AWCA 10-Q
Awaysis Capital, Inc. (AWCA)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period
ended
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:
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction | (I.R.S. Employer | |
| of Incorporation or Organization) | Identification No.) |
(Address Including Zip Code of Registrant’s Principal Executive Offices)
(Registrant’s Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | 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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of February 25, 2025, there were shares of common stock, par value $ per share, outstanding.
TABLE OF CONTENTS
| 2 |
PART I
Item 1. Financial Statements
Awaysis Capital, Inc.
Consolidated Balance Sheet
| December 31, 2024 | June 30, 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Prepaid expenses | ||||||||
| Inventory | ||||||||
| Due from related parties | ||||||||
| Due from booking agents | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Fixed assets, net | ||||||||
| Mortgage note receivable | ||||||||
| Operating lease right-of-use asset | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | ||||||||
| Other current liabilities | ||||||||
| Current portion of lease liability | ||||||||
| Due to related parties | $ | |||||||
| Convertible note payable – related party | ||||||||
| Line of credit payable – related party | ||||||||
| Notes payable | ||||||||
| Total current liabilities | $ | $ | ||||||
| Operating lease liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock - shares authorized $ par value issued and outstanding at December 31, 2024 and June 30, 2024, respectively | ||||||||
| Common stock – shares authorized $ par value; issued and outstanding common shares at December 31, 2024 and June 30, 2024 were and , respectively | ||||||||
| Common stock subscribed – $ par value subscribed common shares at December 31, 2024 and June 30, 2024 were and , respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total Liabilities and Stockholders Equity | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Awaysis Capital, Inc.
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (income) expense | ||||||||||||||||
| Other (income) expense | ( | ) | ||||||||||||||
| Interest expense | ||||||||||||||||
| Total other expense | ||||||||||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted per common share amounts: | ||||||||||||||||
| Basic and diluted net loss | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| (basic and diluted) | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Awaysis Capital, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
| Common | Common | Additional | Total | |||||||||||||||||||||||||
| Common | Stock Par | Stock | Subscription | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||
| Stock Shares | Value | Subscribed | Receivable | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | | |||||||||||||||||
| Retrospective adjustment from adoption of ASU 2020-06 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net income adjustment due to adoption of ASU 2020-06 | ||||||||||||||||||||||||||||
| Adjusted Balance, June 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Shares issued for professional services | ||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
| Shares issued for professional services | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, Sept 30, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
| Shares issued at par $ | ||||||||||||||||||||||||||||
| Shares issued for professional services | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Awaysis Capital, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| For the six months Ended | ||||||||
| December 31, 2024 | December 31, 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | $ | |||||||
| Interest expense | ||||||||
| Stock based compensation | $ | |||||||
| Amortization of operating lease right-of-use | $ | |||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) in accounts receivable | $ | ( | ) | |||||
| (Increase) in prepaid expenses | $ | ( | ) | ( | ) | |||
| (Increase) decrease in inventory | $ | ( | ) | ( | ) | |||
| (Increase) decrease in other current assets | $ | ( | ) | |||||
| (Increase) decrease in escrow deposit- real estate | $ | ( | ) | |||||
| (Increase) decrease in mortgage receivable | $ | ( | ) | |||||
| Increase (decrease) in due to related party | $ | |||||||
| Increase (decrease) in accounts payable | $ | |||||||
| Increase (decrease) in other current liability | $ | |||||||
| Increase (decrease) in accrued expenses | $ | ( | ) | |||||
| (Decrease) in operating lease liabilities | $ | ( | ) | ( | ) | |||
| Net cash provided (used) by operating activities | $ | ( | ) | ( | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of fixed assets | $ | ( | ) | |||||
| Sale of fixed assets | $ | |||||||
| Net cash used in investing activities | $ | ( | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Increase in related party notes payable | $ | |||||||
| Payment of note payable | $ | ( | ) | |||||
| Net proceeds from sale of equity | ||||||||
| Net cash provided by financing activities | $ | |||||||
| Net (decrease) in cash | $ | ( | ) | |||||
| Cash - beginning of year | $ | |||||||
| Cash - end of year | $ | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Awaysis Capital, Inc.
Notes to the Consolidated Financial Statements
1. NATURE OF OPERATIONS
Nature of Business
Awaysis Capital, Inc. (the “Company”, “we”, “us” or “our’) is a real estate management and hospitality company focused on acquisition, redevelopment, sales, and managing rentals of residential vacation home communities in desirable travel destinations. We seek to create value through the targeting and acquisition, development, and up-cycling, rebranding, and repositioning of currently undervalued operating and shovel ready residential/resort communities in global travel destinations, with the intention to relaunch these assets under the “Awaysis” brand with the goals of creating a network of residential and resort enclave communities that will optimize both sales and rental revenues, providing attractive returns to owners and exceptional vacation experiences to travelers.
Increased global trends towards “work from home” opportunities has impacted both residency and travel. We believe that more people are seeking comfortable and convenient places to travel, visit, and live for extended durations. We seek to capitalize on these trends by transforming residential/resort properties in desirable locations into convenient enclaves that facilitate this type of travel or residency. We define an enclave as a gated community that has all the amenities that will allow a person to live, work and play without having to leave the community.
The Company seeks to own, grow and manage a stable, cash generating, diversified portfolio of single-family and luxury resort/residence properties in the Caribbean, Europe, South America, and the United States.
We are a licensed real estate corporation in the State of Florida and maintain compliance with the Florida Real Estate Commission, the entity that regulates companies providing real estate services such as rentals, management, and sales. Additionally, our business is subject to federal, state, local and foreign laws, rules, and regulations that may vary depending on the geographical location and classification of our individual properties. Hospitality operations are also subject to compliance with the U.S. Americans with Disabilities Act and other laws and regulations relating to accessibility, and to laws, regulations and standards in other areas such as zoning and land use, licensing, permitting and registrations, safety, environmental and other property condition matters, staffing and employee training, and cleanliness/sanitation protocols.
Our
business strategy entails targeting and identifying undervalued assets in emerging markets located in proximity to high demand travel
destinations. The Company intends to focus these efforts on shovel-ready properties and/or other assets that we believe can be used to
optimize sales and rental revenues. We have currently identified five properties in Belize, all of which are expected to constitute our
initial real estate portfolio. To that effect, on June 30, 2022, we closed on the acquisition of certain real estate assets in San Pedro,
Belize (the “Casamora Awaysis Assets”), pursuant to our previously announced series of Agreements of Purchase and Sale, all
dated April 15, 2022. The total consideration paid by us for the properties subject to the agreements was at the appraisal value of $
Acquisition of Chial Mountain
On
December 31, 2024, Awaysis Belize Ltd., a Belize corporation and wholly-owned subsidiary of the Company, or Awaysis Belize, acquired
all of the stock and substantially all of the assets of Chial Mountain Ltd., a Belize corporation, or Chial Mountain, pursuant to
the terms and conditions of an Agreement of Purchase and Sale, dated December 31, 2024 and effective December 20, 2024, between
Chial Mountain and Awaysis Belize. Simultaneously, Awaysis Capital acquired
Pursuant
to the terms of the Asset Purchase Agreement, Awaysis Belize acquired all outstanding shares of Chial Mountain and concurrently acquired
substantially all of the assets of Chial Mountain on an “as is, where is” basis, including, but not limited to: (i) all tangible
and intangible property of Chial Mountain; and (ii) certain real property located in the Cayo District of Belize, aggregating over
The
aggregate estimated purchase price of the Chial Reserve Assets is $
The senior convertible promissory note is convertible at the option of Mr. Singh into shares of the Company’s Common Stock at a conversion price equal to the closing price of the Company’s Common Stock on the trading day immediately prior to Mr. Singh’s delivery of a notice of conversion, as set forth therein.
Company History
The Company was formed in Delaware on September 29, 2008 under the name ASPI, Inc.
On May 18, 2022, the Company changed its name from JV Group, Inc. to Awaysis Capital, Inc. In connection with this name change, we changed our ticker symbol from “ASZP” to “AWCA” and effective May 25, 2022, we began trading on the OTC Market under our new symbol.
In December 2021, we formed a wholly owned subsidiary, Awaysis Capital, LLC, a Florida single member limited liability corporation to hold the office lease and to become the master payroll company for Awaysis Capital, Inc.
We also formed a wholly owned subsidiary, Awaysis Casamora Limited, a Belize single member limited liability corporation to hold the title to the acquisition of the Casamora assets.
From October 2015 to February 2022, we were a publicly quoted shell company seeking to merge with an entity with experienced management and opportunities for growth in return for shares of our common stock to create values for our shareholders. In February 2022, the Board of Directors of the Company determined to pursue a business strategy of acquiring, developing and managing residential vacation home communities in desirable travel destinations.
In September 2024, our Board of Directors and holders of a majority of our outstanding voting securities, approved of a reverse split of up to 1-for-20 of our issued and outstanding shares of common stock (the “Reverse Split”) and authorized our Co-CEOs, in their sole discretion, to determine the final ratio and effective date. We have not yet determined the final ratio or the effective date for the Reverse Split, nor will we commence the Reverse Split unless and until we deem it appropriate.
The Company’s principal executive office is located at 3400 Lakeside Drive, Suite 100, Miramar, FL 33027 and its main number is 855-795-3377. The Company’s website address is www.awaysisgroup.com. The information contained on, or that can be accessed through, our website is not incorporated by reference and is not a part of this Quarterly Report on Form 10-Q.
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2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The summary of significant accounting policies is presented to assist in the understanding of the financial statements. These policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied. The Company has selected June 30 as its financial year end.
Principles of Consolidation
The consolidated financial statements include accounts of the Company’s wholly-owned subsidiaries Awaysis Capital, LLC, Awaysis Belize LTD, Awaysis Casamora Limited and Awaysis Chial Limited. Additionally, Chial Mountain Ltd., a wholly-owned subsidiary of Awaysis Belize LTD, is included in the consolidation. All significant intercompany balances and transactions have been eliminated in consolidation.
Interim Reviewed Financial Statements
The accompanying unaudited interim reviewed financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. While we believe that the disclosures presented herein are adequate and not misleading, these interim financial statements should be read in conjunction with the Company’s audited financial statements and the footnotes thereto for the fiscal year ended June 30, 2024 included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 and filed on October 11, 2024. Operating results for the interim period presented are not necessarily indicative of the results for the full year.
Use of Estimates
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
We maintain cash balances in a non-interest-bearing account and unrestricted cash in escrow that currently does not exceed federally insured limits. For the purposes of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents. The Company will hold payments made by guests to its facilities in advance of reservations in a restricted escrow account until the rescission period expires in accordance with U.S. state regulations.
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.
Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.
Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
Our financial accounts consist of accounts receivable, prepaid expenses, accounts payable, accounts payable due to related parties and notes payable. The carrying amount of our accounts receivable, prepaid expenses, accounts payable, accounts payable - related party and notes payable – related party approximate their fair values because of the short-term maturities.
| 8 |
Related Party Transactions
A related party is generally defined as (i) any person that holds 10% or more of our membership interests including such person’s immediate families, (ii) our management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with us, or (iv) anyone who can significantly influence our financial and operating decisions. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. See Note 8 and 9 below for details of related party transactions in the period presented.
Fixed Assets
Fixed assets are carried at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives. The fixed assets include property, equipment and software which ownership is maintained by the Company.
When a property is substantially completed and held for rental, it transitions from being considered a development project (in progress) to an operating asset. At this point, the key measurement focuses on capitalizing costs and transitioning into depreciation as required under ASC 970-340-25-18.
Capitalization of Construction Costs Ceases after Substantial Completion
Prior to substantial completion, the costs incurred for the construction and development of the property (such as land acquisition, construction costs, interest, and certain other costs) are capitalized.
As per ASC 970-340-25-18, once the property is considered substantially complete, the capitalization of costs typically ceases. The entity stops adding new costs to the property’s carrying value except for additional improvements or costs that extend the asset’s life or improve its utility. This means that these types of costs are no longer added to the property’s carrying value once the property is substantially completed and held for rental. Instead, these costs are expensed as incurred, unless they directly enhance the property or extend its useful life.
Once the property is held for rental and substantially complete, the property is classified as a depreciable real estate asset and the total cost capitalized to date up to the point of substantial completion becomes the asset’s carrying amount. The cost of the property’s carrying amount (less its land value) is allocated over its estimated useful life.
Costs incurred after the property is completed and held for rental are generally expensed unless they extend the property’s useful life (ASC 970-340-35-3).
Impairment Testing (ASC 970-340-35-1 to 35-2)
Even though the property is measured at cost, impairment testing may be required under ASC 360 if there are indicators that the property’s carrying amount might not be recoverable. After substantial completion, the property’s carrying value is subject to impairment testing under ASC 360, where a reduction in the property’s recoverable value may require a write-down to fair value (ASC 970-340-35). If held at fair value (under ASC 360 or other applicable standards), market-based inputs would be used, including comparable sales, discounted cash flows, or appraisals to determine the fair value of the property.
Leases
The Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and all related amendments on January 1, 2022, on a modified retrospective basis. Under Topic 842, the Company determines if an arrangement is or contains a lease at inception. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease term includes options to extend the lease when it is reasonably certain that the Company will exercise that option and when doing so is at the Company’s sole discretion. The Company has elected the short-term lease exception for all classes of assets, and therefore has not applied the recognition requirements of Topic 842 to leases of 12 months or less. The Company has also elected the practical expedient to not separate lease and non-lease components for all classes of assets. The Company’s classes of assets that are leased include real estate leases and equipment leases. Real estate leases typically pertain to the Company’s corporate office locations, field operation locations, or vacation properties whereby the Company takes control of a third party’s property during the lease period for the purpose of renting the property on a short-term basis.
The Company recognizes lease expense on a straight-line basis over the lease term. The Company’s lease agreements may contain variable costs such as common area maintenance, operating expenses or other costs. Variable lease costs are expensed as incurred on the consolidated statements of operations.
| 9 |
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) as assets, operating lease non-current liabilities, and operating lease current liabilities in our balance sheet. Finance leases are property and equipment, other current liabilities, and other non-current liabilities in the balance sheet.
ROU assets represent the right to use an asset for the lease term and lease liability represent the obligation to make lease payment arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over lease term. As most of the leases don’t provide an implicit rate, we generally use the incremental borrowing rate on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payment is recognized on a straight-line basis over lease term.
As of the quarter ended December 31, 2024, we were party to an operating lease agreement which commenced during the fiscal year ended June 30, 2023.
See Note 10 below for details of lessee leases during the six months ended December 31, 2024.
Beneficial Conversion Features
The Company adopted ASU 2020-06, Debt – Debt with Conversion and options (subtopic 470-20), and all related amendments on July 1, 2025 on a full retrospective basis. This new standard removed guidance in ASC 470-20 that required separate accounting for beneficial conversion features and amended disclosure requirements.
As the convertible loan was approved by the Board of Directors of the Company on June 26, 2024, the retrospective impact of this adoption effects the financials for the year ended June 30, 2024. The financial impact is removing the discount on the beneficial conversion feature and the related amortization from the liability and equity section of the financial statements for the year ended June 30, 2024.
As of June 30, 2024, the Company accounted for convertible notes payable in accordance with ASC 470-20. A beneficial conversion feature is a non-detachable conversion feature that is “in the money” at the commitment date, which requires recognition of interest expense for underlying debt instruments and a deemed dividend for underlying equity instruments. A conversion option is in the money if the effective conversion price is lower than the commitment date fair value of a share into which it is convertible.
Foreign Currency
The Company’s reporting currency is the U.S. dollar. The Company determines the functional currency for each of its foreign subsidiaries by reviewing their operations and currencies used in their primary economic environments. Assets and liabilities for foreign subsidiaries with functional currency other than U.S. dollar are translated into U.S. dollars at the rate of exchange existing at the balance sheet date. Statements of operations amounts are translated at average exchange rates for the period. Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Remeasurement gains and losses are included in other income (expense), net on the consolidated statements of operations. Monetary assets and liabilities are remeasured at the exchange rate on the balance sheet date and nonmonetary assets and liabilities are measured at historical exchange rates.
Income Taxes
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Revenue Recognition
Revenue Recognition Standard, ASC 606 is used by the Company to recognize revenue. ASC 606 standards were jointly issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The total booking value is generally due prior to the commencement of the reservation. The total booking value collected in advance of the reservation is recorded on the balance sheets as funds payable to owners, hospitality and sales taxes payable and deferred revenue in the amount obligated to the homeowner, the taxing authority, and the Company, respectively.
| 10 |
The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
Step 1: Identify the contract(s) with customers
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
The Company is a development stage corporation, and we have identified certain revenue streams during this development stage.
The Company currently derives its revenue primarily from the short-term unit rentals of sold and unsold inventory at the resort we own and manage.
Revenue from rentals is recognized over the period in which a guest completes a stay.
Other services consist of revenue derived from our real estate brokerage and other related services.
Other Services
In addition to providing vacation rental platform services, the Company provides other services including real estate brokerage and management services. The purpose of these services is to attract and retain homeowners as customers of the Company’s vacation rental platform. As such, the Company enters into an exclusive rental management contract with each homeowners’ associations it controls. Under the real estate brokerage services, the Company assists home buyers and sellers in listing, marketing, selling and finding homes. Real estate commissions earned by the Company’s real estate brokerage business are recorded as revenue at a point in time which is upon the closing of a real estate transaction (i.e., purchase or sale of a home). The commissions the Company pays to real estate agents are recognized concurrently with associated revenues and presented as cost of revenue in the consolidated statements of operations. Under the homeowners’ association management services, the Company provides or would provide common area property management, community governance, and association accounting services to community and homeowner associations in exchange for a management fee and other incrementally billed services. The services represent an individual performance obligation in which the Company has determined it is primarily responsible. Revenue is recognized over time as services are rendered for the management fee and incrementally billed services are recognized at a point in time.
Inventory
New real estate inventory is carried at the lower of cost or net realizable value. The cost of finished inventories determined on the specific identification method is removed from inventories and recorded as a component of cost of sales at the time revenue is recognized. Under the specific identification method, if finished real estate inventory can be sold for a profit there is no basis to write down the inventory below the lower of cost or net realizable value.
For real estate inventory that is considered substantially completed and may include the Company’s rental pool, the Company has implemented the Real Estate Accounting Guidance under ASC 970 for real estate development, rental, and sales activities. Details of ASC 970 are included in Fixed Assets above.
Impairment Testing (ASC 330)
Inventory is measured at the lower of cost and net realizable value (NRV) in accordance with applicable accounting standard ASC 330. The cost of inventory includes all costs of purchase, conversion, and other costs incurred in bringing the inventories to their present location and condition. At each reporting date, inventory is reviewed to ensure its carrying amount does not exceed NRV.
Impairment testing includes all categories of inventory, including raw materials, work-in-progress, and finished goods, as reported in the Company’s financial records. Impairment testing of inventory is to ensure the carrying value of inventory does not exceed its recoverable amount. If the NRV is lower than the carrying value, an impairment loss is recognized as part of cost of goods sold.
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Financial Instruments
Fair Value of Financial Instruments - From inception, the Company adopted ASC 820, Fair Value Measurements and Disclosures, which provides a framework for measuring fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard also expands disclosures about instruments measured at fair value and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
| ● | Level 1: Quoted prices for identical assets and liabilities in active markets. | |
| ● | Level 2: Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and | |
| ● | Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
The carrying amounts of financial instruments including cash, accounts payable, and notes payable approximated fair value as of December 31, 2024 due to the relatively short maturity of the respective instruments.
Advertising and Marketing Costs
We expense advertising costs when advertisements occur. Advertising for the Company consists primarily of the creation and marketing of the Awaysis brand guideline, logo, wordmark, tagline, and website.
The cost of equity instruments issued to employees and non-employees in return for goods and services is measured by the grant date fair value of the equity instruments issued in accordance with ASC 718, Compensation – Stock Compensation. The related expense is recognized as services are rendered or vesting periods elapse.
Basic earnings (loss) per common share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average shares outstanding, assuming all dilutive potential common shares were issued. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
Recently Issued Accounting Pronouncements
As of December 31, 2024, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.
The Company adopted ASU 2020-06, Debt – Debt with Conversion and options (subtopic 470-20), and all related amendments on July 1, 2024 on a full retrospective basis. This new standard removed guidance in ASC 470-20 that required separate accounting for beneficial conversion features and amended disclosure requirements.
As
the convertible loan was approved by the Board on June 26, 2024, the retrospective impact of this adoption effects the financials for
the year ended June 30, 2024. The financial impact is removing the discount on the beneficial conversion feature and the related amortization
from the liability and equity section of the financial statements for the year ended June 30, 2024. This accounted for an increase in
the liabilities by $
3. CASH
As
of December 31, 2024, our cash balance was $
4. INVENTORY
As
of December 31, 2024, our balance of inventory of real estate under construction was $
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5. FIXED ASSETS
The carrying basis and accumulated depreciation of fixed assets at December 31, 2024 and at June 30, 2024 is as follows:
| December 31, | June 30, | |||||||||
| Useful Lives | 2024 | 2024 | ||||||||
| Property placed into service | $ | $ | ||||||||
| Building improvements | ||||||||||
| Site developments | ||||||||||
| Buildings | ||||||||||
| Vehicles | ||||||||||
| Computer and equipment | ||||||||||
| Furniture and fixtures | ||||||||||
| Software | ||||||||||
| Less depreciation and amortization | ( | ) | ( | ) | ||||||
| Total fixed assets, net | $ | |||||||||
The
Company recorded depreciation and amortization expense of approximately $
6. MORTGAGE NOTE RECEIVABLE
As
of December 31, 2024 and June 30, 2024, the balance of Mortgage Note Receivable was $
Terms of the Notes:
Principal
Amounts: $
Interest
rates:
Payment
Terms:
Collateral:
Prepayment: Borrower may prepay the outstanding balance in whole or in part without penalty. Prepayments are applied first to accrued interest and then to the principal balance.
Accounting Treatment
| ● | Initial Recognition and Measurement: The Note is initially recognized at its fair value, with subsequent measurement performed at amortized cost using the effective interest rate method. |
| ● | Interest Income: Interest is accrued and recognized in the income statement over the term of the Note in accordance with the effective interest rate. |
| ● | Credit Losses: There is no credit losses or allowance since title remain with the company until the Notes are paid in full. |
7. ACCOUNTS PAYABLE
As
of December 31, 2024 and June 30, 2024, the balance of accounts payable was $
8. OTHER CURRENT LIABILITIES
Other current liabilities consist of a hospitality tax payable, a security deposit liability, accrued expenses related to payroll and interest, and Chial Reserve Escrow Deposit payables and Chial Reserve homeowners maintenance fees. The balance of other current liabilities as of December 31, 2024, and June 30, 2024 was $ and $, respectively,
As
of December 31, 2024 the balance consisted of Chial’s escrow deposit payable of $
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9. DUE TO RELATED PARTIES
As
of December 31, 2024 and June 30, 2024, the balance due to related parties was $
Between
November 15, 2024 and December 20, 2024, the Company borrowed an aggregate of $
On
June 26, 2024, the Board approved a $
10. NOTES PAYABLE AND CONVERTIBLE NOTE PAYABLE – RELATED PARTY
The
Company has notes payable as of December 31, 2024 and June 30, 2024 in the amount of approximately $
On
June 30, 2022, the Company purchased from a non-related party, real estate asset appraised at $
Line of Credit – Related Party
Between
November 15, 2024 and December 20, 2024, the Company borrowed an aggregate of $
Interest
on the note portion of the loan is
| 1. | $ | |
| 2. | $ | |
| 3. | The balance of the principal and interest to be paid on or before June 1, 2025. |
The note is secured by a first priority lien on substantially all of the assets of Awaysis Belize LTD and contains customary events of default, which entitle BOS, among other things, to accelerate the due date of the unpaid principal and accrued and unpaid interest of the note. Additional definitive documentation regarding the line of credit has not yet been negotiated or entered into. However, the Company expects the note will be rolled into the definitive documents relating to the full line of credit once finalized and executed.
Convertible Note Payable – Related Party
On
June 26, 2024, the Board approved a $
On
December 20, 2024, the company executed a convertible note payable to Michael Singh for the purchase of the stocks of Awaysis Belize
LTD in the amount of $
As of June 30, 2024, the Company accounted for convertible notes payable in accordance with ASC 470-20. A beneficial conversion feature is a non-detachable conversion feature that is “in the money” at the commitment date, which requires recognition of interest expense for underlying debt instruments and a deemed dividend for underlying equity instruments. A conversion option is in the money if the effective conversion price is lower than the commitment date fair value of a share into which it is convertible.
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As
of June 30, 2024 and per ASU 470-20, the excess of the fair value of the convertible note was $
As
of June 30, 2024, the net balance of Notes – related party was $
As of July 1, 2024, the Company is required to adopt ASU 2020-06, Debt – Debt with Conversion and options (subtopic 470-20), and all related amendments on July 1, 2024 on a full retrospective basis. This new standard removed guidance in ASC 470-20 that required separate accounting for beneficial conversion features and amended disclosure requirements. Per the new guidance, the convertible debt can be accounted for as a single liability unit and eliminates the beneficial conversion feature.
As
the convertible loan was approved by the Board on June 26, 2024, the retrospective impact of this adoption effects the financials only
for the year ended June 30, 2024. The financial impact is removing the discount on the beneficial conversion feature and the related
amortization from the liability and equity section of the financial statements for the year ended June 30, 2024. This accounted for an
increase in the liabilities by $
After
the adoption of ASU 2020-06, the balance of the convertible note payable is $
Balance Sheet
| Balance Sheet at | Adoption of | |||||||||||
| June 30, 2024 | ASU 2020-06 | Restated | ||||||||||
| (Audited) | Adjustments | Balance Sheet | ||||||||||
| Convertible note payable - related party, net of discount | ||||||||||||
| Total current liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Additional paid in capital | ( | ) | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||||
| Total stockholders equity | ( | ) | ||||||||||
| Total liabilities and stockholders equity | ||||||||||||
| Income Statement | ||||||||||||
| Interest Expense | ||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||
11. OPERATING LEASES - LESSEE
The
Company has an operating lease for office space, with a term of
The maturity schedule of future minimum lease payments under operating leases and the reconciliation to the operating lease liabilities reported on the Consolidated Balance Sheets was as follows:
| December 31, | ||||
| 2024 | ||||
| Remaining six months ending June 30, 2025 | $ | |||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total operating lease payments | ||||
| Present value adjustment | ( | ) | ||
| Total operating lease liabilities | $ | |||
As
of December 31, 2024, the total operating lease liability amount of $
Operating
lease costs were $
The following table summarizes the weighted-average remaining lease term and weighted-average discount rate related to the Company’s operating leases as of December 31, 2024:
| December 31, | ||||
| 2024 | ||||
| Weighted-average remaining lease term, years | ||||
| Weighted-average discount rate, % | % | |||
12. COMMITMENTS & CONTINGENCIES
Legal Proceedings
We were not subject to any legal proceedings during the six months ended December 31, 2024, and, to the best of our knowledge, no legal proceedings are pending or threatened.
Purchase Commitments
We were not party to any purchase commitments during the six months ended December 31, 2024.
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13. STOCKHOLDERS’ EQUITY
Preferred Stock
As of December 31, 2024, we were authorized to issue shares of preferred stock with a par value of $.
shares of preferred stock were issued and outstanding during the six months ended December 31, 2024 or the year ended June 30, 2024.
Common Stock
As of December 31, 2024, we were authorized to issue shares of common stock with a par value per share of $, of which shares of common stock were issued and outstanding and shares of common stock were subscribed, contractually obligated and committed to be issued but not yet issued pending payment therefor.
During
the three and six months ended December 31, 2024 the company accounted for the issuance of common shares in the amount of $
The Company issued all shares for payment of professional services.
As of December 31, 2024, the Company has entered into subscription agreements with investors in a private offering, for shares, at a price per share of $ for $, and has a subscription receivable in the Consolidated Balance Sheet.
During
the fiscal year ended June 30, 2024, the Company issued common shares in the amount of $
The Company has the following potentially dilutive debt or equity instruments which were issued or outstanding during the six months ended December 31, 2024, or for the year ended June 30, 2024:
| ● | On June 26, 2024, the Board
approved a $ | |
| ● | On December 20, 2024, the
Company executed a convertible note payable to Michael Singh for the purchase of the stock of Awaysis Belize LTD in the amount of $ |
The Company has not declared or paid any dividends or returned any capital to common stock shareholders as of December 31, 2024, or for the year ended June 30, 2024.
Stock Options
The Company adopted the 2022 Omnibus Performance Award Plan in February 2022. The Plan authorizes the granting of of the Company’s Common Stock. stock options under the Plan were issued or outstanding during the six months ended December 31, 2024 or for the year ended June 30, 2024.
On
February 13, 2023, the Company awarded to certain of its executive officers, options to purchase an aggregate of shares of
the Company’s stock at an exercise price per share equal to the fair market value of the Company’s common stock on the date
of the grant, $ per share; all of which are currently exercisable and outstanding as of December 31, 2024. No expense has been recorded
under ASC 718 as there is compensation expense to be recognized. The expense for stock options is based on the fair value of the options
at the grant date and this fair value is determined to be
14. SUBSEQUENT EVENTS
The Company evaluated subsequent events after December 31, 2024, in accordance with FASB ASC 855 Subsequent Events, through the date of the issuance of these financial statements and has determined the following subsequent event is required to be disclosed:
On
January 30, 2025, Chial Mountain assigned an Agreement, dated December 20, 2024 to Awaysis Belize LTD, granting Awaysis Belize LTD the
right until May 28, 2025 to purchase an aggregate of approximately
Other than as provided above or in the other notes to these financial statements, the Company has determined that there were no other subsequent events that are required to be disclosed.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
The following discussion should be read in conjunction with our unaudited financial statements and related notes included in Item 1, “Financial Statements,” of this Quarterly Report on Form 10-Q. Certain information contained in this MD&A includes “forward-looking statements.” Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition and results of operations, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our existing and proposed business, including many assumptions regarding future events. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors, including those risks described in detail in the section entitled “Risk Factors” on our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the Securities and Exchange Commission on October 11, 2024.
Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “will,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology.
In light of these risks and uncertainties, and especially given the nature of our existing and proposed business, there can be no assurance that the forward-looking statements contained in this section and elsewhere in this Quarterly Report on Form 10-Q will in fact occur. Potential investors should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
Overview
We are a real estate management and hospitality company focused on acquisition, redevelopment, sales, and managing rentals of residential vacation home communities in desirable travel destinations. We seek to create value through the targeting and acquisition, development, and up-cycling, rebranding, and repositioning of currently undervalued operating and shovel ready residential/resort communities in global travel destinations, with the intention to relaunch these assets under the “Awaysis” brand with the goals of creating a network of residential and resort enclave communities that will optimize both sales and rental revenues, providing attractive returns to owners and exceptional vacation experiences to travelers.
Increased global trends towards “work from home” opportunities have impacted both residency and travel. We believe that more people are seeking comfortable and convenient places to travel, visit, and live for extended durations. We seek to capitalize on these trends by transforming residential resort properties in desirable locations into convenient enclaves that facilitate this type of travel or residency. We define an enclave as a gated community that has all the amenities that will allow a person to live, work and play without having to leave the community.
At least initially, we are seeking to develop resorts that have not been completed nor have a prior operational history. As such we intend to purchase the real estate and finish the development, then we would sell the finished units to individual buyers and put them in a rental pool that we would manage.
We seek to own, grow and manage a stable, cash generating, diversified portfolio of single-family and luxury resort/residence properties in the Caribbean, Europe, South America, and the United States.
We are a licensed real estate corporation in the State of Florida and maintain compliance with the Florida Real Estate Commission, the entity that regulates companies providing real estate services such as rentals, management, and sales. Additionally, our business is subject to federal, state, local and foreign laws, rules, and regulations that may vary depending on the geographical location and classification of our individual properties. Hospitality operations are also subject to compliance with the U.S. Americans with Disabilities Act and other laws and regulations relating to accessibility, and to laws, regulations and standards in other areas such as zoning and land use, licensing, permitting and registrations, safety, environmental and other property condition matters, staffing and employee training, and cleanliness/sanitation protocols.
Our business strategy entails targeting and identifying undervalued assets in emerging markets located in proximity to high demand travel destinations. We intend to focus these efforts on shovel-ready properties and/or other assets that we believe can be used to optimize sales and rental revenues.
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Revenues
Our business is expected to encompass a diverse range of activities, including real estate development and sales, hospitality rentals, resort operations, and club management. We anticipate generating revenues from the following primary sources:
| · | Real Estate Sales: Selling developed resort inventory, which includes condominiums, single-family homes, and villas, to support our overall growth strategy. | |
| · | Management Services: Providing comprehensive management services for branded resorts through agreements with homeowners’ associations (HOAs), ensuring seamless operations and a high standard of service. | |
| · | Short-Term Rentals: Managing short-term rental operations for both sold and unsold inventory at the resorts we own or manage, offering high-quality accommodations and experiences for vacationers and travelers. |
We believe these revenue streams will collectively support our growth strategy and position us as a unique player in the resort and hospitality market.
As of December 31, 2024, our revenue consists primarily of monthly rental income of villas and commission from the rental of real property.
Sales and Marketing Expenses
Our sales and marketing expenses consist primarily of salaries, commissions and other personnel-related expenses, which may include share-based compensation, for employees engaged in sales, marketing and support of our products and services, promotional and public relations expenses and management and administration expenses in support of sales and marketing.
General and Administrative Expenses
Our general and administrative costs include payroll, employee benefits, and other personnel-related costs, which include share-based compensation, associated with administrative and support staff, as well as legal and accounting costs, insurance costs, depreciation and other administrative fees.
Results of Operations
We commenced activities and started to incur material costs in the fiscal year ended June 30, 2022, as a result of our change in control transaction in November 2021 and commencement in February 2022 of our business strategy of acquiring, developing, and managing residential vacation home communities in desirable travel destinations. Our business strategy continued throughout the fiscal year ended June 30, 2024, showing substantial growth in operating expenses in preparation for expected future growth in revenue.
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We expect 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. We recently commenced rentals of a few “rental ready” units and expect increasing sales to also generate cash flow for working capital.
Three Months Ended December 31, 2024, as Compared to December 31, 2023
Revenues
We recognized revenue of $138,526 and $27,100 - during the three months ended December 31, 2024, and 2023, respectively. Revenue generated during the three months ended December 31, 2024 consisted of monthly rental income and commissions from short term property rentals. Revenue generated during the three months ended December 31, 2023 also consisted of monthly rental income from property rentals. The increase in revenue from the three months ended December 31, 2023 to 2024 was a result of having units available for rent in 2024 that were not available in the prior year period and the additional rental income from the recent purchase of Chial Reserve.
Sales and Marketing Expenses
During the three months ended December 31, 2024 and 2023, we incurred sales and marketing expenses of $60,405 and $25,015, respectively, consisting of marketing and support of our products and services, promotional and public relations expenses, and management and administration expenses in support of rental offerings and marketing. The increase in sales and marketing expenses from the three months ended December 31, 2023 to 2024 is due to an increased focus on marketing expenses as construction is completed and units become available for rent.
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General and Administrative Expenses
During the three months ended December 31, 2024 and 2023, we incurred general and administrative expenses of $857,759 and $630,365, respectively, consisting of audit and accounting fees, travel and entertainment, payroll and employee benefits, legal fees, filing fees and transfer agent fees, all relating to both sustaining the corporate existence of the Company and public company-related expenses and its continued transitioning from being a shell company to an operating company. The increase in general and administrative expenses from the three months ended December 31, 2023 to 2024 mostly relates to an increase in professional and SEC fees, insurance and utilities.
Operating Loss
During the three months ended December 31, 2024 and 2023, we recognized operating losses of $(779,638) and $(628,280), respectively. These losses were primarily attributable to the Company transitioning from being a shell company to an operating company under its current management and brand along with the deployment of its sales, marketing, and acquisition initiatives. The increase in operating loss from the three months ended December 31, 2023 to 2024 was a result of increased expenses related to G&A and Sales and Marketing expenses, offset by increased revenue from units being available for rent, and other details as described in this section.
Other Income (Expenses)
During the three months ended December 31, 2024 and 2023, we incurred net other expense of $34,197 and $0, respectively, consisting of interest expense of $33,008 and a change in foreign exchange of $1,189.
Net Loss
During the three months ended December 31, 2024 and 2023, we recognized net losses of $(813,835) and $(628,280), respectively. These losses were primarily attributable to accounting, marketing, legal, payroll and employee benefits, filing fees and transfer agent fees to sustaining the corporate existence of the Company and public company related expenses, and the continued transitioning from being a shell company to an operating company. The increase in net loss from the three months ended December 31, 2023 to 2024 was a result of increased expenses related to G&A and Sales and Marketing expenses offset by increased revenue from units being available for rent, and other details as described above.
Six Months Ended December 31, 2024, as Compared to December 31, 2023
Revenues
During the six months ended December 31, 2024, and 2023, we recognized revenue of $182,645 and $33,900, respectively. Revenue generated during the six months ended December 31, 2024 consisted of monthly rental income and commissions from short term property rentals. Revenue generated during the six months ended December 31, 2023 also consisted of monthly rental income from property rentals. The increase in revenue from the six months ended September 2023 to 2024 was a result of having units available for rent in 2024 that were not available in the prior year period and the addition of Chial Reserve rental income.
Sales and Marketing Expenses
During the six months ended December 31, 2024 and 2023, we incurred sales and marketing expenses of $122,321 and $28,036, respectively, consisting of marketing and support of our products and services, promotional and public relations expenses, and management and administration expenses in support of rental offerings and marketing. The increase in sales and marketing expenses from the six months ended December 31, 2023 to 2024 is due to an increased focus on marketing expenses as construction is completed and units become available for rent.
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General and Administrative Expenses
During the six months ended December 31, 2024 and 2023, we incurred general and administrative expenses of $1,506,831 and $4,165,972, respectively, consisting of audit and accounting fees, travel and entertainment, payroll and employee benefits, legal fees, filing fees and transfer agent fees, all relating to both sustaining the corporate existence of the Company and public company-related expenses and its continued transitioning from being a shell company to an operating company. The decrease in general and administrative expenses from the six months ended December 31, 2023 to 2024 mostly relates to bonuses of over $2.6 million paid during the six months ended December 31, 2023 that were not included during the six months ended December 31, 2024.
Operating Loss
During the six months ended December 31, 2024 and 2023, we recognized operating losses of $(1,446,507) and $(4,160,108), respectively. These losses were primarily attributable to the Company transitioning from being a shell company to an operating company under its current management and brand along with the deployment of its sales, marketing, and acquisition initiatives. The decrease in operating loss from the six months ended December 31, 2023 to 2024 was a result of decreased expenses related to salary and payroll bonuses, increased revenue from units being available for rent, and other details as described in this section.
Other Income (Expenses)
During the six months ended December 31, 2024 and 2023, we incurred net other expense of $61,402 and $0, respectively, consisting of interest expense of $66,062 offset by other income of foreign exchange gains and interest earned of $4,660
Net Loss
During the six months ended December 31, 2024 and 2023, we recognized net losses of $(1,507,909) and $(4,160,108), respectively. These losses were primarily attributable to accounting, marketing, legal, payroll and employee benefits, filing fees and transfer agent fees to sustaining the corporate existence of the Company and public company related expenses, and the continued transitioning from being a shell company to an operating company. The decrease in net loss from the six months ended December 31, 2023 to 2024 was a result of decreased expenses related to salary and payroll bonuses, increased revenue from units being available for rent, and other details as described above.
Liquidity and Capital Resources
As of December 31, 2024, we had cash of $34,684 and had a positive working capital of $287,007, which was mainly from the issuance of shares for real estate inventory, the sale of shares from our private placement of common stock, and the June 2024 loan of $1,100,000 to the Company from an affiliate. We have sufficient cash or commitments for funding to satisfy our basic operations for at least 12 months, and expect the anticipated cost of development of our first properties to come from the $5 million line of credit commitment we expect to consummate in full in the first half of calendar 2025, and of which through the filing date of this Quarterly Report on Form 10-Q we borrowed an aggregate of approximately $3,000,000. We will need to raise additional cash to satisfy our medium and long-term requirements.
Historically, an affiliate shareholder has advanced funds on our behalf as we have required for the Company to become, and remain, a fully reporting public company while seeking to create value for shareholders. The shareholder has indicated its intention to continue to do so and most recently loaned $1,100,000 to the Company; provided, however, that such intentions do not represent a binding commitment by the affiliate shareholder and there is no guarantee that it will be able to provide the funding necessary to achieve this objective. To date, the affiliate shareholder has advanced an aggregate of approximately $309,501 on behalf of the Company to cover certain of the Company’s expenses and loaned an additional $1,100,000 for bridge financing. A different entity, which is an affiliate of one of our Co-CEOs, is the lender under our $5 million line of credit commitment. The affiliate is also the lender under two promissory notes, in the aggregate principal amount of $3.1 million, we issued as partial payment for the Chial Reserve assets.
Raising debt or equity funding for small publicly quoted, penny stock companies is extremely challenging. We can provide no assurance that funding will be available in the amounts it needs or on terms acceptable to it, if at all. If we are not able to secure adequate additional acquisition and construction capital when it becomes needed, we may be required to make reductions in our acquisition strategy, and/or suspend or curtail planned acquisitions and developments. Any of these actions could materially harm our existing and planned business.
Our plan for satisfying our cash requirements and to remain operational beyond the next 12 months or to further expand our asset base is through the generation of rental revenues, sale of shares of our capital stock to third parties, and advances from our affiliate shareholder or other affiliates. While we are seeking to raise up to $10 million through the sale of our common stock or through other offerings of securities, we cannot assure you we will be successful in raising any or all of such capital and in meeting our working capital needs. Since November 23, 2021, we raised an aggregate of $1,918,000 in our private placement, and we can give no assurance that we will be successful in raising the remaining funds being sought, including 943,000 shares of common stock that were subscribed, contractually obligated and committed to be issued but have not yet been issued pending payment therefor. We have also issued shares of our common stock in lieu of cash to cover compensation obligations to our executives. The capital raises from issuances of equity securities or other issuances has resulted in and could result in additional dilution to our shareholders. In addition, to the extent we determine to incur indebtedness, our incurrence of debt could result in debt service obligations and operating and financing covenants that would restrict our operations.
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The following table provides a summary of the net cash flow activity for each of the periods set forth below:
| Six months ended | |||||||
| December 31, | |||||||
| 2024 | 2023 | ||||||
| Cash used in operating activities | $ | (4,606,898) | $ | (494,283) | |||
| Cash provided by investing activities | (1,042,125) | 1,849 | |||||
| Cash provided by financing activities | 4,937,716 | 504,528 | |||||
| Change in cash | $ | (711,307) | $ | 12,094 | |||
Cash Flows from Operating Activities
Net cash flows used in operating activities were $(4,606,898) and $(494,283) for the six months ended December 31, 2024 and 2023, respectively. The net cash used in operations primarily consisted of the selling, marketing, and general and administrative expenses that resulted from the company recently going operational, transferring of inventory assets to assets placed in service as the units become available for rent, and issuance of stock for services provided and payroll.
Cash Flows from Investing Activities
During the six months ended December 31, 2024 and 2023, net cash flow used for investing activities was $(1,042,125) and $1,849 respectively. This consisted of payments for building improvements related to assets that have been placed in service and the purchase of Chial Reserve Assets.
Cash Flows from Financing Activities
For the six months ended December 31, 2024 and 2023, net cash from financing activities was $4,937,716 and $504,028, respectively.
This consisted of the line of credit from BOS investments of $2,859,973 and convertible loan related party of $2,081,365 and a payment on a note payable of $3,622.
We are dependent upon the receipt of capital investment or other financing to fund our ongoing construction and to execute our business plan. In addition, we are dependent upon our controlling shareholders to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement our plan of operations.
Critical Accounting Policies
The Company applies judgment and estimates that may have material effect in the eventual outcome of assets, liabilities, revenues and expenses, accounts receivable, inventory and goodwill. The following explains the basis and the procedure where judgment and estimates are applied.
Inventories
New real estate inventory is carried at the lower of cost or net realizable value. The cost of finished inventories determined on the specific identification method is removed from inventories and recorded as a component of cost of sales at the time revenue is recognized. In addition, an allocation of depreciation and amortization is included in cost of goods sold. Under the specific identification method, if finished real estate inventory can be sold for a profit there is no basis to write down the inventory below the lower of cost or net realizable value.
As per ASC 970-340-25-18, once the property is considered substantially complete, the capitalization of costs typically ceases. The entity stops adding new costs to the property’s carrying value except for additional improvements or costs that extend the asset’s life or improve its utility. This means that these types of costs are no longer added to the property’s carrying value once the property is substantially completed and held for rental. Instead, these costs are expensed as incurred, unless they directly enhance the property or extend its useful life.
Once the property is held for rental and substantially complete, the property is classified as a depreciable real estate asset and the total cost capitalized to date up to the point of substantial completion becomes the asset’s carrying amount. The cost of the property’s carrying amount (less its land value) is allocated over its estimated useful life.
Costs incurred after the property is completed and held for rental are generally expensed unless they extend the property’s useful life (ASC 970-340-35-3).
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company needs to implement disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports are recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure.
As of December 31, 2024, the Chief Executive Officer and Chief Financial Officer carried out an assessment, of the effectiveness of the design and operation of our then existing disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). As of the date of this assessment, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2024 to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures, primarily as a result of the Company’s recent and continued failure to timely file certain forms or reports under the Securities Act of 1933 and the Securities Exchange Act of 1934. The Company’s management is seeking to remedy this deficiency.
This Form 10-Q does not include an attestation report from our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Form 10-Q.
Changes in Internal Control Over Financial Reporting.
There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
In addition to the below, please see the risk factors included in our Annual Report on Form 10-K filed on October 11, 2024.
We have been unable to maintain effective disclosure controls and procedures, which could result in our stock price and investor confidence being materially and adversely affected.
We are required to maintain disclosure controls and procedures that are effective. To date, we have identified ineffective disclosure controls and procedures, mainly relating to the failure to timely file certain reports under the Securities Act of 1933 and the Securities Exchange Act of 1934. The past and current failure of controls or absence of adequate controls could result in a material adverse effect on our business and financial results, resulting in downwards pressure on our stock price and decreasing investor confidence.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
In October and November 2024, the Company issued 296,049 shares of its common stock as consideration for services rendered. These shares include 290,152 shares actually issued and 5,897 shares that are paid and pending issue as of December 31, 2024. The securities were issued in private transactions in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, as transactions not involving any public offering.
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Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During
the six months ended December 31, 2024, no director or officer, as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934,
as amended, of the Company
Item 6. Exhibits.
| (1) | Incorporated by reference from the exhibit included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on February 22, 2024. |
| (2) | Incorporated by reference from the exhibit included in the Company’s Current Report on Form 8-K filed with the SEC on May 23, 2022. |
| (3) | Incorporated by reference from the exhibit included in the Company’s Current Report on Form 8-K filed with the SEC on November 19, 2024. |
| (4) | Incorporated by reference from the exhibit included in the Company’s Current Report on Form 8-K filed with the SEC on December 30, 2024. |
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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.
| AWAYSIS CAPITAL, INC. | ||
| Date: February 26, 2025 | /s/ Michael Singh | |
| Michael Singh | ||
| Co-Chief Executive Officer | ||
| (Co-Principal Executive Officer) | ||
| Date: February 26, 2025 | /s/ Andrew Trumbach | |
| Andrew Trumbach | ||
| Co-Chief Executive Officer and Chief Financial Officer | ||
| (Co-Principal Executive Officer, Principal Financial and Accounting Officer) |
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