UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarter ended
OR
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________ to _______________
Commission File No.
(Exact name of registrant as specified in its charter) |
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(State of other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification Number) |
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(Address of principal executive offices) |
| (Zip Code) |
(
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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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.
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☐ | 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 Exchange Act). Yes
As of September 30, 2023, there were
TABLE OF CONTENTS
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Unaudited Interim Condensed Consolidated Financial Statements |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Table of Contents |
Cautionary Note Concerning Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements”. These forward-looking statements, including without limitation forward-looking statements made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” involve risks and uncertainties. Any statements contained in this Quarterly Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements as to our future operating results; plans for the marketing of our services; future economic conditions; the effect of our market and product development efforts; and expectations or plans relating to the implementation or realization of our strategic goals and future growth, including through potential future acquisitions. Forward-looking statements may include, among other things, statements relating to future sales, earnings, cash flow, results of operations, use of cash and other measures of financial performance, as well as statements relating to future dividend payments. Other forward-looking statements may be identified through the use of words such as “believes,” “anticipates,” “may,” “should,” “will,” “plans,” “projects,” “expects,” “expectations,” “estimates,” “predicts,” “targets,” “forecasts,” “strategy,” and other words of similar meaning in connection with the discussion of future operating or financial performance. These statements are based on current expectations, estimates and projections about the industries in which we operate, and the beliefs and assumptions made by management. Because forward-looking statements relate to the future, they are subject to inherent risks, uncertainties and changes in circumstances that are difficult to predict. Accordingly, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Investors, therefore, are cautioned against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance.
3 |
Table of Contents |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FLOOIDCX CORP
Unaudited Interim Condensed Consolidated Financial Statements
Three and Nine Months Ended September 30, 2023
(Expressed in US dollars)
(unaudited)
4 |
Table of Contents |
FLOOIDCX CORP
Interim Condensed Consolidated Balance Sheets
(Expressed in U.S. dollars)
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| (Unaudited) |
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| (Audited) |
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| September 30, |
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| December 31, |
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| 2022 |
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ASSETS |
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Current Assets |
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Cash |
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Total Assets |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current Liabilities |
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Accounts Payable and Accrued Liabilities |
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Loans and Notes Payable - Related Parties |
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Total Current Liabilities |
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Total Liabilities |
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Stockholders' Deficit |
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Preferred A Stock - $ |
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Preferred B Stock - $ |
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Preferred C Stock - $ |
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Common Stock - $ |
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Common Stock Issuable (Note 6) |
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Additional Paid-In-Capital |
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Accumulated Deficit |
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Total Stockholders' Deficit |
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Total Liabilities and Stockholders' Deficit |
| $ |
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| $ |
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(The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements)
F-1 |
Table of Contents |
FLOOIDCX CORP
Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss
(Expressed in U.S. dollars)
(Unaudited)
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| For the Three Months Ended |
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| For the Nine Months Ended |
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| September 30, |
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| September 30, |
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| 2023 |
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| 2022 |
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| 2022 |
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Revenue |
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Operating Expenses |
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General and Administrative |
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Total Operating Expenses |
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Income (Loss) Before Other Expenses |
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Other Income (Expenses) |
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Income (Loss) on Foreign Currency Transactions |
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Interest Expense |
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Loss on Debt Conversion Settlements |
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Total Other Income (Expenses) |
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Net Income (Loss) for the Period from Continuing Operations |
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Net Loss for the Period from Discontinued Operations |
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Operating Loss on Discontinued Operations |
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Net Loss for the Period from Discontinued Operations |
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Net Income (Loss) for the Period |
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Other Comprehensive Income (Loss) |
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Foreign Currency Translation Gain (Loss) on Continuing Operations |
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Foreign Currency Translation Gain (Loss) on Discontinued Operations |
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Comprehensive Income (Loss) |
| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ | ( | ) | |
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Weighted Average Number of Common Shares - |
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Basic |
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Diluted |
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Net Loss for the Period Per Common Shares - Basic |
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Loss from Continuing Operations |
| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ |
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Loss from Discontinued Operations |
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| ( | ) | |||
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| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ | ( | ) | |
Net Loss for the Period Per Common Shares - Diluted |
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Loss from Continuing Operations |
| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ |
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Loss from Discontinued Operations |
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| ( | ) | |||
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| $ | ( | ) |
| $ |
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| $ | ( | ) |
| $ | ( | ) |
(The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements)
F-2 |
Table of Contents |
FLOOIDCX CORP
Unaudited Interim Condensed Consolidated Statements of Stockholders’ Deficit
(Expressed in U.S. dollars)
(Unaudited)
|
| Preferred A Stock $0.001 Par |
|
| Preferred B Stock $0.001 Par |
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| Preferred C Stock $0.001 Par |
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| Common Stock $0.001 Par |
|
| Common Stock |
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| Additional Paid-In |
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| Accumulated Other Comprehensive |
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| Accumulated |
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| Total Stockholders' |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Issuable |
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| Capital |
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| Income |
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| Deficit |
|
| Deficit |
| |||||||||||||
Balance - January 1, 2022 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||||||||
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Net Loss for the Period |
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| — |
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| — |
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| — |
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| — |
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Balance - March 31, 2022 |
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Foreign Exchange Translation Loss |
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| — |
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| — |
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| — |
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| — |
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Split-off |
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| — |
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| — |
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| — |
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Net Loss for the Period |
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| — |
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| — |
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| — |
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| — |
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Balance - June 30, 2022 |
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Net Income for the Period |
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Balance - September 30, 2022 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
F-3 |
Table of Contents |
|
| Preferred A Stock $0.001 Par |
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| Preferred B Stock $0.001 Par |
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| Preferred C Stock $0.001 Par |
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| Common Stock $0.001 Par |
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| Common Stock |
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| Additional Paid-In |
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| Accumulated Other Comprehensive |
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| Accumulated |
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| Total Stockholders' |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Issuable |
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| Capital |
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| Income |
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| Deficit |
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| Deficit |
| |||||||||||||
Balance - January 1, 2023 |
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| $ |
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Preferred Shares Issued in Exchange for Note Receivable |
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|
|
|
|
|
|
|
Net Loss for the Period |
|
| — |
|
|
|
|
|
| — |
|
|
|
|
|
| — |
|
|
|
|
|
| — |
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| ( | ) |
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| ( | ) | |||||||
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|
Balance - March 31, 2023 |
|
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| ( | ) |
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| ( | ) | ||||||||||||
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Cancellation of Shares |
|
| ( | ) |
|
| ( | ) |
|
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| |||||||||||
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|
|
|
Preferred Conversion to Common 30:1 |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
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| ( | ) |
|
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| ||||||||||
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|
|
|
|
|
|
|
Common Stock Issued for Deposit on Potential Merger |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
| ( | ) |
|
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|
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| ||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
Net Loss for the Period |
|
| — |
|
|
|
|
|
| — |
|
|
|
|
|
| — |
|
|
|
|
|
| — |
|
|
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| ( | ) |
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| ( | ) | |||||||
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|
|
Balance - June 30, 2023 |
|
|
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|
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| ( | ) |
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| ( | ) | ||||||||||||
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|
|
|
|
|
|
|
|
|
|
Preferred Conversion to Common 30:1 |
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
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| ( | ) |
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| ||||||||||
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|
|
|
|
|
|
|
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|
|
Common Stock Issued for Deposit on Potential Merger |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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| ( | ) |
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| |||||||||||||
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|
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|
|
Common Stock Issued for Conversion of Debt |
|
|
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| |||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
Net Loss for the Period |
|
| — |
|
|
|
|
|
| — |
|
|
|
|
|
| — |
|
|
|
|
|
| — |
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| ( | ) |
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| ( | ) | |||||||
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|
|
|
|
|
|
|
|
Balance - September 30, 2023 |
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ |
|
| $ |
| $ | ( | ) |
| $ | ( | ) |
(The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements)
F-4 |
Table of Contents |
FLOOIDCX CORP
Unaudited Interim Condensed Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
(Unaudited)
For the Nine Months Ended September 30, |
| 2023 |
|
| 2022 |
| ||
|
|
|
|
|
|
| ||
Cash Flows from Operating Activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
Net Loss for the Period |
| $ | ( | ) |
| $ | ||
|
|
|
|
|
|
|
|
|
Non-Cash Adjustments: |
|
|
|
|
|
|
|
|
(Income) Loss on Foreign Currency Transactions |
|
|
|
|
| ( | ) | |
Loss on Debt Conversion Settlements – Related Parties |
|
|
|
|
|
|
| |
Changes in Assets and Liabilities: |
|
|
|
|
|
|
|
|
Prepaid Expenses |
|
|
|
|
| ( | ) | |
Accounts Payable and Accrued Liabilities - Discontinued Operations |
|
|
|
|
|
| ||
Due to Related Parties |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net Cash Flows Used In Operating Activities |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
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| ||
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
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|
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Proceeds from Loans Payable |
|
|
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|
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| ||
|
|
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|
|
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|
|
Net Cash Flows Provided By Financing Activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net Change in Cash |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Cash - Beginning of Period |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Cash - End of Period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Cash Paid During the Period for: |
|
|
|
|
|
|
|
|
Interest |
| $ |
|
| $ |
| ||
Income Taxes |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
Non-Cash Transactions |
|
|
|
|
|
|
|
|
Non-Cash Issuance of Equity for Deposit on Potential Merger |
| $ |
|
| $ |
| ||
Issuance of Stock for Conversion of Debt – Related Parties |
| $ | |
|
| $ | |
|
(The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements)
F-5 |
Table of Contents |
FLOOIDCX CORP
Notes to the Unaudited Condensed Consolidated Financial Statements
Three and Nine Months Ended September 30, 2023 and 2022
(Expressed in U.S. Dollars)
1. Nature of Operations and Continuance of Business
flooidCX Corp, currently in process of changing its name to Quantum Energy Corporation, and formerly Gripevine, Inc. and Baixo Relocation Services, Inc.) (the “Company”) was incorporated in the state of Nevada on January 7, 2014. Prior to the split-off of the MB Holdings, Inc. (“MB Holdings”), subsidiary, the Company was in the business of developing and building an online resolution platform.
Effective June 27, 2022, the Company entered into a split-off agreement with its President and majority shareholder at the time, and MP Special Purpose Corporation (“MP Special”). As part of the agreement the Company transferred its equity interest in MB Holdings, Inc., (“MBE”) to the majority shareholder, and the majority shareholder transferred his equity interest in the Company to MP Special in exchange for $600,000. In addition, as part of the transaction, the parties agreed that certain specified debt would remain or be transferred to flooidCX Corp., and that other specific debt would remain or be transferred to MBE. Because the Company’s majority shareholder was involved in this transaction, it has been treated as common control transaction, and therefore, the derecognition of the net liabilities of MBE were accounted for as an equity transaction rather than a gain. After the split-off of MBE, the Company had no operating activities. However, in March 2023, the Company entered into a merger agreement with Quantum Energy, Inc., (See Note 7).
These condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, creditors, and related parties, and the ability of the Company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations. As of September 30, 2023, the Company did not have any operations generating revenue and had stockholders’ deficit of approximately $4.0 million, and was in default of certain loans payable. (refer to Note 3). These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These unaudited interim condensed consolidated financial statements (the “condensed consolidated financial statements”) do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2. Significant Accounting Policies
(a) Basis of Presentation
These condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company and the following entities: Resolution 1, Inc. a wholly-owned subsidiary, and MBE Holdings, Inc., an entity that was wholly-owned subsidiary until the date of the split-off. After the split-off MBE Holdings, Inc. was derecognized in the Company’s financial statements, and the activity of MBE Holdings, Inc. after the date of the split-off is not included in the accompanying financial statements.
All inter-company balances and transactions have been eliminated.
The Company has evaluated subsequent events through the date of the filing of its Form 10-Q with the Securities and Exchange Commission. The Company is not aware of any other significant events that occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the Company’s financial statements.
(b) Discontinued Operations
In accordance with ASC No. 205-20, Discontinued Operations, for all periods presented, the results of operations and related balance sheet items associated with the MB Holdings are reported in discontinued operations in the accompanying consolidated statements of operations. See Note 6 – Discontinued Operations for further details.
F-6 |
Table of Contents |
(c) Use of Estimates
The preparation of these consolidated financial statements in conformity with U.S. 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
(d) Recent Accounting Pronouncements
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2022. The Company determined that the new standard did not have an effect on its financial statements.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its condensed consolidated 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.
(e) Net Loss per Share
Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. Potentially dilutive shares outstanding as of September 30, 2023 and December 31, 2022 consist of
(f) Foreign Currency Translation
The Company’s functional and reporting currency is the United States dollar. The functional currency of MBE and Resolution 1 is the Canadian dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets, liabilities, and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. As disclosed in Note 1, MBE was split off from the Company in June 2022.
(g) Reclassification
Certain prior period amounts have been reclassified to the current period presentation. The Company has netted the line “Deposit on Potential Merger” with Additional Paid-In Capital in the current period. During the previous periods such was included as contra-equity and the reclassification had no effect on the Total Stockholder’s Deficit line item.
F-7 |
Table of Contents |
3. Notes Payable & Loans - Related Parties
At September 30, 2023 and December 31, 2022, the Company owed $
At September 30, 2023 and December 31, 2022, the Company owed $-
During the three months ended September 30, 2023, the Company issued
4. Other Related Party Transactions
During the three and nine months ended September 30, 2023 and 2022, the Company incurred $nil (2022 – $nil) and $nil (2022: $
5. Equity
Preferred Stock
The preferred stock contains certain rights and preferences as detailed below: There were nil(
Preferred A: (
| · | In the event of acquisition of the Company, the preferred stockholder will receive |
| · | |
| · | |
| · |
In connection with the potential merger (Note 7), the company established additional series of preferred stock, summarized as follows:
Preferred B: (
| · | |
| · | Each holder shall be entitled to cast no votes. |
| · |
2023 Activity
During the three months ended March 31, 2023, the Company issued
F-8 |
Table of Contents |
During the three months ended June 30, 2023, the Company issued
During the three months ended September 30, 2023, the Company issued 900,000 shares of common stock upon the conversion of 30,000 shares of Series B preferred stock in accordance with the original conversion terms.
Preferred C: (
| · | The stockholder cannot convert into common stock; and |
| · | |
| · |
2023 Activity
During the three months ended March 31, 2023, the Company issued
Preferred D; (
| · | |
| · | Each holder of preferred stock shall be entitled to cast no votes. |
| · |
Preferred E; (
| · | |
| · | Each holder of preferred stock shall be entitled to cast no votes. |
| · |
Common Stock
During the three months ended June 30, 2023, the Company issued
During the three months ended September 30, 2023, the Company issued
During the three months ended September 30, 2023, the Company issued
F-9 |
Table of Contents |
6. Discontinued Operations
On June 27, 2022, the Company finalized the split-off of MBE Holdings, Inc., and as part of the split-off agreement notes payable of MBE Holdings, Inc. totaling approximately $
In connection with the transaction the Company derecognized $
The Company has accounted for the Split-off of MBE Holding, Inc. as discontinued operations in accordance with ASC No. 205-20, Discontinued Operations.
Based on the related party nature of such transaction, the Company recorded the effect of the transaction as a capital contribution.
Discontinued Operations disclosures for 2022 period
|
| Nine Months Ended September 30, 2022 |
|
| Three Months Ended September 30, 2022 |
| ||
TOTAL REVENUE |
| $ |
|
| $ |
| ||
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
General and administrative expense |
|
|
|
|
| |||
Research and development |
|
|
|
|
| |||
TOTAL OPERATING EXPENSES |
|
|
|
|
| |||
OPERATING LOSS |
|
|
|
|
| |||
Finance Costs |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
NET LOSS OF DISCONTINUED OPERATIONS |
| $ | ( | ) |
| $ |
|
Depreciation was approximately $
The consolidated statements of cash flows do not present the cash flows from discontinued operations separately from cash flows from continuing operations.
7. Potential Merger
On March 29, 2023 FlooidCX Corp. (“FLCX”), a Nevada corporation entered into An Agreement and Plan of Merger (the “Agreement”) with Quantum Energy, Inc., a Nevada corporation (“QREE”). Under the terms of the Agreement, the shares of QREE will be exchanged for the shares of FLCX on the following basis:
QREE | FLCX |
|
|
Common 6 shares | Common 1 share |
Series D Preferred 1 share | Series D Preferred 1 share |
F-10 |
Table of Contents |
Under the terms of the Merger Agreement, the surviving company will change its name from flooidCX Corp. to Quantum Energy, Inc. and management shall apply to change the trading symbol of the surviving corporation from FLCX to QREE.
The Agreement contains representations and warranties of the parties that are common to such agreements. The merger transaction is subject to regulatory approval and applications for such approval would be submitted to all applicable regulatory agencies, including the Securities and Exchange Commission and the Financial Industry Regulatory Authority. In addition, management plans to file a registration statement on SEC Form S-4 to register the shares to be issued to the Quantum shareholders. Under the Agreement, the transaction may not proceed in the event that holders with more than 20% of the number of outstanding shares of QREE shall dissent from the transaction. Certain members of the management of FLCX are also members of the management of QREE. The Merger is contingent upon the filing of SEC Form S-4, SEC and FINRA comments, and Nevada state corporate filings to complete.
Inductance Energy Corporation, (“IE”), of Wyoming, shall be operated as a subsidiary of the surviving entity, currently IE is operated as a subsidiary of Quantum Energy, Inc. Shareholders of Inductance Energy Corporation will retain their current shareholding in IE. As the Company has not attained all required approvals, such transaction has not yet been consummated.
F-11 |
Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides an analysis of the Company’s financial condition and results of operations and should be read in conjunction with the Interim Consolidated Financial Statements and notes thereto included in Item 1 of Part I of this Quarterly Report on Form 10-Q and with the Company’s Annual Report on Form 10-K filed for the fiscal year ended February 28, 2021. The discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors.
Overview
flooidCX Corp, currently in process of changing its name to Quantum Energy Corporation, and formerly Gripevine, Inc. (the “Company”), was incorporated under the name Baixo Relocation Services, Inc. in the state of Nevada on January 7, 2014.
Effective February 28, 2017, we entered into a share exchange agreement (the “MBE Exchange Agreement”) with MBE Holdings Inc., a private corporation organized under the laws of Delaware (“MBE”) and the shareholders of MBE (the “MBE Shareholders”), pursuant to which MBE Exchange Agreement we acquired all the technology and assets and assumed all liabilities of MBE, and MBE became our wholly-owned subsidiary. In accordance with the terms and provisions of the MBE Exchange Agreement, an aggregate of 5,248,626 (pre-reverse split) shares of our restricted common stock were issued to the MBE Shareholders in exchange for 157,458,778 of the total issued and outstanding shares of MBE.
Effective March 18, 2019, we changed our name to flooidCX Corp. pursuant to Certificate of Amendment to our Articles of Incorporation filed with the Nevada Secretary of State. The name of the Company was changed as part of our rebranding, which better reflects our new business direction into the customer care and feedback solutions space – offering easy to adapt customer care and feedback solutions to enterprises of all sizes.
On May 17, 2019, we entered into a Share Exchange Agreement (the “R1 Exchange Agreement”) with the stockholders of Resolution 1, Inc., a Delaware corporation (“R1”), to acquire all of the outstanding shares of R1 in exchange for 10,000,000 (pre-reverse split) restricted shares of our common stock (the “Acquisition”). R1 has developed a comprehensive customer care and feedback management platform, which is delivered as a cloud-based, software as a service solution. R1 was founded in August 2012 by Richard Hue, the CEO and a director of our Company. The Acquisition was approved by the independent members of the board of directors of the Company. Since the majority shareholders of the Company and R1 are the same, this did not result in the change in control at the ultimate parent or the controlling shareholder level, and was accounted for as a common control transaction.
On January 27, 2021, the Company’s common stock began trading on a 1-for-85 reverse stock split basis.
Our mission is to help businesses bring back the conversation with customers with innovative, simple to use solutions that empower both the businesses and customers to communicate and create positive outcomes. With the consummation of the R1 Exchange Agreement resulting in R1 being our subsidiary, we now offer a suite of customer relationship management (CRM) solutions that enhances and builds upon our initial offering, “GripeVine.”
We offer unified communications and collaboration online CRM solutions - GripeVine and Resolution1. GripeVine is a consumer-to-business platform that helps build a customer feedback-minded community, focused on transparency, mutual respect and open communications among like-minded customers and businesses – all working together – to facilitate positive outcomes. It allows for private messaging between customers and businesses for positive resolutions, so that businesses are not forced to communicate via the comments section. Resolution1 functions as a cloud-based customer care and feedback workflow management platform, where businesses can manage the entire logistics of customer care, feedback or inquiries throughout their entire organizations. Businesses can respond quickly and accurately to customers, while keeping track of every customer interaction. The platform is designed to grow and scale, so that businesses of all sizes, from small to medium-size enterprises (SMEs) to large enterprises, can use this cloud-based customer care and feedback management system
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Results of Operations
The following discussions are based on our unaudited interim consolidated financial statements, including our wholly-owned subsidiaries. These discussions summarize our unaudited interim consolidated financial statements for the three-month periods ended September 30, 2023 and 2022, and should be read in conjunction with the Company’s audited consolidated financial statements for the period ended December 31, 2022 and notes thereto included in the Form 10-KT filed with the SEC on May 4, 2023.
The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Quarterly Report on Form 10-Q. The financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Three-Month Period Ended September 30, 2023 Compared to Three-Month Period Ended September 30, 2022
Revenue. There was no revenue generated for the three months ended September 30, 2023, as compared to $0 for the comparable period in 2022.
Operating expenses.
During the quarter ended September 30, 2023, we incurred operating expenses in the amount of $26,645 compared to operating expenses incurred during quarter ended comparable 2022 of a negative $26,496 (an increase of $53,141). Operating expenses include: (i) general and administrative of $26,645 (2022: $(26,496). General and administrative expenses increased by $53,141, due primarily to the increase in cost of accounting and reports compilation.
Other Income
Net loss.
The Company had net loss of $5,147,668 or $0.11 per share (continuing operations) for the three months ended September 30, 2023 compared to a net income of $285,794 or $0.14 per share (continuing operations) for the three months ended September 30, 2022.
Discontinued operations
On June 27, 2022, the Company finalized the split off of MBE Holdings, Inc. As of September 27, 2922, the Company transferred all the equity in MBE Holdings, Inc. to Richard Hue, former majority shareholder and CEO of the Company. MBE’s historical operations consisted primarily of business holdings.
Nine-Month Period Ended September 30, 2023 Compared to Nine-Month Period Ended September 30, 2022
Revenue. There was no revenue generated for the three months ended September 30, 2023, as compared to $0 for the comparable period in 2022.
Operating expenses.
During the quarter ended September 30, 2023, we incurred operating expenses in the amount of $ 127,445 compared to operating expenses incurred during quarter ended comparable 2022 of $ 64,674 (a decrease of $ 62,771). Operating expenses include: (i) general and administrative of $ 127,445 (2022: $64,674). General and administrative expenses increased by $64,674, due primarily to the increase in cost of accounting and reports compilation.
Net loss.
The Company had net loss of $5,263,910 or $0.25 per share (continuing operations) for the three months ended September 30, 2023 compared to a net income of $9,708 or $0.09 per share (continuing operations) for the three months ended September 30, 2022.
Liquidity and Capital Resources As of September 30, 2023
Cash Flows from Operating Activities
We have generated $nil(0) cash flows from operating activities. For the Nine months ended September 30, 2023, net cash flows used in operating activities was $nil(0) compared to a negative $194,236 for the Nine months ended September 30, 2022.
Cash Flows from Financing Activities
Net cash flows provided by financing activities during the Nine months ended September 30, 2023 was $nil(0). During the Nine months ended September 30, 2022, cash flows provided by financing activities was $350,261, which consisted of $nil(0) proceeds from loans from third party and related party.
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Off-Balance Sheet Arrangements
There were no off-balance sheet arrangements during the Nine months ended September 30, 2023 that have, or are reasonably likely to have, a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our interests.
Plan of Operation
At September 30, 2023, we had a working capital deficit of $ 3,685,367 and we will require additional financing in order to enable us to proceed with our plan of operations.
Thus far, we believe that COVID-19 has not impacted our business negatively. As more businesses adopt virtual office operation models due to the risk of the virus, such adoption may in fact present us with more opportunities to offer businesses cost-effective, cloud-based solutions.
When we will require additional financing, there can be no assurance that additional financing will be available to us, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due. We are pursuing various alternatives to meet our immediate and long-term financial requirements.
We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of equity securities or arrange for debt or other financing to fund our planned business activities.
There is substantial doubt that we can continue as a going business for the next twelve months unless we generate sufficient revenues. There is no assurance we will ever reach that point. In the meantime, the continuation of the Company is dependent upon the continued financial support from our shareholders, our ability to obtain necessary equity financing to continue operations and the attainment of profitable operations.
Our operations and financial results are subject to various risks and uncertainties that could adversely affect our business, financial condition and results of operations.
We require approximately $1,500,000 for the next 12 months as a reporting issuer and additional funds are required. The additional funding may come from equity financing from the sale of our common stock or loans from management, related parties or third parties. In the event we do not raise sufficient capital to implement its planned operations or divest, your entire investment could be lost.
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Recent Accounting Pronouncements
As reflected in Note 2 of the Notes to the Interim Consolidated Financial Statements, there have been recent accounting pronouncements or changes in accounting pronouncements that impacted the Nine months ended September 30, 2023 or which are expected to impact future periods as follows:
In September 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The new standard is effective for fiscal years and interim periods within those years beginning after December 15, 2022. The Company determined that the new standard did not have an effect on its financial statements.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2023. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.
Evaluation of Disclosure Controls and Procedures
Management conducted its evaluation of disclosure controls and procedures under the supervision of our chief executive officer and our chief financial officer. Based upon, and as of the date of this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of September 30, 2023 due to the following material weaknesses that our management identified in our internal control over financial reporting as of September 30, 2023:
| 1) | We do not have an Audit Committee — While not being legally obligated to have an audit committee, it is the management’s view that such a committee, including a financial expert member, is an utmost important entity level control over the Company’s financial statement. Currently the Board of Directors acts in the capacity of the Audit Committee and does not include a member that is considered to be independent of management to provide the necessary oversight over management’s activities. |
| 2) | We lack internal accounting personnel who possesses U.S GAAP knowledge and working experience. |
We plan to take steps to remedy these material weaknesses as soon as practicable by implementing a plan to improve our internal control over financial reporting including, but not limited to, hiring additional staff who has U.S. GAAP knowledge and working experience and/or maintaining outside consultants experienced in U.S. GAAP financial reporting as well as in SEC reporting requirements. Our management team will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action to solve these deficiencies as necessary.
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Evaluation of Changes in Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our president (our principal executive officer and our principal accounting officer and principal financial officer), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of our company are being made only in accordance with authorizations of management and directors of our company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Further, the evaluation of the effectiveness of internal control over financial reporting was made as of a specific date, and continued effectiveness in future periods is subject to the risks that controls may become inadequate, because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has conducted, with the participation of our CEO (our principal executive officer, our principal accounting officer and our principal financial officer), an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2023 in accordance with the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) 2013 in Internal Control — Integrated Framework. Based on this assessment, management concluded that as of September 30, 2023, there are material weaknesses, as identified above, in our internal controls over financial reporting. The material weaknesses identified did not result in the restatement of any previously reported financial statements or related financial disclosure, nor does management believe that it had any affect on the accuracy of the Company’s financial statements for the current period.
Our Company is in the process of adopting specific internal control mechanisms. Future controls, among other things, will include more checks and balances and communication strategies between the management and the board to ensure efficient and effective oversight over Company activities as well as more stringent accounting policies to track and update our financial reporting.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting during the Nine months ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company currently is not a party to any legal proceedings and, to the Company’s knowledge; no such proceedings are threatened or contemplated.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES USE OF PROCEEDS, ISSUER PURCHASE OF EQUITY SECURITIES
| 1. | During the quarter the following equity was issued and converted: 900,000 preferred conversion |
| 2. | 3,486,281 stock issued as a deposit on potential merger |
| 3. | 1,365,414 debt conversion |
The shares described above were issued pursuant to an exemption for registration provided by Section 4(2) of the Securities Act of 1933. This was not a public offering as defined in Section 4(2) due to the limited number of persons that received the shares, and the manner of the issuance. In addition, the transferees of the common stock represented that they had the necessary investment intent as required by Section 4(2) of the Securities Act and agreed to receive share certificates or book entry shares containing a legend that stated the securities are restricted pursuant to Rule 144 of the Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
The following exhibits are filed as part of this Form 10-Q:
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101** |
| Interactive data files pursuant to Rule 405 of Regulation S-T. |
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101.INS |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
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101.SCH |
| Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB |
| Inline XBRL Taxonomy Extension Labels Linkbase Document. |
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101.PRE |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
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** | XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
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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.
flooidCX Corp. | |||
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November 10, 2023 | By: | /s/ Dennis M. Danzik | |
| Dennis M. Danzik | ||
| Chief Executive Officer, President, Secretary, Treasurer, Chief Financial Officer and Director |
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