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| As of January 31, 2025 | As of January 31, 2024 | |||||||
| Non-current deferred tax assets: | ||||||||
| Net operating loss carryforward | $ | $ | ||||||
| Tax rate | % | % | ||||||
| Deferred tax asset | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | - | $ | - | ||||
The Company is currently in the process of gathering the information necessary for filing tax returns for past years, due to the Company’s lack of profitability since inception management does not believe that there is any income tax liability for past years.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-looking statements
Statements made in this Form 10-Q that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 (the “Act”) and Section 21E of the Securities Exchange Act of 1934. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Financial information contained in this report and in our financial statements is stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
Description of Business
Overview
NAPC Defense, Inc. (Formerly Treasure & Shipwreck Recovery, Inc (the “Company”), was incorporated in the State of Nevada on January 24, 2016 as Beliss Corp. The Company changed its name to Treasure & Shipwreck Recovery Inc. on June 26, 2019. The Company is in the colonial era treasure shipwreck recovery business operating salvage crews on the east coast of Florida. On April 1, 2024, the Company changed its name to NAPC Defense, Inc. with the State of Nevada, for an additional direction in the military arms and law enforcement field.
Corporate History
The Company will produce and supply CornerShot units under license from Silver Shadow of Israel, to both overseas military and governments as allowed by the US Government, and sales to US based law enforcement agencies. As well the Company intends and has direct lines of sourcing personal ballistics protection for personnel, such as helmets, bullet resistant vests and shields for overseas sale and domestic sale to US entities. In addition, the Company will use contacts and sources for the sale of small caliber arms in form of rifles and pistols including newly developing technologies and products for overseas and domestic sales. Other areas of brokering existing contacts from overseas of larger scale ammunition and artillery from overseas sources is being followed from known sources of supply for brokered sales to US approved allies and other countries. The brokering of armored vehicles for domestic purchase and overseas sales is also being pursued.
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By March 2024, the board determined and entered into an acquisition agreement for the acquisition of the rights, intellectual property, and associated contracts, letters of intent, and assets from Native American Pride Constructors, LLC for acquisition of certain rights to sale and production of the CornerShot firearms and surveillance technology, owned by Silver Shadow of Israel and licensed to Native American Pride Constructors LLC (Native American), and other associated leads and rights into the defense industry, including munitions brokering overseas under United Stated State Department Approval for artillery, rocket, and other munitions sales from off shore sources to U.S. approved allies and other countries. Native American held rights to a number of ATF licenses for sale and production of arms, was a party to a transaction for potential contract and sale of the Cornershot to Saudi Arabia and for sale in the US, and held large access to broker munitions under US approval overseas, from foreign sourced to US Allies and approved countries.
In addition, other defense lines of technology development including small arms, suppressor technology development business, and other items of opportunity held by Native American Pride Constructors LLC, the board determined that an acquisition agreement of such rights was in the best interest of the Company to pursue as an additional business direction while maintaining its treasure related business. Such agreement was reached on March 26, 2024, however, was subject to further diligence and verification of the list of acquired rights and business plans with a close out date of May 1, 2024 and sign off by NAPC Defense, Inc./BLIS by the CEO for release of the consideration to be made for the purchase of such rights. The board concluded that the addition of this business direction was in the best interest of the Company, regardless of the specific acquisition transaction closing. Pursuant to the March 26, 2024 agreement such acquisition of rights was made for 95,000,000 shares of common stock to be distributed upon approval by NAPC Defense, Inc../BLIS to enumerated parties at such time being May 1, 2024 or after. Such shares were not to be distributed to Native American upon release, so there was no change in control to Native American. There was an acquisition of such rights, intellectual property, sales leads, letters of intent, contract rights and leads, and other matters set forth in such agreement to gain the rights from Native American Pride and change the Company’s name to its new defense line of work to NAPC Defense, Inc. but still maintain the treasure business on a more limited basis.
Such shares were subject to release by the Company upon approval of the business lines, by the then current but now former CEO and Director. Such shares did not cause a change in ownership control by any majority shareholder and have been under the rights as set forth in the acquisition agreement. The matters of diligence to be completed for the acquisition completion were as follows:
Items acquired for NAPC Defense, Inc. on acquisition made, including
| ● | CornerShot rights for sale, domestically and through Saudi Arabia as existing with Silver Shadow of Israel, including the LOI for the CornerShot sale for Saudi Arabia from the Ministry of Defense, which is expected, for an expected order and contract for some 37,000 units of the CornerShot firearms and tactical units to Saudi Arabia as held by Native American Pride for the Silver Shadow of Israel, amount owed for Saudi Arabian payment potential under a contract if transacted. Such rights include the ability to contract and utilize the ATF licenses held for production and sale of firearms and accessories related to such technology under contract with NAPC Defense, Inc./BLIS, and existing approvals from the Department of State for foreign arms transactions, an existing or expected approval for firearms under approval from the Saudi Government. As well this includes the existing relationship with the Saudi Ministry of Defense for interest in the CornerShot purchase, including the relationship and visits expected for closing of such contract. Rights to the proceeds from the joint venture in Saudi Arabia for such introductions and potential future sales, visit to occur in Saudi Arabia, and domestic US sales potentials, including domestic law enforcement shows, conventions and US Military demonstration. |
| ● | In addition, the ability and agreements to produce the CornerShot domestically in the United States which includes a current plastics manufacturer relationship and metals production relationship, both to be contracted, for such units of the CornerShot to be produced for all contracts or purchase orders which could be achieved. The Company attended various industry and networking conventions and conferences in Florida in June 2024, in New Jersey in June 2024 and the visit to Saudi Arabia in the summer of 2024. |
| ● | Rights as existing to the CornerShot from Silver Shadow of Israel. To include the foreign sales to Saudi Arabia created by persons related to Native American, as well as domestic sales to law enforcement or government agencies in the United States. To include all media, CornerShot units, additional show and demonstration units, videos, and other rights. |
| ● | Overseas brokering opportunities of ammunition sales to US Allies, with State Dept. the DDTC (Directorate of Defense Trade Controls, a government agency within the United States Department of State) as a registered broker the ability to request pre-brokering approval. This includes the sources and leads existing to large scale munitions inventories from third parties, including those on a revolving list that is held by parties which are available overseas for sale, to approved countries and end users. This includes all contacts and relations to overseas producers, holders, and potential purchasers of large-scale munitions sales for such areas as Allied and US military or foreign add to Ukraine. These leads and brokering needed confirmation as to available inventories from owners overseas by the Company through relations created with the new operations. The amounts and the available rolling catalogues of available munitions and sources were subject to review and approval for final distribution. The verification was to be made as of or after May 1, 2024, through the former CEO with his experience and knowledge. |
| ● | Verification for ability to design, manufacture and sell new items and lines of firearms and accessories to include but not be limited to rifles, small arms, ammunition, and accessories. the Company had additional information and contacts and will use the abilities of production and sales under the Native American Pride permits to conduct such study of new technologies, firearms, production, prototyping knowledge, and sales rights as necessary. |
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Thus on April 1, 2024 there was the change in officers and directors, which was made for an additional new segment of the Company into the defense and law enforcement business. Pursuant to the Board of Directors resolution there was no change in control of the Issuer to any party. The change in officers and directors was made to include the following for the change in the main direction of the Company: The Agreement was entered into without abandoning the treasure and recovery business, while the board made a change in officers and directors. There was no change in control of the Company.
Thus, pursuant to the Board of Directors intent for the new addition of a business line for defense, it was decided and concluded that as of April 1, 2024, Craig A. Huffman, Patrick Scheider, and Frederick Conte, resigned as officer and directors, with Craig A. Huffman to continue as Secretary and Chief Legal Officer for the Corporation while overseeing and approval of the acquisition, overseeing corporate compliance, contracting and numerous other matters on a continuing basis. The board appointed Edward K. West as Director and Chief Executive Officer, Evelyn R. Gurba as director, Derrick West as director, and John Spence as director and Chief Financial Officer.
As of April 1, 2024, the Company determined the new business priority would best be reflected by a change in the name to NAPC Defense, which was reflected by a change of the corporate name in the State of Nevada to NAPC Defense, Inc.
Results of operations
We have incurred recurring losses to date. At January 31, 2025, the Company’s had a working capital deficit of 1,035,381, which indicates that it is not able to cover its current liabilities with its current assets. These matters raise substantial doubt about the Company’s ability to continue as a going concern; however, the accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
We will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities. However, there can be no assurances that we will be able to raise additional capital. Based on its historical rate of expenditures, the Company expects to expend its available cash in less than one month from March 24, 2025.
Summary of the Nine Months Ended January 31, 2025 Results of Operations Compared to the Nine Months Ended January 31, 2024 Results of Operations
Revenue
The Company generated $67,467 in revenue during the nine month period ended January 31, 2025 and $0 revenue during the nine month period ended January 31, 2024. The Company has determined that the revenue generated during the nine month period ended is uncollectible.
Operating Expenses
Operating expenses were $788,727 during the nine month period ended January 31, 2025 versus $462,726 during the nine month period ended January 31, 2024, a year-over-year increase of approximately 70 %. The Company incurred boat expenses of $5,675 during the nine month period ended January 31, 2025 as compared to boat expenses of $98,500 during the nine month period ended January 31, 2024, a decrease of approximately 94%. Professional fees were $18,354 in 2025 versus $14,300 in 2024, an increase of 28%. Consulting and accounting fees were $226,820 during the nine month period ended January 31, 2025 and $205,684 during the nine month period ended January 31, 2024, an increase of 10%. During the nine month period ended January 31, 2025 general and administrative expenses were $250,162, during the nine month period ended January 31, 2024 they were $31,343, an increase of approximately 698 %. Legal fees were $43,750 during the nine month period ended January 31, 2025 versus $16,390 during the nine month period ended January 31, 2024, a year-over-year increase of approximately 167%. There were $418 in labor expenses during the nine month period ended January 31, 2025 versus $73,992 during the nine month period ended January 31, 2024. The decrease in labor expense is attributable to decreased exploration during the nine month period ended January 31, 2025. Rent expenses were $230,000 in 2025 versus $9,600 during the nine month period ended January 31, 2024, an increase of $220,400. Rent expenses increased due to the Company leasing a commercial office and warehouse facility. Depreciation expenses were $3,436 during the nine month period ended January 31, 2025 and $8,611 during the nine month period ended January 31, 2024. Operating expenses increased during the nine month period ended January 31, 2025 as the Company began new ventures during its fiscal year starting May 1, 2024.
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Other Income (Expense)
Interest expense was $65,073 during the nine month period ended January 31, 2025 and $44,988 during the nine month period ended January 31, 2024, an increase of 45%. The Company’s other income (expense) for the nine months ended January 31, 2025 also included losses from extinguishment of debt ($123,653), bad debt expense ($67,467), impairment of assets ($140,296), amortization of debt discounts ($134,197), and financing fees ($277,050).
Net Loss
For the nine month period ended January 31, 2025 the Company incurred net losses of $1,528,996 versus net losses of $507,714 for the nine month period ended January 31, 2024, a year-over-year increase of approximately 201 %.
Summary of the Three Months Ended January 31, 2025 Results of Operations Compared to the Three Months Ended January 31, 2024 Results of Operations
Revenue
The Company did not generate any revenue during the three month periods ended January 31, 2025 and 2024.
Operating Expenses
Operating expenses were $259,498 during the three month period ended January 31, 2025 versus $74,865 during the three month period ended January 31, 2024, a year-over-year increase of approximately 247 %. The Company incurred professional fees were $3,183 in 2025 versus $12,237 in 2024, a decrease of 74%. Consulting and accounting fees were $95,574 during the three month period ended January 31, 2025 and $50,222 during the three month period ended January 31, 2024, an increase of 90%. During the three month period ended January 31, 2025 general and administrative expenses were $71,632 and during the three month period ended January 31, 2024 they were $625, an increase of $71,007. Rent expenses were $75,000 during the three month period ended January 31, 2025 and $0 during the three month period ended January 31, 2024. Rent expenses increased due to the Company leasing a commercial office and warehouse facility. Legal fees were $8,100 during the three month period ended January 31, 2025 and $2,175 during the three month period ended January 31, 2024, a year-over-year increase of approximately 272%. Operating expenses increased during the three month period ended January 31, 2025 because the Company was transitioning into new ventures.
Other Income (Expense)
Interest expense was $23,701 during the three month period ended January 31, 2025 and $12,881 during the three month period ended January 31, 2024, an increase of 84%. The increase in interest expense during the three month period ended January 31, 2025 was a result of the issuance of new convertible notes. The Company’s other income (expense) for the three months ended January 31, 2025 also included finance fees ($277,050 ) and amortization of debt discount ($78,963).
Net Loss
For the three month period ended January 31, 2025 the Company incurred net losses of $639,212 versus net losses of $87,746 for the three month period ended January 31, 2024, a year-over-year increase of $551,466.
Liquidity and capital resources
As of January 31, 2025, our total assets were $1,631,686.
As of January 31, 2025, our current assets were $15,686, our current liabilities were $1,051,067 and Stockholders’ equity was $580,569.
As of January 31, 2025 we had a net capital working deficit of $1,035,381.
Cash flows from operating activities
For the nine months ended January 31, 2025 net cash flows used in operating activities was $639,609.
For the nine months ended January 31, 2024 net cash flows used in operating activities was $380,148.
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Cash flows from financing activities
For the nine months ended January 31, 2025 we have generated $655,295 in cash flows from financing activities.
For the nine months ended January 31, 2024 we have generated $173,426 in cash flows from financing activities.
We qualify as a “smaller reporting company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.
For example, smaller reporting companies are not required to provide a compensation discussion and analysis under Item 402(b) of Regulation S-K or the auditor attestation of internal controls over financial reporting.
Future Financings
We will continue to rely on equity sales of the Company’s common shares in order to continue to fund business operations. Issuances of additional shares will result in dilution to existing shareholders. There is no assurance that the Company will achieve any additional sales of equity securities or arrange for debt or other financing to fund planned operations.
Liquidity and Capital Resources and Cash Requirements
As of the date of this report, the current funds available to the Company will not be sufficient to continue maintaining a reporting status. At January 31, 2025, the Company had a working capital deficit of $1,035,381. The Company is in immediate need of further working capital and is seeking options, with respect to financing, in the form of debt, equity or a combination thereof. Based on its historical rate of expenditures, the Company expects to expend its available cash in less than one month from March 24, 2025.
The Company may not be able to continue as a going concern. The report of our independent auditors for the years ended April 30, 2024 and 2023 raises substantial doubt as to our ability to continue as a going concern. If the Company is not able to continue as a going concern, it is highly likely that all capital invested in the Company will be lost.
Management believes that current trends toward lower capital investment in start-up companies pose the most significant challenge to the Company’s success over the next year and in future years. Additionally, the Company will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. The Company’s management will have to spend additional time on policies and procedures to make sure it is compliant with various regulatory requirements, especially that of Section 404 of the Sarbanes-Oxley Act of 2002. This additional corporate governance time required of management could limit the amount of time management has to implement its business plan and impede the speed of its operations.
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
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None
ITEM 4. CONTROLS AND PROCEDURES
Management’s Responsibility for Controls and Procedures
The Company’s management is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting. The Company’s controls over financial reporting are designed under the supervision of the Company’s President and Principal Financial Officer to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our President and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, as of January 31, 2025. Based on this evaluation, management concluded that our financial disclosure controls and procedures were not effective so as to timely record, process, summarize and report financial information required to be included on our Securities and Exchange Commission (“SEC”) reports due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. However, as a result of our evaluation and review process, management believes that the financial statements and other information presented herewith are materially correct.
Internal Control Over Financial Reporting
As of January 31, 2025, under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of the design and operations of our internal control over financial reporting, as defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 and based on the criteria for effective internal control described in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (as revised). Based on our evaluation, management concluded that our internal control over financial reporting was not effective so as to timely record, process, summarize and report financial information required to be included on our Securities and Exchange Commission (“SEC”) reports due to the Company’s limited internal resources and lack of ability to have multiple levels of transaction review. However, as a result of our evaluation and review process, management believes that the financial statements and other information presented herewith are materially correct.
The management including its Principal Executive Officer/Principal Financial Officer, does not expect that its disclosure controls and procedures, or its internal controls over financial reporting will prevent all error and all fraud. A control system no matter how well conceived and operated, can provide only reasonable not absolute assurance that the objectives of the control system are met. Further, the design of the control system must reflect the fact that there are resource constraints, and the benefit of controls must be considered relative to their costs.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.
The Company has limited resources and as a result, a material weakness in financial reporting currently exists, because of our limited resources and personnel, including those described below.
| * | The Company has an insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis. |
| * | We have not achieved the optimal level of segregation of duties relative to key financial reporting functions. |
| * | We do not have an audit committee or an independent audit committee financial expert. While not being legally obligated to have an audit committee or independent audit committee financial expert, it is managements view that to have an audit committee, comprised of independent board members, and an independent audit committee financial expert is an important entity-level control over the Company’s financial statements. |
A material weakness is a deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) auditing standard 5) or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that a material weakness exists due to a lack of segregation of duties, resulting from the Company’s limited resources and personnel.
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Remediation Efforts to Address Deficiencies in Internal Control Over Financial Reporting
As a result of these findings, management, upon obtaining sufficient capital and operations, intends to take practical, cost-effective steps in implementing internal controls, including the possible remedial measures set forth below. As of January 31, 2025, we did not have sufficient capital and/or operations to implement any of the remedial measures described below.
| * | Assessing the current duties of existing personnel and consultants, assigning additional duties to existing personnel and consultants, and, in a cost effective manner, potentially hiring additional personnel to assist with the preparation of the Company’s financial statements to allow for proper segregation of duties, as well as additional resources for control documentation. |
| * | Assessing the duties of the existing officers of the Company and, in a cost effective manner, possibly promote or hire additional personnel to diversify duties and responsibilities of such executive officers. |
| * | Board to review and make recommendations to shareholders concerning the composition of the Board of Directors, with particular focus on issues of independence. The Board of Directors will consider nominating an audit committee and audit committee financial expert, which may or may not consist of independent members. |
| * | Interviewing and potentially hiring outside consultants that are experts in designing internal controls over financial reporting based on criteria established in Internal Control Integrated Framework issued by Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (as revised). |
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.
(b) Change in Internal Control Over Financial Reporting
The Company has not made any change in our internal control over financial reporting during the nine month period ended January 31, 2025.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not presently involved in any litigation nor is it aware of any pending or threatened litigation against us of a material nature.
In May of 2023, NAPC Defense, Inc. was sued in county court over a contract by the firm of Delmar which contends that NAPC Defense, Inc. NAPC Defense, Inc. did not follow through on a contract for their services related to its regulation A offering in 2022. The Company has defended and is defending such on the basis that Del Mar never performed on its obligations and therefore was discharged on the contract. Such matter is pending motions by NAPC Defense, Inc. in the county court. Such lawsuit is seeking $20,000 by Delmar. As of January 31, 2024, the suit was pending dismissal for lack of prosecution.
ITEM 1A. RISK FACTORS
Not required.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the nine month period ended January 31, 2025 the Company entered into subscription agreements to sell 2,892,857 shares of its restricted common stock in exchange for proceeds of $81,000. The proceeds received were used for general corporate purposes, working capital and repayment of some debt.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
The following exhibits are included as part of this report by reference:
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: March 26, 2025 | By: | /s/ Edward K.West |
| Edward
K. West Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer ) | ||
| Date: March 26, 2025 | By: | /s/ John Spence |
| John
Spence Chief Financial Officer Director | ||
| Date: March 26, 2025 | By: | /s/ Craig A Huffman |
| Craig
A. Huffman Chief Legal Officer, Principal Financial Officer, Secretary | ||
| Date: March 26, 2025 | By: | /s/ Evelyn R. Gurba |
| Director | ||
| Date: March 26, 2025 | By: | /s/ Derrick West |
| Director |
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