Evil Empire Designs, Inc. [EVVL] Filings

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

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

For the quarterly period ended September 30, 2023

OR

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

For the transition period from ____________ to ___________

Commission File No. 000-56212

5313 Corbett St.

Las Vegas, Nevada 89130

(Address of principal executive offices, zip code)

(725) 666-3700

 (Registrant’s telephone number, including area code)

___________________________________________________________

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

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

Indicate by check mark whether the issuer (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 and post such files).   Yes ☒ No ☐

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

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 Exchange Act Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

As of January 30, 2024, there were 29,491,829 shares of common stock, $0.001 par value per share, outstanding.

EVIL EMPIRE DESIGNS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED SEPTEMBER 30, 2023

INDEX

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of Evil Empire Designs, Inc., a Nevada corporation (the “Company”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: (i) the development and protection of our brands and other intellectual property, (ii) the need to raise capital to meet business requirements, (iii) significant fluctuations in marketing expenses, (iv) the ability to achieve and expand significant levels of revenues, or recognize net income, from the sale of our products, (v) the Company’s ability to conduct the business if there are changes in laws, regulations, or government policies related to the motorcycle or motorcycle parts industry, (vi) management’s ability to attract and maintain qualified personnel necessary for the development and commercialization of its planned products, and (vii) other information that may be detailed from time to time in the Company’s filings with the United States Securities and Exchange Commission (“SEC”).

Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

EVIL EMPIRE DESIGNS, INC

CONSOLIDATED  BALANCE SHEETS

(Unaudited)

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

EVIL EMPIRE DESIGNS, INC.

 CONSOLIDATED STATEMENTS OF OPERATIONS 

As of September  30,

(Unaudited)

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

EVIL EMPIRE DESIGNS, INC

CONSOLISATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

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

EVIL EMPIRE DESIGNS, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR  NINE MONTHS ENDED SEPTEMBER 30,

(Unaudited)

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

EVIL EMPIRE DESIGNS, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2023

 (Unaudited)

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

The following information should be read in conjunction with (i) the financial statements of Evil Empire Designs, Inc., a Nevada corporation (the “Company”), and the notes thereto appearing elsewhere in this Form 10-Q together with (ii) the more detailed business information and the December 31, 2022 audited financial statements and related notes included in the Company’s Form 10-K (File No. 000-56212; the “Form 10-K”), as filed with the Securities and Exchange Commission on April 17, 2023.  Statements in this section and elsewhere in this Form 10-Q that are not statements of historical or current fact constitute “forward-looking” statements.

OVERVIEW

The Company was incorporated in the State of Nevada on December 23, 2009, and has established a fiscal year end of December 31.

The Company’s authorized capital stock amounts to 125,000,000 shares, consisting of 100,000,000 of common stock with a par value of $0.001 per share, and 25,000,000 shares of preferred stock with a par value of $0.001 per share.

Going Concern

To date the Company has had operations and revenues of a developing business, and consequently has incurred recurring losses from operations. No substantial revenues are anticipated until we complete the financing we endeavor to obtain, as described in the Form 10-K, and implement our initial business plan. The ability of the Company to continue as a going concern is dependent on raising capital to fund our business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern.

Our activities have been financed from related-party loans and the proceeds of share subscriptions.

The Company plans to raise additional funds through debt or equity offerings. There is no guarantee that the Company will be able to raise any capital through this or any other offerings.

PLAN OF OPERATION

We are an operating motorcycle parts design, manufacturing, marketing and sales business and have generated revenues of $3,021 for the nine months ended September 30, 2023.  During the 12 months following the date of filing of this Quarterly Report on Form 10-Q, we will be focused on attempting to raise $750,000 of funds to expand our business. We have no assurance that future financing will materialize. If that financing is not available, we may be unable to continue. Management believes that if we are successful in raising $750,000, we will be able to generate sales revenue within the following twelve months thereof. However, if such public financing is not available, we could fail to satisfy our future cash requirements. We have no assurance that future financing will materialize. If that financing is not available we may be unable to continue. Management believes that if subsequent private placements are successful, we will be able to generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.

If we are unsuccessful in raising the additional proceeds through a private placement offering we will then have to seek additional funds through debt financing, which would be highly difficult for an early-stage company to secure. Therefore, the Company is highly dependent upon the success of the anticipated private placement offering and failure thereof would result in the Company having to seek capital from other sources such as debt financing, which may not even be available to the Company. However, if such financing were available, because we are an early stage company, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If we cannot raise additional proceeds via a private placement of its common stock or secure debt financing it would be required to cease business operations. As a result, investors in our common stock would lose all of their investment.

With new investors joining, the Company will increase its current efforts on marketing and selling its already created variety of products.

RESULTS OF OPERATIONS

Comparison of the three and nine months ended September 30, 2023 and 2022

The Company recorded revenue of $723 and $22,246 during the three months ended September 30, 2023 and 2022, respectively.  The Company recorded revenue of $3,021 and $42,891 during the nine months ended September 30, 2023 and 2022, respectively.

Operating expenses for the three-month period ended September 30, 2023 were $136,059, consisting of a general and administrative expense of $33,086, advertising cost of $20,559, professional fees of 19,174, materials of $39,535 and depreciation and amortization of $23,705. Operating expenses for the three-month period ended September 30, 2022 were $4,653, consisting of a general and administrative expense of $2,971, and depreciation and amortization of 1,682. The increase in operating expenses for the three months ended September 30, 2023, was due to primarily an increase in advertising cost of $20,559, and an increase in professional fees of $19,174.

Operating expenses for the nine-month period ended September 30, 2023, were $214,130, consisting of a general and administrative expense of $43,905, advertising cost of $20,559, professional fees of 84,816, materials of $39,535 and depreciation and amortization of $25,315 for the nine months ended September 30, 2023.  Operating expenses for the nine-month period ended September 30, 2022, were $16,724, consisting of a general and administrative expense of $13,002, and depreciation and amortization of $3,722 for the nine months ended September 30, 2023.  The increase in operating expenses for the nine months ended September 30, 2023, was due to primarily an increase in advertising cost of $20,559 and professional fees of $84,816.

For the three-month periods ended September 30, 2023 and 2022, we had net losses of $163,943 and $4,606. For the nine-month periods ended September 30, 2023 and 2022, we had net losses of $287,103 and $4,429. 

Liquidity and Capital Resources

There are no agreements or understandings about future loans by or with the officers, directors, principals, affiliates, or shareholders of the Company. The Company will continue to raise outside capital through loans, equity sales and possible licensing agreements. These factors raise substantial doubt about the company’s ability to continue as a going concern

At September 30, 2023, the Company had negative working capital of $581,412, and total assets were $2,049,805.  Current liabilities as of September 30, 2023, were $1,198,328, consisting of convertible debt of $721,530, outstanding notes of $103,959, equipment loans of a related party of $102,565, lease liability of $27,014, and accounts payable and accrued liabilities $243,260.

Net cash used in operating activities in the nine-month periods ended September 30, 2023 and 2022, was $168,725 and $1,755, respectively. The variance between the same periods relates mainly to the loss of $287,103 in the nine months ended September 30, 2023 compared to a net loss of $23,398 for the same period in 2022.

Net cash used in investing activities was $645,920 in the nine months period ended September 30, 2023 compared to $6,200 for the same period in 2022.  The increase of investment activity in 2023 consisted of notes receivable of $62,550 and investment in fixed assets of $583,370

Net cash provided by financing activities for the nine-month periods ended September 30, 2023 and 2022, was $836,770, and 15,911, respectively. Cash provided was a result of proceeds from the offer and sale of convertible notes in the principal amounts of  $346,105 for the period ended September 30, 2023 and $2,000 for the period ended March 31, 2022 plus an equipment loan of $545,073 in the period ended September 30, 2023..

As of September 30, 2023, the Company had total assets of $2,049,805 and total liabilities of $1,614,900. Our accumulated deficit as of September 30, 2023 was $927,770.

Inflation

We believe that inflation has not had a significant impact on our operations since inception.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements or guarantees of third party obligations at September 30, 2023.

Subsequent Events

None through date of this filing.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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 3.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures

Our management, with the participation of our President and Chief Executive Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon 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.

Based on that evaluation, our President and Chief Executive Officer concluded that, as of September 30, 2023, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules, regulations and forms, and (ii) that such information is accumulated and communicated to our management, including our President and Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in internal control over financial reporting

Our management, with the participation of the President and Chief Executive Officer, has concluded there were no significant changes in our internal controls over financial reporting that occurred during this quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

On September 22, 2023, the Company filed a Complaint in the District Court, Clark County, Nevada, Case Number A-23-878268-C, against TOL Designs, LLC, a Nevada limited liability company (“TOL”), and Sean Belitsos (“Belitsos), who the Company believes to be the sole holder of securities of TOL, for breach of Memorandum of Understanding, Breach of Promissory Notes (against only TOL), Breach of Guarantees (against only Belitsos), Writ of Attachment, for damages in excess of $15,000 and pre- and post-judgment interest on all amounts awarded, and for an ward of attorney’s fees, costs and litigation expenses, and any other relief the court may grant.

Except for the lawsuit against TOL and Belitsos, the Company is not currently subject to any other legal proceedings. From time to time, the Company may become subject to litigation or proceedings in connection with its business, as either a plaintiff or defendant. There are no such pending legal proceedings to which the Company is a party that, in the opinion of management, is likely to have a material adverse effect on the Company’s business, financial condition or results of operations.

ITEM 1A.  RISK FACTORS

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 1A.

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.

On January 18, 2024, the board of directors appointed Jad Wakim, currently the sole officer and director of the Company’s wholly-owned subsidiary, Jade Affiliated Inc. (“Jade Affiliated”), as a director, Secretary and Treasurer of the Company.  On January 18, 2024, Sheila Cunningham resigned as Secretary and Treasurer.

Mr. Wakim, age 36, has served as Chief Executive Officer of Jade Affiliated since December 2017. Mr. Wakim attended Fullerton College during 2005 and 2006, and graduated with a Bachelor’s Degree in Business from the University of Phoenix in 2008.

There are no arrangements or understandings between Mr. Wakim and any other person pursuant to which Mr. Wakim was elected as one of our directors. We are not aware of any transaction requiring disclosure under Item 404(a) of Regulation S-K promulgated by the Securities and Exchange Commission.  

ITEM 6. EXHIBITS.

(a) The following Exhibits, as required by Item 601 of Regulation SK, are attached or incorporated by reference, as stated below.

_____________ 

 *Furnished, not filed.

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.