UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
Or
For the transition period from ___________ to ___________
Commission file number:
| (Exact name of registrant as specified in charter) |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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| (Address of principal executive offices) | (Zip Code) |
| +1 ( |
| (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: None
Indicate
by checkmark whether the registrant has (1) 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 (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by checkmark 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 standard provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
No
As of February 5, 2024, the issuer had shares of its common stock, $0.001 par value per share, outstanding.
TABLE OF CONTENTS
| Page | ||
| PART I - Financial Information | ||
| Item 1 | Financial Statements | 1 |
| Consolidated Balance Sheets – As of December 31, 2023 (Unaudited) and June 30, 2023 | 1 | |
| Consolidated Statements of Operations (Unaudited) – For the Three and Six Months Ended December 31, 2023 and 2022 | 2 | |
| Consolidated Statements of Changes in Stockholders’ Deficit (Unaudited) – For the Three and Six Months Ended December 31, 2023 and 2022 | 3 | |
| Consolidated Statements of Cash Flows (Unaudited) – For the Six Months Ended December 31, 2023 and 2022 | 4 | |
| Condensed Notes to Consolidated Financial Statements (Unaudited) | 5 | |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 10 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 12 |
| Item 4 | Controls and Procedures | 12 |
| Part II - Other Information | ||
| Item 1 | Legal Proceedings | 12 |
| Item 1A | Risk Factors | 12 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 12 |
| Item 3 | Defaults Upon Senior Securities | 12 |
| Item 4 | Mine Safety Disclosures | 12 |
| Item 5 | Other Information | 12 |
| Item 6 | Exhibits | 13 |
| Signatures | 14 | |
| i |
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GHST World Inc.
Consolidated Balance Sheets
December 31, 2023 | June 30, 2023 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Total Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Advances from related parties | ||||||||
| Common stock payable | ||||||||
| Deferred revenue | ||||||||
| Total Current Liabilities | ||||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, $ par value; shares authorized; Series A, shares issued and outstanding at December 31, 2023 and June 30, 2023 | ||||||||
| Series B, shares issued and outstanding at December 31, 2023 and June 30, 2023 | ||||||||
| Common stock, $ par value, shares authorized; shares issued at December 31, 2023 and June 30, 2023 | ||||||||
| Additional paid-in-capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 1 |
GHST World Inc.
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended December 31, | For the Six Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (As Restated) | (As Restated) | |||||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Patent development costs | ||||||||||||||||
| Product development costs | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Other Income(expense): | ||||||||||||||||
| Other income | ( | ) | ( | ) | ||||||||||||
| Total Other Income (expense) | ( | ) | ( | ) | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share - basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 2 |
GHST World Inc.
Consolidated Statements of Changes in Stockholders' Deficit
For the Three and Six Months Ended December 31, 2023 and 2022
(Unaudited)
| Preferred Stock Series A | Preferred Stock Series B | Common Stock | Additional Paid in | Accumulated | Total Stockholders' | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| Balance June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Issuance of common stock for cash | — | — | ||||||||||||||||||||||||||||||||||
| Net loss for the three months ended September 30, 2022 | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance September 30, 2022 - As Restated | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of common stock for cash | — | — | ||||||||||||||||||||||||||||||||||
| Net loss for the three months ended December 31, 2022 | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance December 31, 2022 - As Restated | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Preferred Stock Series A | Preferred Stock Series B | Common Stock | Additional Paid in | Accumulated | Total Stockholders' | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| Balance June 30, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Net loss for the three months ended September 30, 2023 | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance September 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Issuance of common stock for services | — | — | ||||||||||||||||||||||||||||||||||
| Net loss for the three months ended December 31, 2023 | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance December 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
GHST World Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| For the Six Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| (As Restated) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Deferred revenue | ( | ) | ||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Advances from related parties | ( | ) | ||||||
| Issuance of common stock for cash | ||||||||
| Net Cash Provided By Financing Activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash - beginning of period | ||||||||
| Cash - end of period | $ | $ | ||||||
| SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the year/period for: | ||||||||
| Interest | $ | $ | ||||||
| Taxes | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
GHST WORLD, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS
Background
GHST World Inc. (“the Company”), is a Delaware corporation that was incorporated on November 12, 1999. The Company is a holding company for various technology and other activities. The Company has acquired and is developing several patents in the technology sector.
Basis of Presentation
The interim unaudited financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. In management's opinion, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly our results of operations and cash flows for the six months ended December 31, 2023 and 2022, and our financial position as of December 31, 2023, have been made. The results of operations for such interim periods are not necessarily indicative of the operating results to be expected for the full year.
Certain information and disclosures normally included in the notes to the annual financial statements have been condensed or omitted from these interim financial statements. Accordingly, these interim unaudited financial statements should be read in conjunction with the financial statements and notes thereto for the year ended June 30, 2023.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Liquidity and Going Concern
The financial statements have been prepared
on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course
of business for the foreseeable future. The Company had net losses of $
Management believes these conditions raise substantial doubt about the Company’s ability to continue as a going concern for the next 12 months from the date these financial statements were issued. The ability to continue as a going concern is dependent upon profitable future operations, positive cash flows, and additional financing. These financial statements do not include any adjustments related to the recovery and classification of recorded asset amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Management intends to raise money through investors as needed to support its working capital needs. Currently the Company intends to raise capital from its existing shareholders and from the possible sale of a minority interest in its subsidiaries. Management cannot provide any assurances that the Company will be successful in completing these undertakings and accomplishing any of its plans.
Principles of Consolidation
The consolidated financial statements include the accounts of the following wholly owned subsidiaries:
| · | GHST Art World, Inc |
| · | GHST Sport Inc. |
| · | IoTT world Inc. |
| · | Insside World Inc. |
All intercompany balances and transactions have been eliminated in consolidation.
| 5 |
GHST WORLD, INC. Notes to Unaudited Condensed Consolidated Financial Statements |
Concentration
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash. The Company places its cash with financial institutions of high credit worthiness. At times, its cash with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it is a credit counterparty, and as such, it believes that any associated credit risk exposures are limited.
The Company currently receives all its revenues from one customer and all the deferred revenues from a few other customers. The company is dependent on its chairman of the Board for short term funding, who has provided a significant portion of the funding through December 31, 2023.
Foreign Currency
Transaction gains and losses are recognized in earnings. The Company is subject to foreign exchange rate fluctuations in connection with the Company’s international transactions as certain vendor payments and repayments of related party advances are done in foreign currency.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Such estimates and assumptions impact, among others, the following: fair value of share-based payments and deferred taxes.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.
Cash
Cash are amounts held at local banks. The Company had
Risks and Uncertainties
The Company is undertaking a new business venture that is inherently subject to significant risks and uncertainties, including financial, operational, technological and other risks that could potentially have a risk of business failure.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. The Company recognizes revenue for its services for contracts with customers at a point in time when the services are completed. Payments received from customers in advance of when services are completed are reflected as deferred revenue on the accompanying consolidated balance sheets.
Accounts Receivable
Accounts receivables are recorded at the invoiced
amount. The Company regularly reviews its receivables on a customer-by-customer basis and evaluates whether an allowance for doubtful
accounts is necessary based on any known or perceived collection issues. As of December 31, 2023 and June 30, 2023, the company did
Fair Value
The carrying value of cash, other assets, accounts and other payable approximate their fair value based on the liquidity or the short-term maturities of these instruments. The fair value hierarchy promulgated by GAAP consists of three levels:
| · | Level one — Quoted market prices in active markets for identical assets or liabilities. |
| · | Level two — Inputs other than level one inputs that are either directly or indirectly observable; and |
| · | Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. |
Determining which category an asset or liability falls
within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The Company has
| 6 |
GHST WORLD, INC. Notes to Unaudited Condensed Consolidated Financial Statements |
Impairment of Long-Lived Assets
The Company accounts for impairment of long-lived assets in accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment, (“ASC 360”). Long-lived assets for the Company consist primarily of other assets and patents. In accordance with ASC 360, the Company periodically evaluates long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When triggering event indicators are present, the Company obtains appraisals on an asset-by-asset basis and will recognize an impairment loss when the sum of the appraised values is less than the carrying amounts of such assets. The appraised values, based on reasonable and supportable assumptions and projections, require subjective judgments. Depending on the assumptions and estimates used, the appraised values projected in the evaluation of long-lived assets can vary within a range of outcomes. The appraisals consider the likelihood of possible outcomes in determining the best estimate for the value of the assets.
Research and Development
Research and development costs are expensed as incurred. These costs consist primarily of costs related to the development of new products.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, 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. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The effect of income tax positions is recognized only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
The Company applies the fair value method of ASC 718, Share Based Payment, in accounting for its stock-based compensation. This accounting standard states that compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period, if any. We measure stock-based compensation using the fair market value of the Company’s common stock on the date of the grant.
Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted net loss per common share is computed using the weighted average number of common shares outstanding for the period, and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options, stock warrants, convertible debt instruments or other common stock equivalents. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. The Company had potentially dilutive securities outstanding for the six months ended December 31, 2023 or 2022.
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This ASU requires measurement and recognition of expected credit losses for financial assets. ASU 2016-13 also requires new disclosures for financial assets measured at amortized cost, loans, and available-for-sale debt securities. ASU 2016-13 is effective for the Company beginning July 1, 2023. Adopting the standard did not have a material impact on the unaudited consolidated financial statements.
There are no other recent accounting pronouncements that are expected to have a material effect on the Company's financial statements.
| 7 |
GHST WORLD, INC. Notes to Unaudited Condensed Consolidated Financial Statements |
NOTE 3 – PATENTS
The Company obtained a US patent dated June 30, 2020,
which is a protection device used in sporting activity with monitoring capabilities. The Company has also obtained a European patent for
the same device in October 2022. The Company has accumulated costs of $
NOTE 4 – COMMON STOCK PAYABLE
The Company has an agreement with certain
investors to convert their investment into common stock of the Company at a price equal to the average value of the stock over the previous
six months. The conversion was contingent on the Company effectuating a
NOTE 5 – RELATED PARTY TRANSACTIONS
At December 31, 2023 and June 30, 2023,
the Company owed related parties a total of $
As shown in Note 4, the Company has committed
to converting certain debts to equity. Included in the debts is $
NOTE 6 – STOCKHOLDERS’ EQUITY
NOTE 7 – COMMITMENTS AND CONTINGENCIES
Legal Matters
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of December 31, 2023, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations
NOTE 8 – IMPACT OF RESTATEMENT
| 8 |
GHST WORLD, INC. Notes to Unaudited Condensed Consolidated Financial Statements |
See below for a reconciliation from the previously reported December 31, 2022 consolidated financial statement to the restated amounts in the consolidated statement of operations, consolidated statement of changes in stockholder’ deficit and consolidated statement of cash flows for the six months ended December 31, 2022. The previously reported amounts were derived from the Company's Quarterly Report on Form 10-Q for the six months ended December 31, 2022 as filed with the SEC on February 14, 2023 (the “Original Report”). These amounts are labeled as “As Previously Reported” in the tables below. The amounts labeled “Restatement Adjustment” represent the effects of this restatement described above. The following presents a reconciliation of the impacted consolidated financial statement line items as previously reported to the restated amounts as of December 31, 2022.
As of December 31, 2022
| Consolidated Balance Sheet | As previously reported | Restatement Adjustment | As restated | |||||||||
| Patent costs | $ | $ | ( | ) | $ | |||||||
For The Three Months Ended December 31, 2022
| As previously reported | Restatement Adjustment | As restated | ||||||||||
| Consolidated Statement of Operations | ||||||||||||
| General and administrative expenses | $ | $ | ( | ) | $ | |||||||
| Impairment of long-lived assets | ||||||||||||
| Depreciation and Amortization | ( | ) | ||||||||||
| Patent development costs | ||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
For The Six Months Ended December 31, 2022
| As previously reported | Restatement Adjustment | As restated | ||||||||||
| Consolidated Statement of Operations | ||||||||||||
| General and administrative expenses | $ | $ | ( | ) | $ | |||||||
| Impairment of long-lived assets | ( | ) | ||||||||||
| Depreciation and Amortization | ( | ) | ||||||||||
| Patent development costs | ||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Foreign exchange loss | ( | ) | ( | ) | ||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Consolidated Statement of Changes in Stockholders’ Deficit | ||||||||||||
| Accumulated deficit | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Total stockholders’ equity (deficit) | $ | ( | ) | $ | ( | ) | $ | ( | ||||
| Consolidated Statement of Cash Flow | ||||||||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net cash provided by financing activities | $ | $ | ( | ) | $ | |||||||
| Net cash used in investing activities | $ | ( | ) | $ | $ | |||||||
NOTE 9 – SUBSEQUENT EVENTS
The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements were issued for potential recognition or disclosure. The Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements.
| 9 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Overview
We are a holding company for various technology and related activities. As of the date of this Quarterly Report on Form 10-Q (this “Report”), our principal business strategy is seeking to exploit a patent and obtain and exploit future patents for the Smart Shin Guard and, more recently, developing a business through a subsidiary formed in April 2023 with an initial focus on the clean energy and defense sectors.
The Smart Shin Guard is a wearable protective device used while playing soccer and other sports combined with data collection and analysis technology that monitors players’ individual and collective physical and performance-based metrics and transmits this information to a separate module in real-time.
We have not generated revenue on a consistent basis or in amounts which are necessary to offset operating losses, and need substantial additional financing to continue the development and commercialization of our business plan and related products and service
Recent Developments
Beginning in October 2023, InSSIDeWorld has performed services related to conducting preliminary research on security and preventative measures focusing on criminal activity at stadiums for sporting events.
In the quarter ended December 31, 2023 and more recently, the Company and its service provider have continued product development efforts for its Smart Shin Guard, with efforts focused on finalizing specifications for an initial prototype of the product.
In the quarter ended December 31, 2023, InSSIDEWorld as continued its efforts to procure solar panel systems, and is in the process of seeking the necessary financing for such systems, as well as evaluating prospective markets for selling these systems.
Results of Operations
The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere in this report.
Three Months Ended December 31, 2023 Compared to the Three Months Ended December 31, 2022
We had $15,854 in revenue in the three months ended December 31, 2023 compared to no revenue for the three months ended December 31, 2022, and we sustained net losses of $380,704 and $23,586, respectively, in those periods. The higher losses resulted from increased operating expenses in the 2023 period, as more particularly described in the paragraph that follows. The revenue during the 2023 period related to the Company’s provision of consulting services through InSSiDe World.
During the three months ended December 31, 2023 and 2022, operating expenses were $397,319 and $23,359, respectively. The operating expenses in the 2023 period included $324,523 of product development costs with no corresponding costs in the 2022 period (as restated), as the Company engaged in research and development efforts for the products and services. In addition, there were $72,796 in general and administrative expenses which related to accounting and legal expenses filings with the Securities and Exchange Commission including for the restated financials described in Note 8 to the accompanying financial statements, compared to $19,181 of in general and administrative expenses in the 2022 period.
Six Months Ended December 31, 2023 Compared to the Six Months Ended December 31, 2022
We had $39,695 in revenue in the six months ended December 31, 2023 compared to no revenue for the six months ended December 31, 2022, and we sustained net losses of $436,800 and $72,221, respectively, in those periods. The revenue during the 2023 period related to the Company’s provision of consulting services through InSSiDe World.
During the six months ended December 31, 2023 and 2022, operating expenses were $476,161 and $72,221, respectively, which consisted of product development costs and general and administrative expenses relating to the same items described above for the three-month period.
| 10 |
We do not expect to generate material revenue unless and until we can implement our business plan and begin marketing and our products and services in sufficient quantities, which was previously delayed by external forces and our limited capital, and may be further delayed as we attempt to balance continuing the development of our legacy Smart Shin Guard business plan and our new business development efforts in the clean energy and security spaces through InSSiDe. We have also recently refocused the efforts of GHST Art towards marketing and entertainment activities and related services, including founding an online newspaper.
We also may encounter difficulties commercializing our products and services in the future based on supply chain issues, inflation and adverse market conditions, which may among other adverse consequences result in a recession in one or more of the markets we intend to serve. In order to become profitable, we will need to further develop and execute on our business plan for our subsidiaries, and then establish a sufficient market for our products and services, including internationally, to offset our development, manufacturing and advertising costs, and our ability to do so will be subject to a number of factors, many of which will be beyond our control.
Liquidity and Capital Resources
Net Cash used by Operating Activities:
For the six months ended December 31, 2023, the Company used net cash of $101,997 in operating activities as compared to $70,867 for the six months ended December 31, 2022. The increase in cash used from operations was primarily due to $324,523 in stock compensation with no corresponding charge in the 2022 period, and an increase in accounts payable and accrued expenses in the 2023 period and legal and accounting expenses arising from the restatement of the Company’s financial statements as described in Note 8 to the accompanying financial statements. We anticipate experiencing sustained or increased operational expenses as we continue our business development efforts.
Cash Flows from Financing Activities:
Cash flows provided by financing activities for the six months ended December 31, 2023 were $63,559 compared to $71,347 for the six months ended December 31, 2022. The difference between periods is primarily attributable to issuance of common stock totaling $72,934 in the 2022 period compared to $0 in the 2023 period, partially offset by the Company’s receipt of related party advances totaling $63,559 compared to payments to related parties totaling $(1,587) in the 2022 period.
Liquidity
We have $1,058 in available cash as of December 31, 2023 and for the past two years we have been relying on loans from our current investors and related parties and proceeds from sales of our common stock to fund our operations. As reflected in the financial statements contained in this Report, management has expressed substantial doubt about our ability to continue as a going concern for the next 12 months from the date the financial statements were issued, unless we can raise the required capital or generate material revenue to fund our operations.
The Company expects to continue to use a portion of the authorized but unissued shares to raise capital and/or to convert previous loans made to the Company.
Cautionary Note Regarding Forward Looking Statements
This Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the development of the Smart Shin Guard and plans to begin commercializing the product, the planned operation of InSSIDe World Inc. as a development-stage business with a focus on the clean energy and security sectors and GHST Art as a marketing and entertainment company, the implementation of our business plan and expected timelines for meeting objectives, future sources of revenue such as a recent agreement with two of our subsidiaries and a third party consultant and customer, our use of common stock in capital raising efforts and to satisfy previous advances to us, and our liquidity. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include the risks arising from the potential adverse effects of inflation, increasing interest rates in response, geopolitical conflicts such as those occurring in Israel and Ukraine and negative operational impacts or an economic downturn or recession which may result, which may result in declines in consumer spending particularly to non-essential products and services such as those that we intend to offer, global supply chain disruptions, shortages and delays which may adversely affect our ability to develop, manufacture and sell our products and services within the intended timeframes or at all, risks and uncertainties surrounding new business opportunities we pursue, and the risks summarized our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 in the section titled “Item 1A. – Risk Factors.” We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officers, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officers have concluded that our disclosure controls and procedures as of December 31, 2023 were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms because of a material weakness in the Company’s internal control over financial reporting. Specifically, the Company did not maintain effective controls to identify and maintain segregation of duties to support the identification, authorization, approval, accounting for, and the disclosure of related-party transactions and non-routine transactions. One individual, the Chief Executive Officer, initiates related-party transactions and non-routine transactions and also reviews, evaluates and approves these same transactions.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act 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.
PART II: OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
From time-to-time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of the date of this Report, we are not aware of any other pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations and there are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 1.A – RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
All unregistered sales of equity securities through the period covered by this Report have previously been disclosed.
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
| Incorporated by Reference | Filed or Furnished | ||||||||||||||||
| Exhibit # | Exhibit Description | Form | Date | Number | Herewith | ||||||||||||
| 2.1 | Certificate of Merger | 10-K | 2/18/2010 | 3.2 | |||||||||||||
| 3.1 | Amended and Restated Certificate of Incorporation | 10-12G | 3/9/2021 | 3.1 | |||||||||||||
| 3.1(a) | Certificate of Amendment to Certificate of Incorporation (Reverse Stock Split) | 10-Q | 11/15/2021 | 3.2 | |||||||||||||
| 3.1(b) | Certificate of Amendment to Certificate of Incorporation (Decrease in Authorized Capital) | 10-Q | 11/15/2021 | 3.3 | |||||||||||||
| 3.1(c) | Certificate of Designation | 10-K | 2/18/2010 | 3.3 | |||||||||||||
| 3.2 | Amended and Restated Bylaws | 10-12G | 3/9/2021 | 3.3 | |||||||||||||
| 16.1 | Letter from Salberg & Company, P.A. dated October 27, 2023 | 8-K | 10/30/2023 | 16.1 | |||||||||||||
| 31.1 | Certification of Principal Executive Officer (302) | Filed | |||||||||||||||
| 31.2(a) | Certification of Principal Financial Officer (302) | Filed | |||||||||||||||
| 31.2(b) | Certification of Principal Financial Officer (302) | Filed | |||||||||||||||
| 32.1 | Certification of Principal Executive and Principal Financial Officers (906) | Furnished* | |||||||||||||||
| 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) | Filed | |||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed | |||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed | |||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed | |||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed | |||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed | |||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed | |||||||||||||||
*This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
Copies of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to GHST World Inc., 667 Madison Avenue, 5th Floor, New York, NY 10065.
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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.
| GHST World Inc. | ||||||
| Dated: | February 12, 2024 | By: | /s/ Edoardo Riboli | |||
| Edoardo Riboli,Chief Executive Officer | ||||||
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(Principal Executive Officer)
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| Dated: | February 12, 2024 | By: | /s/ Marcello Appella | |||
| Marcello Appella, Chief Financial Officer | ||||||
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(Principal Financial Officer)
| ||||||
| Dated: | February 12, 2024 | By: | /s/ Paolo Sangiovanni | |||
| Paolo Sangiovanni, Chief Financial Officer | ||||||
|
(Principal Financial Officer)
| ||||||
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