GPOX 10-Q
GPO Plus, Inc. (GPOX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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For the quarterly period ended | |
| or |
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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For the transition period from _________ to ________ |
Commission File Number |
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
(Registrant’s telephone number, including area code) |
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N/A |
(Former name, former address, and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large, accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
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| 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)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ☐ YES ☐ NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
GPO PLUS, INC.
FORM 10-Q
TABLE OF CONTENTS
Contents
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| 3 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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| PART II - OTHER INFORMATION |
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| 2 |
| Table of Contents |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Our unaudited interim condensed financial statements for the three-month period ended July 31, 2023, form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with generally accepted accounting principles in the United States.
GPO PLUS, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
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| July 31, |
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| April 30, |
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| 2023 |
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| 2023 |
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ASSETS |
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Current Assets: |
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Cash |
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Accounts receivable |
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Prepaid expenses |
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Inventory |
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Total Current Assets |
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Finance lease right-of-use assets, net |
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Property and equipment, net |
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Intangible assets, net |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current Liabilities: |
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Accounts payable and accrued liabilities |
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Accrued interest |
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Accrued liabilities - related parties |
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Deposits |
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Convertible note payable |
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Promissory note payable, net of debt discount of $ |
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Finance lease liabilities |
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Total Current Liabilities |
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Finance lease liabilities - non-current |
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Total Liabilities |
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Commitments and Contingencies (Note 11) |
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Founders Series A Non-Voting Redeemable Preferred Stock, $ |
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Series A Non-Voting Redeemable Preferred Stock, $ |
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Stockholders' Deficit: |
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Series A Preferred Shares, $ |
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Founders Class A Common stock, $ |
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Common stock, $ |
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Stock payable |
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Stock payable - related parties |
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Additional paid in capital |
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Accumulated deficit |
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Total Stockholders' Deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ |
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| $ |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
| 3 |
| Table of Contents |
GPO PLUS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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| Three Months Ended |
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| July 31, |
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| 2023 |
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| 2022 |
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Revenues |
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| $ |
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Cost of revenue |
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Gross Profit |
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Operating Expenses |
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General and administrative |
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Professional fees |
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Professional fees - related parties |
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Management fees and salaries - related parties |
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Total Operating Expenses |
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Loss from operations |
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Other Expense |
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Interest expense |
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Total Other Expense |
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Net Loss |
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| $ | ( | ) |
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Net Loss Per Common Share: Basic and Diluted |
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Weighted Average Number of Common Shares Outstanding: Basic and Diluted |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
| 4 |
| Table of Contents |
GPO PLUS, INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED JULY 31, 2023, AND 2022
Three Months Ended July 31, 2023
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| Founders Series A |
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| Stockholders' Deficit |
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| Non-Voting Redeemable Preferred Stock |
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| Series A Non-Voting Redeemable Preferred Stock |
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| Series A Convertible Preferred Shares |
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| Founders Class A Common stock |
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| Common stock |
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| Stock |
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| Stock Payable-Related |
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| Additional Paid In |
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| Accumulated |
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| Total Stockholders' |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Payable |
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| Parties |
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| Capital |
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| Deficit |
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Balance, April 30, 2023 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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Issuance of common stock for conversion of debts |
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| - |
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| - |
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| - |
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| - |
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| - |
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Stock payable |
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| - |
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| - |
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| - |
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| - |
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| - |
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Stock payable - related parties |
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| - |
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| - |
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| - |
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| - |
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| - |
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Net loss |
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| - |
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| - |
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| - |
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| - |
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| - |
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Balance, July 31, 2023 |
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| 28,750 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | ||||||||||||
Three Months Ended July 31, 2022
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| Founders Series A |
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| Stockholders' Deficit |
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| Non-Voting Redeemable Preferred Stock |
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| Series A Non-Voting Redeemable Preferred Stock |
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| Series A Convertible Preferred Shares |
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| Founders Class A Common stock |
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| Common stock |
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| Additional Paid In |
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| Accumulated |
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| Total Stockholders' |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| Capital |
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| Deficit |
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Balance, April 30, 2022 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||||||||
Stock based compensation |
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| - |
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| - |
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| - |
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| - |
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| - |
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| - |
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Stock based compensation - related party |
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| - |
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| - |
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| - |
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| - |
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Issuance of common stock for lease |
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| - |
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| - |
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| - |
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| - |
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Issuance of common stock for cash |
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| - |
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| - |
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| - |
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| - |
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Issuance of common stock for exercise of warrants |
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| - |
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| - |
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| - |
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| - |
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Issuance of common stock for intangible assets |
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| - |
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| - |
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| - |
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| - |
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Issuance of common stock for note inducement |
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| - |
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| - |
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| - |
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| - |
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| 75,000 |
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Issuance of common stock for salary payable - related party |
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| - |
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| - |
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| - |
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| - |
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Net loss |
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| - |
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| - |
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| - |
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| - |
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| - |
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| ( | ) |
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| ( | ) | ||||||
Balance, July 31, 2022 |
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| 28,750 |
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| $ |
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| $ |
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| 1,000,000 |
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| $ |
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| 115,000 |
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| $ |
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| 32,305,382 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 5 |
| Table of Contents |
GPO PLUS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
| Three Months Ended |
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| July 31, |
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| 2023 |
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| 2022 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock based compensation for services |
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Stock based compensation for services - related parties |
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Non-cash interest expense for promissory notes extension |
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Lease expense settled by common stock |
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Stock payable for lease expense |
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Depreciation of furniture and equipment |
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Depreciation of right-of-use-assets |
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Amortization of intangible assets |
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Amortization of promissory note discount |
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Amortization of convertible note discount |
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Interest expense on finance lease |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Prepaid expenses |
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Inventory |
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Accounts payable and accrued liabilities |
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Accrued interest |
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Accrued liabilities - related parties |
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Deposit |
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Net cash used in Operating Activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchase of intangible assets |
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Net cash used in Investing Activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Repayment for finance leases |
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Proceeds from issuance of common stock |
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Proceeds from exercise of warrants |
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Proceeds from issuance of promissory notes |
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Repayment of promissory notes |
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| ( | ) |
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Net cash provided by Financing Activities |
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Net change in cash for period |
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| ( | ) |
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Cash at beginning of period |
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Cash at end of period |
| $ |
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| $ |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash paid for income taxes |
| $ |
|
| $ |
| ||
Cash paid for interest |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Recognition of finance lease right-of-use assets |
| $ |
|
| $ |
| ||
Stock payable for note inducement |
| $ |
|
| $ |
| ||
Stock payable for prepaid expense |
| $ |
|
| $ |
| ||
Issuance of common stock for intangible assets |
| $ |
|
| $ |
| ||
Issuance of common stock for note inducement |
| $ |
|
| $ |
| ||
Issuance of common stock for salary payable - related party |
| $ |
|
| $ |
| ||
Issuance of common stock for conversion of debts |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 6 |
| Table of Contents |
GPO PLUS, INC.
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
THREE MONTHS ENDED JULY 31, 2023, AND 2022
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
GPO Plus, Inc. (the “Company”) is a corporation originally established under the name of Koldeck, Inc. under the corporation laws in the State of Nevada on March 29, 2016.
On April 2, 2018, the Company changed our corporate name from Koldeck Inc. to Global House Holdings Ltd. and merged with our wholly owned subsidiary Global House Holdings Ltd. Koldeck Inc. remained the surviving company of the merger, continuing under the name Global House Holdings Ltd.
On June 19, 2020, the Company changed our corporate name from Global House Holdings Ltd. to GPO Plus, Inc. and merged with our wholly owned subsidiary GPO Plus, Inc. Global House Holdings Ltd. remained the surviving company of the merger, continuing under the name GPO Plus, Inc
Effective May 5, 2020, Brett H. Pojunis acquired
On June 7, 2022, the Company entered into a Master Distribution Agreement with DEV Distribution LLC, which appoints GPOX as a master distributor for the best-efforts sale of Branded Products, Bulk Products and White Label Products within a specific Territory.
We are a start-up company engaged in the business of organizing, promoting, and operating industry-specific group purchase organizations (GPOs). A GPO is an entity created to leverage the purchasing power of a group of businesses (or individuals) to obtain discounts from vendors.
NOTE 2 - GOING CONCERN
The Company’s financial statements as of July 31, 2023, have been prepared using generally accepted accounting principles in the United States of America (“US GAAP”) applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The Company has incurred a cumulative deficit of $
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking third party equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with US GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three months ended July 31, 2023, are not necessarily indicative of the results that may be expected for the year ending April 30, 2024. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for fiscal year 2023 have been omitted. This report should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended April 30, 2023, included in the Company’s Form 10-K as filed with the Securities and Exchange Commission on August 31, 2023.
| 7 |
| Table of Contents |
Use of Estimates
Preparing financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.
As of July 31, 2023 and April 30, 2023, the Company had cash of $
Accounts Receivable
Accounts receivables are recorded in accordance with ASC 310, “Receivables,” at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company does not currently have any amount recorded as an allowance for doubtful accounts. Based on management’s estimate and based on all accounts being current, the Company has not deemed it necessary to reserve for doubtful accounts at this time.
As of July 31, 2023, and April 30, 2023, the Company had accounts receivable of $
As of July 31, 2023, the Company has two customers concentrated over 10% of the accounts receivable at 64% and 22%, respectively.
As of April 30, 2023, the Company has two customers concentrated over 10% of the accounts receivable at 67% and 27%, respectively.
Prepaid Expense
Prepaid expenses relate to security deposit for an office premise and prepayment made for future services in advance that will be expensed over time as the benefit of the services is received in the future expected within one year. As of July 31, 2023, and April 30, 2023, prepaid expense was $
|
| July 31, |
|
| April 30, |
| ||
|
| 2023 |
|
| 2023 |
| ||
Security Deposit |
| $ |
|
| $ |
| ||
Prepayment for shares issued to consultants |
|
|
|
|
|
| ||
Total |
| $ |
|
| $ |
| ||
Inventory
Inventory is stated at lower of cost or net realizable value, with cost being determined on the first-in, first-out (“FIFO”) method.
| 8 |
| Table of Contents |
No reserves are considered necessary for slow moving or obsolete inventory as inventory on hand at year-end was purchased near the end of the year. The Company continuously evaluates the adequacy of these reserves and makes adjustments to these reserves as required.
As of July 31, 2023 and April 30, 2023, the Company had finished goods inventory of $
Intangible Assets
The Company accounts for intangible assets (including trademarks and formula) in accordance with ASC 350 “Intangibles-Goodwill and Other.”
ASC 350 requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below it carrying value. In addition, ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests when circumstances indicate that the recoverability of the carrying amount of goodwill may be in doubt. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions or the occurrence of one or more confirming events in future periods could cause the actual results or outcomes to materially differ from such estimates and could also affect the determination of fair value and/or goodwill impairment at future reporting dates.
The cost of intangible assets with determinable useful lives is amortized to reflect the pattern of economic benefits consumed, either on a straight-line or accelerated basis over the estimated periods benefited. Patents, technology, and other intangibles with contractual terms are generally amortized over their respective legal or contractual lives. When certain events or changes in operating conditions occur, an impairment assessment is performed and lives of intangible assets with determinable lives may be adjusted. (Note 4)
Long-Lived Assets
Long-lived assets are evaluated for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted future cash flows to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value.
Property, Plant and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method. The depreciation and amortization methods are designed to amortize the cost of the assets over their estimated useful lives, in years, of the respective assets as follows:
Furniture and Equipment | |
Computer Equipment | |
Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income.
The long-lived assets of the Company are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment,” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the three months ended July 31, 2023, and 2022, no impairment losses have been identified.
| 9 |
| Table of Contents |
Revenue Recognition
The Company recognizes revenue from the sale of products in accordance with ASC 606, “Revenue Recognition” following the five steps procedure:
Step 1: Identify the contract(s) with customers - The invoice has been generated and provided to the customer.
Step 2: Identify the performance obligations in the contract - The performance obligations of delivery of products are stated in the invoice.
Step 3: Determine the transaction price - The transaction price has been identified in the invoice.
Step 4: Allocate the transaction price to performance obligations - The Company has allocated the transaction price to performance obligation in the invoice.
Step 5: Recognize revenue when the entity satisfies a performance obligation - The Company has shipped out the product and, therefore, satisfied the performance obligation. The risk of loss passed to the customers at the point of shipment.
GPOPlus+ (GPOX)
GPO Plus (GPOX) is a product development, manufacturing, and distribution company which offers a diverse portfolio of high-quality innovative products sold directly to consumers and retailers. Our business is organized around four key areas: products (developing and manufacturing), distribution (getting our products to customers), marketing (promoting our products), and sales (selling our products to consumers and retailers). Our goal is to expand our product line and distribution reach to meet market demand and the needs of our customers. Our business is organized around four key areas:
| • | Products (developing and manufacturing unique products) |
|
|
|
| • | Distribution (getting our products to customers through Direct to store Delivery "DSD" and independent sales organizations "ISO's") |
|
|
|
| • | Branding (promoting our Products and our Company) |
|
|
|
| • | Sales (a technology and data-driven approach) |
We recently successfully deployed our new “White Glove” Direct to Store (“DSD”) service. This new service includes new point of sale displays for our flagship brand “The Feel Good Shop+” and “Mr. Vapor”. To implement the new DSD service program GPOX created “Mini Hubs” supported by a Regional Distribution Hub in Lubbock, Texas.
Currently, GPOX services approximately 570 stores across 12 states centralized in the Southwest and Midwest regions of the United States. The Company has already identified 316 locations approved for the new program, with approximately 100 currently active. The next 116 stores in Dallas, TX, Austin, TX, and Albuquerque, NM, plan to be activated before the end of October 2023. The Company also has in its growth plans to activate an additional 103 stores in Wyoming, Kansas, and Missouri marketplaces by the end of October 2023.
Once the Company opens a Mini Hub, sales teams actively look to add additional specialty retailers (gas stations, smoke shops, vape shops, and liquor stores), with a goal of each Mini Hub servicing approximately 100 to 150 locations. This equates to an initial goal of 1,000 to 1,500 retail locations to be supported by the Regional Hub in Lubbock.
During the three months ended July 31, 2023 and 2022, the Company recognized $
During the three months ended July 31, 2023, the Company has one customer contributed over 10% of total sales at 91%.
During the three months ended July 31, 2022, the Company has four customers contributed over 10% of total sales at 37%, 21%, 18% and 10%, respectively.
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities refers to trade payable to non-affiliate vendors and payroll liabilities to employees. As of July 31, 2023 and April 30, 2023, accounts payable and accrued liabilities was $
Leases
We determine if an arrangement is a lease at inception and whether the lease obligation is an operating lease or finance lease in accordance with ASC 842, “Leases.” A lease obligation is classified as a finance lease, if at least one of the following criteria is met:
| · | A transferal of ownership of an asset to the lessee at the end of the term of the initial lease |
| · | The lessee is reasonably certain that they will exercise a purchase option at the end of the term of the lease |
| · | The leased asset has no alternative use to the lessor at the end of the lease |
| · | The lease term is a major part of the economic life (75%) of the underlying asset |
| · | The present value of lease payments is substantially all of the fair value of the leased asset (90%) |
| 10 |
| Table of Contents |
Operating leases
Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term by adding interest expense determined using the effective interest method to the amortization of right-of-use asset. Amortization of the right-of-use asset is calculated as the difference between the straight-line expense and the interest expense on the lease liability over the lease term. Lease expense is presented at a single line item in the operating expense in the statement of operations. The right-of-use assets is tested for impairment in accordance with ASC 360.
Finance lease
Finance leases are included in finance lease right-of-use (“ROU”) assets, finance lease liabilities - current, and finance lease liabilities - noncurrent on the balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Finance lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The finance lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Interest expense is determined using the effective interest method. Amortization is recorded on the right-of-use asset on a straight-line basis. Interest and amortization expense are generally presented separately in the statement of operations. The right-of-use asset is tested for impairment in accordance with ASC 360.
Segments
Operating segments are defined as components of an enterprise engaging in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company operates and manages its business as one operating segment and all of the Company’s revenues and operations are currently in the United States.
Financial Instruments
The carrying values of our financial instruments comprised of our current assets and liabilities approximate their fair value due to the short maturities of these financial instruments.
Related Party Balances and Transactions
The Company follows FASB ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions. (Note 7)
Convertible Financial Instruments
The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable US GAAP with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable US GAAP.
| 11 |
| Table of Contents |
When the Company has historically determined that the embedded conversion options should not be bifurcated from their host instruments, discounts have been recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument. On May 1, 2021, the Company chose to early adopt ASU 2020-06 and did not record a beneficial conversion feature (“BCF”) discount on the issuance of convertible notes with the conversion rate below the Company’s market stock price on the date of note issuance.
Share-Based Compensation
The Company accounts for share-based compensation under the fair value method in accordance with ASC 718, “Compensation - Stock Compensation,” which requires all such compensation to employees and non-employees to be calculated based on its fair value of the equity instrument at the grant date and recognized in the earnings over the requisite service or vesting period.
During the three months ended July 31, 2023, and 2022, the Company recorded $
|
| Three Months Ended |
| |||||
|
| July 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Common stock award to consultants |
| $ |
|
| $ |
| ||
Common stock award to management and executives - related parties |
|
|
|
|
|
| ||
|
| $ |
|
| $ |
| ||
Basic and Diluted Loss per Share
Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period.
For the three months ended July 31, 2023, and 2022, Series A preferred stock, convertible notes, warrants and common stock payable were potentially dilutive instruments and were not included in the calculation of diluted loss per share as their effect would be antidilutive.
|
| July 31, |
|
| July 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
|
| (Shares) |
|
| (Shares) |
| ||
Series A Preferred Shares |
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| ||
Convertible Notes |
|
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| ||
Warrants |
|
|
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| ||
Common Stock Payable |
|
|
|
|
| - |
| |
|
|
|
|
|
|
| ||
The Company had
| 12 |
| Table of Contents |
As of July 31, 2023, and 2022, convertible shares from the Company’s non-affiliate convertible notes were
As of July 31, 2023, and 2022, the outstanding warrants issued in connection with these convertible notes were
As of July 31, 2023, and 2022, the Company had stock payable of $
Net loss per share for each class of common stock is as follows:
|
| Three Months Ended |
| |||||
|
| July 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Net loss per share, basic diluted |
| $ | ( | ) |
| $ | ( | ) |
Net loss per common shares outstanding: |
|
|
|
|
|
|
|
|
Founders Class A Common stock |
| $ | ( | ) |
| $ | ( | ) |
Ordinary Common stock |
| $ | ( | ) |
| $ | ( | ) |
|
|
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|
|
Weighted average shares outstanding: |
|
|
|
|
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|
|
Founders Class A Common stock |
|
|
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|
|
| ||
Ordinary Common stock |
|
|
|
|
|
| ||
Total weighted average shares outstanding |
|
|
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|
| ||
New Accounting Pronouncements
The Company’s management has considered all recent accounting pronouncements issued and believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
NOTE 4 – ASSETS PURCHASE
On July 7, 2022, the Company entered into an Assets Purchase Agreement to acquire inventory and intangible assets from Orev LLC. The purchase price consisted of $
The inventory acquired are Nutriumph Products for resale purpose. These inventory items have been sold during the year ended April 30, 2023.
The intangible assets comprised of proprietary formula at $
|
| Amortization |
| |
Year Ended April 30, |
| Expense |
| |
2024 |
| $ |
| |
2025 |
|
|
| |
Thereafter |
|
|
| |
|
| $ |
| |
| 13 |
| Table of Contents |
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment as of July 31, 2023, and April 30, 2023, are summarized as follows:
Cost |
| Furniture and Equipment |
|
| Computer Equipment |
|
| Total |
| |||
April 30, 2023 |
| $ |
|
| $ |
|
| $ |
| |||
Additions |
|
|
|
|
|
|
|
|
| |||
July 31, 2023 |
| $ |
|
| $ |
|
| $ |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation |
| Furniture and Equipment |
|
| Computer Equipment |
|
| Total |
| |||
April 30, 2023 |
| $ |
|
| $ |
|
| $ |
| |||
Additions |
|
|
|
|
|
|
|
|
| |||
July 31, 2023 |
| $ |
|
| $ |
|
| $ |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value |
| Furniture and Equipment |
|
| Computer Equipment |
|
| Total |
| |||
April 30, 2023 |
| $ |
|
| $ |
|
| $ |
| |||
July 31, 2023 |
| $ |
|
| $ |
|
| $ |
| |||
On April 30, 2023, the Company issued
As of July 31, 2023, and April 30, 2023, Property and Equipment was $
NOTE 6 - CAPITAL STOCK
Share Capital
On November 20, 2020, the Company filed amended and restated article of incorporation, resulting in increasing the authorized share capital from
| · | |
| · | |
| · | |
| · | |
| · |
On January 21, 2021, the Company filed amended certification of stock designation after issuance of class/series for designating
Equity Compensation Plans
On March 27, 2023, the board of directors and majority shareholder of the Company approved the adoption of the GPO Plus, Inc. 2023 Equity Incentive Plan (the “2023 Equity Incentive Plan”). The purpose of the 2023 Equity Incentive Plan is to foster and promote the Company’s long-term financial success and increase stockholder value by motivating performance through incentive compensation. The 2023 Equity Incentive Plan is intended to encourage participants to acquire and maintain ownership interests in the Company and to attract and retain the services of talented individuals upon whose judgment and special efforts the successful conduct of the Company’s business is largely dependent. A total of
| 14 |
| Table of Contents |
Equity Compensation Plan Information Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (1) Equity compensation plans approved by security holders shares - N/A
| (1) | On April 4, 2023, the Company issued 332,878 shares of immediately vested common stock to employees and consultants under the 2023 Equity Incentive Plan. The market value of the shares on the grant date was $0.162 per share, resulting in a $53,892.96 expense and 1,867,122 remaining shares issuable under the plan. No options or warrants were issued in connection with these common shares. |
Ordinary Common Stock
Three months ended July 31, 2023
During the three months ended July 31, 2023, the Company issued
Three months ended July 31, 2022
On May 25, 2022, the Company issued
On June 7, 2022, the Company issued
On June 30, 2022, the Company issued
On July 7, 2022, in pursuant to an asset purchase agreement to acquire assets from Nutriumph, the Company made a $
On July 28, 2022, the Company issued
On July 28, 2022, the Company issued
On July 28, 2022, the Company issued
On July 28, 2022, the Company issued
As of July 31, 2023 and April 30, 2023, the issued and outstanding ordinary common stock was
| 15 |
| Table of Contents |
Founders’ Class A Common Stock and Founders’ Series A Non-Voting Redeemable Preferred Stock
During the year ended April 30, 2021, the Company issued common and preferred stock units comprising
The founder’s series A non-voting redeemable preferred stock has a redemption value of $
As of July 31, 2023, and April 30, 2023, the Company had
Series A Convertible Preferred Stock
The Company has designated
On January 21, 2021, the Company issued
On January 21, 2021, the Company issued
As of July 31, 2023, and April 30, 2023, the Company had
Series A Non-Voting Redeemable Preferred Stock
On May 21, 2021, the Company issued
The series A non-voting redeemable preferred stock has a redemption value of $
As of July 31, 2023, and April 30, 2023, the Company had
Warrants
On June 16, 2021, in conjunction with the issuance of a convertible note on June 16, 2021, the Company issued
On September 8, 2021, in conjunction with the issuance of a convertible note on September 8, 2021, the Company issued
| 16 |
| Table of Contents |
The below table summarizes the activity of warrants exercisable for shares of common stock during the three months ended July 31, 2023, and year ended April 30, 2023:
|
| Number of Shares |
|
| Weighted- Average Exercise Price |
| ||
Balances as of April 30, 2022 |
|
|
|
| $ |
| ||
Granted |
|
| - |
|
|
|
| |
Redeemed |
|
| - |
|
|
|
| |
Exercised |
|
| ( | ) |
|
|
| |
Forfeited |
|
| - |
|
|
|
| |
Balances as of April 30, 2023 |
|
|
|
| $ |
| ||
Granted |
|
| - |
|
|
| - |
|
Redeemed |
|
| - |
|
|
|
| |
Exercised |
|
| - |
|
|
|
| |
Forfeited |
|
| - |
|
|
|
| |
Balances as of July 31, 2023 |
|
|
|
| $ |
| ||
The fair value of the warrants on the date of grant was estimated at $
|
| Year Ended |
| |
|
| April 30, |
| |
|
| 2022 |
| |
Exercise price |
| $ |
| |
Expected term |
|
| ||
Expected average volatility |
| % | ||
Expected dividend yield |
|
| - |
|
Risk-free interest rate |
| % | ||
The following table summarizes information relating to outstanding and exercisable warrants as of July 31, 2023:
Warrants Outstanding |
|
| Warrants Exercisable |
| ||||||||||||||
Number of Shares |
|
| Weighted Average Remaining Contractual life (in years) |
|
| Weighted Average Exercise Price |
|
| Number of Shares |
|
| Weighted Average Exercise Price |
| |||||
|
|
|
|
|
| $ |
|
|
| - |
|
| $ |
| ||||
Aggregate intrinsic value is the sum of the amounts by which the quoted market price of the Company’s stock exceeded the exercise price of the warrants at July 31, 2023, for those warrants for which the quoted market price was in excess of the exercise price (“in-the-money” warrants). As of July 31, 2023, the aggregate intrinsic value of warrants outstanding was $
Stock Payable
As of July 31, 2023, the Company had stock payable of $
During the three months ended July 31, 2023, the Company recorded stock payable of $
| 17 |
| Table of Contents |
During the three months ended July 31, 2023, the Company recorded stock payable of $
During the three months ended July 31, 2023, the Company recorded stock payable of $
During the three months ended July 31, 2023, the Company recorded stock payable of $
During the three months ended July 31, 2023, the Company recorded stock payable of $
During the three months ended July 31, 2023, the Company recorded stock payable of $
During the three months ended July 31, 2023, the Company recorded stock payable of $
NOTE 7 - RELATED PARTY TRANSACTIONS
Related party compensation for the three months ended July 31, 2023, and 2022, and shareholding and salary payable as of July 31, 2023 and 2022, are summarized as below:
|
| Three Months Ended July 31, 2023 |
| |||||||||
|
|
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| |||||||||
Title |
| Wages Expense |
|
| Management/Consulting Fees |
|
| Stock Compensation |
| |||
CEO and CFO |
| $ |
|
| $ | - |
|
| $ |
| ||
Advisor - Affiliate |
|
| - |
|
|
|
|
|
| - |
| |
President - Distro Plus |
|
|
|
|
|
|
|
|
| |||
Operational Manager |
|
|
|
|
| - |
|
|
|
| ||
VP - Distro Plus |
|
|
|
|
| - |
|
|
|
| ||
Director |
|
|
|
|
|
|
|
|
|
|
| |
|
| $ |
|
| $ |
|
| $ |
| |||
|
|
| Three Months Ended July 31, 2022 |
| |||||||||
|
|
|
|
| |||||||||
Title |
|
| Wages Expense |
|
| Management/Consulting Fees |
|
| Stock Compensation |
| |||
(5) CEO |
| $ |
|
| $ | - |
|
| $ | 13,125 |
| ||
Advisor - Affiliate |
|
|
| - |
|
|
|
|
|
| - |
| |
(1) President |
|
|
|
|
| - |
|
|
|
| |||
(2) COO |
|
|
|
|
| - |
|
|
|
| |||
(3) Interim CFO |
|
|
|
|
| - |
|
|
|
| |||
(4) VP Sales and Marketing |
|
|
|
|
| - |
|
|
| - |
| ||
|
|
| $ |
|
| $ |
|
| $ |
| |||
| (1) | The President served from December 3, 2021 through October 18, 2022. |
| (2) | The COO served from December 29, 2021 through November 18, 2022. |
| (3) | The interim CFO served on consultant basis since August 22, 2022 and is appointed as consultant as of July 31, 2023. |
| (4) | The VP Sales and Marketing resigned on March 27, 2023, and rejoined as Lead Technologist on April 10, 2023. |
| (5) | The CEO is also serving as CFO of the Company as of July 31, 2023 |
| 18 |
| Table of Contents |
As of July 31, 2023 Title Common Stock (Shares) Convertible Series A Preferred (Shares) Series A non-voting redeemable preferred (Shares) Salary/Consulting Fees Payable CEO and CFO Advisor - Affiliate President - Distro Plus Operational Manager VP - Distro Plus Director - $ - - - - - - $
As of April 30, 2023 | ||||||||||||||||
| ||||||||||||||||
Title |
| Common Stock (Shares) |
|
| Convertible Series A Preferred (Shares) |
|
| Series A non-voting redeemable preferred (Shares) |
|
| Salary/Consulting Fees Payable |
| ||||
CEO and CFO |
|
|
|
|
|
|
|
| - |
|
| $ |
| |||
Advisor - Affiliate |
|
|
|
|
|
|
|
|
|
|
|
| ||||
President |
|
|
|
|
| - |
|
|
| - |
|
|
| - |
| |
COO |
|
|
|
|
| - |
|
|
| - |
|
|
| - |
| |
Interim CFO/Consultant |
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
VP Sales and Marketing |
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
President - Distro Plus |
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
Operational Manager |
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
VP - Distro Plus |
|
|
|
|
| - |
|
|
| - |
|
|
|
| ||
|
|
|
|
|
|
|
|
| 175,000 |
|
| $ |
| |||
CEO and CFO
During the three months ended July 31, 2022, the Company issued
During the three months ended July 31, 2023, the Company awarded
| 19 |
| Table of Contents |
During the three months ended July 31, 2023 and 2022, the Company incurred management salary expense of $
Advisor - Affiliate
During the year ended April 30, 2022, the Company issued
During the three months ended July 31, 2023 and 2022, the Company incurred consulting fees of $
President – Distro Plus
During the three months ended July 31, 2023, the Company awarded
During the three months ended July 31, 2023, and 2022, the Company incurred management salary of $
Operational Manager
During the three months ended July 31, 2023, the Company awarded
During the three months ended July 31, 2023 and 2022, the Company incurred management salary of $
VP – Distro Plus
During the three months ended July 31, 2023, the Company awarded
During the three months ended July 31, 2023 and 2022, the Company incurred management salary of $
Director
During the three months ended July 31, 2023, the Company awarded 8
During the three months ended July 31, 2023, and 2022, the Company incurred consulting fees of $
As of July 31, 2023 and April 30, 2023, the amount due to the related parties was $
| 20 |
| Table of Contents |
NOTE 8 - COVERTIBLE NOTE PAYABLE
Convertible note payable at July 31, 2023 and April 30, 2023, consists of the following:
|
| July 31, 2023 |
|
| April 30, 2023 |
| ||
Dated June 16, 2021 |
| $ |
|
| $ |
| ||
Dated September 8, 2021 |
|
|
|
|
|
| ||
Total convertible notes payable, gross |
|
|
|
|
|
| ||
Less: Unamortized debt discount |
|
|
|
|
|
| ||
Total convertible notes |
| $ |
|
| $ |
| ||
On June 16, 2021, the Company issued a $
On September 8, 2021, the Company issued a $
During the three months ended July 31, 2023, and 2022, the Company recorded interest expense of $
As of July 31, 2023 and April 30, 2023, the convertible note payable was $
| 21 |
| Table of Contents |
NOTE 9 - PROMISSORY NOTE PAYABLE
Promissory note payable at July 31, 2023, and April 30, 2023, consists of the following:
|
| July 31, 2023 |
|
| April 30, 2023 |
| ||
June 2022 |
| $ | - |
|
| $ |
| |
August 2022 |
|
|
|
|
|
| ||
September 2022 |
|
|
|
|
|
| ||
October 2022 |
|
|
|
|
|
| ||
November 2022 |
|
|
|
|
|
| ||
January 2023 |
|
|
|
|
|
| ||
February 2023 |
|
|
|
|
|
| ||
March 2023 |
|
|
|
|
|
| ||
April 2023 |
|
|
|
|
|
| ||
May 2023 |
|
|
|
|
|
| ||
June 2023 |
|
|
|
|
|
| ||
Total promissory notes payable, gross |
|
|
|
|
|
| ||
Less: Unamortized debt discount |
|
| ( | ) |
|
| ( | ) |
Total promissory notes |
| $ |
|
| $ |
| ||
The terms of the promissory notes are summarized as follows:
| · | Loan Expiry Term of One Year |
|
|
|
| · | Weighted Average Remaining Term of |
|
|
|
| · | Annual interest rate of |
|
|
|
| · |
During the three months ended July 31, 2023 and 2022, the Company issued promissory notes for aggregate principal amount of $
During the three months ended July 31, 2023, the Company made repayment on principal balance of promissory notes of $
During the three months ended July 31, 2023, the Company issued
During the three months ended July 31, 2023, the Company recorded stock payable of $
During the three months ended July 31, 2023, the Company recorded stock payable of $
During the three months ended July 31, 2023, and 2022, the Company recorded interest expense of $
| 22 |
| Table of Contents |
NOTE 10 – LEASES
In March 2023, the Company entered into finance lease contracts for three vehicles with the ownership of the vehicles transferred to the Company at the end of the term of the leases.
During the three months ended July 31, 2023, the Company entered into finance lease contracts for two vehicles with the ownership of the vehicles transferred to the Company at the end of the term of the leases.
As of July 31, 2023, and April 30, 2023, the finance lease obligations included in current liabilities was $
As of July 31, 2023, the Company had the following lease obligations:
|
| Discount |
|
|
| July 31, |
|
| April 30, |
| ||
|
| Rate |
| Maturity |
| 2023 |
|
| 2023 |
| ||
Current |
|
| March 2027 - July 2029 |
| $ |
|
| $ |
| |||
Non-current |
|
| March 2027 - July 2029 |
|
|
|
|
|
| |||
|
|
|
|
|
| $ |
|
| $ | 113,604 |
| |
Balance - April 30, 2023 |
| $ | 113,604 |
|
Lease liability additions |
|
|
| |
Repayment of lease liability |
|
| ( | ) |
Imputed interest |
|
|
| |
Balance - July 31, 2023 |
| $ |
|
The following table summarizes the maturity of our lease liabilities as of July 31, 2023:
Year Ended April 30, |
|
|
| |
2024 |
| $ |
| |
2025 |
|
|
| |
2026 |
|
|
| |
2027 |
|
|
| |
2028 |
|
|
| |
Thereafter |
|
|
| |
Total lease payments |
|
|
| |
Less: imputed interest |
|
| ( | ) |
Lease liabilities |
| $ |
| |
As of July 31, 2023, the Company has right-of-use assets as follows:
Balance - April 30, 2023 |
| $ |
| |
Additions |
|
|
| |
Depreciation |
|
| ( | ) |
Balance - July 31, 2023 |
| $ |
|
| 23 |
| Table of Contents |
NOTE 11 - COMMITTMENTS AND CONTINGENCIES
The Company’s principal business and corporate address is 3571 E. Sunset Road, Suite 300, Las Vegas, NV 89120.
On August 5, 2020, the Company entered into a lease agreement for the office premise under a term of
The Company also operates a Regional Distribution Hub in Lubbock, Texas. This office is located at 512 East 42nd Street Lubbock, Texas 79404. This office is approximately 9,940 square feet and is currently leased for a term ending March 31, 2024, at a cost of $3,600 per month.
NOTE 12 - SUBSEQUENT EVENTS
Subsequent to July 31, 2023, and through the date that these financials were issued, the Company had the following subsequent events:
On August 15, 2023, the Company issued an aggregate of
On August 15, 2023, the Company issued
On August 15, 2023, the Company issued
On August 15, 2023, the Company issued
On August 28, 2023, the Company issued
On August 29, 2023, the Company issued
On August 4, 2023, the Company issued convertible promissory notes for aggregate
On September 1, 2023, the Company issued promissory note for principal amount of $
| 24 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
As used in this quarterly report, the terms “we, “us,” “our” and “our company” mean GPO Plus, Inc., unless otherwise indicated.
General Overview
GPO Plus (GPOX) is a product development, manufacturing, and distribution company which offers a diverse portfolio of high-quality innovative products sold directly to consumers and retailers. Our business is organized around four key areas: products (developing and manufacturing), distribution (getting our products to customers), marketing (promoting our products), and sales (selling our products to consumers and retailers). Our goal is to expand our product line and distribution reach to meet market demand and the needs of our customers. Our business is organized around four key areas:
| • | Products (developing and manufacturing unique products) |
|
|
|
| • | Distribution (getting our products to customers through Direct to store Delivery "DSD" and independent sales organizations "ISO's") |
|
|
|
| • | Branding (promoting our Products and our Company) |
|
|
|
| • | Sales (a technology and data-driven approach) |
We recently successfully deployed our new “White Glove” Direct to Store (“DSD”) service. This new service includes new point of sale displays for our flagship brand “The Feel-Good Shop+” and “Mr. Vapor.” Implement the new DSD service program GPOX created “Mini Hubs” supported by a Regional Distribution Hub in Lubbock, Texas.
Currently, GPOX services approximately 570 stores across 12 states centralized in the Southwest and Midwest regions of the United States. The Company has already identified 316 locations approved for the new program, with approximately 100 currently active. The next 116 stores in Dallas, TX, Austin, TX, and Albuquerque, NM, plan to be activated before the end of October 2023. The Company also has in its growth plans to activate an additional 103 stores in Wyoming, Kansas, and Missouri marketplaces by the end of October 2023.
Once the Company opens a Mini Hub, sales teams actively look to add additional specialty retailers (gas stations, smoke shops, vape shops, and liquor stores), with a goal of each Mini Hub servicing approximately 100 to 150 locations. This equates to an initial goal of 1,000 to 1,500 retail locations to be supported by the Regional Hub in Lubbock.
| 25 |
| Table of Contents |
Results of Operations
The following summary of our results of operations should be read in conjunction with our financial statements for the three months ended July 31, 2023 and 2022, which are included herein.
Three Months Ended July 31, 2023, Compared to the Three Months July 31, 2022
|
| Three Months Ended |
|
|
|
|
| |||||||||
|
| July 31, |
|
|
|
|
| |||||||||
|
| 2023 |
|
| 2022 |
|
| Changes |
|
| % |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ | 970,735 |
|
| $ | 17,663 |
|
| $ | 953,072 |
|
|
| 5,396 | % |
Cost of revenue |
|
| (747,031 | ) |
|
| (13,093 | ) |
|
| (733,938 | ) |
|
| 5,606 | % |
Gross Profit |
|
| 223,704 |
|
|
| 4,570 |
|
|
| 219,134 |
|
|
| 4,795 | % |
Operating Expenses |
|
| (1,155,090 | ) |
|
| (351,974 | ) |
|
| (803,116 | ) |
|
| 228 | % |
Loss from Operations |
|
| (931,386 | ) |
|
| (347,404 | ) |
|
| (583,982 | ) |
|
| 168 | % |
Other Expenses |
|
| (286,422 | ) |
|
| (29,442 | ) |
|
| (256,980 | ) |
|
| 873 | % |
Net Loss |
| $ | (1,217,808 | ) |
| $ | (376,846 | ) |
| $ | (840,962 | ) |
|
| 223 | % |
Revenues
We had revenues of $970,735 from operations during the three months July 31, 2023, as compared to $17,663 of revenues during the three months ended July 31, 2022. The increase in revenue is attributed to increased business activities during the three months ended July 31, 2023.
Net Loss
Our unaudited financial statements report a net loss of $1,217,808 for the three months ended July 31, 2023, compared to a net loss of $376,846 for the three months ended July 31, 2022. The increase in net loss was due to an increase in operating expenses and other expenses.
Expenses
Our operating expenses for the three months ended July 31, 2023, were $1,155,090 compared to $351,974 for the three months ended July 31, 2022. Operating expenses for the three months ended July 31, 2023 consisted of $331,510 in general and administrative, $438,693 in professional fees, $257,299 in professional fees – related parties and $127,588 in management fees and salaries – related parties. Operating expenses for the three months ended July 31, 2022 consisted of $40,771 in general and administrative, $176,821 in professional fees, $45,675 in professional fees – related parties and $88,707 in management fees and salaries – related parties. The increase in operating expenses during the three months ended July 31, 2023 was mainly due to the increase in general and administration, professional fees and stock-based compensation totaling $404,397 incurred during three months ended July 31, 2023 as compared to $170,385 incurred during the three months ended July 31, 2022.
Our other expenses for the three months ended July 31, 2023 were $286,422 compared to $29,442 for the three months ended July 31, 2022. During the three months ended July 31, 2023 and 2022, the Company incurred interest expense from convertible notes and finance leases of $109,916 and $10,932 and debt discount amortization of $176,506 and $18,510, respectively.
| 26 |
| Table of Contents |
Liquidity and Financial Condition
Working Capital
|
| July 31, |
|
| April 30, |
| ||
|
| 2023 |
|
| 2023 |
| ||
|
|
|
|
|
|
| ||
Current Assets |
| $ | 469,811 |
|
| $ | 325,458 |
|
Current Liabilities |
| $ | 3,104,369 |
|
| $ | 2,389,691 |
|
Working Capital (Deficiency) |
| $ | (2,634,558 | ) |
| $ | (2,064,233 | ) |
Our total current assets as of July 31, 2023 were $469,811 as compared to total current assets of $325,458 as of April 30, 2023 due to increases in accounts receivable, prepaid expenses and inventory.
Our total current liabilities as of July 31, 2023 were $3,104,369 as compared to total current liabilities of $2,389,691 as of April 30, 2023 due primarily to increases in promissory note payable, accounts payable and accrued interest.
Our working capital deficit on July 31, 2023 was $2,634,558 as compared to working capital deficit of $2,064,233 as of April 30, 2023 due to the factors noted above.
Cash Flows
|
| Three Months Ended |
| |||||
|
| July 31, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
|
|
|
|
|
|
| ||
Cash Flows used in Operating Activities |
| $ | (314,373 | ) |
| $ | (100,538 | ) |
Cash Flows used in Investing Activities |
| - | ) |
|
| (26,553 | ) | |
Cash Flows provided by Financing Activities |
|
| 311,277 |
|
|
| 126,750 |
|
Net decrease in cash during period |
| $ | (3,096 | ) |
| $ | (341 | ) |
Operating Activities
Net cash used in operating activities was $314,373 for the three months ended July 31, 2023 compared with $100,538 net cash used in operating activities during the same period in 2022.
During the three months ended July 31, 2023, net cash used in operating activities was attributed to net loss of $1,217,808, decreased by stock-based compensation of $404,397, depreciation of furniture and equipment of $6,354, amortization of convertible note discount of $176,506, amortization of intangible assets of $7,129, depreciation of right-of-use-assets of $7,727, interest expense on finance lease of $2,884, stock payable for extension of promissory notes of $5,390, stock payable for lease expense of $6,921 and a net change in operating assets and liabilities of $234,127.
During the three months ended July 31, 2022, net cash used in operating activities was attributed to net loss of $376,846, decreased by stock-based compensation of $170,385, depreciation of furniture and equipment of $286, amortization of convertible note discount of $18,510, amortization of intangible assets of $1,875 and lease expense settled by common stock of $5,000 and a net change in operating assets and liabilities of $80,252.
Investing Activities
During the three months ended July 31, 2023 and 2022, we used $0 and $26,553, respectively, in investing activities. During the three months ended July 31, 2022, the Company acquired intangible assets with cash of $26,553.
Financing Activities
During the three months ended July 31, 2023, net cash from financing activities was $305,336 compared to $126,750 during the same period in 2022. Cash flows from financing activities during the three months ended July 31, 2023 were derived from proceeds from issuance of promissory notes totaling of $433,500 offset by repayment for finance leases of $19,223 and repayment of promissory notes of $103,000. Proceeds from financing activities during the three months ended July 31, 2022 were derived from proceeds from issuance of promissory notes totaling of $75,000, proceeds from stock subscription of $9,750 and proceeds from warrants exercised of $42,000.
| 27 |
| Table of Contents |
Going Concern
As of July 31, 2023, we had cash on hand of $52,400. We generated revenues of $970,735 and gross profit of $223,704 during the three months ended July 31, 2023, but incurred net loss of $1,217,808 during the period and a cumulative net loss of $35,719,921 since our inception. We expect to generate additional losses for the foreseeable future while we establish our business.
We will require additional funds for our budgeted expenses over the next 12 months. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable. We need to raise additional funds in the immediate future in order to proceed with our budgeted expenses. We anticipate continuing to rely on equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned business activities. We presently do not have any arrangements for additional financing for the expansion of our future operations, and no potential lines of credit or sources of financing are currently available for the purpose of proceeding with our plan of operations. If we are not successful in raising sufficient capital to execute our business plan, we will be required to scale down or delay our plan of operation to accommodate our available resources.
Contractual Obligations
Not required for smaller reporting companies
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
The preparation of financial statements in 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. A change in managements’ estimates or assumptions could have a material impact on our financial condition and results of operations during the period in which such changes occurred. Actual results could differ from those estimates. Our financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued. Our company’s management believes that these recent pronouncements will not have a material effect on our financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company,” we are not required to provide the information required by this Item.
| 28 |
| Table of Contents |
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of July 31, 2023. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of July 31, 2023.
Our disclosure controls and procedures are not effective for the following reasons:
We did not maintain effective controls to identify and maintain segregation of duties in identifying, authorizing, approving, accounting for, and disclosing significant estimates, related-party transactions, significant unusual transactions, and other non-routine events and transactions. Specifically, we only have one individual, our sole officer and director, who reviews, evaluates, approves, and records transactions and initiates journal entries, approves journal entries, and posts journal entries to the general ledger. There is no independent review of any financial duties performed by this individual.
Changes in Internal Control Over Financial Reporting
During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Internal Controls
Our management do not expect that our disclosure controls and procedures or our internal control over financial reporting are or will be capable of preventing or detecting all errors or all fraud. Any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements, due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns may occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risk.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in litigation relating to claims arising out of our operations in the normal course of business.
As of the date of this Quarterly Report, we are not involved in any pending legal proceeding or litigation, and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party, and which would reasonably be likely to have a material adverse effect on our company.
Item 1A. Risk Factors
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no sales of equity securities during the period covered by this Report that were not registered under the Securities Act and were not previously reported in an Annual Report on Form 10-K, Quarterly Report on Form 10-Q or a Current Report on Form 8-K filed by the Company.
From May 1, 2023 through August 29, 2023, the Company issued 613,437 shares of common stock for the conversion of note principal amount of $93,150.
Pursuant to the exchange agreement entered on May 18, 2023, the Company issued 400,000 shares of common stock for the conversion of 7,500 Founders Series A Non-Voting Redeemable Preferred Stock.
On August 15, 2023, the Company issued an aggregate of 400,000 shares of common stock for term extension of three promissory notes.
On August 15, 2023, the Company issued 675,377shares of common stock to consultants for services.
On August 15, 2023, the Company issued 786,000 shares of common stock as loan inducements for to promissory notes.
On Aug 15, 2023, the Company issued 1,629,746 shares of common stock to executives and employees.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None
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Item 6. Exhibits
Exhibit Number |
| Exhibit |
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101.INS |
| XBRL INSTANCE DOCUMENT |
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101.SCH |
| XBRL TAXONOMY EXTENSION SCHEMA |
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|
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101.CAL |
| XBRL TAXONOMY EXTENSION CALCULATION LINKBASE |
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|
|
101.DEF |
| XBRL TAXONOMY EXTENSION DEFINITION LINKBASE |
|
|
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101.LAB |
| XBRL TAXONOMY EXTENSION LABEL LINKBASE |
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|
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101.PRE |
| XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| GPO PLUS, INC. |
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| (Registrant) |
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Dated: September 20, 2023 |
| /s/ Brett H. Pojunis |
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| Brett H. Pojunis |
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| President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director |
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| (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
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| 32 |