GHST 10-Q
GHST World Inc. (GHST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
Or
For the transition period from ___________ to ___________
Commission file number:
| (Exact name of registrant as specified in charter) |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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| (Address of principal executive offices) | (Zip Code) |
| +1 ( |
| (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by checkmark whether the registrant has
(1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act..
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☒ | Smaller reporting company | |||
| Emerging growth company |
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard
provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is
a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
As of May 4, 2022, the issuer had shares of its common stock, $0.001 par value per share, outstanding.
TABLE OF CONTENTS
| Page | ||
| PART I - Financial Information | ||
| Item 1 | Financial Statements | 1 |
| Consolidated Balance Sheets (Unaudited) – As of March 31, 2022 and December 31, 2021 | 1 | |
| Consolidated Statements of Operations (Unaudited) – For the Three and Nine Months Ended March 31, 2022 and 2021 | 2 | |
| Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited) – For the Nine Months Ended March 31, 2022 and 2021 | 3 | |
| Consolidated Statements of Cash Flows(Unaudited) –For the Nine Months Ended March 31, 2022 and 2021 | 4 | |
| Notes to Consolidated Financial Statements (Unaudited) | 5 | |
| Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 9 |
| Item 3 | Quantitative and Qualitative Disclosures About Market Risk | 11 |
| Item 4 | Controls and Procedures | 12 |
| Part II - Other Information | ||
| Item 1 | Legal Proceedings | 13 |
| Item 1A | Risk Factors | 13 |
| Item 2 | Unregistered Sales of Equity Securities and Use of Proceeds | 13 |
| Item 3 | Defaults Upon Senior Securities | 13 |
| Item 4 | Mine Safety Disclosures | 13 |
| Item 5 | Other Information | 13 |
| Item 6 | Exhibits | 14 |
| Signatures | 15 | |
| i |
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GHST World Inc.
Consolidated Balance Sheets
(Unaudited)
| March 31, 2022 | June 30, 2021 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Total Current Assets | ||||||||
| Other assets | ||||||||
| Patent costs | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Advances from related parties | $ | |||||||
| Common stock payable | ||||||||
| Total Current Liabilities | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, $ par value; shares authorized; | ||||||||
| Series A, shares issued and outstanding | ||||||||
| Series B, shares issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized; and shares issued at March 31, 2022 and June 30 2021 | ||||||||
| Additional paid-in-capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ||||||
| Total Liabilities and Stockholders' Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 1 |
GHST World Inc.
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended March 31 | For the Nine Months Ended March 31 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Product development costs | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Other Income(expense): | ||||||||||||||||
| Foreign exchange loss | ||||||||||||||||
| Interest expense | ( | ) | ||||||||||||||
| Loss on change in fair value of debts | ( | ) | ||||||||||||||
| Total Other Income(expense) | ( | ) | ||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 2 |
GHST World Inc.
Consolidated Statement of Stockholders' Deficit
For the Year Ended June 30, 2021 and the Nine Months Ended March 31, 2022
(Unaudited)
| Preferred Stock | Preferred Stock | Common Stock | Additional | Total | ||||||||||||||||||||||||||||||||
| Series A | Series B | $0.001 Par Value | Paid in | Accumulated | Stockholders' | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||
| Balance June 30, 2020 | $ | $ | $ | $ | $ | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Issuance of common stock for cash | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock in exchange for debt | ||||||||||||||||||||||||||||||||||||
| Net loss for the year ended June 30, 2021 | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance June 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Issuance of common stock in exchange for debt | ||||||||||||||||||||||||||||||||||||
| Issuance of common stock for cash | ||||||||||||||||||||||||||||||||||||
| Net loss for the nine months ended March 31, 2022 | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance March 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
GHST World Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| For the Nine Months Ended March 31, | ||||||||
| 2022 | 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Loss on change in fair value of debt | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | ||||||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Patent costs | ( | ) | ||||||
| Net Cash Used In Investing Activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Advances from related parties | ||||||||
| Increase in common stock payable | ||||||||
| Issuance of common stock for cash | ||||||||
| Net Cash Provided By Financing Activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash - beginning of period | ||||||||
| Cash - end of period | $ | $ | ||||||
| SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the year/period for: | ||||||||
| Interest | $ | $ | ||||||
| Taxes | $ | $ | ||||||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Issuance of common stock in exchange for debt | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
GHST WORLD, INC.
Notes to Consolidated Financial Statements
March 31, 2022 and 2021
(Unaudited)
NOTE 1- ORGANIZATION AND DESCRIPTION OF BUSINESS
Background
GHST World Inc. (“the Company”), is a Delaware corporation that was incorporated on November 12, 1999.
The Company is a holding company for various technology and other activities. The Company has acquired and is developing several patents in the technology sector.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Liquidity and Going Concern
The financial statements have been prepared on
a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course
of business for the foreseeable future. The Company had a net loss of $
Management believes these conditions raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date these financial statements were issued. The ability to continue as a going concern is dependent upon profitable future operations, positive cash flows, and additional financing.
Management intends to raise money through investors as needed to support its working capital needs. Currently the Company intends to raise capital from its existing shareholders and from the possible sale of a minority interest in its subsidiaries. Management cannot provide any assurances that the Company will be successful in completing these undertakings and accomplishing any of its plans.
Presentation
The accompanying unaudited interim consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with the SEC’s regulations for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the Company’s financial position, results of operations, cash flows, and stockholders’ equity for the periods presented. The results for the three and nine months
ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 filed with the SEC.
Principles of Consolidation
The consolidated financial statements include the accounts of the following wholly owned subsidiaries:
| · | GHST Art World, Inc |
| · | GHST Sport Inc. |
| · | IoTT World Inc. |
All intercompany balances and transactions have been eliminated in consolidation.
| 5 |
GHST WORLD, INC. Notes to Consolidated Financial Statements March 31, 2022 and 2021 (Unaudited) |
Concentration of Credit Risk
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash. The Company places its cash with financial institutions of high credit worthiness. At times, its cash with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it is a credit counterparty, and as such, it believes that any associated credit risk exposures are limited.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Such estimates and assumptions impact, among others, the following: the fair value of share-based payments and deferred taxes.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.
Cash
Cash are amounts held at local banks in Italy.
The Company had
Risks and Uncertainties
The Company is undertaking a new business venture that is inherently subject to significant risks and uncertainties, including financial, operational, technological and other risks that could potentially have a risk of business failure.
Impairment of Long-Lived Assets
The Company accounts for impairment of long-lived
assets in accordance with Accounting Standards Codification (“ASC”) 360, Property, Plant and Equipment, (“ASC 360”).
Long-lived assets consist primarily of property, plant and equipment. In accordance with ASC 360, the Company periodically evaluates long-lived
assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When triggering
event indicators are present, the Company obtains appraisals on an asset by asset basis and will recognize an impairment loss when the
sum of the appraised values is less than the carrying amounts of such assets. The appraised values, based on reasonable and supportable
assumptions and projections, require subjective judgments. Depending on the assumptions and estimates used, the appraised values projected
in the evaluation of long-lived assets can vary within a range of outcomes. The appraisals consider the likelihood of possible outcomes
in determining the best estimate for the value of the assets. As of March 31, 2022 and June 30, 2021, the Company did
Intangible Assets
The Company capitalizes external costs, such as
filing fees and associated attorney fees, incurred to obtain issued patents and patent license rights. The Company expenses costs associated
with maintaining and defending patents subsequent to their issuance in the period incurred. The Company will amortize capitalized patent
costs for internally generated patents on a straight-line basis over ten years, which represents the estimated useful lives of the patents.
The ten-year estimated useful life for internally generated patents is based on management’s assessment of such factors as the integrated
nature of the portfolios being licensed, the overall makeup of the portfolio over time, and the length of license agreements for such
patents. The Company assesses the potential impairment to all capitalized net patent cost when events or changes in circumstances indicate
that the carrying amount of its patent portfolio may not be recoverable. For the nine months ended March 31, 2022 and 2021 the Company
has capitalized $
| 6 |
GHST WORLD, INC. Notes to Consolidated Financial Statements March 31, 2022 and 2021 (Unaudited) |
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets, including tax loss and credit carryforwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The effect of income tax positions is recognized only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.
The Company measures and recognizes the tax implications
of positions taken or expected to be taken in its tax returns on an ongoing basis. The Company’s tax returns are subject to examination
by federal and state taxing authorities for the years ended June 30, 2007 through 2021. However, the Company's federal net operating losses
for tax years ending June 30, 2020 and 2021 will remain subject to examination until the losses are utilized or expire. Under the Tax
Cuts and Jobs Act (“TCJA”), which was enacted on December 22, 2017, Net Operating Losses (“NOLs”) incurred for
tax years beginning before January 1, 2018, will be able to be carried forward for 20 years. For NOLs incurred in tax years beginning
after December 31, 2017, these NOLs will be subject to the new limitations imposed by TCJA. Under the new law, an NOL can offset only
80% of taxable income in any given tax year. Furthermore, NOLs can no longer be carried back, they must be carried forward. The 20-year
carryforward period has been replaced with an indefinite carryforward period for NOLs incurred for tax years beginning after December
31, 2017. The Company’s NOL for the year ended June 30, 2021 will be subject to the 20-year carryforward period and would be utilized
before any NOLs incurred for tax years beginning after December 31, 2017. The Company’s NOL incurred for the year ended June 30,
2019 and 2020 are subject to the new rules of TCJA. The NOL carryforwards for the periods ended June 30, 2021 and 2020 are approximately
$
The Company applies the fair value method of ASC 718, Share Based Payment, formerly Statement of Financial Accounting Standards (“SFAS”) No. l23R "Accounting for Stock Based Compensation", in accounting for its stock-based compensation. This accounting standard states that compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period, if any. As the Company does not have sufficient, reliable, and readily determinable values relating to its common stock, the Company has used the stock value pursuant to its most recent sale of stock for purposes of valuing stock-based compensation.
Recent Accounting Pronouncements
There are no other recent accounting pronouncements that are expected to have a material effect on the Company's financial statements.
NOTE 3 – PATENTS
The Company obtained a patent dated June 30, 2020,
which is a protection device used in sporting activity with the capability to monitor data from the device. The Company has capitalized
the patent costs totaling $
NOTE 4 – COMMON STOCK PAYABLE
The Company has an agreement with certain investors
to convert their investment into common stock of the Company at a price equal to the average value of the stock over the previous six
months. The conversion is contingent on the Company effectuating a
| 7 |
GHST WORLD, INC. Notes to Consolidated Financial Statements March 31, 2022 and 2021 (Unaudited) |
The Company recorded a common stock payable in
2018 for an agreement in which the Company agreed to issue shares of post-split stock in exchange for the patent. The Company
recorded this at $
NOTE 5 – RELATED PARTY TRANSACTIONS
At March 31, 2022 and June 30, 2021, the Company
owed related parties a total of $
As shown in Note 4, the Company has committed
to converting certain debts to equity. Included in the debts is $
These transactions were in the normal course of operations and were measured at a value that represents the amount of consideration established and agreed to by the related parties.
NOTE 6 – STOCKHOLDERS’ EQUITY
On August 7, 2021, the board approved amending
its articles of incorporation to reduced the number of authorized shares from 700,000,000 to of which are reserved
for common stock and for preferred stock. The amendment was effective on September 9, 2021. Effective on September 30, 2021,
the Company effectuated a
Common Stock Issuances
During the nine months ended March 31, 2022 the
Company issued a total of shares at an average price of approximately $ in exchange for $
NOTE 7 – INCOME TAXES
The Company has accumulated losses of approximately
9.4 million since its inception. For income tax purposes,
NOTE 8 – SUBSEQUENT EVENTS
The Company evaluates subsequent events and transactions that occur after the balance sheet date up to the date that the consolidated financial statements were issued for potential recognition or disclosure.
On April 12, 2022, the Company sold shares
at a price of $ per share for total proceeds of $
*****
| 8 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Overview
We are a holding company for various technology and other activities. As of the date of this Report, our principal business strategy is seeking to exploit a patent and obtain and exploit future patents for the Smart Shin Guard. The Smart Shin Guard is a wearable protective device used while playing soccer and certain other sports combined with data collection and analysis technology that monitors players’ individual and collective physical and performance-based metrics and transmits this information to a separate module in real-time.
We have not generated any revenue and need substantial additional financing to market our services. In the fiscal year ended June 30, 2021 we filed a registration statement on Form 10 with the SEC, which became effective May 8, 2021 (the “Form 10”), pursuant to which we became subject to the periodic and current reporting requirements under Section 12(g) of the Securities Exchange Act of 1934 (the “Exchange Act”).
Results of Operations
The following discussion should be read in conjunction with the financial statements and notes thereto included elsewhere in this report.
Fiscal Quarter Ended March 31, 2022 Compared to the Fiscal Quarter Ended March 31, 2021
We had no revenues in the three months ended March 31, 2022 and 2021, and we sustained net losses of $23,948 and $46,777, respectively, in those periods. During the nine months ended March 31, 2021 and 2021, expenses consisted primarily of general and administrative expenses, including professional fees for legal and financial services.
Nine Months Ended March 31, 2022 Compared to the Nine Months Ended March 31, 2021
We had no revenues in the nine months ended March 31, 2022 and 2021, and we sustained net losses of $116,615 and $93,415, respectively, in those periods. The increase is primarily due to compliance costs incurred following our Form 10 becoming effective in May 2021. During the nine months ended March 31, 2022 and 2021, expenses consisted primarily of general and administrative expenses, including professional fees for legal and financial services, and expenses incurred in connection with our product development efforts.
We do not expect to generate material revenue unless and until we can implement our business plan and begin marketing and selling our product(s) in sufficient quantities, which was previously delayed due to COVID-19 impacts on our development efforts and on league play which adversely affected our product development capabilities. We also may encounter difficulties commercializing our product in the future based on supply chain issues, inflation and adverse market conditions which may result. In order to become profitable, we will need to establish a sufficient market for our product, including internationally, to offset our development, manufacturing and advertising costs, and our ability to do so will be subject to a number of factors, many of which will be beyond our control.
Liquidity and Capital Resources
Net Cash used by Operating Activities:
For the nine months ended March 31, 2022, the Company used net cash of $113,701 in operating activities as compared to $90,521 for the nine months ended March 31, 2021. The increase in cash used from operations was due to an increase in professional fees and compliance costs in becoming an SEC reporting company and preparing and filing SEC reports. We expect expenses for professional services to remain higher than in prior periods due to our continuing reporting obligations with the SEC as a result of the Form 10 becoming effective on May 8, 2021. We also anticipate sustained or increased operational expenses as we transition our focus from product development to production and marketing efforts, which is expected to begin later in calendar year 2022 assuming our product development goals are met and testing yields satisfactory results.
9
In the nine months ended March 31, 2022, we continued our product development efforts under two agreements with third party developers. One such agreement provides for the development of our Smart Shin Guard, and the other provides for the development of a smart phone application for use in conjunction with our Smart Shin Guard and a web site application for our professional product. Under these agreements, we have agreed to pay the service providers a total of approximately €142,000 (approximately $173,000). Our payment obligations under these agreements are based on the progress of the work performed. Following completion of these projects, we intend to shift our focus to producing and marketing our product, including locating league players and teams to assist with advertising in exchange for free use of our products. We deployed our Smart Shin Guard prototype with one Italian Series C football team to assist with testing, monitoring and improving upon our product’s functionality, a process which is expected to last for several months. Our engineering staff are in the process of analyzing this data and updating our products as may be appropriate based on the results, including the artificial intelligence algorithms. We expect to proceed to final testing of the product during the fourth quarter of the fiscal year ending June 30, 2022.
Cash Used in Investing Activities:
For the nine months ended March 31, 2022 and 2021, the Company used $0 and $8,025 in investing activities. Our investing activities during the period ended 2021 consisted of obtaining our patent and related patent applications.
Cash Flows from Financing Activities:
Cash flows from financing activities for the nine months ended March 31, 2022 were $106,713 compared to $153,830 for the nine months ended March 31, 2021. The difference between periods is primarily attributable to subscriptions for common stock totaling $148,479 in the 2021 period compared to $30,525 in the 2022 period, partially offset by an increase in advances from related parties in the 2022 period when compared to the prior period, and a $15,334 increase in common stock payable.
We have $362 in available cash as of March 31, 2022 and for the past two years we have been relying on loans from our current investors and related parties and proceeds from sales of our common stock to fund our operations. As reflected in the financial statements contained elsewhere in this Report, management has expressed substantial doubt about our ability to continue as a going concern for the next 12 months from the date the financial statements were issued, unless we can raise the required capital or generate material revenue to fund our operations.
We do not have sufficient capital to support our operations for the next 12 months and will be dependent upon on the proceeds from a financing, which may consist of sales of our common stock, the issuance of debt securities and/or issuance of securities convertible into shares of our common stock, any of which could have a dilutive effect on our existing shareholders. We intend to raise capital from existing investors or from the sale of a minority interest in our subsidiaries if and to the extent possible. We estimate that we will need to raise at least $1,000,000 in order to meet our working capital needs for the next 12 months. We plan to phase in our expenses and grow our business as working capital is available.
On September 23, 2021, we filed a Certificate of Amendment to our Certificate of Incorporation to effect a 1-for-100 reverse stock split. On November 2, 2021, we filed another Certificate of Amendment to reduce our authorized capital stock to 310,000,000 shares consisting of 300,000,000 shares of authorized common stock and 10,000,000 shares of authorized preferred stock. Following these amendments, we now have 175,797,376 authorized and unissued shares of common stock.
The Company expects to continue to use a portion of the authorized but unissued shares to convert previous loans made to the Company which total $9,559 as of March 31, 2022. During the three months ended March 31, 2022, the Company issued a total of 69,901,962 shares of common stock in exchange for $129,247 of debt and $5,800 of previously paid subscriptions.
Cautionary Note Regarding Forward Looking Statements
This quarterly report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the development, marketing and sale of the Smart Shin Guard, arrangements with soccer teams and players, the implementation of our business plan and expected timelines for meeting objectives, our authorized common stock and the use thereof to satisfy prior loans, and our liquidity. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods.
10
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include the risks arising from the potential adverse effects of inflation, the Federal Reserve’s policy of increasing interest rates in response and an economic downturn or recession which may result, the possibility of a new outbreak of the COVID-19 pandemic, and global supply chain disruptions, shortages and delays which may adversely affect our ability to develop, manufacture and sell our products within the intended timeframes or at all, delays in or suspensions of soccer league play particularly in areas in which we plan to further develop and market our product, and the risks summarized our Annual Report on Form 10-K for the fiscal year ended June 30, 2021 in the section titled “Item 1A. – Risk Factors.” We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.
Significant Accounting Policies and Recent Accounting Pronouncements
Please see the notes to our Financial Statements for information about our Significant Accounting Policies and Recent Accounting Pronouncements.
COVID-19 Update
The COVID-19 pandemic has had a significant adverse effect on the economy throughout the world, including recently by contributing to continued supply chain disruptions and suspensions of football (soccer) league play, and may continue to affect the economy and our industry, depending on the vaccine rollouts and the emergence of virus mutations.
As of the date of this Report, the Company is unable to predict the impact the pandemic may have on its business and plan of operations, however adverse consequences from COVID-19 and recent supply chain disruptions and delays and suspensions in football (soccer) league play may hinder our ability to continue the product development, manufacturing and marketing efforts of us and the third parties on which we rely. While vaccinations beginning in 2021 allowed for the reopening of the economy in many areas, the potential for new variants, as well as reduced efficacy of vaccines over time and the possibility that a large number of people decline to get vaccinated or receive booster shots, creates inherent uncertainty as to the future impact the virus may have. Additionally, the pandemic has been a contributing factor in supply chain disruptions and shortages which, when combined with inflationary environment and tightening fiscal policies, may hinder our product development, production and marketing efforts or those of third parties with which we transact, or increase our operating costs.
Off Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements as of March 31, 2022.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
11
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officers, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by this Report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officers have concluded that our disclosure controls and procedures as of March 31, 2022 were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms because of a material weakness in the Company’s internal control over financial reporting. Specifically, the Company did not maintain effective controls to identify and maintain segregation of duties to support the identification, authorization, approval, accounting for, and the disclosure of related-party transactions and non-routine transactions. One individual, the Chief Executive Officer, initiates related-party transactions and non-routine transactions and also reviews, evaluates and approves these same transactions.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act that occurred during the period covered by this Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II: OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
From time-to-time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of the date of this Report, we are not aware of any other pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations and there are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 1.A – RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended March 31, 2022, the Company issued a total of 69,863,296 shares of common stock to certain investors at an average price of approximately $0.00185 in exchange for $129,247 of debt.
During the three months ended March 31, 2022, the Company issued a total of 38,666 shares of common stock to an investor at an average price of $0.15 in exchange for $5,800 of previously paid subscriptions.
On April 12, 2022, the Company agreed to issue 163,015 shares of common stock to two investors at an average price of approximately $0.13 in exchange for $21,192 of subscriptions. As of May 4, 2022, these shares have not been issued.
The above transactions were exempt from registration under Section 4(a)(2) under the Securities Act of 1933 (the “Securities Act”), and under Regulation S of the Securities Act as the shares were issued in a transaction not involving a public offering or in an offshore transaction to persons who are not U.S. Persons as defined by Regulation S, and there were no directed selling efforts made in the United States.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 - OTHER INFORMATION
Not applicable.
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ITEM 6 – EXHIBITS
| Incorporated by Reference |
Filed or Furnished | |||||||||
| Exhibit # | Exhibit Description | Form | Date | Number | Herewith | |||||
| 2.1 | Certificate of Merger | 10-K | 2/18/2010 | 3.2 | ||||||
| 3.1 | Amended and Restated Certificate of Incorporation | 10-12G | 3/9/2021 | 3.1 | ||||||
| 3.2 | Certificate of Amendment to Certificate of Incorporation (Reverse Stock Split) | 10-Q | 11/15/21 | 3.2 | ||||||
| 3.3 | Certificate of Amendment to Certificate of Incorporation (Decrease in Authorized Capital) | 10-Q | 11/15/2021 | 3.3 | ||||||
| 3.4 | Certificate of Designation | 10-K | 2/18/2010 | 3.3 | ||||||
| 3.5 | Amended and Restated Bylaws | 10-12G | 3/9/2021 | 3.3 | ||||||
| 31.1 | Certification of Principal Executive Officer (302) | Filed | ||||||||
| 31.2(a) | Certification of Principal Financial Officer (302) | Filed | ||||||||
| 31.2(b) | Certification of Principal Financial Officer (302) | Filed | ||||||||
| 32.1 | Certification of Principal Executive and Principal Financial Officers (906) | Furnished* | ||||||||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | Filed | ||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed | ||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed | ||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed | ||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed | ||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed | ||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed | ||||||||
*This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
** Portions of this exhibit have been omitted as permitted by the rules of the SEC. The information excluded is both (i) treated by the Company as private or confidential and (ii) not material. The Company undertakes to submit a marked copy of this exhibit for review by the SEC staff, to the extent it has not been previously provided, and provide supplemental materials to the SEC staff promptly upon request.
Copies of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to GHST World Inc., 667 Madison Avenue, 5th Floor, New York, NY 10065.
| 14 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| GHST World Inc. | |||
| Dated: | May 13, 2022 | By: | /s/ Edoardo Riboli |
| Edoardo Riboli,Chief Executive Officer | |||
|
(Principal Executive Officer)
| |||
| Dated: | May 13, 2022 | By: | /s/ Marcello Appella |
| Marcello Appella, Chief Financial Officer | |||
|
(Principal Financial Officer)
| |||
| Dated: | May 13, 2022 | By: | /s/ Paolo Sangiovanni |
| Paolo Sangiovanni, Chief Financial Officer | |||
|
(Principal Financial Officer)
| |||
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