UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
FOR
THE QUARTERLY PERIOD ENDED
Commission
File Number
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization)
(Address of principal executive offices, including zip code.)
(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 | ||
| N/A |
Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days. ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | 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 ☐ NO
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the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
GENUFOOD ENERGY ENZYMES CORP.
FORM 10-Q FOR THE THREE-MONTH PERIOD ENDED DECEMBER 31, 2023
TABLE OF CONTENTS
| Page Number | ||||
| PART I. FINANCIAL INFORMATION | ||||
| ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS | 1 | ||
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 11 | ||
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 14 | ||
| ITEM 4. | CONTROLS AND PROCEDURES | 15 | ||
| PART II. OTHER INFORMATION | 17 | |||
| ITEM 1. | LEGAL PROCEEDINGS | 17 | ||
| ITEM 1A. | RISK FACTORS | 17 | ||
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 17 | ||
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 17 | ||
| ITEM 4. | MINE SAFETY DISCLOSURES | 17 | ||
| ITEM 5. | OTHER INFORMATION | 17 | ||
| ITEM 6. | EXHIBITS | 18 |
i
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
GENUFOOD ENERGY ENZYMES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, | September 30, | |||||||
| 2023 | 2023 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepayment | ||||||||
| Total Current Assets | ||||||||
| Equipment | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ (Deficit) Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Due to related parties | ||||||||
| Total Current Liabilities | ||||||||
| Commitment and contingencies (Note 8) | ||||||||
| Stockholders’ (Deficit) Equity | ||||||||
| Common stock: $ | ||||||||
| Additional paid-in capital | ||||||||
| Discount on common stock | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ (Deficit) Equity | ( | ) | ||||||
| Total Liabilities and Stockholders’ (Deficit) Equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
GENUFOOD ENERGY ENZYMES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
| For the Three Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| (Restated) | ||||||||
| Revenue | $ | $ | ||||||
| Operating expenses | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Interest expense | ( | ) | ||||||
| Foreign currency loss | ( | ) | ||||||
| Other non-operating income (expenses), net | ( | ) | ( | ) | ||||
| Total other (expense) income | ( | ) | ( | ) | ||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive income (loss) | ||||||||
| Foreign currency transaction adjustment | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share of common stock basic and diluted | ||||||||
| * |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
GENUFOOD ENERGY ENZYMES CORPORATION
CONDENSED CONSOILDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
| Accumulated | ||||||||||||||||||||||||||||
| Common Stock | Additional | Discount on | Other | Total | ||||||||||||||||||||||||
| Number of | Paid-in- | common | Accumulated | Comprehensive | Stockholder’s | |||||||||||||||||||||||
| Shares | Amount | Capital | stock | Deficit | Income (loss) | Equity | ||||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| Stock-based compensation | - | |||||||||||||||||||||||||||
| Net Loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||
| Common Stock | Additional | Discount on | Other | Total | ||||||||||||||||||||||||
| Number of | Paid-in- | common | Accumulated | Comprehensive | Stockholder’s | |||||||||||||||||||||||
| Shares | Amount | Capital | stock | Deficit | Income (loss) | Equity | ||||||||||||||||||||||
| Balance at September 30, 2022 (restated) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||
| Stock-based compensation (restated) | - | |||||||||||||||||||||||||||
| Foreign currency translation | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss (restated) | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at December 31, 2022 (restated) | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
GENUFOOD ENERGY ENZYMES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Three Months Ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| (Restated) | ||||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Stock-based compensation | ||||||||
| Change in operating assets and liabilities | ||||||||
| Prepayment | ||||||||
| Accounts payable | ||||||||
| Due to related parties | ( | ) | ||||||
| Commitment and contingencies | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
GENUFOOD ENERGY ENZYMES CORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – GENERAL ORGANIZATION AND BUSINESS
Genufood Energy Enzymes Corp., USA (the “Company” or “GEEC”) was incorporated under the laws of the State of Nevada on June 21, 2010. On February 13, 2012, GEEC incorporated a wholly-owned subsidiary, Genufood Enzymes (S) Pte Ltd (“GESPL”) in Singapore, which was dissolved on January 9, 2023.
Since its inception, the Company has always been in the development stage and never generated significant revenues. The Company is currently developing business in Electric Vehicle Charge station. The Company has engaged in business agreements and development with various parties. The Company has initiated its electric vehicle charging station business.
On August 1, 2022, the board of directors (the “Board”) of the Company unanimously approved to expand our business in the area of electric vehicle supply equipment (“EVSE”) and will direct the management team to implement its new business plan in such industry. On August 16, 2022, the Company formally announced its intention to reposition as EVSE solutions provider, seeking to grow business in EVSE industry, including building, owning, and operating the next generation of electric vehicle charging stations in the U.S. The Company intends to bring convenient, reliable, and accessible charging experience to electric vehicle drivers, utilizing frictionless technology and carbon-neutral vehicle-charging infrastructure.
On October 26, 2022, the Company entered into three Charging Station Site Host Agreements (the “Agreements”) with two institutions (the “Site Hosts”), respectively, pursuant to which the Site Hosts agree to allow the Company to install its electric vehicle charging stations at the locations set forth in the Agreements (the “Charging Stations”). Under the Agreements, the Company has agreed to share the revenue generated by the sales of electricity at the Charging Stations with the Site Hosts.
As of December 31, 2023, the Company has two sites under construction for charging stations and three sites under planning.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). The accompanying condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring items, which, in the opinion of management, are necessary for a fair statement of the results of operations for the periods shown and are not necessarily indicative of the results to be expected for the full year ending September 30, 2024. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2023.
Principle of Consolidation
The condensed consolidated financial statements include the accounts of GEEC and its wholly-owned subsidiary GESPL. All significant inter-company accounts and transactions have been eliminated in consolidation. The wholly-owned subsidiary of the Company did not have business activities prior to its dissolution.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with US GAAP 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
5
Concentrations of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consisted primarily of cash, to the extent balances exceeded limits that were insured by the Federal Deposit Insurance Corporation. The Company does not require collateral and maintains reserves for potential credit losses. Such losses have historically been immaterial and have been within management’s expectations.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with original maturities of three months or less when acquired to be cash equivalents. As of December 31, 2023 and September 30, 2023, the Company did not have cash equivalents.
Fair Value of Financial Instruments
The Company follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1 inputs are quoted prices available for identical assets and liabilities in active markets. | |
| ● | Level 2 inputs are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets or other inputs that are observable or can be corroborated by observable market data. | |
| ● | Level 3 inputs are less observable and reflect our own assumptions. |
The Company’s financial instruments consist principally of cash and cash equivalents, accounts payable and accrued expenses and due to related parties. The carrying amounts of such financial instruments in the accompanying consolidated balance sheets approximate their fair values due to their relatively short-term nature. It is management’s opinion that the Company is not exposed to any significant currency or credit risks arising from these financial instruments.
Foreign Currency Translation and Transactions
The reporting and functional currency of GEEC is the USD. The functional currency of GESPL, a wholly owned subsidiary of GEEC, is the Singapore Dollar (“SGD”).
For
financial reporting purposes, the financial statements of the Company’s Singapore subsidiary, which are prepared using the SGD,
are translated into the Company’s reporting currency, USD. Assets and liabilities are translated using the exchange rate on the
balance sheet date, which was
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transactions. The resulting exchange difference, presented as foreign currency transaction loss, is included in the accompanying consolidated statements of operations.
Business Segments
The
Company operates in only
6
Net Income (Loss) Per Share
The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive. There were no potential dilutive debt or equity instruments issued and outstanding at any time during the three months ended December 31, 2023 and 2022.
Discounts on Common Stock
Common stock issued lower than the Company’s par value is treated as common stock issued under discounts. The portion of the discount is shown separately as a deduction from the Company’s account of common stock on the Company’s consolidated financial statements.
Stock-Based Compensation
The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under FASB ASC Topic 718, Compensation – Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded to reduce the Company’s deferred tax assets to the amount that is more likely than not to be realized.
The Company considers positive and negative evidence when determining whether a portion or all of its deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carry-forward periods, its experience with tax attributes expiring unused, and its tax planning strategies. The ultimate realization of deferred tax assets is dependent upon its ability to generate sufficient future taxable income within the carry-forward periods provided for in the tax law and during the periods in which the temporary differences become deductible. When assessing the realization of deferred tax assets, the Company has considered possible sources of taxable income including (i) future reversals of existing taxable temporary differences, (ii) future taxable income exclusive of reversing temporary differences and carry-forwards, (iii) future taxable income arising from implementing tax planning strategies, and (iv) specific known trend of profits expected to be reflected within the industry.
The
Company recognizes a tax benefit associated with an uncertain tax position when, in its judgment, it is more likely than not that the
position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition
threshold, the Company initially and subsequently measures the tax benefit as the largest amount that the Company judges to have a greater
than
There were no current and deferred income tax provision recorded for the three months ended December 31, 2023 and 2022 since the Company has recurring losses.
7
Recent Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs” or “ASU”) on the Company’s consolidated financial statements. Updates not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s consolidated financial position or results of operations. Recently issued ASUs that the Company feels may be applicable to the Company are as follows:
In August 2020, the FASB issued Accounting Standards Update No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). The subtitle is Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU addresses complex financial instruments that have characteristics of both debt and equity. The application of this ASU would reduce the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models would result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. To date, no such bifurcation has been necessary. Management is evaluating the potential impact. This ASU becomes effective for fiscal years beginning after December 15, 2023.
NOTE 3 – GOING CONCERN
As
of December 31, 2023 and September 30, 2023, the Company had an accumulated deficit of $
The
Company received $
NOTE 4 – EQUIPMENT
As
of December 31, 2023 and September 30, 2023 the Company had equipment of $
NOTE 5 – STOCKHOLDERS’ EQUITY (DEFICIT)
The
Company is authorized under its articles of incorporation, as amended, to issue
On
February 24, 2023, the Company conducted a private placement offering and sold
On
March 24, 2023, the Company issued
Stock Options
On
July 15, 2022, the CEO, David Tang, was granted
Compensation
costs associated with the Company’s stock options are recognized, based on the grant-date fair value of these options, over the
requisite service period, or vesting period. Accordingly, the Company recognized stock-based compensation expense of $
8
| December 31, 2023 | ||||
| Risk-free interest rate | % | |||
| Expected term | ||||
| Expected volatility | % | |||
| Expected dividend yield | % | |||
| Options | Number of Underlying Shares | Weighted average exercise price | Weighted Average Remaining Contractual Life (years) | Aggregate Intrinsic Value | ||||||||||||
| Outstanding at October 1, 2023 | $ | $ | ||||||||||||||
| Granted | $ | – | $ | – | ||||||||||||
| Exercised | $ | – | $ | – | ||||||||||||
| Forfeited or expired | $ | – | $ | – | ||||||||||||
| Outstanding at December 31, 2023 | $ | $ | ||||||||||||||
| Vested and expected to vest as of December 31, 2023 | $ | $ | ||||||||||||||
| Exercisable at December 31, 2023 | $ | $ | ||||||||||||||
As
of December 31, 2023, unrecognized total compensation cost associated with these options was $
NOTE 6 – RELATED PARTY TRANSACTIONS
| Name of related parties | Relationship with the Company | |
| Yi Lung (Oliver) Lin | ||
| Jui Pin (John) Lin | ||
| Jia Tian (Jeffery) Lin | ||
| Wen-Piao (Jack) Lai | ||
| Shao-Cheng (Will) Wang | ||
| Kuang Ming (James) Tsai | ||
| Hsin-Ta (Darren) Su | ||
| Hui-Chuan (Sandra) Lin | ||
| David Tang |
Due to Related Parties
| December 31, 2023 | September 30, 2023 | |||||||
| Hsin-Ta (Darren) Su | $ | $ | ||||||
| David Tang | ||||||||
| Total | $ | $ | ||||||
The related party balances are unsecured, interest-free and due on demand.
9
NOTE 7 – INCOME TAXES
The Company has not generated any revenue from any source in the United States and had consolidated net loss for all the years since inception in 2010. Management believes GEEC does not have any U.S. income tax liability due. However, even though the Company does not have U.S. income tax liability, it may be required to file Form 5471 each year with the Internal Revenue Service (the “IRS”) of Department of Treasury. GEEC falls in the Category Five Filer (as a domestic corporation). The Company used to have subsidiaries: GEECIS in Sri Lanka that was established in May 2011, GESPL in Singapore that was established in February 2012, and GESTL in Thailand that was established in December 2014. The subsidiaries in Sri Lanka and Thailand were disposed in 2014 and 2016, respectively. The Singapore subsidiary has been inactive since 2016 and dissolved in January 2023.
Internal
Revenue Code (“IRC”) Section 6038(a) requires information reporting with respect to certain foreign corporations (Form 5471)
and describes the information required to be reported on this form. IRC Section 6038(b)(1) provides for a monetary penalty of $
The Company believes that based on the current information available, it is difficult to determine whether it is probable that the Company will be charged penalties by IRS for the late filing of Form 5471 and even if it will be, it is difficult to reasonably estimate the amount of penalties that may be assessed.
During
the fiscal year ended September 30, 2021, the IRS imposed a $
NOTE 8 – COMMITMENTS AND CONTINGENCIES
The
Company terminated its previous virtual office agreement in Los Angeles, California and has established a new virtual office in Arcadia,
California. The new arrangement is on a month-to-month basis at a cost of $
During
the fiscal year ended September 30, 2021, the IRS imposed a $
NOTE 9 – SUBSEQUENT EVENTS
Management has evaluated subsequent events pursuant to the requirements of ASC Topic 855, from the balance sheet date through the date when the consolidated financial statements were issued and determined that no subsequent events occurred that would require adjustment to or disclosure in the consolidated financial statements.
10
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words “may,” “could,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect”, “anticipate”, “hope” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for our ongoing obligation to disclose material information as required by the federal securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. Some of the key factors impacting these risks and uncertainties include, but are not limited to:
| ● | risks related to our ability to identify, pursue and commence a reverse merger and/or a possible operating business; |
| ● | our ability to obtain adequate funding to complete a reverse merger or commence a possible operating business and meet our operating expenses on a current basis; |
| ● | general economic uncertainty, whether as a result of the COVID-19 pandemic or otherwise; |
| ● | delays in our ability to obtain any necessary business licenses and permits, and commence business operations, whether as a result of the COVID-19 pandemic or otherwise; and |
| ● | current and longer-term economic and other impacts of the COVID-19 pandemic on our operations, results of operations and financial condition, including without limitation changes in consumer spending patterns for non-essential products, resulting from the economic crisis caused by lockdown, shelter-in-place, stay-at-home or similar orders instituted as a result of the pandemic, or otherwise. |
Overview
On August 1, 2022, the board of directors (the “Board”) of the Company unanimously approved to expand our business in the area of electric vehicle supply equipment (“EVSE”) and will direct the management team to implement its new business plan in such industry. On August 16, 2022, the Company formally announced its intention to reposition as EVSE solutions provider, seeking to grow business in EVSE industry, including building, owning, and operating the next generation of electric vehicle charging stations in the U.S. The Company intends to bring convenient, reliable, and accessible charging experience to electric vehicle drivers, utilizing frictionless technology and carbon-neutral vehicle-charging infrastructure.
On October 26, 2022, we entered into three Charging Station Site Host Agreements (the “Agreements”) with two institutions (the “Site Hosts”), respectively, pursuant to which the Site Hosts agree to allow us to install our electric vehicle charging stations at the locations set forth in the Agreements (the “Charging Stations”). Under the Agreements, we have agreed to share our revenue generated by the sales of electricity at the Charging Stations with the Site Hosts in accordance with the schedules set forth therein.
As of December 31, 2022, the Company has purchased certain electric vehicle charging equipment. Furthermore, the Company is in the process of obtaining permits to construct the Charging Stations at the three confirmed sites. As of December 31, 2022, the Company contracted an architectural firm on providing design and engineering services for the two sites and working on technical issues for the third site.
As of February 13, 2023, the Company has received the finalized site plans and electrical diagrams from the architectural firm and electrical engineers for 2 sites. The Company has also received permission from the site owners to proceed with the charging station construction permit applications with the local municipalities. The Company expects to install up to a total of 10 charging units for the first two sites and expects to have them operational in early 2024.
11
Results of Operations
Three Months Ended December 31, 2023 compared to the Three Months Ended December 31, 2022
Revenues
We did not generate any revenues during the three months ended December 31, 2023 and 2022.
Operating Expenses
We incurred total operating expenses of $95,616 and $148,995 for the three months ended December 31, 2023 and 2022, respectively. Our operating expenses consist of business development expenses, legal fees, other professional fees, payroll expenses, stock-based compensation, rent, bank charges, and transfer agent fees. The decrease in operating expenses for the three months ended December 31, 2023 compared to the same period ended in 2022 was primarily due to decrease in payroll expenses.
Other expense
During the three months ended December 31, 2023, we incurred $794 other expenses mainly due to interest incurred for unpaid penalty from IRS. During the three months ended December 31, 2022, we incurred $793 other expenses mainly due to interest incurred for unpaid penalty from IRS.
Net Loss
As a result of the above, our net loss decreased from $149,788 in the three months ended December 31, 2022 to $98,010 in the same period ended in 2023.
Liquidity and Capital Resources
Working Capital
| December 31, | September 30, | |||||||
| 2023 | 2023 | |||||||
| Current Assets | $ | 27,617 | $ | 134,111 | ||||
| Current Liabilities | 116,323 | 115,616 | ||||||
| Working Capital (Deficit) | $ | (88,706 | ) | $ | 18,495 | |||
As of December 31, 2023, we had current assets of $27,617 and a working capital deficit of $88,706. In comparison, as of September 30, 2023, we had current assets of $134,111 and a working capital surplus of $18,495.
We had $116,323 in total current liabilities as of December 31, 2023, consisting of $111,849 in accounts payable, $37 in accrued expenses, and $4,437 due to related parties. This is compared to total current liabilities of $115,616 in total current liabilities as of September 30, 2023, consisting of $100,849 in accounts payable, $37 in accrued expenses, and $14,730 in due to related parties. The decrease in due to related parties was primarily due to unpaid compensation to officers and directors repaid.
We had total stockholders’ deficit of $25,540 and an accumulated deficit of $10,601,201 as of December 31, 2023. In comparison, we had a total stockholders’ equity of $53,720 and an accumulated deficit of $10,503,191 as of September 30, 2023.
12
Cash Flows
| Three months ended December 31, 2023 | Three months ended December 31, 2022 | |||||||
| Cash flows used in operating activities | $ | (77,616 | ) | $ | (74,869 | ) | ||
| Cash flows used in investing activities | (28,691 | ) | (15,005 | ) | ||||
| Cash flows provided by financing activities | - | - | ||||||
| Effect of exchange rate changes on cash | - | - | ||||||
| Net decrease in cash during period | $ | (106,307 | ) | $ | (89,874 | ) | ||
During the three months ended December 31, 2023, we used $77,616 of cash in operating activities which was attributable primarily to our net loss of $98,010 offset by stock-based compensation, and change in operating assets and liabilities of $20,394. In comparison, during the three months ended December 31, 2022, we used $74,869 of cash in operating activities which was attributable primarily to our net loss of $149,788 offset by stock-based compensation and change in operating assets and liabilities of $74,919.
During the three months ended December 31, 2023, we used $28,691 of cash investing activity in purchase of equipment. During the three months ended December 31, 2022, we used $15,005 of cash investing activity in purchase of equipment.
During the three months ended December 31, 2023 and 2022, we did not have any financing activity.
There is substantial doubt that we can continue as an ongoing business for the next twelve months unless we obtain additional capital to pay our expenses as they become due. We do not anticipate any significant additional revenue until and unless we begin to execute our plan of operations involving the start of our new electric vehicle charging station business. There is no assurance that we will ever reach that stage. The condensed consolidated financial statements presented herein 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 we cannot continue as a going concern.
Our ability to continue as a going concern is dependent upon our ability to successfully execute our business plan and generate profitable operations in the future, and, until and unless we achieve that, to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operation as and when they become due. To date, our capital requirements have primarily been funded by shareholders through the purchase of our Common Stock in private offerings and short-term borrowings from a former officer and another shareholder.
Contractual Obligations
We do not have material contractual obligations and commitments. We only have one lease that is renewed on a month-to-month basis.
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Off-Balance Sheet Arrangements
As of December 31, 2023, we had not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. As of December 31, 2023, we had not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our condensed consolidated financial statements. Furthermore, as of December 31, 2023, we had not had any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. As of December 31, 2023, we had not had any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
Critical accounting policies and estimates
Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We continually evaluate our estimates, including those related to income taxes, and the valuation of equity transactions. We base our estimates on historical experience and on various other assumptions that we believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. For the three months ended December 31, 2023, and 2022, no significant estimates and assumptions have been made in the condensed consolidated financial statements. The following are some of the critical accounting policies in relation to the preparation of the condensed consolidated financial statements. For a full summary of our critical accounting policies, please refer to Note 2 to the Consolidated Financial Statements.
Stock-Based Compensation
We account for stock-based compensation in which we obtain employee services in share-based payment transactions under FASB ASC Topic 718, Compensation – Stock Compensation, which requires us to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.
Recent accounting pronouncements
We do not expect that the adoption of recently issued accounting pronouncements will have a material impact on our financial position, results of operations, or cash flows. For a full summary of recent accounting pronouncements, please refer to Note 2 to the Consolidated Financial Statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not required for smaller reporting companies.
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ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that the information relating to our Company, including our consolidated subsidiary, required to be disclosed in our reports filed with the Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow for timely decisions regarding required disclosure. We conducted an evaluation, under the supervision and with the participation of management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this annual report. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of the evaluation date, our disclosure controls and procedures were not effective due to material weaknesses in our internal control over financial reporting, as described below.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of management, including our chief executive officer and chief financial officer, we conducted an evaluation of the design and operating effectiveness of our internal controls over financial reporting based on the framework in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 and identified the following material weaknesses:
Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.
Comingling of funds: We do not have adequate control of our petty cash, resulting in the comingling of our petty cash with the nominal account holder’s personal funds.
Lack of Adequate Staffing: We do not have adequate in-house accounting personnel and expertise in key positions, which resulted in overly relying on outside consultants in preparing financial statements and other required disclosures by the Securities and Exchange Commission.
Ineffective oversight: We do not exercise effective oversight and monitoring procedures designed and implemented to certain control activities.
Overly relied on outside professionals: We are unable to prepare internally financial statements and relied on outside professional consultants to prepare financial statements and adequate disclosures.
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A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. As a result of the material weaknesses in internal control over financial reporting identified above, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2023, based on the criteria set forth in “Internal Control-Integrated Framework” issued by COSO.
Due to the nature of the material weaknesses, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected. The material weaknesses identified above either individually or in aggregation did not result in any identified misstatements or errors in the Company’s condensed consolidated financial statements at and for the three-month period ended December 31, 2023.
Management’s Plan for Remediation
Management has discussed the material weaknesses noted above with our independent registered public accounting firm. Management is committed to improving its internal controls and, subject to having adequate financial resources, intends to:
| ● | increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties to monitor and review until there are sufficient personnel to segregate duties; |
| ● | consider providing professional courses for our key position personnel; |
| ● | hire additional employees to realize segregation of duties; and |
| ● | strengthen management monitoring control over accounting and financial statements preparation processing. |
However, due to limitation of funds and personnel, we have so far been unable to begin to implement the plan to remediate the material weaknesses noted above and it is uncertain when we will be able to begin to implement the plan to remediate these material weaknesses.
Inherent Limitations on Effectiveness of Controls
A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all control issues or misstatements. Accordingly, our controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our control system are met. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become adequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control
There have been no changes in our internal control over financial reporting that occurred during the period covered by this report 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
We are not currently a party to any lawsuit or proceeding, which, in the opinion of management, is likely to have a material adverse effect on us or our business.
ITEM 1A. RISK FACTORS
Not required of smaller reporting companies.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
| * | The certifications attached as Exhibits 32.1 and 32.2 accompany this quarterly report on Form 10-Q pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Registrant for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| GENUFOOD ENERGY ENZYMES CORP. | ||
| Date: February 20, 2024 | By: | /s/ David Tang |
| David Tang | ||
| Chief Executive Officer | ||
| By: | /s/ Kuang Ming (James) Tsai | |
| Kuang Ming (James) Tsai | ||
| Director, Chief Financial Officer | ||
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