EZRaider Co. - Quarter Report: 2020 November (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: November 30, 2020
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________
Commission file number: 333-180251
|
E-WASTE CORP. |
|
(Exact name of registrant as specified in its charter) |
|
Florida |
|
45-4390042 |
|
(State or other jurisdiction of incorporation or organization) |
|
(IRS Employer Identification No.) |
|
610 Jones Ferry Road, Suite 207 Carrboro, NC 27510 |
|
(Address of principal executive offices) |
|
|
|
(919) 933-2720 |
|
(Registrant’s telephone number, including area code) |
|
|
|
N/A |
|
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
| None | N/A | N/A |
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.
Yes ☐ No ☐
(Note: The registrant is a voluntary filer of reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 and has filed during the preceding 12 months all reports it would have been required to file by Section 13 or 15(d) of the Securities Exchange Act of 1934 if the registrant had been subject to one of such Sections.)
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).
Yes ☒ No ☐
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 the “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
Large Accelerated Filer ☐ |
|
Accelerated Filer ☐ |
|
Non-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 ☐
As of January 8, 2021, there were 10,000,000 shares of the registrant’s common stock, par value $0.0001 per share, issued and outstanding.
E-WASTE CORP.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2020
TABLE OF CONTENTS
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PAGE |
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PART I - FINANCIAL INFORMATION |
3 |
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Item 1. |
Financial Statements (Unaudited) |
3 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
20 |
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Item 4. |
Controls and Procedures |
21 |
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PART II - OTHER INFORMATION |
21 |
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Item 1. |
Legal Proceedings |
21 |
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Item 1A. |
Risk Factors |
21 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
21 |
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Item 3. |
Defaults Upon Senior Securities |
21 |
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Item 4. |
Mine Safety Disclosures |
21 |
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Item 5. |
Other Information |
21 |
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Item 6. |
Exhibits |
22 |
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SIGNATURES |
23 |
- 2 -
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in our Form 10-K for the fiscal year ended February 29, 2020, filed with the SEC on June 15, 2020. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
TABLE OF CONTENTS
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PAGE |
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Condensed Consolidated Balance Sheets as of November 30, 2020 (unaudited) and February 29, 2020 |
4 |
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Condensed Consolidated Statements of Operations for the three and nine-month periods ended November 30, 2020 and 2019 (unaudited) |
5 |
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Condensed Consolidated Statements of Changes in Stockholders Deficit for the three and nine-month periods ended November 30, 2020 and 2019 (unaudited) |
6-7 |
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Condensed Consolidated Statements of Cash Flows for the nine-month periods ended November 30, 2020 and 2019 (unaudited) |
8 |
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Notes to the Condensed Consolidated Financial Statements (unaudited) |
9 |
- 3 -
E-WASTE CORP.
Condensed Consolidated Balance Sheets
|
|
|
November 30, 2020 |
|
February 29, 2020 |
| ||
|
|
|
(Unaudited) |
|
(Audited) |
| ||
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Assets |
| ||||||
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
182,999 |
|
$ |
— |
|
|
Total Current Assets |
|
|
182,999 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
182,999 |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Deficit |
| ||||||
|
|
|
|
|
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|
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|
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Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
$ |
3,579 |
|
$ |
13,654 |
|
|
Accrued interest payable - related parties |
|
|
3,813 |
|
|
— |
|
|
Notes payable - related parties |
|
|
405,000 |
|
|
— |
|
|
Total Current Liabilities |
|
|
412,392 |
|
|
13,654 |
|
|
|
|
|
|
|
|
|
|
|
Advances - related party |
|
|
— |
|
|
404,988 |
|
|
|
|
|
|
|
|
|
|
|
Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
412,392 |
|
|
418,642 |
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 250,000,000 shares authorized |
|
|
1,000 |
|
|
1,200 |
|
|
Additional paid-in capital |
|
|
289,966 |
|
|
42,565 |
|
|
Accumulated deficit |
|
|
(520,359 |
) |
|
(462,407 |
) |
|
Total Stockholders’ Deficit |
|
|
(229,393 |
) |
|
(418,642 |
) |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Deficit |
|
$ |
182,999 |
|
$ |
— |
|
See accompanying notes to condensed consolidated financial statements.
- 4 -
E-WASTE CORP.
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended November 30, 2020 and 2019
(Unaudited)
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
| ||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
|
20,330 |
|
|
6,489 |
|
|
49,139 |
|
|
34,885 |
|
|
Consulting fees - related party |
|
|
5,000 |
|
|
— |
|
|
5,000 |
|
|
— |
|
|
Total operating expenses |
|
|
25,330 |
|
|
6,489 |
|
|
54,139 |
|
|
34,885 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(25,330 |
) |
|
(6,489 |
) |
|
(54,139 |
) |
|
(34,885 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(3,813 |
) |
|
— |
|
|
(3,813 |
) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(29,143 |
) |
$ |
(6,489 |
) |
$ |
(57,952 |
) |
$ |
(34,885 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share - basic and diluted |
|
$ |
(0.00 |
) |
$ |
(0.00 |
) |
$ |
(0.00 |
) |
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares - basic and diluted |
|
|
10,945,055 |
|
|
12,000,000 |
|
|
11,650,909 |
|
|
12,000,000 |
|
See accompanying notes to condensed consolidated financial statements.
- 5 -
E-WASTE CORP.
Condensed Consolidated Statements of Changes in Stockholders Deficit
For the Three and Nine Months Ended November 30, 2020 and 2019
(Unaudited)
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
Total |
| ||
|
|
|
Common Stock |
|
Paid-in |
|
Accumulated |
|
Stockholders’ |
| ||||||
|
|
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Deficit |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2020 |
|
12,000,000 |
|
$ |
1,200 |
|
$ |
42,565 |
|
$ |
(491,216 |
) |
$ |
(447,451 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for cash ($0.05/share) - related parties |
|
1,000,000 |
|
|
100 |
|
|
49,900 |
|
|
— |
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of shares - former related party |
|
(3,000,000 |
) |
|
(300 |
) |
|
300 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness of advances - former related party |
|
— |
|
|
— |
|
|
194,701 |
|
|
— |
|
|
194,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed capital - former related party |
|
— |
|
|
— |
|
|
2,500 |
|
|
— |
|
|
2,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss - three months ended November 30, 2020 |
|
— |
|
|
— |
|
|
— |
|
|
(29,143 |
) |
|
(29,143 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2020 |
|
10,000,000 |
|
$ |
1,000 |
|
$ |
289,966 |
|
$ |
(520,359 |
) |
$ |
(229,393 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
Total |
| ||
|
|
|
Common Stock |
|
Paid-in |
|
Accumulated |
|
Stockholders’ |
| ||||||
|
|
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Deficit |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 29, 2020 |
|
12,000,000 |
|
$ |
1,200 |
|
$ |
42,565 |
|
$ |
(462,407 |
) |
$ |
(418,642 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for cash ($0.05/share) - related parties |
|
1,000,000 |
|
|
100 |
|
|
49,900 |
|
|
— |
|
|
50,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cancellation of shares - former related party |
|
(3,000,000 |
) |
|
(300 |
) |
|
300 |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forgiveness of advances - former related party |
|
— |
|
|
— |
|
|
194,701 |
|
|
— |
|
|
194,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributed capital - former related party |
|
— |
|
|
— |
|
|
2,500 |
|
|
— |
|
|
2,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss - nine months ended November 30, 2020 |
|
— |
|
|
— |
|
|
— |
|
|
(57,952 |
) |
|
(57,952 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2020 |
|
10,000,000 |
|
$ |
1,000 |
|
$ |
289,966 |
|
$ |
(520,359 |
) |
$ |
(229,393 |
) |
- 6 -
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
Total |
| ||
|
|
|
Common Stock |
|
Paid-in |
|
Accumulated |
|
Stockholders’ |
| ||||||
|
|
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Deficit |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August 31, 2019 |
|
12,000,000 |
|
$ |
1,200 |
|
$ |
42,565 |
|
$ |
(442,264 |
) |
$ |
(398,499 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss - three months ended November 30, 2019 |
|
— |
|
|
— |
|
|
— |
|
|
(6,489 |
) |
|
(6,489 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2019 |
|
12,000,000 |
|
$ |
1,200 |
|
$ |
42,565 |
|
$ |
(448,753 |
) |
$ |
(404,988 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
Total |
| ||
|
|
|
Common Stock |
|
Paid-in |
|
Accumulated |
|
Stockholders’ |
| ||||||
|
|
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Deficit |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
February 28, 2019 |
|
12,000,000 |
|
$ |
1,200 |
|
$ |
42,565 |
|
$ |
(413,868 |
) |
$ |
(370,103 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss - nine months ended November 30, 2019 |
|
— |
|
|
— |
|
|
— |
|
|
(34,885 |
) |
|
(34,885 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 30, 2019 |
|
12,000,000 |
|
$ |
1,200 |
|
$ |
42,565 |
|
$ |
(448,753 |
) |
$ |
(404,988 |
) |
See accompanying notes to condensed consolidated financial statements.
- 7 -
E-WASTE CORP.
Condensed Consolidated Statements of Cash Flow
For the Nine Months Ended November 30, 2020 and 2019
(Unaudited)
|
|
|
For the Nine Months Ended |
| ||||
|
|
|
2020 |
|
2019 |
| ||
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(57,952 |
) |
$ |
(34,885 |
) |
|
Adjustments to reconcile net loss to net cash used in operations |
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Increase (decrease) in |
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses |
|
|
(10,075 |
) |
|
— |
|
|
Accrued interest payable - related parties |
|
|
3,813 |
|
|
— |
|
|
Net cash used in operating activities |
|
|
(64,214 |
) |
|
(34,885 |
) |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
Proceeds from issuance of notes payable - related parties |
|
|
405,000 |
|
|
— |
|
|
Proceeds from advances - former related party |
|
|
42,463 |
|
|
34,885 |
|
|
Repayments on advances - former related party |
|
|
(252,750 |
) |
|
— |
|
|
Common stock issued for cash |
|
|
50,000 |
|
|
— |
|
|
Contributed capital - former related party |
|
|
2,500 |
|
|
— |
|
|
Net cash provided by financing activities |
|
|
247,213 |
|
|
34,885 |
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash |
|
|
182,999 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Cash - beginning of period |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Cash - end of period |
|
$ |
182,999 |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
— |
|
$ |
— |
|
|
Cash paid for income tax |
|
$ |
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities |
|
|
|
|
|
|
|
|
Forgiveness of advances - former related party |
|
$ |
194,701 |
|
$ |
— |
|
|
Cancellation of shares - former related party |
|
$ |
300 |
|
$ |
— |
|
See accompanying notes to condensed consolidated financial statements.
- 8 -
E-WASTE CORP.
Notes to Condensed Consolidated Financial Statements
November 30, 2020 and 2019
Note 1 – Organization and Nature of Operations
Organization and Nature of Operations
E-Waste Corp. (the “Company”) was organized in the State of Florida on January 26, 2012, to develop an e-waste recycling business. The Company was not successful in its efforts and discontinued that line of business. Since that time, the Company has been a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).
Going forward, the Company intends to seek, investigate and, if such investigation warrants, engage in a business combination with a private entity whose business presents an opportunity for its shareholders. No specific assets or businesses have been definitively identified and there is no certainty that any such assets or business will be identified or that any transactions will be consummated.
On November 29, 2016, the Company formed a wholly owned Delaware subsidiary, in connection with its proposed reincorporation in the State of Delaware. The reincorporation was to be effected in anticipation of a potential business combination the Company was considering. The reincorporation did not occur, as the Company determined not to proceed with the proposed business combination.
The Company has a February 28/29 fiscal year end.
The ongoing COVID-19 global and national health emergency has caused significant disruption in the international and United States economies and financial markets. In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The spread of COVID-19 has caused illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in business activity and financial transactions, labor shortages, supply chain interruptions and overall economic and financial market instability. The COVID-19 pandemic has the potential to significantly impact the Company’s supply chain, distribution centers, or logistics and other service providers.
In addition, a severe prolonged economic downturn could result in a variety of risks to the business, including weakened demand for products and services and a decreased ability to raise additional capital when needed on acceptable terms, if at all. As the situation continues to evolve, the Company will continue to closely monitor market conditions and respond accordingly. To date, the Company has not experienced any significant economic impact due to COVID-19, however, efforts are being made to secure additional capital.
Basis of Presentation
Management acknowledges its responsibility for the preparation of the accompanying unaudited condensed consolidated financial statements which reflect all adjustments, consisting of normal recurring adjustments, considered necessary in its opinion for a fair statement of its consolidated financial position and the consolidated results of its operations and cash flows for the periods presented.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S. GAAP”) for interim financial information and with the instructions to Article 8-03 of Regulation S-X.
Operating results for interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole. Certain information and note disclosure normally included in financial statements prepared in accordance with U.S. GAAP has been condensed or omitted from these statements pursuant to such accounting principles and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements.
These unaudited condensed consolidated financial statements should be read in conjunction with the summary of significant accounting policies and notes to the condensed consolidated financial statements for the year ended February 29, 2020 of the Company, which were included in the Company’s annual report on Form 10-K as filed with the Securities and Exchange Commission on June 15, 2020.
- 9 -
E-WASTE CORP.
Notes to Condensed Consolidated Financial Statements
November 30, 2020 and 2019
Liquidity, Going Concern and Management’s Plans
These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
As reflected in the accompanying unaudited consolidated financial statements, for the nine months ended November 30, 2020, the Company had:
|
|
• |
Net loss of $57,952; and |
|
|
• |
Net cash used in operations was $64,214. |
Additionally, at November 30, 2020, the Company had:
|
|
• |
Accumulated deficit of $520,359 |
|
|
• |
Stockholders’ deficit of $229,393; and |
|
|
• |
Working capital deficit of $229,393. |
The Company has cash on hand of $182,999 at November 30, 2020. Although the Company intends to raise additional debt or equity capital, the Company expects to continue to incur significant losses from operations and have negative cash flows from operating activities for the near-term. These losses could be significant as the Company seeks a merger candidate. The Company will have continuing expenses related to compensation, professional fees, and regulatory.
The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the nine months ending November 30, 2020, and our current capital structure including equity-based instruments and our obligations and debts.
During the nine months ended November 30, 2020, the Company has satisfied its obligations from the issuance of related party notes ($405,000), receipt of related party advances ($42,463) and the sale of common stock to related parties ($50,000); however, there is no assurance that such successful efforts will continue during the twelve months subsequent to the date these condensed consolidated financial statements are issued.
If the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations. The Company continues to explore obtaining additional capital financing and the Company is closely monitoring its cash balances, cash needs, and expense levels.
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these consolidated financial statements are issued. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Management’s strategic plans include the following:
|
|
• |
Pursuing additional capital raising opportunities, |
|
|
• |
Seeking an acquisition or merger candidate; and |
|
|
• |
Identifying unique market opportunities that represent potential positive short-term cash flow. |
- 10 -
E-WASTE CORP.
Notes to Condensed Consolidated Financial Statements
November 30, 2020 and 2019
Note 2 – Summary of Significant Accounting Policies
Principles of Consolidation
These consolidated financial statements have been prepared in accordance with U.S. GAAP and include the accounts of the Company and its inactive, wholly owned subsidiary. All intercompany transactions and balances have been eliminated.
Business Segments and Concentrations
The Company uses the “management approach” to identify its reportable segments. The management approach requires companies to report segment financial information consistent with information used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. The Company manages its business as one reportable segment.
Use of Estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material.
Significant estimates during the nine months ended November 30, 2020 include uncertain tax positions, and the valuation allowance on deferred tax assets.
Fair Value of Financial Instruments
The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements. ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, based on the Company’s principal or, in absence of a principal, most advantageous market for the specific asset or liability.
The Company uses a three-tier fair value hierarchy to classify and disclose all assets and liabilities measured at fair value on a recurring basis, as well as assets and liabilities measured at fair value on a non-recurring basis, in periods subsequent to their initial measurement. The hierarchy requires the Company to use observable inputs when available, and to minimize the use of unobservable inputs, when determining fair value.
The three tiers are defined as follows:
|
|
• |
Level 1 — Observable inputs that reflect quoted market prices (unadjusted) for identical assets or liabilities in active markets; |
|
|
|
|
|
|
• |
Level 2 — Observable inputs other than quoted prices in active markets that are observable either directly or indirectly in the marketplace for identical or similar assets and liabilities; and |
|
|
|
|
|
|
• |
Level 3 — Unobservable inputs that are supported by little or no market data, which require the Company to develop its own assumptions. |
The determination of fair value and the assessment of a measurement’s placement within the hierarchy requires judgment. Level 3 valuations often involve a higher degree of judgment and complexity. Level 3 valuations may require the use of various cost, market, or income valuation methodologies applied to unobservable management estimates and assumptions. Management’s assumptions could vary depending on the asset or liability valued and the valuation method used. Such assumptions could include estimates of prices, earnings, costs, actions of market participants, market factors, or the weighting of various valuation methods. The Company may also engage external advisors to assist us in determining fair value, as appropriate.
- 11 -
E-WASTE CORP.
Notes to Condensed Consolidated Financial Statements
November 30, 2020 and 2019
Although the Company believes that the recorded fair value of our financial instruments is appropriate, these fair values may not be indicative of net realizable value or reflective of future fair values.
The Company’s financial instruments, including cash, accounts payable and accrued expenses, are carried at historical cost. At November 30, 2020 and February 29, 2020, respectively, the carrying amounts of these instruments approximated their fair values because of the short-term nature of these instruments.
ASC 825-10 “Financial Instruments” allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (“fair value option”). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding financial instruments.
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At November 30, 2020 and February 29, 2020, respectively, the Company did not have any cash equivalents.
Income Taxes
The Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of November 30, 2020 and February 29, 2020, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.
The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded for the three and nine months ended November 30, 2020 and 2019.
As of November 30, 2020, tax years 2016-2019 remain open for IRS audit.
Basic and Diluted Earnings (Loss) per Share
Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. At November 30, 2020 and 2019, the Company did not have any potential dilutive securities.
Related Parties
Parties are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.
- 12 -
E-WASTE CORP.
Notes to Condensed Consolidated Financial Statements
November 30, 2020 and 2019
Recent Accounting Standards
Changes to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof.
Management has considered all recent accounting pronouncements and believes that these recent pronouncements will not have a material effect on the company’s financial statements.
Note 3 – Notes Payable and Accrued Interest – Related Parties
The Company has two (2) outstanding notes payable to related parties.
The following represents a summary of the Company’s notes payable – related parties, key terms and outstanding balances at November 30, 2020 and February 29, 2020, respectively:
|
Terms |
|
Note Payable |
|
Note Payable |
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
Issuance date of note |
|
September 25, 2020 |
|
November 25, 2020 |
|
|
| |||
|
Term |
|
1 year |
|
1 year |
|
|
| |||
|
Maturity date |
|
September 25, 2021 |
|
November 25, 2021 |
|
|
| |||
|
Interest rate |
|
8% |
|
6% |
|
|
| |||
|
Collateral |
|
Unsecured |
|
Unsecured |
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
Note Date |
|
September 25, 2020 |
|
November 25, 2020 |
|
Total |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal |
|
$ |
255,000 |
|
$ |
150,000 |
|
$ |
405,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - February 29, 2020 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Proceeds |
|
|
255,000 |
|
|
150,000 |
|
|
405,000 |
|
|
Balance - November 30, 2020 |
|
$ |
255,000 |
|
$ |
150,000 |
|
$ |
405,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Interest Payable |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 25, 2020 |
|
November 25, 2020 |
|
Total |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - February 29, 2020 |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Interest expense |
|
|
3,689 |
|
|
124 |
|
|
3,813 |
|
|
Balance - November 30, 2020 |
|
$ |
3,689 |
|
$ |
124 |
|
$ |
3,813 |
|
Note 4 – Advances Payable – Former Related Party and Change in Control
The Company has received and repaid advances to a former related party that was its controlling stockholder.
On September 25, 2020, the Company paid this related party $252,750 in full settlement of the outstanding advances, and the related party simultaneously forgave the remaining debt in the amount of $194,701. Since the settlement occurred with a related party, the amount was credited to additional paid-in capital.
Additionally, on October 14, 2020, in a private transaction, the former controlling stockholder of the Company sold 6,000,000 shares of the Company’s common stock to a third party. As a result of the sale, and the simultaneous cancellation of 3,000,000 shares owned by another stockholder, there was a change in control of the Company.
- 13 -
E-WASTE CORP.
Notes to Condensed Consolidated Financial Statements
November 30, 2020 and 2019
The following represents a summary of the Company’s advances – former related party, key terms and outstanding balances at November 30, 2020 and February 29, 2020, respectively:
|
Terms |
|
Advances |
| |
|
|
|
|
|
|
|
Issuance date of advances |
|
Various |
| |
|
Term |
|
Due on demand |
| |
|
Interest rate |
|
0% |
| |
|
Collateral |
|
Unsecured |
| |
|
|
|
|
|
|
|
Balance - February 29, 2020 |
|
$ |
404,988 |
|
|
Advances |
|
|
42,463 |
|
|
Repayments |
|
|
(252,750 |
) |
|
Forgiveness of advances |
|
|
(194,701 |
) |
|
Balance - November 30, 2020 |
|
$ |
— |
|
Note 5 – Commitments
Operating Lease Agreement – Related Party
On September 25, 2020, the Company entered into a one-year operating lease with a significant stockholder for its office space at a monthly rate of $250. The lease agreement can be terminated by either party at any time, with 30 days written notice.
For the three months ended November 30, 2020 and 2019, the Company recorded rent expense of $500 and $0, respectively, which is included as a component of general and administrative expenses on the accompanying condensed consolidated statements of operations.
For the nine months ended November 30, 2020 and 2019, the Company recorded rent expense of $500 and $0, respectively, which is included as a component of general and administrative expenses on the accompanying condensed consolidated statements of operations.
Consulting Agreement – Related Party
On October 1, 2020, the Company entered into a one-year consulting agreement with an entity having an owner that is a significant stockholder. Services are for financial and strategic advice. The consultant is paid $2,500 per month over the term of the agreement. The consulting agreement can be terminated by either party at any time, with 30 days written notice.
For the three months ended November 30, 2020 and 2019, the Company recorded consulting fee expense of $5,000 and $0, respectively, which is included on the accompanying condensed consolidated statements of operations.
For the nine months ended November 30, 2020 and 2019, the Company recorded consulting fee expense of $5,000 and $0, respectively, which is included on the accompanying condensed consolidated statements of operations.
Note 6 – Stockholders’ Deficit
Equity Transactions During 2021
Stock Issued for Cash – Related Parties
During 2021, the Company issued 1,000,000 shares of common stock for an aggregate of $50,000 ($0.05/share).
Contribution of Capital – Former Related Party
During 2021, the former controlling stockholder of the Company contributed $2,500.
- 14 -
E-WASTE CORP.
Notes to Condensed Consolidated Financial Statements
November 30, 2020 and 2019
Note 7 – Subsequent Events
On December 1, 2020, the Company executed a one-year consulting agreement with a third party to provide consulting services including investor relations, analysis of potential merger candidates, social media development and other general financial services. The consulting agreement can be terminated by either party at any time, with 30 days written notice. The consultant will be paid $4,000 per month.
- 15 -
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein. You should carefully review the risks described herein and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
Basis of Presentation
The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles.
The audited financial statements for our fiscal year ended February 29, 2020, contained in our Annual Report, include a summary of our significant accounting policies and should be read in conjunction with the discussion below. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in these audited financial statements. All such adjustments are of a normal recurring nature.
All references in this Form 10-Q to the “Company,” “we,” “us,” or “our,” are to E-Waste Corp. and its consolidated subsidiary.
General Overview
We were organized in the State of Florida on January 26, 2012, to develop an e-waste recycling business. We were not successful in our efforts and discontinued that line of business. Since that time, we have been a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Going forward, we intend to seek, investigate and, if such investigation warrants, engage in a business combination with a private entity whose business presents an opportunity for our shareholders. No specific assets or businesses have been definitively identified and there is no certainty that any such assets or business will be identified or that any transactions will be consummated. See Part I, Item 1, “Business” and Part I, Item 1A, “Risk Factors,” in our Annual Report for the fiscal year ended February 29, 2020, filed with the SEC on June 15, 2020, for additional information and risks associated with our proposed business plan.
On November 29, 2016, we formed a wholly-owned Delaware subsidiary, in connection with our proposed reincorporation in the State of Delaware. The reincorporation was to be effected in anticipation of a potential business combination we were considering. The reincorporation did not occur, as we determined not to proceed with the proposed business combination.
During the next 12 months, we anticipate incurring costs related to filing of Exchange Act reports, and possible costs relating to consummating an acquisition or combination.
- 16 -
Recent Developments
On September 25, 2020, GEM Global Yield Fund LLC SCS (“GEM”), which was Company’s controlling stockholder, sold 6,000,000 shares of the Company’s common stock to Global Equity Limited (“Global”), for an aggregate purchase price of $30,000 (the “Share Sale Transaction”). The Shares purchased by Global represented 50% of the Company’s issued and outstanding shares of common stock as of the date of the closing of the Share Sale Transaction. Therefore, the Share Sale Transaction resulted in a change in control of the Company. In connection with the consummation of the Share Sale Transaction, Peter de Svastich, who was the Company’s sole officer and director resigned from all positions he held with the Company and John D. Rollo was appointed as the Company’s. President, Treasurer and Secretary, and the sole member of the Company’s board of directors.
In addition, on September 25, 2020, the Company received a loan of $255,000 from a related party (the “$255,000 Loan”). To evidence the $255,000 Loan, the Company issued a promissory note in the principal amount of $255,000 (the “Note”), with a maturity date of September 25, 2021. Interest on the Note accrues on the principal amount at the rate of eight percent (8%) per annum, and shall be paid on a quarterly basis, in the amount of $5,100 per quarter, on the following dates: December 25, 2020, March 25, 2021, June 25, 2021 and September 25, 2021. The Company may prepay any amounts due under the Note without penalty or premium.
The Company used the $255,000 Loan primarily to pay GEM $252,750 (the “Settlement Amount”) as full and complete payment, and in full satisfaction, of the total outstanding debt the Company owed to GEM. GEM had previously made advances to the Company in the aggregate amount of $447,451 to pay certain expenses of the Company (the “GEM Debt”). GEM discharged the Company from any further obligations it may have had to GEM to repay any remaining amounts of the GEM Debt, and the Company and GEM released each other from any claims they may have had against each other, with respect to the GEM Debt, or otherwise. The additional $2,250 of proceeds were used by the Company for working capital and general corporate purposes.
On October 14, 2020, the Company sold an aggregate of 1,000,000 shares of the Company’s common stock to two “accredited investors,” who were related parties, for gross cash proceeds of $50,000. The Company utilized the net proceeds from the sales for working capital and general corporate purposes.
In addition, on October 14, 2020, 3,000,000 shares of the Company’s common stock were cancelled and returned to the Company’s number of authorized and unissued shares of common stock.
On November 25, 2020, the Company received a loan of $150,000 from a related party (the “$150,000 Loan”). To evidence the $150,000 Loan, the Company issued a promissory note in the principal amount of $150,000 (the “Note”), with a maturity date of November 25, 2021. Interest on the Note accrues on the principal amount at the rate of six percent (6%) per annum, and shall be paid on a quarterly basis, in the amount of $2,250 per quarter, on the following dates: February 25, 2021, May 25, 2021, August 25, 2021 and November 25, 2021. The Company may prepay any amounts due under the Note without penalty or premium.
Results of Operations
Three-Month Period Ended November 30, 2020 Compared to Three-Month Period Ended November 30, 2019
Revenues and Other Income
During the three-month periods ended November 30, 2020 and 2019, we did not realize any revenues from operations.
Operating Expenses
Operating expenses, consisting primarily of general and administrative expenses (including professional fees) totaled $25,330 in the three-month period ended November 30, 2020, compared to $6,489 in the three-month period ended November 30, 2019, which consisted primarily of professional fees. The increase of $18,841, or 290.35%, was due to increase in legal fees related to the Company’s recent financing activities and entry into a consulting agreement.
Interest Expense
Interest expense increase by $3,813 to $3,813 for the three month period ended November 30, 2020 from $0 for the three month period ended November 30, 2019. The increase was primarily due to interest on certain Company loans.
- 17 -
Net Loss
As a result of the foregoing, we incurred a net loss of $29,143, or $0.00 per share, for the three months ended November 30, 2020, compared to a net loss of $6,489, or $0 per share, for the corresponding period ended November 30, 2019.
Nine-Month Period Ended November 30, 2020 Compared to Nine-Month Period Ended November 30, 2019
Revenues and Other Income
During the nine-month periods ended November 30, 2020 and 2019, we did not realize any revenues from operations.
Expenses
Operating expenses, consisting primarily of general and administrative expenses (including professional fees) totaled $54,139 in the nine-month period ended November 30, 2020, compared to $34,885 in the nine-month period ended November 30, 2019, which consisted primarily of ordinary operating expenses and professional fees. The increase of $19,254, or approximately 55.2%, was due to increase in legal fees related to the Company’s recent financing activities and entry into a consulting agreement.
Interest Expense
Interest expense increase by $3,813 to $3,813 for the nine month period ended November 30, 2020 from $0 for the nine month period ended November 30, 2019. The increase was primarily due to interest on certain Company loans.
Net Loss
As a result of the foregoing, we incurred a net loss of $57,952, or $0.00 per share, for the nine months ended November 30, 2020, compared to a net loss of $34,885, or $0.00 per share, for the corresponding period ended November 30, 2019.
Liquidity and Capital Resources
As of the date of this report, we had yet to generate any revenues from our business operations.
On September 25, 2020, the Company received the $255,000 Loan from a related party, the majority of which was used to pay GEM the $252,750 Settlement Amount in full satisfaction of the $447,451 GEM Debt. The remaining $2,250 of proceeds were used by the Company for working capital and general corporate purposes. The Company plans to utilize the net proceeds from the sales for working capital and general corporate purposes. On November 25, 2020, the Company received the $150,000 Loan from a related party. As a result, of November 30, 2020, the total amount of loans made to us by related parties was $405,000 in principal amount.
On October 14, 2020, the Company sold 1,000,000 shares of its common stock to two “accredited investors” for cash proceeds of $50,000.
As of November 30, 2020, we had $182,999 in cash, we had liabilities of $412,392, and our working capital deficit was $229,393. We anticipate that our current liquidity is not sufficient to meet the obligations associated with being a company that is fully reporting with the SEC.
To date, we have managed to keep our monthly cash flow requirement low for two reasons. First, our sole officer has not drawn a significant salary. Second, we have been able to keep our operating expenses to a minimum by operating in space provided at no or minimal expense by related parties.
We currently have no external sources of liquidity such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.
Our sole director and officer has made no commitments written or oral, with respect to providing a source of liquidity in the form of cash advances, loans and/or financial guarantees.
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We expect that we will need to raise funds in order to effectuate our business plan. We anticipate that we will need to seek financing through means such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise such funds. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to seek a buyer for our business or another entity with which we could create a joint venture. If all of these alternatives fail, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.
We have a history of operating losses and negative cash flow. These conditions raise substantial doubt about our ability to meet all of our obligations over the twelve months following the filing of this Form 10-Q. Management has evaluated these conditions and concluded that current plans will alleviate this concern. We currently have debt obligations to related parties in the total amount of $408,813, consisting of $405,000 in principal amount and $3,813 in accrued interest.
Our ability to continue as a going concern is dependent on our ability to implement our business plan, raise capital and generate revenues.
Cash Flows from Operating Activities
For the nine months ended November 30, 2020, net cash used in operating activities was $64,214, as compared to net cash used in operating activities of $34,885 for the nine months ended November 30, 2019.
Cash Flows from Investing Activities
The Company did not use any funds for investing activities during the nine-month periods ended November 30, 2020 and 2019.
Cash Flows from Financing Activities
For the nine months ended November 30, 2020, net cash provided by financing activities was $247,213. We had no cash provided by financing activities for the nine months ended November 30, 2019.
Going Concern
These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.
As reflected in the accompanying unaudited consolidated financial statements, for the nine months ended November 30, 2020, the Company had:
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Net loss of $57,952; and |
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Net cash used in operations was $64,214. |
Additionally, at November 30, 2020, the Company had:
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Accumulated deficit of $520,359; |
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Stockholders’ deficit of $229,393; and |
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Working capital deficit of $229,393. |
The Company has cash on hand of $182,999 at November 30, 2020. Although the Company intends to raise additional debt or equity capital, the Company expects to continue to incur significant losses from operations and have negative cash flows from operating activities for the near-term. These losses could be significant as the Company seeks a merger candidate. The Company will have continuing expenses related to compensation, professional fees, and regulatory.
The Company has incurred significant losses since its inception and has not demonstrated an ability to generate sufficient revenues from the sales of its products and services to achieve profitable operations. There can be no assurance that profitable operations will ever be achieved, or if achieved, could be sustained on a continuing basis. In making this assessment we performed a comprehensive analysis of our current circumstances including: our financial position, our cash flows and cash usage forecasts for the nine months ending November 30, 2020, and our current capital structure including equity-based instruments and our obligations and debts.
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During the nine months ended November 30, 2020, the Company has satisfied its obligations from the issuance of related party notes ($405,000), receipt of related party advances ($42,463) and the sale of common stock to related parties ($50,000); however, there is no assurance that such successful efforts will continue during the twelve months subsequent to the date these condensed consolidated financial statements are issued.
If the Company does not obtain additional capital, the Company will be required to reduce the scope of its business development activities or cease operations. The Company continues to explore obtaining additional capital financing and the Company is closely monitoring its cash balances, cash needs, and expense levels.
These factors create substantial doubt about the Company’s ability to continue as a going concern within the twelve-month period subsequent to the date that these consolidated financial statements are issued. The condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
Management’s strategic plans include the following:
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Pursuing additional capital raising opportunities; |
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Seeking an acquisition or merger candidate; and |
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Identifying unique market opportunities that represent potential positive short-term cash flow. |
Critical Accounting Policies and Estimates
Our financial statements and accompanying notes have been prepared in accordance with GAAP applied on a consistent basis. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company 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.
Off-Balance Sheet Arrangements
We have never entered into any off-balance sheet financing arrangements and have not formed any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure.
Our management has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, management has concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting identified in connection with the evaluation we conducted on the effectiveness of our internal control over financial reporting as of November 30, 2020, that occurred during our third fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Other than as previously reported in our Current Reports on Form 8-K, or prior periodic reports, we did not sell any unregistered securities during the three-month period ended November 30, 2020, or subsequent period through the date hereof.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
As of October 1, 2020, John D. Rollo, the Company’s sole officer and director, began receiving monthly payments of $500 per month. As of January 1, 2021, the monthly payments to Mr. Rollo increased to $1,000 per month.
On October 1, 2020, the Company entered into a one-year consulting agreement with an entity having an owner that is a related party. Services are for financial and strategic advice. The consultant is paid $2,500 per month over the term of the agreement. The consulting agreement can be terminated by either party at any time, with 30 days written notice.
On November 25, 2020, the Company received the $150,000 loan from a related party. To evidence the $150,000 Loan, the Company issued a Note in the principal amount of $150,000, with a maturity date of November 25, 2021. Interest on the Note accrues on the principal amount at the rate of six percent (6%) per annum, and shall be paid on a quarterly basis, in the amount of $2,250 per quarter, on the following dates: February 25, 2021, May 25, 2021, August 25, 2021 and November 25, 2021. The Company may prepay any amounts due under the Note without penalty or premium.
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On December 1, 2020, the Company entered into a one-year consulting agreement with a consultant. Services are for financial and strategic advice. The consultant is paid $4,000 per month over the term of the agreement. The consulting agreement can be terminated by either party at any time, with 30 days written notice.
ITEM 6. EXHIBITS
In reviewing the agreements included as exhibits to this Form 10-Q, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:
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should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; |
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have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; |
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may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and |
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were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
The following exhibits are included as part of this report:
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Exhibit No. |
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Description |
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4.1 |
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10.1 |
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Consulting Agreement with Tryon Capital, LLC, dated September 25, 2020 |
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10.2 |
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Consulting Agreement with Benzions LLC, dated December 1, 2020 |
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31.1 / 31.2 |
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32.1 / 32.2 |
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Rule 1350 Certification of Chief Executive and Financial and Accounting Officer |
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101.INS |
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XBRL Instance Document |
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101.SCH |
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XBRL Schema Document |
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101.CAL |
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XBRL Calculation Linkbase Document |
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101.DEF |
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XBRL Definition Linkbase Document |
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101.LAB |
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XBRL Label Linkbase Document |
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101.PRE |
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XBRL Presentation Linkbase Document |
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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.
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E-WASTE CORP. |
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Dated: January 8, 2021 |
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/s/ John D. Rollo |
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Name: |
John D. Rollo |
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Title: |
President, Treasurer and Secretary (Principal Executive Officer and Principal Financial and Accounting Officer) |
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