Limitless X Holdings Inc 10-Q for FY2021 Q2
Limitless X Holdings Inc. (LIMX)
About this 10-Q
Limitless X Holdings Inc filed this 10-Q on July 30, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).
Headline figures
Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $154.87K
- Net loss
- $92.03K
- compared with a net loss of $48.35K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number:
(Exact name of registrant as specified in its charter)
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(Address of principal executive offices)
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Securities registered pursuant to Section 12(b) of the Act:
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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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days.
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No[ ] |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 for 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).
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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.
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Large accelerated filer |
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Accelerated filer |
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Smaller reporting company |
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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 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).
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Yes |
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No[X] |
Indicate the number of share outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of July 30, 2021, there were
TABLE OF CONTENTS
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PART I – FINANCIAL INFORMATION | |
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Item 1.Financial Statements (Unaudited) |
2 |
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Consolidated Balance Sheets – June 30, 2021 and December 31, 2020 |
2 |
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Consolidated Statements of Operations – Three and Six months ended June 30, 2021 and 2020 |
3 |
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Consolidated Statement of Changes in Stockholders’ Equity – Six months ended June 30, 2021 |
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Consolidated Statements of Cash Flows – Six months ended June 30, 2021 and 2020 |
6 |
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7 | |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 14 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk – Not Applicable | 16 |
| Item 4. Controls and Procedures | 16 |
| PART II- OTHER INFORMATION | |
| Item 1. Legal Proceedings – Not Applicable | 17 |
| Item 1A. Risk Factors | 17 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds – Not Applicable | 17 |
| Item 3. Defaults Upon Senior Securities – Not Applicable | 17 |
| Item 4. Mine Safety Disclosures – Not Applicable | 17 |
| Item 5. Other Information – Not Applicable | 17 |
| Item 6. Exhibits | 18 |
| Signatures | 19 |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Bio Lab Naturals, Inc. and Subsidiary
Consolidated Balance Sheets
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June 30, |
December 31, | |||||||
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Assets |
2021 |
2020 | ||||||
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Current assets |
(Unaudited) |
(Audited) | ||||||
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Cash |
$ |
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$ |
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Due from other |
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Net property on operating lease |
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Deposits |
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Total current assets |
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Equipment | ||||||||
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Equipment, net of accumulated depreciation, $ | ||||||||
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$ |
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Total assets |
$ |
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$ |
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Liabilities and Stockholders' Equity | ||||||||
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Current liabilities | ||||||||
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Accounts payable and accrued liabilities |
$ |
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$ |
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Deferred revenue |
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Note payable |
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Note payable, related party |
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Total current liabilities |
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Total liabilities |
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Commitments and Contingencies |
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Stockholders' Equity | ||||||||
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Preferred shares, $ | ||||||||
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Class A Convertible, deemed par value $ | ||||||||
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shares issued and outstanding at June 30, 2021 and | ||||||||
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December 31, 2020 |
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Common shares, $ | ||||||||
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respectively at June 30, 2021 and December 31, 2020 |
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Additional paid in capital |
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Retained (deficit) |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
$ |
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$ |
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The accompanying notes are an integral part of these financial statements.
Bio Lab Naturals, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
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Three Months Ended June 30, | ||||||||
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2021 |
2020 | |||||||
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Revenues | ||||||||
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Sales |
$ |
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$ |
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Rentals |
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Total revenues |
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Cost of sales | ||||||||
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Purchases |
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Cost of sales - other |
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Depreciation - rental |
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Depreciation |
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Total cost of sales |
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Gross profit |
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Operating expenses | ||||||||
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Consulting fees, related party |
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General and administrative expenses - other |
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Professional fees |
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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, related party |
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Interest expense |
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Total other (expense) |
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Loss before income taxes |
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Income taxes |
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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 |
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* | ||||||||
The accompanying notes are an integral part of these financial statements.
Bio Lab Naturals, Inc. and Subsidiary
Consolidated Statements of Operations
(Unaudited)
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Six Months Ended June 30, | ||||||||
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2021 |
2020 | |||||||
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Revenues | ||||||||
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Sales |
$ |
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$ |
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Rental |
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Total revenues |
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Cost of sales | ||||||||
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Purchases |
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Cost of sales - other |
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Depreciation - rental |
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Depreciation |
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Total cost of sales |
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Gross profit |
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Operating expenses | ||||||||
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Consulting fees, related party |
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Consulting fees |
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General and administrative expenses - other |
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Professional fees |
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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, related party |
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Interest expense |
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(Loss) on disposal of assets |
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Total other (expense) |
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Loss before income taxes |
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Income taxes |
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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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$ |
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Weighted average number of common shares |
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The accompanying notes are an integral part of these financial statements.
Bio Lab Naturals, Inc. and Subsidiary
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited)
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Class A Convertible Preferred $0.0001 Par Value |
Common Shares $0.0001 Par Value |
Additional Paid-in |
Accumulated |
Total Stockholders' | ||||||||||||||||||||||||
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Shares |
Amount |
Shares |
Amount |
Capital |
(Deficit) |
Equity | ||||||||||||||||||||||
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BALANCES, December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of shares for services |
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Net loss for the period |
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— |
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BALANCES, June 30, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these financial statements.
Bio Lab Naturals, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
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Six Months Ended June 30, | ||||||||
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2021 |
2020 | |||||||
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OPERATING ACTIVITIES | ||||||||
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Net loss |
$ |
( |
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$ |
( |
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Adjustment to reconcile net loss to net cash flows used | ||||||||
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in operating activities | ||||||||
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Depreciation |
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Issuance of common shares for services |
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Loss on disposition of asset |
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Changes in: | ||||||||
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Accounts receivable - net |
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Deposits |
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Accounts payable and accrued liabilities |
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Net cash (used in) operating activities |
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INVESTING ACTIVITIES | ||||||||
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Acquisition of property on operating lease |
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Proceeds from disposition of asset |
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Net cash provided by investing activities |
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FINANCING ACTIVITIES | ||||||||
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Funds from sales of common shares |
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Funds from over subscription |
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Funds from deferred revenue |
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Funds from deposits |
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Funds from loan, net of repayment |
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Funds from loan related party, net of repayment |
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Net cash provided by financing activities |
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Net (decrease) in cash |
( |
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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 Schedule of Cash Flow Information: | ||||||||
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Interest paid |
$ |
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$ |
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Income taxes paid |
$ |
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$ |
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The accompanying notes are an integral part of these financial statements.
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 2021
Note 1 – Organization and History
Vyta Corp (the “Company”) was incorporated in Nevada in June 1996. On August 20, 2010, it changed its state of incorporation to Delaware and on November 5, 2010 it changed its name to Bio Lab Naturals, Inc. On August 20, 2010, the Company executed a redomicile merger with its wholly owned subsidiary Vyta Corp (Delaware), as result of the merger the Company’s corporate domicile moved from Nevada to Delaware.
Prior to 2011, the Company was involved in various business activities and since then the Company has been seeking a business opportunity.
Effective December 31, 2019, the Company entered into a Reorganization Agreement with Prime Time Live, Inc., a Colorado corporation (“PTL”), whereby PTL merged with a newly formed wholly owned subsidiary of the Company, and the subsidiary being the survivor in exchange for the Company issuing one share of its common stock for each share of PTL’s
Note 2 – Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Bio Lab Naturals, Inc. and its wholly owned subsidiary. All intercompany balances have been eliminated during consolidation.
Use of Estimates in the Preparation of Consolidated Financial Statements
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates include the fair value of assets and liabilities, income taxes and the valuation allowances related to accounts receivable, deferred tax assets and contingencies.
Cash and Cash Equivalents
The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents include demand deposits carried at cost which approximates fair value. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”).
Concentration of Credit Risk
The Company offers its services to a small number of clients. This risk of non-payment by these clients is considered minimal and the Company does not generally obtain collateral for sales. The Company continually monitors the credit standing of its clients.
Accounts Receivable
The Company records accounts receivable at net realizable value. This value includes an appropriate allowance for uncollectible accounts to reflect any loss anticipated on the accounts receivable balances and is charged to other income (expense) in the statements of operations. Management calculates this allowance based on its history of write-offs, the level of past-due accounts based on the contractual terms of the receivables, and the Company’s relationships with, and the economic status of, its clients. At June 30, 2021 and December 31, 2020, there are no allowance for uncollectible accounts.
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 2021
Leases
Capital Leases
The Company follows the provisions of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and incremental direct costs directly related to lease origination activity are expensed.
New lease transactions can be structured as direct financing leases that are non-cancelable "net" leases, contain "hell-or-high-water" provisions under which the lessee must make all lease payments regardless of any defects in the property, and which require the lessee to maintain, service and insure the property against casualty loss and pay all property, sales and other taxes. The re-lease of property that has come off lease may be accounted for as a sales-type lease or as an operating lease, depending on the terms of the re-lease. Leased property that comes off lease and is re-marketed through a sale to the lessee or a third party is accounted for as sale of leased property.
For leases that qualify as direct financing leases, the aggregate lease payments receivable and estimated residual value, if any, are recorded net of unearned income as net investment in leases. The unearned income is recognized as direct finance income on an internal rate of return method calculated to achieve a level yield on the Company’s investment over the lease term. There are no costs or expenses related to direct financing leases since lease income is recorded on a net basis.
For leases that qualify as sales-type leases, the Company recognizes profit or loss at lease inception to the extent the fair value of the property leased differs from the Company's carrying value. The difference between the discounted value of the aggregate lease payments receivable and the property cost, less the discounted value of the residual, if any, and any initial direct costs is recorded as sales-type lease income. For balance sheet purposes, the aggregate lease payments receivable and estimated residual value, if any, are recorded net of unearned income as net investment in leases. Unearned income is recognized as direct finance income over the lease term on an internal rate of return method.
The residual value is an estimate for accounting purposes of the fair value of the lease property at lease termination. The estimates are reviewed periodically to ensure reasonableness, however, the amounts the Company may ultimately realize could differ from the estimated amounts.
The Company has no leases that qualify as capital leases at and during the three and six months ended June 30, 2021.
Operating Leases
Lease contracts which do not meet the criteria of capital leases are accounted for as operating leases. Property on operating leases is recorded at the lower of cost or fair value and depreciated on a straight-line basis over the estimated useful life of the property. Rental income is recorded on a straight-line basis over the lease term. See Note 5 – Leases.
Equipment
Equipment is recorded at cost and consists of screen video and related equipment. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation of equipment is over the estimated useful life of five to ten years using the straight-line method for consolidated financial statement purposes. At June 30, 2021 and December 31, 2020, there were capitalized costs of $
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 2021
During the six months ended June 30, 2021, the Company sold a used screen for $
Revenue recognition
The Company follows the provisions of ASU No. 2014 - 09, Revenue from Contracts with Customers (Topic 606), using the full retrospective transition method. The Company’s adoption of ASU 2014 - 09 did not have a material impact on the amount and timing of revenue recognized in its consolidated financial statements.
Under ASU 2014 - 09, the Company recognizes revenue when control of the promised services is transferred to clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.
The Company derives its revenues from the rendering of entertainment rental services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its contracts:
Identify the contract with a client;
Identify the performance obligations in the contract;
Determine the transaction price;
Allocate the transaction price to performance obligations in the contract; and
Recognize revenue as the performance obligation is satisfied.
Impairment of Long-Lived Assets
In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the ASC, the Company assesses the recoverability of the carrying value of its long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
Other Comprehensive Loss
The Company has no material components of other comprehensive loss and accordingly, net loss is equal to comprehensive loss for the period.
Income Taxes
The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the accounting bases and the tax bases of the Company’s assets and liabilities. The deferred tax assets and liabilities are computed using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.
The Company's deferred income taxes include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.
The Company has adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 2021
income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At June 30, 2021 and December 31, 2020, there were no uncertain tax positions that required accrual.
Goodwill
In accordance with generally accepted accounting principles, goodwill cannot be amortized, however, it must be tested annually for impairment. This impairment test is calculated at the reporting unit level. The goodwill impairment test has two steps. The first identifies potential impairments by comparing the fair value of a reporting unit with its book value, including goodwill. If the fair value of the reporting unit exceeds the carrying amount, goodwill is not impaired and the second step is not necessary. If the carrying value exceeds the fair value, the second step calculates the possible impairment loss by comparing the implied fair value of goodwill with the carrying amount. If the implied goodwill is less than the carrying amount, a write-down is recorded. Management tests goodwill each year for impairment, or when facts or circumstances indicate impairment has occurred. See Note 4 – Fair Value Measurements.
Loss per Share
Basic net loss per common share of stock is calculated by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding during each period. Diluted net loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding, including the effect of other dilutive securities. The Company’s had no potentially dilutive securities issued as of and during the three and six months ended June 30, 2021 and 2020.
Equity Based Payments
The Company recognizes compensation cost for equity-based awards based on estimated fair value of the award and records capitalized cost or compensation expense over the requisite service period.
Off-Balance Sheet Arrangements
As part of its ongoing business, the Company has not participated in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. For the period through June 30, 2021, the Company has not been involved in any unconsolidated SPE transactions.
Subsequent Events
The Company evaluates events and transactions after the balance sheet date but before the consolidated financial statements are issued.
Note 3 – Going Concern and Managements’ Plan
The Company’s consolidated financial statements for the six months ended June 30, 2021 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company reported a net loss for the three and six months ended June 30, 2021 of $
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 2021
The Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern within one year after the date of the issuance of these consolidated financial statements. The future success of the Company is dependent on its ability to attract additional capital and ultimately, upon its ability to develop future profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. However, management believes that actions presently being taken to raise additional capital as more fully disclosed in these consolidated financial statements provides the opportunity for the Company to continue as a going concern.
Note 4 – Fair Value Measurements
The Company applies the authoritative guidance applicable to all financial assets and liabilities required to be measured and reported on a fair value basis, as well as to non-financial assets and liabilities measured at fair value on a non-recurring basis, including impairments of long-lived assets. The fair value of an asset or liability is the amount that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from sources independent of the Company. Unobservable input are inputs that reflect the Company’s assumptions of what market participants would use in valuing the asset or liability based on the information available in the circumstances.
Financial and non-financial assets and liabilities are classified within the valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. The Company’s policy is to recognize transfers in and out of the fair value hierarchy as of the end of the reporting period in which the event or change in circumstances caused the transfer. The Company has consistently applied the valuation techniques discussed below in all periods presented. The hierarchy is organized into three levels based on the reliability of the inputs as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities; or
Level 2: Quoted prices in active markets for similar assets and liabilities and inputs, quoted prices for identical or similar assets or liabilities in markets that are not active and model-derived valuations whose inputs or significant value drivers are observable; or
Level 3: Unobservable pricing inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.
The Company did not measure the financial or non-financial assets and liabilities at June 30, 2021 as there was no event or significant change within the valuation hierarchy during the six months ended June 30, 2021.
Note 5 – Net property on operating leases
The Company’s rental income consists of the income derived from an operating lease on a semi-truck video screen unit commencing on April 5, 2021 for a period of
At June 30, 2021, there were net property on operating lease capitalized costs of $
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 2021
Note 6 – Debt
Promissory Notes
On March 1, 2021, an individual loaned the Company $
Related Party
On March 1, 2021, an affiliate of an officer of the Company, loaned the Company $
Note 7 – Stockholders’ Equity
Preferred Shares
Class A Convertible
At June 30, 2021 and December 31, 2020, there are a total of
Common Shares
The Company’s capital stock at June 30, 2021 consists of
During the three months ended June 30, 2021, the Company issued
Note 8 – Equity Based Payments
The Company accounts for equity-based payment accruals under authoritative guidance as set forth in the Topics of the ASC. The guidance requires all equity-based payments to employees and non-employees, including grants of employee and non-employee stock options and warrants, to be recognized in the consolidated financial statements based at their fair values.
2014 Stock Incentive Plan
Effective January 15, 2020, the Company’s adopted its 2020 Stock Option and Award Plan (the “2020 Stock Incentive Plan”). Under the 2020 Stock Incentive Plan, the Board of Directors may grant options or purchase rights to purchase common stock to officers, employees, and other persons who provide services to the Company or any related company. The participants to whom awards are granted, the type of awards granted, the number of shares covered for each award, and the purchase price, conditions and other terms of each
BIO LAB NATURALS, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
June 30, 2021
award are determined by the Board of Directors, except that the term of the options shall not exceed
Note 9 – Related Party Transactions
Due to Related Parties
During the three months ended June 30, 2020, the Company repaid an affiliate of one of its officers $
During the three months ended June 30, 2020, the Company repaid an affiliate of one of its officers $
Equity for Services
During the three months ended June 30, 2021, the Company issued
During the three months ended June 30, 2020, the Company issued
Consulting Fees
During the three months ended June 30, 2021, the Company incurred consulting fees in the total amount of $
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements and Associated Risks.
This Form 10-Q contains certain statements that are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will, “expect,” “believe,” “anticipate,” “estimate,” “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.
Based on our financial history since inception, our auditor has expressed substantial doubt as to our ability to continue as a going concern. As reflected in the accompanying financial statements, as of June 30, 2021, we had an accumulated deficit totaling $(35,674,920). This raises substantial doubts about our ability to continue as a going concern.
Our plan of operations for the next 12 months is as follows:
The Company has been continuing its business and due to the lessening impact of COVD-19 experienced increased revenues during the three months ended June 30, 2021. Also, management has now been able to reconnect with event services business relationships and the normal demand for the event services business. Therefore, the Company now expects, without any new or additional steps, additional revenues to be generated during the third quarter of 2021 and continued operational status.
| 3rd Quarter 2021 | Marketing and Operations | $ | 50,041 | |||||
| 4th Quarter 2021 | Marketing and Operations | $ | 18,559 | |||||
| 1st Quarter 2021 | Marketing and Operations | $ | 70,290 | |||||
| 2nd Quarter 2022 | Marketing and Operations | $ | 90,523 |
Results of HISTORICAL Operations
For the Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020
During the three months ended June 30, 2021 and 2020 we recognized total revenues of $154,870 and $0, respectively. The Company expects to generate revenues in the third quarter of 2021 and for the next 12 months. The increase in revenues was the result of a twelve-month operating lease as well as the sale of a LED Video screen unit.
Gross profit for the three months ended June 30, 2020 was $29,964 compared to gross loss of ($13,113) for the prior period. The increase in gross profit of $43,077 was due to an increase in cost of sales of $111,793 and the related increase in revenues of 154,870.
During the three months ended June 30, 2021, we recognized $120,378 in operating expenses compared to $34,981 for the prior period. The increase of $85,397 was due to an increase in consulting and professional fees of $86,771 as a result of the Company’s audits and filings with the OTC Markets and a decrease in general & administrative expense - other of $1,374 as the result of a decrease in filing fees.
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For the Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020
During the six months ended June 30, 2021 and 2020 we recognized total revenues of $154,870 and $0, respectively. The increase in revenues of $154,870 was the result of a new operating lease as well as the sale of a LED Video screen unit.
Gross profit for the six months ended June 30, 2021 was $17,091 as compared to gross loss of ($27,956) for the prior period. The increase in gross profit of $45,047 was due to an increase in cost of sales of $109,823 and the related increase in revenues of 154,870.
During the six months ended June 30, 2021, we recognized $172,946 in operating expenses compared to $123,394 for the prior period. The increase of $49,552 was due to an increase in consulting and professional fees of $54,683 as a result of the Company’s audits, use of consultants and filings with the OTC Markets and a decrease in general & administrative expense - other of $5,131 as a result of a decrease in filing fees.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
During the six months ended June 30, 2021, the Company used cash flows from operational activities of $2,037 that was adjusted by non-cash items of: deprecation in the amount of $10,415, a loss on the disposition of asset in the amount of $73,046 and issuance of common shares for services in the amount of $77,500.
Investing Activities
During the six months ended June 30, 2021, the Company expended funds to acquire property on an operating lease in the amount of $115,789 as well as received proceeds from the sale of its used screen in the amount of $9,850.
Financing Activities
During the six months ended June 30, 2021, the Company borrowed funds in the amount of $65,000 and received deferred revenue on an operating lease in the amount of $9,000.
In order for us to continue as a going concern, we will need to obtain additional debt or equity financing and look for companies with cash flow positive operations that we can acquire. There can be no assurance that we will be able to secure additional debt or equity financing, that we will be able to acquire cash flow positive operations, or that, if we are successful in any of those actions, those actions will produce adequate cash flow to enable us to meet all our future obligations. Most of our existing financing arrangements are short-term. If we are unable to obtain additional debt or equity financing, we may be required to significantly reduce or cease operations.
Going Concern
We have approximately $21,000 in cash as of July 26, 2021 and have incurred operating losses and limited cash flows from operations since inception. As of June 30, 2021, we had accumulated deficit of $(35,674,920) and we will require additional working capital to fund operations through 2021 and beyond. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements included in this Form 10-Q do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern. The audited financial statements included in the Company’s recent annual report on Form 10-K have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result if we cease to continue as a going concern.
Based on our financial history since inception, in their report on the financial statements for the period ended December 31, 2020, our independent registered public accounting firm has expressed substantial doubt as to
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our ability to continue as a going concern. There is no assurance that any revenue will be realized in the future.
There can be no assurance that we will have adequate capital resources to fund planned operations or that any additional funds will be available to us when needed or at all, or, if available, will be available on favorable terms or in amounts required by us. If we are unable to obtain adequate capital resources to fund operations, we may be required to delay, scale back or eliminate some or all of our operations, which may have a material adverse effect on our business, results of operations and ability to operate as a going concern.
Short Term
On a short-term basis, we have not generated revenues sufficient to cover our growth-oriented operations plan. Based on prior history, we may continue to incur losses until such a time that our revenues are sufficient to cover our operating expenses and growth-oriented operations plan. As a result, we may need additional capital in the form of equity or loans, none of which is committed as of this filing.
Capital Resources
We have only common stock as our capital resource, and our assets, including cash.
We have no material commitments for capital expenditures within the next year, however, as operations are expanded substantial capital will be needed to pay for expansion and working capital.
Need for Additional Financing
We have limited funds, and such funds may not be adequate to carry out our business plan in the event production industry. Our ultimate success depends upon our ability to raise additional capital. We are investigating the availability, sources, and terms that might govern the acquisition of additional capital.
We have no commitment at this time for additional capital. If we need additional capital, we have no assurance that funds will be available from any source or, if available, that they can be obtained on terms acceptable to us. If not available, our operations will be limited to those that can be financed with our existing capital.
Off Balance Sheet Arrangements
None
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer/principal financial officer as appropriate, to allow timely decisions regarding required disclosure.
Management has carried out an evaluation of the effectiveness of the design and operation of our Company’s disclosure controls and procedures. Due to the lack of personnel and outside directors, management
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acknowledges that there are deficiencies in these controls and procedures. The Company anticipates that with further resources, the Company will expand both management and the board of directors with additional officers and independent directors in order to provide sufficient disclosure controls and procedures.
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)) during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
There have been no material changes with respect to risk factors previously disclosed in the Company’s Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 1, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
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ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.
| 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a–14(a) or 15d-14(a) of the Securities Exchange Act of 1934 |
| 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 |
| 32.1 | Certification of Chief Executive Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 32.2 | Certification of Chief Financial Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
| 101.INS | 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. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | Cover Page Interactive Data File (formatted as an Inline XBRL document and included in Exhibit 101) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BIO LAB NATURALS, INC. | ||
| (Registrant) | ||
| Dated: July 30, 2021 | By: | /s/ Edward Nichols |
| W. Edward Nichols | ||
| (Chief Executive Officer, Principal Executive | ||
| Officer) | ||
| Dated: July 30, 2021 | By: | /s/ Darrell Avey |
| Darrell Avey | ||
| (Chief Financial Officer, Principal Accounting | ||
| Officer) | ||
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