,449)   -    (86,449)
Net loss, for nine months ended August 31, 2022   -    -    -    -    -    -    -    -    -    (255,668)   (255,668)
Balance August 31, 2022   -   $-    900,000   $900    500,000   $125,000    45,625,000   $4,563   $4,303,890   $(9,812,658)  $(5,378,305)

 

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

 

F-4
 

 

BioPower Operations Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

August 31, 2022

 

Note 1. Organization

 

BioPower Corporation (“BioPower” or the “Company”) was incorporated in the State of Florida on September 13, 2010. On January 5, 2011, the Company re-domiciled to Nevada and formed BioPower Operations Corporation, a Nevada corporation. On January 6, 2011, the shareholders of BioPower Corporation contributed their shares of BioPower Corporation to BioPower Operations Corporation and BioPower Corporation became a wholly owned subsidiary.

 

On October 24, 2014, the Company executed a Share Exchange Agreement (“SEA”) with Green3Power Holdings Company (“G3P”) to acquire G3P and its wholly owned subsidiaries Green3Power Operations Inc., a Delaware corporation (“G3P OPS”), and Green3Power International Company, a Nevis corporation (“G3PI”). This transaction was a stock for stock exchange (the “Exchange”), which was accounted for as an acquisition and recorded as an expense based on the fair value of the Company’s common stock as of the date of the exchange. Also exchanged was one share of the Company’s Series B preferred stock, which is convertible into common shares two years from the date of the SEA, if certain milestones are met as required by the SEA. No value was attributed to the preferred share. We conduct all of our operations through G3P and its subsidiaries which are primarily engaged in the development of waste-to-energy projects and services including design, permitting, equipment procurement, construction management and operations and maintenance of the intended facilities. We intend to hold equity interests in the waste-to-energy facilities on a global basis and operate and maintain the facilities. A second business unit is focused on providing waste remediation services globally.

 

The Company’s fiscal year end is November 30.

 

On January 6, 2011, we acquired 100% of BioPower Corporation (“BC”), a Florida corporation incorporated on September 13, 2010, by our then-CEO and Director contributing 100% of the outstanding shares to the Company. As a result, BC became a wholly owned subsidiary of the Company.

 

On May 12, 2012, the Company formed FTZ Energy Exchange Inc., a wholly owned subsidiary, for the future development of an energy exchange. On June 7, 2012, the Company’s then-Chief Executive Officer contributed 100% of his member interest in FTZ Exchange, LLC (“FTZ”), a wholly owned subsidiary, to the Company for no consideration. FTZ is a licensing company that licenses business know-how and technology to build transaction fee-based exchanges for the sale of products and services in vertical markets.

 

On August 2, 2012, the Company formed Agribopo, Inc., a wholly owned subsidiary, for the development of biomass related projects. On November 27, 2012, the Company entered into a non-exclusive global license with Advanced Green Technologies, LLC to convert biomass wastes from animals, humans and cellulosic biomass to cellulosic ethanol, fertilizer and other derivative products.

 

On October 24, 2014, the Company entered into the SEA with G3P to acquire G3P and its wholly owned subsidiaries, G3P OPS and G3PI through the Exchange.

 

By October 24, 2016, G3P had failed to meet the provisions of the SEA that would allow G3P to take over control of the Company. As a result, the Company’s Board of Directors tried to come to an arrangement to separate BioPower from its subsidiaries, but in the end, decided that it would be in the best interests of the Company’s shareholders to move forward looking for a new acquisition. From October 24, 2016 until February 2017, the Company continued project development of waste-to-energy projects with extremely limited funds. In February 2017, the Company ceased all operations. At that time, we became a shell company.

 

F-5
 

 

In 2019, we entered into a memorandum of understanding with WPP Energy GmbH and China Energy Partners, LLC (“CEP”), but after exhausting all efforts we were unable to negotiate a definitive agreement or close the transaction.

 

On June 29, 2021, we entered into an Asset Purchase Agreement (the “APA”) with Rafael Ben Shaya, Troy MacDonald, Adam Benchaya, Thomas Perez, Tom Saban and Edouard Pouchoy (collectively, Messrs. Ben Shaya, MacDonald, Benchaya, Perez, Saban and Pouchoy are referred to herein as the “Sellers”).

 

Pursuant to the terms of the APA, the Company agreed to acquire from the Sellers, and the Sellers agreed to sell to the Company, certain assets comprised of the goodwill, intellectual property, business proprietary know-how and trade secrets, intangible property and other assets of Sellers’ business with respect to HyFi, and any and all rights of Sellers in and to the foregoing (the “Assets”), and certain governance/utility virtual tokens (collectively, the “HyFi Tokens”) expected to be used as a means of payment on the HyFi Platform, as hereinafter defined (the “Acquisition”). The “HyFi Platform” refers to the HyFi Decentralized Finance (“DeFi”) exchange marketplace using blockchain platform technology. The DeFi principles are based on an ecosystem of financial services utilizing tokenization and non-fungible tokens (“NFTs”) in connection with qualifying products, licenses and projects.

 

In addition, the Sellers agreed to (i) pay to the Company, on the closing date of the Acquisition, $300,000 (the “Cash Consideration”), and (ii) transfer to the Company, on the closing date of the Acquisition, 400,000,000 HyFi Tokens (the “HyFi Token Consideration”). The Company used the Cash Consideration to bring the Company into a fully reporting status with the Securities and Exchange Commission (the “SEC”) and for public company operating expenses.

 

Pursuant to the terms of the APA, the Company agreed to file with the State of Nevada the certificate of designation for the Series C preferred stock on or before the date that is 60 calendar days after the closing of the Acquisition. In exchange for the sale of the Assets and the Cash Consideration, the Company agreed to issue to the Sellers an aggregate of 900,000 Series C preferred shares within 30 calendar days after the State of Nevada provides written confirmation of filing of the certificate of designation for the Series C preferred stock.

 

Pursuant to the terms of the APA, the parties agreed that the Series C preferred stock will have the following terms, among others:

 

1. Authorized Shares of Series C Preferred Stock. The number of authorized shares of Series C preferred stock will be 900,000.

 

2. Conversion. Subject to the other terms and conditions in the certificate of designation, a Series C preferred stockholder will have the right from time to time and at any time following the date that is one year after the date on the signature page of the certificate of designations to convert each outstanding share of Series C preferred stock into 450 shares of Company common stock. Based on the number of shares of common stock issued and outstanding as of June 29, 2021, if all of the 900,000 shares of Series C preferred stock are issued and subsequently converted, the holders of the converted stock will hold 90% of the issued and outstanding shares of common stock.

 

3. Voting. Except as otherwise set forth in the certificate of designation, each share of Series C preferred stock will, on any matter submitted to the holders of Company common stock, or any class thereof, for a vote, vote together with the common stock, or any class thereof, as applicable, as one class on such matter, and each share of Series C preferred stock will have 450 votes.

 

4. Dividends. The Series C preferred stock is not entitled to receive dividends or distributions.

 

The Acquisition closed on June 29, 2021 (the “Closing Date”). On the Closing Date, the Sellers delivered the Cash Consideration and the HyFi Token Consideration.

 

On August 27, 2021, the Company filed with the State of Nevada a certificate of designations for the Series C preferred stock.

 

Series A Preferred Stock Redemption Agreement & Senior Promissory Note

 

F-6
 

 

Also on the Closing Date, the Company and CEP entered into a share redemption agreement (the “Redemption Agreement”), dated as of June 29, 2021, pursuant to which the Company redeemed one share of the Company’s Series A preferred stock from CEP (the “Series A Share”). On the Closing Date, as provided in the Redemption Agreement, the Company issued to CEP a senior promissory note (the “Note”) in the principal amount of $1,000,000. The Series A Share will be held in escrow. If an Event of Default (as defined in the Note) occurs under the Note, then the Company will direct the escrow agent to release the Series A Share to CEP; provided, however, that CEP will also retain all rights and privileges under the Note (and the Company will remain bound to all obligations under Note) even if the Series A Share is required to be released by the escrow agent to CEP as provided in the Redemption Agreement. For the avoidance of doubt, CEP will regain all rights, title, and interest in and to the Series A Share upon the occurrence of an Event of Default under the Note, regardless of the amount of the outstanding balance owed under the Note at the time of the occurrence of an Event of Default under the Note.

 

On October 7, 2021, the Company filed a certificate of amendment (the “Certificate of Amendment”) to its amended and restated articles in the State of Nevada and with FINRA, in order to change its corporate name from BioPower Operations Corporation. to HyFi Corp (the “Name Change”). The State of Nevada has officially changed the name of the Company to HYFI Corp. The Name Change and stock symbol change will be effective for Securities and Exchange Commission or trading purposes until it is cleared by the Financial Industry Regulatory Authority (FINRA).

 

Note 2. Summary of Significant Accounting Policies

 

Management’s Representation of Interim Financial Statements

 

The accompanying unaudited consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the SEC. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements at filed as part of the Company’s Annual Report on Form 10-K with the SEC on February 17, 2022.

 

Principles of Consolidation

 

All inter-company accounts and transactions have been eliminated in consolidation.

 

Basis of Presentation

 

The accompanying financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (the “ASC”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP.

 

Going Concern

 

The accompanying unaudited consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. The Company has incurred significant operating losses since inception. As of August 31, 2022, the Company had an accumulated deficit of $9,812,658 and stockholders’ deficit of $5,378,305.

 

Because the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations, this raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to raise additional funds and is currently exploring alternative sources of financing. Historically, the Company has raised capital through private placements, as an interim measure to finance working capital needs and may continue to raise additional capital through the sale of common stock or other securities and obtaining some short-term loans. The Company will be required to continue to so until its operations become profitable. Also, the Company has, in the past, paid for consulting services with its common stock to maximize working capital, and intends to continue this practice where feasible.

 

F-7
 

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

 

Accounts Receivable

 

Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to repay their obligation. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions. If market conditions decline, actual collection experience may not meet expectations and may result in decreased cash flows and increased bad debt expense.

 

The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made.

 

Inventory

 

Inventories are stated at the lower of cost or net realizable value. Cost is determined by the first-in, first-out basis and net realizable value. Net realizable value is defined as sales price less cost of completion, disposition and transportation and a normal profit margin. As of August 31, 2022 and November 30, 2021, inventory amounted to $12,893 and $0, respectively, which consisted of finished goods.

 

Revenue Recognition

 

On July 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Results for reporting periods beginning after January 1, 2018, are presented under ASC 606.

 

On June 29, 2021, the Sellers agreed to (i) pay to the Company, on the closing date of the Acquisition, $300,000 (the “Cash Consideration”), and (ii) transfer to the Company, on the closing date of the Acquisition, 400,000,000 HyFi Tokens (the “HyFi Token Consideration”). The Company used the Cash Consideration to bring the Company into a fully reporting status with the SEC and for public company operating expenses.

Concentration

 

One customer accounted for 100% of sales during the three months ended September 31, 2022.

 

Six customers, including two related parties, account for 100% of sales during the nine months ended August 31, 2022.

 

F-8
 

 

Cash and cash equivalents

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. On August 31, 2022, and November 30, 2021, the Company’s cash equivalents totaled $15,109 and $95,973, respectively.

 

Income taxes

 

The Company accounts for income taxes under FASB ASC 740, “Accounting for Income Taxes”. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, “Accounting for Uncertainty in Income Taxes,” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

 

The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions quarterly to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.

 

Stock-based Compensation

 

The Company accounts for stock-based compensation using the fair value method following the guidance outlined in Section 718-10 of the ASC for disclosure about stock-based compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

 

Net Loss per Share

 

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by ASC Topic 260, “Earnings per Share.” Basic earnings per common share calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard.

 

We adopted ASC 842 on July 1, 2021. The adoption of ASC 842 did not have any impact on our financial statements.

 

F-9
 

 

Stockholders’ Equity

 

On July 28, 2021, the Company amended and restated its articles of incorporation, as amended, in order to, among other things, (i) increase the number of authorized shares of common stock from 100,000,000 to 500,000,000, (ii) increase the number of authorized shares of preferred stock from 10,000 to 5,000,000, and (iii) change the par value of the preferred stock from $1.00 par value per share to $0.0001 par value per share. As of November 30, 2021, the Company had authorized 500,000,000 shares of common stock, $0.0001 par value per share, and 5,000,000 shares of preferred stock, $0.0001 par value per share.

 

On March 4, 2022, the Company issued 625,000 shares of restricted common stock to a Canadian investor for $0.40 per share for a total purchase price of $250,000.

 

As of August 31, 2022, and November 30, 2021, respectively, there were 45,625,000 and 45,000,000 shares of common stock issued and outstanding, respectively, and 900,000 and 1 shares and 0 shares of preferred stock issued and outstanding, respectively.

 

Note 3. Notes Payable and Convertible Debt

 

Notes payable consists of the following:

  

   Balance   Interest Rate   Maturity 
Demand loans  $551,167    4% to 8%   Various 
Reclassification of accrued compensation to notes payable   143,031    8%   December 1, 2017 
Balance –August 31, 2022 and November 30, 2021  $694,198           

 

As of August 31, 2022 and November 30, 2021, all loans are past due and in default.

 

On July 27, 2016, the Company entered into demand loan agreements with a third-party investor totaling $193,667 at 4% interest, payable upon demand.

 

Between October 28, 2011 and January 7, 2012, the Company issued a total of $70,000 in notes payable, due May 31, 2012. Interest on the notes is payable at 4%. The lender may elect to convert the loan before maturity at a conversion price of $0.25 per share. The loans are currently past due.

 

On December 3, 2013, the Company entered into convertible debt agreements with a third-party investor totaling $62,500 at 8% interest, payable upon demand. The debt is convertible into shares of common stock at a conversion price of $0.10 per share, for any amount up to 50% of the original amount of the notes. As of August 31, 2022 and November 30, 2021, the note was in default.

 

On July 30, 2015, the Company entered into convertible debt agreements with a third-party investor totaling $200,000 at 8% interest, due on December 31, 2015. The debt is convertible into shares of common stock at a conversion price of $0.15 per share. As of August 31, 2022 and November 30, 2021, the note was in default.

 

On May 23, 2016, the Company entered into convertible debt agreements with a third-party investor totaling $25,000 at 8% interest, due on May 23, 2018. The debt is convertible into shares of common stock at a conversion price of $0.10 per share. As of August 31, 2022 and November 30, 2021, the note was in default.

 

On July 30, 2015, the Company entered into convertible debt agreements with a third-party investor totaling $15,000 at 8% interest, due on May 23, 2018. The debt is convertible into shares of common stock at a conversion price of $0.15 per share. As of August 31, 2022 and November 30, 2021, the note was in default.

 

On July 30, 2015, the Company entered into convertible debt agreements with a third-party investor totaling $15,000 at 8% interest, due on May 23, 2018. The debt is convertible into shares of common stock at a conversion price of $0.15 per share. As of August 31, 2022 and November 30, 2021, the note was in default.

 

F-10
 

 

Between December 3, 2014 and July 28, 2015, the Company issued a total of $113,031 in notes payable. Interest on the notes is payable at 8%. The loans were due prior to December 31, 2015 and are past due.

 

Accrued interest on notes payable and convertible debt at August 31, 2022 and November 30, 2021 amounted to $308,842 and $275,071, respectively, which is included as a component of accounts payable and accrued expenses.

 

Interest expense on notes payable and convertible debt with third parties amounted to $11,247 and $11,247 for the three months ended August 31, 2022 and August 31, 2021 respectively. Interest expense on notes payable and convertible debt with third parties amounted to $33,741 and $32,741 for the nine months ended August 31, 2022 and May 31, 2021 respectively.

 

Note 4. Related Party Transactions

 

On May 27, 2016, the former Chief Executive Officer, now our Chief Financial Officer, agreed to reduce his accrued compensation by $206,250 as a contribution to additional paid in capital. He also agreed to reclassify $874,000 in accrued compensation to long term debt upon the issuance of a non-convertible 4% interest bearing note with a maturity date of December 1, 2017. The compensation included was accrued during the period from January 2, 2011 to February 29, 2016. This compensation will be paid as bonuses out of future income only and is further subject to a cap of 20% of operating net cash flow in any given period. If bonuses are paid, accrued compensation will be paid with an amount decided by the Board. On June 1, 2016, he agreed to reduce his accrued compensation by $25,000 as a contribution to additional paid in capital. He also agreed to reduce his long term note by $214,000 as a contribution to additional paid in capital. As the Company was not funded prior to December 1, 2016, the Board of Directors reversed the contribution of accrued salaries. As of August 31, 2022 and November 30, 2021, the Chief Financial Officer was owed $445,250 and $445,250, respectively, of accrued compensation and accrued salary was reduced by $15,722.47. As of August 31, 2022 and November 30, 2020, the Chief Financial Officer was owed $805,637 and $805,637, respectively, of notes payable and accrued interest.

 

On May 27, 2016, the Director of Strategy agreed to reduce her accrued compensation by $206,250 as a contribution to additional paid in capital. She also agreed to reclassify $660,000 in accrued compensation to long term debt upon the issuance of a non-convertible 4% interest bearing note with a maturity date of December 1, 2017. The total principal amount of $710,000 included three different notes totaling $50,000@ 8% interest. The compensation included was accrued during the period from January 2, 2011 to February 29, 2016. This compensation will be paid as bonuses out of future income only and is further subject to a cap of 20% of operating net cash flow in any given period. If bonuses are paid, accrued compensation will be paid with an amount decided by the Board. On June 1, 2016, she agreed to reduce her accrued compensation by $225,000 as a contribution to additional paid in capital. She also agreed to reduce her long term note by $9,583 as a contribution to additional paid in capital. As the Company was not funded prior to December 1, 2016, the Board of Directors reversed the contribution of accrued salaries. As of August 31, 2022 and November 30, 2021, the Director was owed a total of $440,833 and $440,833, respectively, of accrued compensation. As of August 31, 2022 and November 30, 2021, the Director was owed a total of $883,791 and $883,791, respectively, of notes payable and accrued interest. There was a reduction in the liability by share issuance of $27,308.

 

 

As of November 30, 2016, a related party investor advanced a total of $99,448 due on or before June 15, 2016. Pursuant to the agreement, the investor is allowed to convert 100% of the debt at a share price of $0.15. As of August 31, 2022 and November 30, 2021, the note was in default.

 

In March 2016, the Chief Operating Officer loaned to the Company $100,000. The loan bears interest at 8% and is due on or before March 2, 2018. Pursuant to the agreement, the investor is allowed to convert 100% of the debt on the maturity date at a share price of $0.15. The Company accounted for the conversion of loan in accordance with ASC 470, “Debt with Conversion and Other Options”. The fair market value of the shares on March 2, 2016 was $0.10 per share and, accordingly, there was deemed to be no Beneficial Conversion Factor. On May 18, 2016, the Chief Operating Officer loaned the Company an additional $50,000 with conversion rights at $0.10 per share. Therefore, effective May 18, 2016, $50,000 of the Chief Operating Officer’s note payable had conversion rights of $0.10 per share. The Company accounted for the conversion of loan in accordance with ASC 470, “Debt with Conversion and Other Options”. The fair market value of the shares on May 18, 2016 was $0.10 per share and accordingly there was deemed to be no Beneficial Conversion Factor. On May 23, 2016, a third-party investor loaned the Company $25,000 with conversion rights at $0.10 per share. Therefore, effective May 23, 2016, an additional $25,000 of the Chief Operating Officer’s $100,000 note payable had conversion rights of $0.10 per share. The Company accounted for the conversion of loan in accordance with ASC 470, “Debt with Conversion and Other Options”. The fair market value of the shares on May 18, 2016 was $0.10 per share and accordingly, was deemed to have no Beneficial Conversion Factor. As of August 31, 2022 and November 30, 2021, the note was in default.

 

F-11
 

 

In May 2016, the Chief Operating Officer made a loan of $50,000, bearing interest at 8% and due on or before May 18, 2018. The debt is convertible into shares of common stock at a conversion price of $0.10 per share. As of August 31, 2022 and November 30, 2021, the note was in default.

 

In July 2016, the Chief Operating Officer made a loan of $50,000 as collateral, bearing interest at 8% and due on or before July 31, 2018. The debt is convertible into shares of common stock at a conversion price of $0.10 per share. As of August 31, 2022 and November 30, 2021, the note was in default.

 

On June 29, 2021 the Company entered into an employment agreement with Robert Kohn. The Company agreed to an annual salary of $150,000 beginning on September 30, 2021. As of August 31, 2022 and November 30, 2021 the Company accrued $100,000 and $25,000, respectively.

 

During the year ended November 30, 2021 the Company issued 17,500,000 HyFi Tokens to related parties for the purchase of technology. The Technology has a historical value of $0. In addition, the Company issued Troy MacDonald 175,000 HyFi Tokens as consideration for his sale of HyFi tokens at 5% of the related token sales.

 

Accrued interest on related party notes payable and convertible debt at August 31, 2022 and November 30, 2021, amounted to $547,723 and $484,156, respectively, and is a component of accounts payable and accrued expenses – related parties.

 

Interest expense on notes payable and convertible debt with related parties amounted to $21,189 and $21,189 for the three months ended August 31, 2022 and August 31, 2021, respectively. Interest expense on notes payable and convertible debt with related parties amounted to $63,567 and $63,567 for the nine months ended August 31, 2022 and August 31, 2021, respectively.

 

The Company has separated accounts payable and accrued expenses on the balance sheet to reflect amounts due to related parties primarily consisting of officer compensation, health insurance, interest on notes and reimbursable expenses to officers for travel, meals and entertainment, vehicle and other related business expenses.

 

Convertible Loans – variable priced conversion

 

Diagonal Lending Securities Purchase Agreement & Convertible Note

 

On May 31, 2022, the Company entered into a Securities Purchase Agreement (the “Diagonal Lending SPA”) by and between the Company and 1800 Diagonal Lending LLC (“Diagonal Lending”). Pursuant to the terms of the Diagonal Lending SPA, the Company agreed to sell, and Diagonal Lending agreed to purchase, a convertible note of the Company in the aggregate principal amount of $90,000. On August 5, 2022 the Company borrowed an additional $78,750 with similar terms

 

On May 31, 2022 and August 5, 2022, pursuant to the terms of the Diagonal Lending SPA, the Company issued to Diagonal Lending a convertible promissory note (the “Diagonal Lending Note”) in the principal amount of $90,000 and $78,750, respectively. The Diagonal Lending Note was funded on June 23, 2022 and August 5th, 2022. The Diagonal Lending Note bears interest at a rate of 10% per annum and matures on May 31, 2023. The Diagonal Lending Note may not be prepaid in whole or in part except as otherwise explicitly set forth in the Diagonal Lending Note. Any amount of principal or interest which is not paid when due will bear interest at a rate of 22% per annum.

 

F-12
 

 

Diagonal Lending has the right from time to time, and at any time following November 27, 2022 and ending on the earlier of (i) payment of all amounts due under the Diagonal Lending Note, (ii) May 31, 2023, if all amounts are repaid in full at such time, or (iii) the date full repayment of all indebtedness to convert all or any part of the indebtedness into common stock subject to the terms of the Digital Lending Note at the Conversion Price (as hereinafter defined). The “Conversion Price” means 65% multiplied by the lowest trading price for the Company’s common stock during the 10 trading day period ending on the latest complete trading day prior to the conversion date, subject to a 4.99% equity blocker and subject to the terms of the Diagonal Lending Note.

 

The Diagonal Lending Note may be prepaid; provided, however, that if the Company exercises its right to prepay, the Company will make payment to Diagonal Lending of an amount in cash equal to the percentage as set forth in the table below, multiplied by the sum of: (w) the then outstanding principal amount of the Diagonal Lending Note, plus (x) accrued and unpaid interest on the unpaid principal amount of the Diagonal Lending Note, plus (y) default interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) certain other amounts owed to Diagonal Lending pursuant to the terms of the Diagonal Lending Note.

 

Prepayment Period  Prepayment Percentage 
May 31, 2022 to July 30, 2022   120%
July 31, 2022 to October 28, 2022   125%
October 29, 2022 to November 27, 2022   130%

 

After November 27, 2022, prepayment will be subject to agreement of the parties with respect to the applicable prepayment percentage.

 

Note 5. Senior Promissory Note – related party

 

On June 29, 2021, the Closing Date, the Company and CEP entered into the Redemption Agreement, dated as of June 29, 2021, pursuant to which the Company redeemed the Series A Share. On the Closing Date, as provided in the Redemption Agreement, the Company issued to CEP the Note in the principal amount of $1,000,000 with an interest rate of 6% per annum. The Series A Share will be held in escrow. If an Event of Default (as defined in the Note) occurs under the Note, then the Company will direct the escrow agent to release the Series A Share to CEP; provided, however, that CEP will also retain all rights and privileges under the Note (and the Company will remain bound to all obligations under Note) even if the Series A Share is required to be released by the escrow agent to CEP as provided in the Redemption Agreement. For the avoidance of doubt, CEP will regain all rights, title, and interest in and to the Series A Share upon the occurrence of an Event of Default under the Note, regardless of the amount of the outstanding balance owed under the Note at the time of the occurrence of an Event of Default under the Note.

 

On June 22, 2022, the Company entered into the Addendum and Amendment of Promissory Note (the “Note Amendment”) by and between the Company and China Energy Partners, LLC (“China Energy”). Pursuant to the terms of the Note Amendment, the Company and China Energy agreed to amend the Senior Promissory Note issued by the Company to China Energy on June 29, 2021 (the “China Energy Note”) such that (i) the principal amount and accrued interest under the China Energy Note will be repaid in full on or before June 28, 2022, with $800,000 to be paid in cash and $200,000 to be paid via the transfer to China Energy of tokens to an electronic wallet; and (ii) the parties agree that $60,000 in interest previously accrued under the China Energy Note was satisfied via the transfer by the Company to China Energy of 53 HyFi NFT Athena vaults.

 

On June 28, 2022, the China Energy Note, as amended by the Note Amendment, was paid in full.

 

Note 6. Stockholders’ deficit

 

On August 5, 2021, Company effected the following share issuances:

 

The Company issued 50,000 shares of common stock valued at $2,500 ($0.05 per share) to a consultant.

 

The Company issued 750,000 shares of common stock valued at $37,500 ($0.05 per share) to Baruch Halpern for severance compensation.

 

The Company issued 546,160 shares of common stock valued at $27,307 ($0.05 per share) to Robert Kohn for partial conversion of accrued compensation.

 

F-13
 

 

The Company issued 546,160 shares of common stock valued at $27,307 ($0.05 per share) to Bonnie Nelson for partial conversion of accrued compensation.

 

On the Closing Date, the Company and CEP entered into the Redemption Agreement, dated as of June 29, 2021, pursuant to which the Company redeemed the Series A Share. On the Closing Date, as provided in the Redemption Agreement, the Company issued to CEP the Note in the principal amount of $1,000,000 with an interest rate of 6% per annum. The Series A Share will be held in escrow. If an Event of Default (as defined in the Note) occurs under the Note, then the Company will direct the escrow agent to release the Series A Share to CEP; provided, however, that CEP will also retain all rights and privileges under the Note (and the Company will remain bound to all obligations under Note) even if the Series A Share is required to be released by the escrow agent to CEP as provided in the Redemption Agreement. For the avoidance of doubt, CEP will regain all rights, title, and interest in and to the Series A Share upon the occurrence of an Event of Default under the Note, regardless of the amount of the outstanding balance owed under the Note at the time of the occurrence of an Event of Default under the Note.

 

On June 29, 2021, the Sellers agreed to (i) pay to the Company, on the closing date of the Acquisition, $300,000 (the “Cash Consideration”), and (ii) transfer to the Company, on the closing date of the Acquisition, 400,000,000 HyFi Tokens (the “HyFi Token Consideration”). The Company used the Cash Consideration to bring the Company into a fully reporting status with the SEC and for public company operating expenses.

 

In exchange for the sale of the Assets and the Cash Consideration, the Company agreed to issue to the Sellers an aggregate of 900,000 Series C preferred shares within 30 calendar days after the State of Nevada provides written confirmation of filing of the certificate of designation for the Series C preferred stock.

 

Pursuant to the terms of the APA, the parties agreed that the Series C preferred stock will have the following terms, among others:

 

1. Authorized Shares of Series C Preferred Stock. The number of authorized shares of Series C preferred stock will be 900,000.

 

2. Conversion. Subject to the other terms and conditions in the certificate of designation, a Series C preferred stock holder will have the right from time to time and at any time following the date that is one year after the date on the signature page of the certificate of designations to convert each outstanding share of Series C preferred stock into 450 shares of Company common stock. Based on the number of shares of common stock issued and outstanding as of November 30, 2021, if all of the 900,000 shares of Series C preferred stock are issued and subsequently converted, the holders of the converted stock will hold 90% of the issued and outstanding shares of common stock.

 

3. Voting. Except as otherwise set forth in the certificate of designation, each share of Series C preferred stock will, on any matter submitted to the holders of Company common stock, or any class thereof, for a vote, vote together with the common stock, or any class thereof, as applicable, as one class on such matter, and each share of Series C preferred stock will have 450 votes.

 

4. Dividends. The Series C preferred stock is not entitled to receive dividends or distributions.

 

On August 27, 2021, the Company filed with the State of Nevada a certificate of designations for the Series C preferred stock.

 

On July 28, 2021, the Company amended and restated its articles of incorporation, as amended, in order to, among other things, (i) increase the number of authorized shares of common stock from 100,000,000 to 500,000,000, (ii) increase the number of authorized shares of preferred stock from 10,000 to 5,000,000, and (iii) change the par value of the preferred stock from $1.00 par value per share to $0.0001 par value per share. As of November 30, 2021, the Company had authorized 500,000,000 shares of common stock, $0.0001 par value per share, and 5,000,000 shares of preferred stock, $0.0001 par value per share. As of May 31, 2022, and November 30, 2021, respectively, there were 45,625,000 and 45,000,000 shares of common stock issued and outstanding, and 900,000 and 1 shares and 0 shares of preferred stock issued and outstanding, respectively.

 

F-14
 

 

On March 5, 2022, the Company entered into a Stock Purchase Agreement (the “Compton SPA”) by and between the Company and Clarke Compton. Pursuant to the terms of the Compton SPA, the Company agreed to sell, and Mr. Compton agreed to purchase, 625,000 shares of the Company’s common stock for a total purchase price of $250,000.

 

On June 26, 2022 PIP agreed to purchase, and the Company agreed to sell, 500,000 shares of restricted common stock at a purchase price of $0.25 per share. As of August 31, 2022 the shares have not been issued by the transfer agent

 

Note 7. Commitments and Contingencies

 

Commitments

 

On April 6, 2022, the Company entered into an agreement (the “Sanctum Agreement”) with Sanctum Studios (“Sanctum”) relating to The Athena Project. Pursuant to the terms of the Sanctum Agreement, Sanctum agreed to conceptualize, create and produce a collection of 20,000 digital art assets based on the Greek Goddess Athena, in exchange for payment by the Company of $121,000 and certain variable rate payments depending on the number of vaults sold by the Company. The $121,000 is payable by the Company in three equal installments of $40,333.33 due on April 4, 2022, May 19, 2022 and July 1, 2022. The Company paid all installments due through August 31, 2022. The Sanctum deliverables are due by July 1, 2022 or earlier, as set forth in the Sanctum Agreement. The Company announced this material definitive agreement and associated Press Release, incorporated by reference, on a Current Report on Form 8-K which was filed with the SEC on April 7, 2022.

 

PIP North America ILO and Multi-Agreement

 

On June 26, 2022 , the Company entered into an ILO and Multi-Agreement (the “PIP Agreement”) with PIP North America Inc. (“PIP”). Pursuant to the terms of the PIP Agreement, the parties agreed as follows:

 

1. The Company agreed to provide PIP the exclusivity to list the first initial license offering (“ILO”) for a minimum of 90 days. PIP can mutually agree to allow the Company to list another ILO during this period and PIP will receive 50% of gross revenues.
2. PIP will not pay any listing fee for its first three ILOs, and the Company will provide free consulting services to help structure the ILOs.
3. The Company agreed to provide services necessary from Super How for the customization of the HyFi technology for the first three PIP ILOs, including smart contracts for each listing.
4. The Company agreed to provide, at the Company’s cost, Prime Trust for anti-money laundering (AML) and know your customer (KYC) services, including processing of the payments, conversion of tokens to fiat currency for the use by the ILO issuer and all other services necessary for any ILOs, projects or bridge loans that PIP agrees to list on HyFi marketplaces to raise capital.
5. The Company agreed to provide PIP with Exclusive License options for one-year $1 million and five-year $10 million exclusives for the agriculture category on the HyFi DeFi marketplaces. Whoever brings the issuer will receive 75% of the gross revenues and whoever does not bring the issuer will receive 25% of the gross revenues. The option for the one-year exclusive must be exercised while the first PIP ILO is listed on the HyFi ILO marketplace and, once exercised, will last for one year. Within 90 days of the expiration of the one-year exclusive license, PIP must exercise the 5-year license.
6. PIP agreed to pay the Company 5% of gross sales of PIP vaults plus usual and customary percentages charged by third party vendors for the vault program.
7. PIP agreed to purchase, and the Company agreed to sell, 500,000 shares of restricted common stock at a purchase price of $0.25 per share. As of August 31, 2022 the shares have not been issued by the transfer agent.
8. PIP agreed to purchase, and the Company agreed to sell, 3,125,000 HyFi tokens at a purchase price of $0.04 per token for $125,000. The HyFi tokens can be used as utility tokens in conjunction with HyFi DeFi marketplace fees and services, HyFi vaults, HyFi memberships and any other HyFi fees and services. As of August 31, 2022 the HyFi tokens have not been delivered.
9. The Company agreed to grant PIP an option to purchase up to 50 HyFi vaults for $1,000. The option will expire on August 30, 2022.
10. The Company agreed to provide a license for the HyFi Vault Program, a blockchain promotional and marketing program, and services necessary from third party vendors, including Super How and Sanctum Studios.
11. In exchange for the above, PIP agreed to pay to the Company $500,000. The Company agreed to use this payment as part of the payments to retire the China Energy Note, as amended.

 

Contingencies

 

From time to time, the Company may be involved in legal matters arising in the ordinary course of business. While the Company believes that such matters are currently not material, there can be no assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will not have a material adverse effect on its business, financial condition or results of operations.

 

Note 8. Subsequent Events

 

On November 15, 2022, Robert Kohn resigned as Chief Financial Officer of the Company and as a member of the Company’s Board of Directors, effective immediately. Mr. Kohn’s resignation was not because of a disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Effective November 15, 2022, the Board appointed Paul Christopher Walton to serve as the Company’s Chief Operating Officer, as well as the Company’s principal financial officer and principal accounting officer.

 

Mr. Walton, age 53, has served as Chief Operating Officer of WPP Energy GmbH, a private Swiss renewable energy company (“WPP Energy”), since December 2017, and as Chief Operating Officer and Chief Innovation Officer since 2020. He remains a key contributor and stakeholder in WPP Energy. Prior to December 2017, Mr. Walton founded The Monetary Man Inc. in June 2004, Gem of a Diamond in 2012 and Investors Gold Corporation in 2014. Collectively, the three companies focused on precious metals, gems and currency.

 

Mr. Walton is co-founder of HyFi Exchange and is also co-founder and co-architect of the HyFi Platform, WPP Token and HyFi Token. He led the effort to successfully create high level partnerships with exchanges, advisors, developers, investors, community support people and other key ecosystem participants.

 

While in his role at WPP Energy, Mr. Walton successfully procured a Master VORAX waste-to-energy technology 25-year global exclusive distribution license and procured unconventional water electrolysis technology. Mr. Walton has built large academic and scientific teams and built and trained a global distributor/reseller network. He has created dozens of corporate partnerships and strategic alliances around the VORAX and W2H2 technologies, including those with multi-billion-dollar companies and large educational institutions.

 

Mr. Walton is a former four-time national award winner for outstanding business development as a HNW private banker with TD Bank (a top 25 world bank) and national employee of the year with HFC/HSBC. Mr. Walton has built multiple successful businesses in the past across a variety of industries. He is also an internationally known numismatist with a 43-year, two generation history in physical currency. The transition into digital currency was a natural challenge for a professional banker and currency expert.

 

Mr. Walton has successfully completed the Harvard Business School Program on “Disruptive Innovation Strategy” and MIT University’s Program on “Blockchain Technology & Business Innovation” and the London School of Economics “Negotiation Programme”. He also studied at Stanford University in the “Energy Innovation & Emerging Technologies Program” and is a graduate of Saint Mary’s University.

 

F-15
 

 

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

 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto as of and for the fiscal year ended November 30, 2021 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2021, filed with the Securities and Exchange Commission (the “SEC”) on September 3, 2021.

 

Forward-Looking Statements

 

The information in this discussion contains forward-looking statements and information. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “should,” “could,” “predicts,” “potential,” “continue,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements. All forward-looking statements in this Quarterly Report on Form 10-Q are made based on our current expectations, forecasts, estimates and assumptions, and involve risks, uncertainties and other factors that could cause results or events to differ materially from those expressed in the forward-looking statements. In evaluating these statements, you should specifically consider various factors, uncertainties and risks that could affect our future results or operations. These factors, uncertainties and risks may cause our actual results to differ materially from any forward-looking statement set forth in this Quarterly Report on Form 10-Q. You should carefully consider these risk and uncertainties described and other information contained in the reports we file with or furnish to the SEC before making any investment decision with respect to our securities. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by this cautionary statement.

 

Overview

 

BioPower Operations Corporation (“we,” “our,” “BioPower”, or the “Company”) was organized in Nevada on January 5, 2011. Since February 2017, the Company has been a shell company.

 

HyFi Asset Purchase Agreement

 

On June 29, 2021, we entered into an Asset Purchase Agreement (the “APA”) with Rafael Ben Shaya, Troy MacDonald, Adam Benchaya, Thomas Perez, Tom Saban and Edouard Pouchoy (collectively, Messrs. Ben Shaya, MacDonald, Benchaya, Perez, Saban and Pouchoy are referred to herein as the “Sellers”).

 

Pursuant to the terms of the APA, the Company agreed to acquire from the Sellers, and the Sellers agreed to sell to the Company, certain assets comprised of the goodwill, intellectual property, business proprietary know-how and trade secrets, intangible property and other assets of Sellers’ business with respect to HyFi, and any and all rights of Sellers in and to the foregoing (the “Assets”), and certain governance/utility virtual tokens (collectively, the “HyFi Tokens”) expected to be used as a means of payment on the HyFi Platform, as hereinafter defined (the “Acquisition”). The “HyFi Platform” means a decentralized finances (“DeFi”) exchange marketplace using blockchain platform technology. The DeFi principles are based on an ecosystem of financial services utilizing tokenization and non-fungible tokens (“NFTs”) for production, licenses, projects and commodities across vertical and horizontal markets.

 

In addition, the Sellers agreed to (i) pay to the Company, on the closing date of the Acquisition, $300,000 (the “Cash Consideration”), and (ii) transfer to the Company, on the closing date of the Acquisition, 400,000,000 HyFi Tokens (the “HyFi Token Consideration”). The Company intends to use the Cash Consideration to bring the Company into a fully reporting status with the Securities and Exchange Commission and for public company operating expenses.

 

3
 

 

Pursuant to the terms of the APA, the Company agreed to file with the State of Nevada the certificate of designation for the Series C preferred stock on or before the date that is 60 calendar days after the closing of the Acquisition. In exchange for the sale of the Assets and the Cash Consideration, the Company agreed to issue to the Sellers an aggregate of 900,000 Series C preferred shares within 30 calendar days after the State of Nevada provides written confirmation of filing of the certificate of designation for the Series C preferred stock.

 

Pursuant to the terms of the APA, the parties agreed that the Series C preferred stock will have the following terms, among others:

 

  1. Authorized Shares of Series C Preferred Stock. The number of authorized shares of Series C preferred stock will be 900,000.
     
  2. Conversion. Subject to the other terms and conditions in the certificate of designation, a Series C preferred stock holder will have the right from time to time and at any time following the date that is one year after the date on the signature page of the certificate of designations to convert each outstanding share of Series C preferred stock into 450 shares of Company common stock. Based on the number of shares of common stock issued and outstanding as of June 29, 2021, if all of the 900,000 shares of Series C preferred stock are issued and subsequently converted, the holders of the converted stock will hold 90% of the issued and outstanding shares of common stock.
     
  3. Voting. Except as otherwise set forth in the certificate of designation, each share of Series C preferred stock will, on any matter submitted to the holders of Company common stock, or any class thereof, for a vote, vote together with the common stock, or any class thereof, as applicable, as one class on such matter, and each share of Series C preferred stock will have 450 votes.
     
  4. Dividends. The Series C preferred stock is not entitled to receive dividends or distributions.

 

The Acquisition closed on June 29, 2021 (the “Closing Date”). On the Closing Date, the Sellers delivered the Cash Consideration and the HyFi Token Consideration.

 

On August 27, 2021, the Company filed with the State of Nevada a certificate of designations for the Series C preferred stock.

 

Series A Preferred Stock Redemption Agreement & Senior Promissory Note

 

Also on the Closing Date, the Company and China Energy Partners, LLC (“CEP”) entered into a share redemption agreement (the “Redemption Agreement”), dated as of June 29, 2021, pursuant to which the Company redeemed one share of the Company’s Series A preferred stock from CEP (the “Series A Share”). On the Closing Date, as provided in the Redemption Agreement, the Company issued to CEP a senior promissory note (the “Note”) in the principal amount of $1,000,000. The Series A Share will be held in escrow by an attorney designated by CEP (the “Escrow Agent”), and the CEP will designate such Escrow Agent within 30 calendar days after the Closing Date. If an Event of Default (as defined in the Note) occurs under the Note, then the Company will direct the Escrow Agent to release the Series A Share to CEP; provided, however, that CEP will also retain all rights and privileges under the Note (and the Company will remain bound to all obligations under Note) even if the Series A Share is required to be released by the Escrow Agent to CEP as provided in the Redemption Agreement. For the avoidance of doubt, CEP will regain all rights, title, and interest in and to the Series A Share upon the occurrence of an Event of Default under the Note, regardless of the amount of the outstanding balance owed under the Note at the time of the occurrence of an Event of Default under the Note.

 

As provided in the APA, on June 29, 2021, Robert Kohn resigned as the Company’s Chief Executive Officer. Mr. Kohn remained as a member of the Board of Directors, however. Also on June 29, 2021, the Company appointed the following individuals to serve as members of the Board of Directors: Troy MacDonald (Chairman), Adam Benchaya, and Thomas Perez. As a result, following the closing of the Acquisition, the Company’s Board of Directors consists of the following:

 

Troy MacDonald (Chairman)

Adam Benchaya

Robert Kohn

Thomas Perez

 

4
 

 

Also on June 29, 2021, the following individuals were appointed to serve as officers of the Company:

 

Troy MacDonald, Chief Executive Officer

Robert Kohn, Chief Financial Officer

Adam Benchaya, President and Chief Marketing Officer

 

HyFi Platform

 

The HyFi Platform is a proposed decentralized finances (DeFi) exchange marketplace utilizing blockchain technology. The DeFi principles are based on the creation of an innovative ecosystem of financial services accessible to anyone with Internet access.

 

The HyFi Token will be featured on the HyFi Platform as the governance token. The HyFi Token may also be used as a payment token for transaction fees on the HyFi Platform. The HyFi ecosystem will be built on a combination of tokens to support its economy.

 

The HyFi economy is being established to advance and accelerate technologies to be funded through the use of our marketplace. Our initial focus will be on renewable energy, environment, agri-food and then other markets globally.

 

The HyFi Platform will initially focus on two distinct businesses: (1) the NFT Marketplace and (2) the Commodities Trading Marketplace.

 

  1. We expect that the HyFi Platform will offer cash flow generating NFTs, on full or fractional ownership basis, in the following major areas and on the following bases:

 

  We anticipate that NFTs will be created that will represent up to a 49% ownership interest of a license to a particular geographic market (example: India) or a particular industry market vertical. There will be a subclass of tokens that represent an opportunity for numerous participants to have fractional ownership of, and participation in, the unique one-of-a-kind exclusive license NFT. The NFTs will be tradeable on the commodities section of the HyFi Platform once certain conditions have been met.
     
  We also expect that there will be NFTs issued for qualified promising projects related to renewable energy, waste to energy, agricultural and other approved projects.
     
  Ownership of technology licenses: We expect that NFTs will represent part or full ownership of technology licenses across many horizontal markets. Each market will include vertical markets such as the green hydrogen industry and its many uses, e.g., electric generation, marine, aviation, transportation and hydrogen fueling station networks. NFTs also will represent part or full ownership of a technology license in a specific geographic territory.
     
  Physical projects related to renewable energy, environmental, agricultural and humanitarian causes. NFTs will be issued to represent an opportunity to invest in projects in these categories.
     
  Other approved cases. In the future we may consider NFTs in the areas of medicine, space, internet & computing, artificial intelligence, robotics, nanotechnology, precious metals, and/or precious gems, for example.

 

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  2. The trading of commodities.

 

  We expect to have an initial emphasis on renewable energy, waste to energy and agri-foods via tokenized futures blockchain based smart contracts.
     
  The trading of certain commodities (e.g., green hydrogen production) will occur in most cases without any physical delivery obligation, and with electronic settlement only. Traders will purchase tokens to participate. In some cases, commodities will be offered with a physical delivery option.
     
  Commodity future supply contracts: A futures contract is a legal agreement to buy or sell a particular commodity asset at a predetermined price at a specified time in the future. The seller of the futures contract is taking on the obligation to provide and deliver the underlying commodity at the contract’s expiration date. Futures contracts are available for every category of commodity. Some manufacturers and service providers use futures contracts as part of their budgeting process to normalize expenses and reduce cash flow-related headaches. Manufacturers and service providers that rely on commodities for their production process may take a position in the commodities markets as a way of reducing their risk of financial loss due to a change in price. There are many advantages to futures contracts as a method of participating in the commodities market. We believe that analysis can be easier because it’s a pure play on the underlying commodity.

 

NFT Marketplace

 

NFTs are collectible digital assets in which various objects are digitized. Each NFT represents ownership of something inherently distinct and unique, whether it be a physical or a digital item. NFTs cannot be mutually exchanged for one another because each NFT has a specific value based on its unique traits and attributes. When NFTs are sold, the digital version of the object is sold as a unique, blockchain-authenticated collectible.

 

NFT marketplaces are platforms where NFTs can be stored, displayed, traded and in some cases, created (or “minted”). NFTs cannot be purchased on centralized or decentralized cryptocurrency or other exchanges. Instead, they are listed and traded on online marketplaces that are specially built for NFTs. We expect to launch our NFT Marketplace by the end of September 2021.

 

NFTs will be created that will represent up to 49% ownership interest of a license to a particular geographic market (e.g., India) or a particular industry market vertical. There will be a subclass of NFTs that represent an opportunity for many participants to have fractional ownership and participation in the unique exclusive license NFT. The HyFi cash flow NFT Marketplace intends to initially list companies in the energy or energy and environment related sectors that will provide license fees from unique license fee contracts for horizontal markets such as territories. As an example, an energy trading company lists on the HyFi Platform that it is willing to pay license fees of 5% annually with a potential bonus based on income for its energy trading license for North America. It is willing to sell up to 49% of its ownership in that license for $250,000,000 minimum and maximum $1,000,000,000 in units of $50,000,000 each to institutional holders. The HyFi Platform will either (1) receive fees for due diligence for each license; listing fees for listing on the HyFi Platform; and other fees associated with this transaction, or (2) do a strategic alliance, charge no fees and have a percentage of the transaction. This decision is up to the applicant.

 

The cash flow NFT Marketplace also intends to initially accept horizontal marketplace NFTs. As an example, an agriculture company has specific technology licenses for growing protocols for organic and non-pesticides food. The company has operations in Costa Rica and other Central American countries. The company intends to sell up to 49% of its technology licenses for $500,000 minimum to $5,000,000 maximum per country and pay 5% license fees and a potential bonus annually. The HyFi Platform will either (1) receive fees for due diligence for each license; listing fees for listing on the HyFi Platform; and other fees associated with this transaction or (2) do a strategic alliance, charge no fees and have a percentage of the transaction. This decision is up to the applicant.

 

Once an owner is satisfied with the amount paid for the licenses, they end the sale of the NFT ownership licenses. At that point the NFTs can then become part of the HyFi commodities marketplace where NFT Tokens are traded.

 

The Company has been in discussions with various companies in energy and energy related sectors and horizontal sectors who are interested in listing their NFTs on the NFT Marketplace. At the same time, we are working with our vendors to build out the NFT Marketplaces. We are also in initial discussions with major investment groups regarding possible joint ventures, licensing or NFT purchases. There can be no assurance that any such discussions will lead to customers or revenue.

 

On July 28, 2021, the Company amended and restated its articles of incorporation, as amended, in order to (i) increase the number of authorized shares of common stock from 100,000,000 to 500,000,000, (ii) increase the number of authorized shares of preferred stock from 10,000 to 5,000,000, (iii) change the par value of the preferred stock from $1.00 par value per share to $0.0001 par value per share; and (iv) increase the number of directors from one to four. As of August 31, 2022, the Company had authorized 500,000,000 shares of common stock, $0.0001 par value per share, and 5,000,000 shares of preferred stock, $0.0001 par value per share. As of August 31, 2022, there were 45,625,000 shares of common stock issued and outstanding, and 900,000 and 1  shares of preferred stock issued and outstanding.

 

On October 7, 2021, the Company filed a certificate of amendment (the “Certificate of Amendment”) to its amended and restated articles in order to change its corporate name from BioPower Operations Corporation. to HyFi Corp (the “Name Change”). The Name Change is expected to be effective in the coming weeks, following clearance by the Financial Industry Regulatory Authority (FINRA).

 

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On April 6, 2022, the Company entered into an agreement (the “Sanctum Agreement”) with Sanctum Studios (“Sanctum”) relating to The Athena Project. Pursuant to the terms of the Sanctum Agreement, Sanctum agreed to conceptualize, create and produce a collection of 20,000 digital art assets based on the Greek Goddess Athena, in exchange for payment by the Company of $121,000 and certain variable rate payments depending on the number of vaults sold by the Company. The $121,000 was payable by the Company in three equal installments of $40,333.33 due on April 4, 2022, May 19, 2022 and July 1, 2022. The Sanctum deliverables were due by July 1, 2022 or earlier, as set forth in the Sanctum Agreement.

 

On August 8, 2022, the Company entered into an Equity Purchase Agreement (the “Agreement”), Common Stock Purchase Warrant (the “Warrant”) and Registration Rights Agreement (the “Registration Rights Agreement”) with Peak One Opportunity Fund, L.P., a Delaware limited Partnership (“Peak One”), dated as of August 8, 2022, pursuant to which the Company shall have the right, but not the obligation, to direct Peak One, to purchase up to $15,000,000.00 (the “Maximum Commitment Amount”) in shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”) in multiple tranches. Further, under the Agreement and subject to the Maximum Commitment Amount, the Company has the right, but not the obligation, to submit a Put Notice (as defined in the Agreement) from time to time to Peak One (i) in a minimum amount not less than $15,000.00 and (ii) in a maximum amount up to the lesser of (a) $300,000.00 or (b) 200% of the Average Daily Trading Value (as defined in the Agreement).

 

In exchange for Investor entering into the Agreement, the Company agreed, among other things, to (A) issue Peak One and Peak One Investments, LLC, an aggregate of 500,000 shares of Common Stock, (B) all shares of Common Stock issued, or that the Company shall be entitled to issue, per any applicable Put Notice, and (C) file a registration statement registering the Common Stock issued as Securities (as defined in the Agreement) or issuable to Investor under the Agreement for resale with the Securities and Exchange Commission within 60 calendar days of the Agreement, as more specifically set forth in the Registration Rights Agreement.

 

Going Concern

 

Our unaudited financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The unaudited financial statements do not include any adjustments that might result from the outcome of this uncertainty. We have a minimal operating history and minimal revenues or earnings from operations. We have no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues for the immediate future.

 

There is substantial doubt that we can continue as an ongoing business for the next 12 months unless we obtain additional capital to pay our expenses. We must raise cash from sources other than revenues generated, such as from the proceeds of loans, public or private equity sales, and/or advances from related parties. There is no guarantee that any loans will be received, any equity sales will be made, and/or any related parties will advance funds to us or that such funds will be available on favorable terms.

 

Plan of Operation

 

We were dormant from February 2017 to June 29, 2021.

 

We are working to define the details for the NFT and commodity trading marketplaces. We are focused on completing the technology needs for our September 30, 2021 launch of the NFT marketplace. At the same time, we are also focused on the end of the year completion of the full HyFi Platform, including the commodities marketplace.

 

The Company has been in discussions with various companies in energy and energy related sectors and horizontal sectors who are interested in listing their NFTs on the Cash Flow NFT Marketplace. At the same time, we are working with our vendors to build out the NFT Marketplaces. We are also in initial discussions with major investment groups regarding possible joint ventures, licensing or NFT purchases. There can be no assurance that any such discussions will lead to customers or revenue.

 

Limited Operating History; Need for Additional Capital

 

We cannot guarantee we will be successful in our business operations. We have not generated any revenue since inception. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to the price and cost increases in supplies and services.

 

If we are unable to meet our needs for cash from either our operations, or possible alternative sources, then we may be unable to continue, develop, or expand our operations.

 

Critical Accounting Policies

 

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

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Recent Accounting Pronouncements

 

Our company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not required for smaller reporting companies.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of disclosure controls and procedures

 

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

 

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of August 31, 2022. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective as of August 31, 2022.

 

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

Change in internal control over financial reporting

 

There has been no change in our internal control over financial reporting that occurred during the quarterly period ended August 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II: OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are not involved in any pending legal proceeding nor are we aware of any pending or threatened litigation against us.

 

ITEM 1A. RISK FACTORS

 

Not required for smaller reporting companies.

 

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

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

  (a) None
     
  (b) There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors since the filing with the SEC of the Company’s Quarterly Report on Form 10-Q for the quarter ended May 31, 2022.

 

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ITEM 6. EXHIBITS

 

Exhibit

No.

  Exhibit Description
     
31.1   Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
31.2   Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1   Certification of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
     
101.INS   Inline XBRL Instance Document
     
101.SCH   Inline XBRL Taxonomy Extension Schema Document
     
101.CAL   Inline XBRL Taxonomy Extension Calculation Document
     
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  BioPower Operations Corporation
   
Date: December 2, 2022 By: /s/ Troy MacDonald
    Troy MacDonald
    Chief Executive Officer
    (principal executive officer)
     
  By: /s/ Paul Christopher Walton
    Paul Christopher Walton
    Chief Operating Officer
    (principal financial officer and principal accounting officer)