Dr. Foods, Inc. [DRFS] Filings

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED December 31, 2023

OR

For the transition period from to

COMMISSION FILE NUMBER: 000-56277

Dr. FOODS, Inc.

(Exact name of registrant as specified in its charter)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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 Exchange Act).

 [   ] Yes [X] No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of February 12, 2024, there were 13,708,699 shares of Common Stock and 10,000 shares of Series Z Preferred Stock issued and outstanding.

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INDEX

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PART I - FINANCIAL INFORMATION

Dr. Foods, Inc.

Consolidated Balance Sheets

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

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Dr. Foods, Inc.

Consolidated Statements of Operations

(Unaudited) 

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

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Dr. Foods, Inc.

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

For the Period Ending December 31, 2023

(Unaudited) 

Dr. Foods, Inc.

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

For the Period Ending December 31, 2022

(Unaudited)

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

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Dr. Foods, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

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

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Dr. Foods, Inc.

Notes to the Unaudited Consolidated Financial Statements

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Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.”

These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.

Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Company Overview

We operate through our wholly owned subsidiaries, which, as of the date of this report, include Dr. Foods Co., Ltd., a Japan Corporation (“DRFS Japan”), and Dr. Foods Co., Ltd., a Dr. Foods (S) PTE. LTD. (“DRFS Singapore”). DRFS Singapore has no material transactions or operations to report as of the date of this report. Our operations have been primarily carried out through DRFS Japan.

At present, our principal focus is on the creation of plant-based food products to replace traditional animal products, while retaining the taste and texture of the original.

At present, we are researching and developing various food products for consumption. These include, but are not limited to, vegan caviar, cultured caviar, and vegan truffle butter.

Currently, we have one product that we have developed and brought to market for sale. We refer to it as, “Dr. Foie Gras”. It is a replacement for the traditional, liver based product derived from a duck or goose. Our version is made predominantly from a mixture of nuts, beans, and other plant based materials, created through a method of fermentation. Dr. Foie Gras is manufactured by Mama Foods Co., Ltd., a Japanese Company, currently indirectly owned and controlled by our sole officer and director, Koichi Ishizuka.

At this time we offer Dr. Foie Gras to customer(s) in Japan, although we seek to expand our reach to customers globally in the future, although we cannot forecast with any level of specificity when that may be, or if it will be feasible.

We have only had nominal sales to date of Dr. Foie Gras, but we believe this is due to the limited period of time it has been made available to the public, and due to limited or no marketing efforts on behalf of the Company to promote or sell the product.

At this time, we have no marketing plan and we intend to rely on Next Meats Holdings, Inc., and or its subsidiaries (referred to herein collectively as “Next Meats”), to promote Dr. Foie Gras. We intend to compensate Next Meats for such services on a case by case basis. As described below under “Officers, Employees, and Compensation”, Next Meats may elect to provide us temporary staff to fulfill any marketing services we require, whereas we will reimburse Next Meats for any associated costs. Further, we cannot forecast with any level of specificity when we will have a definitive marketing plan if ever we do have one.

We have entered into a collaborative effort wherein we dedicate our staff, along with the staff of Mama Foods Co., Ltd., to develop and produce Next Kalbi Chips (this is a short-rib style alternative meat product) for Next Meats Co., Ltd. When this product is finalized, Mama Foods Co., Ltd. plans to sell the Next Kalbi Chips to Next Meats Co., Ltd., who plans to then sell the Next Kalbi Chips to their customers.

Although our staff is collaborating with the development of the Next Kalbi Chips, at this point in time Dr. Foods, Inc., and its subsidiaries, will not generate any revenue, and do not benefit in any material way, from this collaborative effort. We believe that the only circumstance in which we would benefit from this arrangement would be if we were to acquire Mama Foods Co., Ltd. There is a risk that the audit of Mama Foods Co., Ltd. is not completed at all, and/or that we never acquire Mama Foods Co., Ltd. Even if the acquisition of Mama Foods Co., Ltd. is completed, there is the possibility that the terms of this acquisition, which is non-definitive at this time, may not be considered favorable for the company and/or its shareholders.

Our customers to date were garnered through personal relationships of our sole officer and director, Koichi Ishizuka.

Note: Our sole officer and director, Koichi Ishizuka, is the controlling shareholder of Next Meats Holdings, Inc., a Nevada Corporation. He is also the Chief Executive Officer and Chief Financial Officer of Next Meats Holdings, Inc. Next Meats Co., Ltd. is a wholly owned subsidiary of Next Meats Holdings, Inc.

Patents

We have filed a patent application with the Japanese Patent Office pertaining to the production method we employ to create our product, referred to as, “Dr. Foie Gras”. The patent describes a new method of making an animal-free "foie gras" substitute in which nuts or beans are fermented by fungi to mimic the taste of liver without the need for miso, soy sauce, yeast extract, or other separately fermented materials. The application number is 2022-61974. It was filed on April 1, 2022 and is pending review.

Officers, Employees, and Compensation

At this time, we have one officer and director, Koichi Ishizuka. We do not have any contractual employees or staff. However, pursuant to an arrangement with Next Meats Co., Ltd., a Japan Corporation, Next Meats Co., Ltd. provides temporary employees (staff) to our Company as needed to further our business agenda. Regarding this arrangement, we are billed by Next Meats Co. Ltd. on a case by case basis depending on the amount of staff and hours allocated by each staff member to our business endeavors, primarily consisting of research and development.

Although under no contractual obligations, our wholly owned subsidiary, Dr. Foods Co., Ltd., has three executive officers, which currently are comprised of Koichi Ishizuka, Dr. Iaroslav Patuk and Hideo Fujioka. Dr. Iaroslav Patuk and Hideo Fujioka are contractual employees of Next Meats Co., Ltd. and provide services to our Company on a need be basis as described above. In the event that we utilize their services, we are billed directly by Next Meats Co., Ltd.

Mergers and Acquisitions

On January 12, 2022, Dr. Foods, Inc., Mama Foods Co., Ltd. (“Mama Foods”), a Japan Company, and White Knight Co., Ltd. (“WKC”) entered into a non-definitive agreement, a “Letter of Intent”, whereas it is proposed that Dr. Foods, Inc. will acquire 100% of the controlling interest of Mama Foods from WKC in exchange for $500,000 coupled with the issuance of 19,500,000 shares of restricted Preferred Stock to WKC. The issuance of shares shall be subject to the rules and limitations set forth by the Securities Act Rule 144. The exact terms of the aforementioned transaction may also change as the agreement is “non definitive” in nature. Currently, all parties continue to remain interested in moving forward with the parameters detailed in the aforementioned Letter of Intent.

Mama Foods is a food company founded in Japan in 1958, currently offering customers in Japan wholesale and retail products centering on Japanese side dishes, from chilled foods to packed and sterilized food. Mama Foods uses ingredients carefully taken from natural kelp and bonito without adding any chemical seasonings, preservatives, coloring agents, etc. Mama Foods has two existing “in house” production facilities and produces 100% of its current product offerings. From time to time, it also produces products of other third parties, including certain products offered for sale by Next Meats Co., Ltd., such as “Next Kalbi 2.0”, a boneless short rib made from meat substitutes. Currently, Mama Foods employs approximately 43 individuals. In 2021, WKC. acquired 100% of Mama Foods from its prior controller, in exchange for approximately 1 million USD.

On March 31, 2022, Dr. Foods, Inc. and Mama Foods mutually agreed to extend the terms of the non-definitive agreement 30 more days in order to provide more time to prepare the books and records of Mama Foods Co., Ltd. This extension period had expired without the books and records of Mama Foods Co., Ltd. having been prepared or progressed in any meaningful capacity. On May 6, 2022 the parties again agreed to extend the terms of the non-definitive agreement, however this time with an expiration date of June 30, 2022, or until, if agreed upon by all parties, further notice.

On June 30, 2022, the non-definitive agreement terminated without the books and records of Mama Foods Co., Ltd. having been prepared or progressed to the satisfaction of the Issuer. Upon termination, common management of both Mama Foods Co., Ltd. and Dr. Foods, Inc. verbally agreed to extend the letter of intent indefinitely until further notice.

The Company does not intend to acquire Mama Foods Co., Ltd., under any terms, prior to the completion of Mama Foods Co., Ltd.’s PCAOB audit for its past two fiscal years. We require that Mama Foods Co., Ltd.’s last two fiscal year ends, at minimum, be audited by a PCAOB auditor. 

The sole shareholder of Mama Foods is WKC which is owned and controlled by Koichi Ishizuka. Koichi Ishizuka is Chief Executive Officer, Chief Financial Officer, and Director of Dr. Foods, Inc., Mama Foods Co., Ltd. and White Knight Co., Ltd. 

The efforts to spearhead preparation of the books and records had been, and continues to be, led by Koichi Ishizuka, who has outside business interests and other demands upon his time that limit his availability. It should also be noted that he does not have expertise in accounting matters. As such, the Company has engaged outside accounting expertise to assist in this process. The Company cannot state, with any level of certainty, when, or if, the books and records will be prepared to the satisfaction of the Issuer, and as such, when the books and records of Mama Foods Co., Ltd. will be fully audited by a PCAOB auditor.

Currently, the Company is pending moving forward with the acquisition of Mama Foods Co., Ltd. due to the fact that Mama Foods Co., Ltd. has yet to complete, a PCAOB audit of its financial statements for the last two fiscal years. At this time, the audit is actively taking place by M&K CPAS, PLLC (“M&K”). However, we understand that progress has been minimal.

The Company cannot estimate with any level of certainty how long the aforementioned audit of Mama Foods Co., Ltd. may take to complete. The Company does not intend to acquire Mama Foods Co., Ltd., under any terms, prior to the completion of its PCAOB audit.

There is a risk that the audit of Mama Foods Co., Ltd. is not completed at all, and/or that we never acquire Mama Foods Co., Ltd. Even if the acquisition of Mama Foods Co., Ltd. is completed, there is the possibility that the terms of this acquisition, which is non-definitive at this time, may not be considered favorable for the company and/or its shareholders.

Any investment in our common stock is extremely high risk and should only be made by those who can afford the entire loss of their investment.

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Loan

During the period ended March 31, 2023, our wholly owned subsidiary, Dr. Foods Co. Ltd, loaned approximately $710,700, which includes $4,402 of accrued interest, to related party White Knight. White Knight is owned and controlled by our Chief Executive Officer, Koichi Ishizuka. During the period ended March 31, 2023, the Company received approximately $183,025 from White Knight as repayment for this loan. 

During the period ended December 31, 2023, Dr. Foods Co. Ltd loaned additional funds to White Knight totaling approximately $122,096, received repayments totaling approximately $84,072 and accrued loan interest of approximately $4,082. The loan is related to the acquisition of Mama Foods Co., Ltd. (“Mama Foods”), currently a wholly owned subsidiary of White Knight. The Company expects to acquire Mama Foods from White Knight during the next fiscal quarter and these funds will be used to facilitate that acquisition. This loan accrues interest at 1%, is non-secured and payable upon demand.

Liquidity and Capital Resources 

Our cash balance is $9,436 as of December 31, 2023. We have been utilizing funds from our Chief Executive Officer, Koichi Ishizuka to fund our operations and we intend to rely on Koichi Ishizuka for funding going forward.

Mr. Ishizuka has no formal commitment, arrangement or legal obligation to advance or loan funds to the company. In order to implement our plan of operations for the next twelve-month period, we may require further funding. Being a start-up stage company, we have very limited operating history. After a twelve-month period we may need additional financing but currently do not have any arrangements for such financing.

If we need additional cash and cannot raise it, we will either have to suspend operations until we do raise the cash we need, or cease operations entirely.

Revenues

We recorded revenue of $6,967 for the three months ended December 31, 2023. Comparatively, we recorded revenue of $167 for the three months ended December 31, 2022. This variance is attributed to food product sales through our subsidiary, Dr. Foods Co., Ltd., which occurred during the three months ended December 31, 2023. The cost of revenues was $0 for the three months ended December 31, 2023 and the gross profit was $6,967. The cost of revenues was $0 for the three months ended December 31, 2022 and the gross profit was $167.

We recorded revenue of $12,730 for the nine months ended December 31, 2023. Comparatively, we recorded revenue of $167 for the nine months ended December 31, 2022. This variance is attributed to food product sales through our subsidiary, Dr. Foods Co., Ltd., which occurred during the nine months ended December 31, 2023. The cost of revenues was $0 for the nine months ended December 31, 2023 and the gross profit was $12,730. The cost of revenues was $0 for the nine months ended December 31, 2022 and the gross profit was $167. 

Net Income

We recorded a net loss of $191,848 for the nine months ended December 31, 2023, and $232,988 for the nine months ended December 31, 2022. 

The net loss for the above periods is primarily comprised of general and administrative expenses, which were primarily attributed to professional fees, and fees billed by Next Meats Co., Ltd. for research/development expenses.

Cash flow

For the nine months ended December 31, 2023, we had negative cash flows from operating activities in the amount of $211,360. Comparatively, for the nine months ended December 31, 2022, we had negative cash flows from operating activities in the amount of $227,776. The variance is attributable to, amongst other things, accounts receivable.

For the nine months ended December 31, 2023, we had negative cash flows from investing activities in the amount of $38,024. Comparatively, for the nine months ended December 31, 2022, we had negative cash flows from investing activities in the amount of $572,720. The variance is attributable to the fact that during the nine months ended December 31, 2022, we loaned a greater amount to a related party.

For the nine months ended December 31, 2023, we had net cash flows from financing activities in the amount of $262,927. Comparatively, for the nine months ended December 31, 2022, we had net cash flows from financing activities in the amount of $831,449. The variance is attributable to deceased sales of shares during the nine months ended December 31, 2023, when compared to the nine months ended December 31, 2022.

Going Concern

The Company’s financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.

The Company demonstrates adverse conditions that raise substantial doubt about the Company's ability to continue as a going concern for one year following the issuance of these financial statements. These adverse conditions are negative financial trends, specifically operating loss, working capital deficiency, and other adverse key financial ratios.

The Company has not established sufficient revenue to cover its operating costs. Management plans to fund operating expenses with related party contributions to capital. There is no assurance that management's plan will be successful. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

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Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer Koichi Ishizuka, who is also our chief financial officer (who is acting as our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.

As of December 31, 2023, we carried out an evaluation, under the supervision of our chief executive officer, who is also our chief financial officer, of the effectiveness of the design and the operation of our disclosure controls and procedures. The officers concluded that the disclosure controls and procedures were not effective as of the end of the period covered by this report due to material weaknesses identified below. 

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: domination of management by a single individual without adequate compensating controls, lack of a majority of outside directors on board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; inadequate segregation of duties consistent with control objectives, and lack of an audit committee. These material weaknesses were identified by our Chief Executive Officer who also serves as our Chief Financial Officer in connection with the above evaluation.

Inherent limitations on effectiveness of controls

Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that have occurred for the fiscal quarter ended December 31, 2023, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II-OTHER INFORMATION

There are no legal proceedings against the Company and the Company is unaware of such proceedings contemplated against it.

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

On or about May 31, 2022, we sold 1,538,462 shares of restricted Common Stock to SJ Capital Co., Ltd., a Japanese Company, for proceeds totaling approximately $769,231.

On or about June 26, 2023, the company consummated an agreement for the sale of 593,811 shares of restricted Common Stock to Ultimate One LLC, a Japanese Company, at a price of $0.315 per share of Common Stock. The transaction was completed, and recorded by the Company’s transfer agent, on September 30, 2023. The total subscription amount paid by Ultimate One LLC was approximately $187,050. Ultimate One LLC is not a related party to the Company.

The aforementioned sales of shares were conducted pursuant to Regulation S of the Securities Act of 1933, as amended ("Regulation S"). The sales of shares were made only to non-U.S. persons/entities (as defined under Rule 902 section (k)(2)(i) of Regulation S), pursuant to offshore transactions, and no directed selling efforts were made in the United States by the issuer, a distributor, any of their respective affiliates, or any person acting on behalf of any of the foregoing. 

None.

Not applicable.

None.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

Dr. Foods, Inc.

(Registrant)

By: /s/ Koichi Ishizuka

Name: Koichi Ishizuka

Chief Financial Officer and Chief Executive Officer

Dated: February 12, 2024 

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