MIBE 10-Q
Miami Breeze Car Care Inc (MIBE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
or
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) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including
area code:
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Securities registered pursuant to Section 12(g) of the Exchange Act: Common Stock, par value $0.0001 per share
Indicate by checkmark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the 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 Regulations S-T (§232.405
of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post 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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: shares of common stock are issued and outstanding as of August 9, 2024.
Documents Incorporated by Reference: None
MIAMI BREEZE CAR CARE INC.
FORM 10-Q
June 30, 2024
TABLE OF CONTENTS
i
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,”, “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “project,” “continue,” “potential,” “ongoing” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:
| ● | our ability to obtain additional funds for our operations; |
| ● | our reliance on third party distributors and manufacturers; |
| ● | the initiation, timing, progress and results of our research and development programs; |
| ● | our dependence on current and future collaborators for developing new products; |
| ● | the rate and degree of market acceptance of our products; |
| ● | the implementation of our business model and strategic plans for our business; |
| ● | our estimates of our expenses, losses, future revenue and capital requirements, including our needs for additional financing; |
| ● | our reliance on third party suppliers to supply the materials and components for our products; |
| ● | our ability to attract and retain qualified key management and technical personnel; |
| ● | our financial performance; |
| ● | the impact of government regulation and developments relating to our competitors or our industry; and |
| ● | other risks and uncertainties, including those listed under the caption “Risk Factors.” |
These statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section titled “Risk Factors” and elsewhere in this Report.
Any forward-looking statement in this Report reflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our business, results of operations, industry, and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this Report completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
This Report also contains estimates, projections and other information concerning our industry, our business and the markets for car care products, including data regarding the estimated size of those markets and their projected growth rates. Information that is based on estimates, forecasts, projections, or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources from which these data are derived.
You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this Report. Except as required by law, we do not undertake any obligation to update or release any revisions to these forward-looking statements to reflect any events or circumstances, whether as a result of new information, future events, changes in assumptions or otherwise, after the date hereof.
ii
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MIAMI BREEZE CAR CARE INC.
BALANCE SHEETS
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | $ | ||||||
| Inventory | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Prepaid expenses - related party | ||||||||
| Total Current Assets | ||||||||
| NON-CURRENT ASSET: | ||||||||
| Deferred offering costs | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Other current liabilites | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Preferred stock; par value $; shares authorized; Series A Preferred stock; shares designated; shares issued and outstanding on June 30, 2024 and December 31, 2023 | ||||||||
| Common stock; par value $: shares authorized; and shares issued and outstanding on June 30, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ Equity | ||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||
See accompanying notes to unaudited financial statements.
1
MIAMI BREEZE CAR CARE INC.
STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| SALES | $ | $ | $ | $ | ||||||||||||
| COST OF SALES | ||||||||||||||||
| GROSS PROFIT | ||||||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Compensation and related benefits | ||||||||||||||||
| Advertising and promotion | ||||||||||||||||
| Professional fees (includes stock-based professional fees of $ | ||||||||||||||||
| Professional fees - related party | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| OTHER EXPENSES: | ||||||||||||||||
| Foreign currency transaction loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total Other Expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| NET LOSS PER COMMON SHARE: | ||||||||||||||||
| Basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| WEIGHTED AVERAGE COMMON SHARE OUTSTANDING: | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
See accompanying notes to unaudited financial statements.
2
MIAMI BREEZE CAR CARE INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(Unaudited)
| Additional | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| # of Shares | Amount | # of Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Common stock issued for services | - | |||||||||||||||||||||||||||
| Common stock issued for cash | - | |||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, March 31, 2024 | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Additional | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Shareholders’ | ||||||||||||||||||||||||
| # of Shares | Amount | # of Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, March 31, 2023 | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
See accompanying notes to unaudited financial statements.
3
MIAMI BREEZE CAR CARE INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Six Months Ended June 30, | For the Six Months Ended June 30, | |||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based professional fees | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Prepaid expenses - related party | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| NET CASH USED IN OPERATING ACTIVITIES | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payment of deferred offering costs | ( | ) | ||||||
| Proceeds from sale of common stock | ||||||||
| Proceeds from sale of common stock yet to be issued | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES | ||||||||
| NET DECREASE IN CASH | ( | ) | ( | ) | ||||
| CASH, beginning of period | ||||||||
| CASH, end of period | $ | $ | ||||||
| - | ||||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
See accompanying notes to unaudited financial statements.
4
MIAMI BREEZE CAR CARE INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2024
(Unaudited)
NOTE 1 – NATURE OF ORGANIZATION
Nature of Organization
Miami Breeze Car Care Inc. (the “Company”) was incorporated on February 25, 2021 in the State of Florida, The Company is a developer and distributor of automotive care products that provide a long-lasting, new car scent.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Going Concern
These financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal
course of business. As reflected in the accompanying unaudited consolidated financial statements, the Company had a net loss of $
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates during the six months ended June 30, 2024 and 2023 include estimates for obsolete or slow-moving inventory and the fair value of non-cash equity transactions.
Fair Value of Financial Instruments and Fair Value Measurements
The Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s (the “FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Disclosures about the fair value of financial instruments are based on pertinent information available to the Company on June 30, 2024 and December 31, 2023. Accordingly, the estimates presented in these financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments. FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy are as follows:
Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2—Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3—Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
5
MIAMI BREEZE CAR CARE INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2024
(Unaudited)
The carrying amounts reported in the balance sheets for cash, inventory, prepaid expenses, deferred offering costs, and accounts payable approximate their fair market value based on the short-term maturity of these instruments.
Cash and Cash Equivalents
For the purposes of the statements of cash flow,
the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts
to be cash equivalents. The Company has
Inventory
Inventory, consisting of finished goods, are stated
at the lower of cost and net realizable value utilizing the weighted average cost method. A reserve is established when management determines
that certain inventories may not be saleable. If inventory costs exceed the expected net realizable value due to obsolescence or quantities
in excess of expected demand, the Company will record reserves for the difference between the cost and the net realizable value. These
reserves are recorded based on estimates and included in cost of sales. During the six months ended June 30, 2024 and 2023, the Company
did not write off obsolete and expired inventory. On June 30, 2024 and December 31, 2023, inventory amounted to $
Prepaid Expenses
Prepaid expenses include the value of fully vested
and non-forfeitable shares issued prior to the services being performed, and other prepaid expenses, which are amortized into expense
over the term of the respective agreement or as services are performed. Prepaid expenses amounted to $
Impairment of Long-Lived Assets
In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.
Revenue Recognition
In accordance with ASU Topic 606 - Revenue from Contracts with Customers, the Company recognizes revenue in accordance with that core principle by applying the following steps:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
The Company sells its products, which include standard warranties, primarily to consumers. Product sales are recognized at a point in time when the products are shipped to the customer and title is transferred and are recorded net of any discounts or allowances. The warranty does not represent a separate performance obligation.
Shipping and Handling Costs
Shipping and handling costs incurred for products shipped to customers are included in general and administrative expenses. Shipping and handling costs charged to customers are included in sales.
Advertising Costs
The Company may participate in various advertising
programs. All costs related to advertising of the Company’s products are expensed in the period incurred. For the six months ended
June 30, 2024 and 2023, advertising costs charged to operations were $
Federal and State Income Taxes
The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The Company follows the accounting guidance for
uncertainty in income taxes using the provisions of Accounting Standards Codification (ASC) 740 “Income Taxes”. Using
that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. As of June 30, 2024 and December 31, 2023, the Company had
6
MIAMI BREEZE CAR CARE INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2024
(Unaudited)
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation –Stock Compensation”, which requires recognition in the financial statements of the cost of employee, director, and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee, director, and non-employee services received in exchange for an award based on the grant-date fair value of the award. The Company has elected to recognize forfeitures as they occur as permitted under ASU 2016-09 Improvements to Employee Share-Based Payment.
ASC 260 “Earnings Per Share”, requires dual presentation of basic and diluted earnings per common share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilutive securities and non-vested forfeitable shares. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares or resulted in the issuance of common shares that then shared in the earnings of the entity. Basic net loss per common share is computed by dividing net loss available to members by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss by the weighted average number of common shares, common share equivalents and potentially dilutive securities outstanding during each period. On June 30, 2024 and December 31, 2023, the Company did t have any potentially dilutive securities.
Leases
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. ASU 2016-02 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to recognize a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The pronouncement requires a modified retrospective method of adoption and is effective on January 1, 2019, with early adoption permitted. The Company has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less.
Segment Reporting
During the six months ended June 30, 2024 and 2023, the Company operated in one reportable business segment.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for the exception. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance was effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and early adoption is permitted. The adoption of ASU 2020-06 had no impact on the Company’s financial statements.
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
NOTE 3 – SHAREHOLDERS’ EQUITY
Preferred Stock
The Company is authorized to issue shares of its $ par value preferred stock. The Company’s board of directors will have the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further stockholder approval. As of June 30, 2024 and December 31, 2023, shares have been designated as Series A preferred stock and Series A preferred shares were issued and outstanding.
Series A Preferred stock
The Certificate of Designations, Preferences, Rights, and Limitations of Series A Preferred Stock (“Certificate of Designations”) provides that the Series A Preferred Stock shall be entitled to vote with the shares of the Company’s common stock at any annual or special meetings of the stockholders of the Company. Together, collectively in their entirety, all holders of Series A preferred stock shall have voting rights equal to exactly 65% of all voting rights available at the time of any vote, including Series A preferred stock. The holders of Series A Preferred Stock, through the ownership of Series A Preferred Stock, have the power to act on behalf of the Company, to call a special meeting of the shareholders, to remove and/or replace the Board of Directors or management or any individual members thereof in the event that one or more of the foregoing has done, or failed to do, anything which in his sole judgment, will materially and adversely impact the business of the Company in any manner whatsoever, including but not limited to, any violations of state or federal securities laws, or any action which could cause bankruptcy, dissolution, or other termination of the Company. In no event will the ombudsman have the right or power to participate in the normal and any usual daily operations of the Company.
7
MIAMI BREEZE CAR CARE INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2024
(Unaudited)
Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders shall be entitled to receive out of the assets of the Company whether such asset or capital are surplus, for each of Preferred Stock an amount equal to the Holder’s pro rata share of the assets and funds of the Company to be distributed.
The Series A Preferred shall have no conversion rights and no dividend shall be declared or paid to the Series A Preferred Stock.
In 2021, the Company issued shares of its Series A preferred stock to the founders of the Company. The Series A preferred shares have no stated or face value.
Common Stock
Sale of Common Stock
On March 13, 2024, the Company entered into a
private placement subscription agreement (the “Subscription Agreement”) with an investor (the “Investor”). In connection
with the Subscription Agreement, the Company issued shares of its common stock to the Investor for cash proceeds of $
Sale of Common Stock yet to be Issued
On June 26, 2024, the Company entered into a private
placement subscription agreement (the “Subscription Agreement”) with an investor (the “Investor”). In connection
with the Subscription Agreement, the Company will issue shares of its common stock to the Investor for cash proceeds of $
Issuance of Common Stock for Services
On April 28, 2021, the Company entered into a
two-year brand ambassador agreement with an entity for marketing and promotional services, including the designing and implementation
of certain promotional campaigns to be rendered by the entity and a certain individual sports celebrity. In connection with this brand
ambassador agreement, the Company issued restricted common shares of the Company to this entity. These shares vest immediately.
These shares were valued at $
On July 29, 2021, the Company issued shares
of its common stock for legal services rendered. These shares were valued at $
On April 20, 2022, the Company issued shares
of its common stock to a consultant pursuant to a 12-month consulting agreement. These shares were valued at $
On January 4, 2024, the Company amended its agreement
with Rafael Scotoni (the “Consultant”) dated April 1, 2022, whereby the Consultant agreed to serve as the non-exclusive Head
of Business of the Company. The Consultant shall provide advice, consultation, referrals, information, and services to the Company as
requested regarding business development. These services encompassed researching, introducing, and negotiating with new manufacturers
for hanging air fresheners, as well as developing a comprehensive master distributor business plan tailored for Austria and Switzerland.
The amended agreement extended the term to March 31, 2026. The Consultant shall be compensated with common stock based on attainment of
milestones. At each quarter end, the Company’s management shall assess the result of Consultant’s efforts based on the number
of strategic partners and customers brought to the Company by Consultant. The Company shall award the aggregate sum of two hundred and
fifty thousand (250,000) shares of common stock of the Company to the Consultant over the term of the amended agreement. In connection
with this agreement, the Company issued shares of its common stock to the Consultant for services rendered for the period from
January 1, 2024, to March 31, 2024. These shares were valued at $
On June 12, 2024, the Company entered to an agreement
with Stefan Lumpp (the “Consultant”), whereby the Consultant agreed to serve as the non-exclusive Head of Business Development
of the Company. The Consultant shall provide advice, consultation, referrals, information, and services to the Company as requested regarding
product sales development including, introduction to potential strategic partners, conducting assessment and creation of alliances and
customers. The term of the agreement shall end on May 30, 2026. The Consultant shall be compensated with common stock based on attainment
of milestones. At each quarter end, the Company’s management shall assess the result of Consultant’s efforts based on the
number of strategic partners and customers brought to the Company by Consultant. The Company shall award the aggregate sum of 10,000 shares
of common stock of the Company to the Consultant when the Company is satisfied that such efforts have a possible/projected benchmark valuation
of $10,000. In connection with this agreement, the Company will issue shares of its common stock to the Consultant for services
rendered for the period from June 12, 2024, to June 30, 2024. These shares were valued at $
8
MIAMI BREEZE CAR CARE INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2024
(Unaudited)
NOTE 4 – CONCENTRATIONS
Concentrations Of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist primarily of cash deposits. The Company places its cash in banks or financial institutions
in the United Stated, and in Europe (not insured by the Federal Deposit Insurance Company (FDIC)). On June 30, 2024 and December 31, 2023,
the Company had
Sales Concentration
During the six months ended June 30, 2024,
NOTE 5 – RELATED PARTY TRANSACTIONS
GH Bill, Inc.
On March 1, 2022, the Company entered into a ten-month
business operations agreement with GH Bill. In connection with this agreement, the Company paid a monthly service fee of $4,000 to GH
Bill for administration and back-office services. Beginning in June 2022, this monthly service fee was increased to $8,500 per month.
In January 2023, this monthly service fee was increased to $14,500 per month, and in August 2023, this monthly service fee was increased
to $18,500 per month. In addition, during the six months ended June 30, 2024 and 2023, the Company paid additional service fees of $
RN Consulting GmbH
On April 28, 2021, the Company entered into a two-year Brand Ambassador Agreement with RN Consulting GmbH, a company owned by Romain Grosjean, a race car driver, pursuant to which Romain Grosjean will, among other promotional engagements for the Company, serve as Brand Ambassador to the Company and its products, including carrying the Company’s branding on his race car suit at the NTT Indy Series sporting events. The Company has agreed and has already issued 2,000,000 shares of restricted stock common stock as compensation to RN Consulting. In addition, RN Consulting shall receive $1.00 for each 16oz bottle or gallon of the Company’s product sold on the Company’s Amazon account. The Brand Ambassador Agreement was renewed for an additional 24 months on March 20, 2023 with an automatic renewal clause for each subsequent 24 months term.
NOTE 6 – SUBSEQUENT EVENTS
The Company has evaluated events subsequent to the balance sheet date through August 9, 2024 the date these financial statements were available to be issued. The Company determines that there are no significant subsequent events.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes and other financial information included in this Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties as described under the heading “Cautionary Note Regarding Our Forward-Looking Statements” elsewhere in this Report. You should review the disclosure under the heading “Risk Factors” in this Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
We are in the car care accessories business, focusing on protection products/car cleaning accessories. We were founded in 2021 as a Florida corporation. Our history dates back to 2018 when Wolfgang Ruecker, our Founder and CEO and car enthusiast, was confronted with a challenge: how do you keep a car with the scent it had a brand-new right off the new car lot. The challenge led to years of collaboration with chemical engineers and mixers/perfumers resulting in what we believe delivers the perfect sensory experience for a luxury car: the Miami Breeze Car Care Products.
The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our financial statements contained in this Report, which have been prepared in accordance with United States generally accepted accounting principles (“GAAP”). You should read the discussion and analysis together with such financial statements and the related notes thereto.
12-Month Outlook and Roll Out of Production
During the next 12 months, we intend to grow production and sales through placement of sponsored ads on Amazon.com, Facebook and other digital media platforms to create product awareness to drive customers to our product. As of August 9, 2024, we have approximately $6,000 in cash and have estimated $740,000 for projected expenses on SEC reporting, legal, accounting and compliance, working capital/overhead and marketing and advertising for the next 12-months. The following provides an overview of our estimated expenses to fund our plan of operation over the next twelve months.
| ESTIMATED EXPENSES FOR THE NEXT TWELVE MONTHS | ||||
| SEC reporting, legal, accounting, audit and compliance | $ | 120,000 | ||
| Working capital/overhead | 120,000 | |||
| Marketing and advertising | 500,000 | |||
| Total | $ | 740,000 | ||
Our cash resources as of August 9, 2024 will not be sufficient for us to execute our business plan. If we do not generate sufficient cash from our intended financing activities and sales, or if our planned digital campaigns were to fail, we will be unable to execute on our projected operations for the next 12 months. In that event, we will be forced to cut down on our planned marketing and advertising campaigns, which will negatively affect our business, results of operations and financial condition. While we intend to engage in several equity or debt financings, there is no assurance that these will occur, nor can we assure our shareholders that we will not be required to obtain additional financing on terms that are not dilutive of their interests.
Going Concern
Our auditors have issued a “going concern” opinion, meaning that there is substantial doubt if we can continue as an on-going business for the next twelve months unless we obtain additional capital. Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying unaudited consolidated financial statements, we had a net loss of $223,916 and $533,980 for the six months ended June 30, 2024 and 2023, respectively. The Company has an accumulated deficit of $3,655,001 and $3,431,085 on June 30, 2024 and December 31, 2023, respectively. The net cash used in operations was $139,406 and $186,051 for the six months ended June 30, 2024 and 2023, respectively. No substantial revenues are anticipated until we have implemented our plan of operations. These factors raise substantial doubt about our ability to continue as a going concern for a period of twelve months from the issuance date of this report. Management cannot provide assurance that we will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. We are seeking to raise capital through additional debt and/or equity financing to fund our operations in the future. Although we have historically raised capital from sales of common shares, there is no assurance that we will be able to continue to do so. If we are unable to raise additional capital or secure additional lending in the near future, management expects we will need to curtail its operations. Our 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.
Basis of Presentation
The financial statements contained herein have been prepared in accordance with accounting principles generally accepted in the United States of America (the “U.S. GAAP”) and the requirements of the Securities and Exchange Commission.
Critical Accounting Estimates
This management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us 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 financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates if conditions differ from our assumptions. While our significant accounting policies and significant estimates are more fully described in Note 1 in the “Notes to Financial Statements”, we believe the following estimates are critical to the process of making significant judgments and estimates in preparation of our financial statements.
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Stock-based compensation
Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation –Stock Compensation”, which requires recognition in the financial statements of the cost of employee, director, and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee, director, and non-employee services received in exchange for an award based on the grant-date fair value of the award. The Company has elected to recognize forfeitures as they occur as permitted under ASU 2016-09 Improvements to Employee Share-Based Payment.
Recently Issued Accounting Pronouncements
Refer to the notes to the unaudited financial statements.
Results of Operations
Revenue
During the three months ended June 30, 2024 and 2023, we generated revenues of $2,249 and $4,313, respectively, a decrease of $2,064, or 47.9%. During the six months ended June 30, 2024 and 2023, we generated revenues of $3,952 and $10,046, respectively, a decrease of $6,094, or 60.7%. Since inception, a majority of the Company’s sales were generated in Europe. No customer accounted for over 10% of sales. The decrease in sales was attributable to our lack of marketing efforts.
Cost of Sales
For the three months ended June 30, 2024 and 2023, cost of sales amounted to $951 and $1,833, respectively, a decrease of $882 or 48.1%. For the six months ended June 30, 2024 and 2023, cost of sales amounted to $1,910 and $4,493, respectively, a decrease of $2,583 or 57.5%. The decrease is primarily attributable to the decrease in sales as described above.
Operating expenses
For the three months ended June 30, 2024, operating expenses amounted to $97,767 as compared to $178,645 for the three months ended June 30, 2023, a decrease of $80,878, or 45.3%. For the six months ended June 30, 2024, operating expenses amounted to $225,260 as compared to $539,059 for the six months ended June 30, 2023, a decrease of $313,799, or 58.2%. For the three and six months ended June 30, 2024 and 2023, operating expenses consisted of the following:
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Compensation and related benefits | $ | - | $ | 18,180 | $ | - | $ | 36,648 | ||||||||
| Advertising and promotion | 515 | 2,864 | 2,828 | 11,056 | ||||||||||||
| Professional fees | 34,452 | 105,759 | 90,077 | 383,476 | ||||||||||||
| Professional fees - related parties | 55,500 | 43,500 | 117,500 | 87,000 | ||||||||||||
| General and administrative expenses | 7,300 | 8,342 | 14,855 | 20,879 | ||||||||||||
| Total Operating Expenses | $ | 97,767 | $ | 178,645 | $ | 225,260 | $ | 539,059 | ||||||||
Compensation and related benefits
Compensation and related expenses include salaries, stock-based compensation, health insurance and other benefits.
For the three months ended June 30, 2024 and 2023, compensation and related benefits amounted to $0 and $18,180, respectively, a decrease of $18,180, or 100.0%. For the six months ended June 30, 2024 and 2023, compensation and related benefits amounted to $0 and $36,648, respectively, a decrease of $36,648, or 100.0%. The decreases were solely attributable to a decrease in compensation and related expenses.
Advertising and promotion
During the three months ended June 30, 2024 and 2023, advertising and promotion expenses amounted to $515 and $2,864, respectively, a decrease of $2,349, or 82.0%. The decrease was primarily attributable to the decrease in advertising campaigns in Europe to promote our products related to cost-cutting measures.
During the six months ended June 30, 2024 and 2023, advertising and promotion expenses amounted to $2,828 and $11,056, respectively, a decrease of $8,228, or 74.4%. The decrease was primarily attributable to the decrease in advertising campaigns in Europe to promote our products related to cost-cutting measures.
Professional fees
During the three months ended June 30, 2024 and 2023, we reported professional fees of $34,452 and $105,759, respectively, a decrease of $71,307, or 67.4%. The decrease was primarily attributable to a decrease in stock-based consulting of $74,259, and a decrease in legal fees of $8,000, offset by an increase in accounting fees of $8,294 and other professional fees of $2,658.
During the six months ended June 30, 2024 and 2023, we reported professional fees of $90,077 and $383,476, respectively, a decrease of $293,399, or 76.5%. The decrease was primarily attributable to a decrease in stock-based consulting of $288,426, and a decrease in legal fees of $20,500, offset by an increase in accounting fees of $13,444 and other professional fees of $2,083.
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Professional fees – related parties
During the three months ended June 30, 2024 and 2023, we incurred $55,500 and $43,500 in professional fees – related parties, an increase of $12,000, or 27.6%. During the six months ended June 30, 2024 and 2023, we incurred $117,500 and $87,000 in professional fees – related parties, an increase of $30,500, or 35.1%. These increases were solely attributable to increases in fees paid to GH Bill, pursuant to a business operations agreement with GH Bill. In connection with this agreement, we paid a monthly service fee ranging from $4,000 to $18,500 to GH Bill for administration and back-office services. Beginning in June 2022, this monthly service fee was increased from $4,000 to $8,500 per month, in January 2023, the monthly fee was increased to $14,500, and in August 2023, the monthly fee was increased to $18,500. In addition, during the six months ended June 30, 2024 and 2023, we paid additional service fees of $6,500 and $0, respectively.
General and administrative expenses
During the three months ended June 30, 2024 and 2023, general and administrative expenses amounted to $7,300 and $8,342, a decrease of $1,042, or 12.5%. This decrease was primarily attributable to a decrease in computer and internet expenses of $2,600, and a decrease in other general and administrative expenses of $89, offset by an increase in software and technology expenses of $1,647.
During the six months ended June 30, 2024 and 2023, general and administrative expenses amounted to $14,855 and $20,879, a decrease of $6,024, or 28.9%. This decrease was primarily attributable to a decrease in software and technology expenses of $4,476, and a decrease in computer and internet expenses of $2,600, offset by an increase in other general and administrative expenses of $1,052.
Loss from Operations
For the three months ended June 30, 2024, loss from operation amounted to $96,469 as compared to $176,165 for the three months ended June 30, 2023, a decrease of $79,696 or 45.2%. For the six months ended June 30, 2024, loss from operation amounted to $233,218 as compared to $533,506 for the six months ended June 30, 2023, a decrease of $310,288 or 58.2%. The decrease was primarily a result of the changes in revenue, cost of sales and operating expenses as discussed above.
Other Expenses
Other expenses solely consisted of foreign currency transaction loss. During the three months ended June 30, 2024 and 2023, we reported other expenses of $30 and $985, respectively, a decrease of $955 or 97.0%. During the six months ended June 30, 2024 and 2023, we reported other expenses of $698 and $474, respectively, a decrease of $224 or 47.3%.
Net Loss
Due to the foregoing reasons, during the three months ended June 30, 2024 and 2023, our net loss was $96,499, or $(0.00) per common share (basic and diluted) and $177,150, or ($0.01) per common share (basic and diluted), respectively, a decrease of $80,651, or 45.5%, and during the six months ended June 30, 2024 and 2023, our net loss was $223,916, or $(0.01) per common share (basic and diluted) and $533,980, or ($0.02) per common share (basic and diluted), respectively, a decrease of $310,064, or 58.1%.
Liquidity and Capital Resources
Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. We had working capital of $58,122 and $28,083 in cash as of June 30, 2024, and working capital of $176,038 and $74,889 in cash as of December 31, 2023, respectively.
| June 30, 2024 | December 31, 2023 | Working Capital Change | Percentage Change | |||||||||||||
| Working capital: | ||||||||||||||||
| Total current assets | $ | 135,148 | $ | 199,847 | $ | (64,699 | ) | (32.4 | )% | |||||||
| Total current liabilities | (77,026 | ) | (23,809 | ) | (53,217 | ) | (223.5 | )% | ||||||||
| Working capital | $ | 58,122 | $ | 176,038 | $ | (117,916 | ) | (67.0 | )% | |||||||
The decrease in working capital of $117,916 was primarily attributable to a decrease in current assets of $64,699 primarily due to a decrease in cash of $46,806, and a decrease in prepaid expenses of $18,945, offset by an increase in deferred offering cost of $10,000 and an increase in inventory of $1,052, and an increase in current liabilities of $53,217 primarily due to an increase in accounts payable and accrued expenses of $16,617, and an increase in other current liabilities of $36,600.
The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying unaudited consolidated financial statements, we had a net loss of $223,916 and $533,980 for the six months ended June 30, 2024 and 2023, respectively. Net cash used in operations was $139,406 and $186,051 for the six months ended June 30, 2024 and 2023. Additionally, as of June 30, 2024 and December 31, 2023, we had an accumulated deficit of $3,655,001 and $3,431,085, respectively, and have generated minimal revenues since inception. These factors raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the issuance date of this report. Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive or raise additional debt and/or equity capital. The Company is seeking to raise capital through additional debt and/or equity financing to fund its operations in the future. Although the Company has historically raised capital from sales of common shares, there is no assurance that it will be able to continue to do so. If the Company is unable to raise additional capital or secure additional lending in the near future, management expects that the Company will need to curtail its operations. 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.
Our primary uses of cash have been for compensation and related expenses, fees paid to third parties for professional services, advertising and promotion expenses, and general and administrative expenses. All funds received have been expended in the furtherance of growing the business. We received funds from the sale of our common stock. The following trends are reasonably likely to result in changes in our liquidity over the near to long term:
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| ● | An increase in working capital requirements to finance our current business; | |
| ● | Product development fees; | |
| ● | Addition of administrative, and sales personnel as the business grows; | |
| ● | The cost of being a public company; | |
| ● | Marketing expense for building brand; and | |
| ● | Capital requirements for production capacity |
Cash Flow Activities for the Six Months Ended June 30, 2024 and 2023
The following table shows a summary of our cash flows for the six months ended June 30, 2024 and 2023.
| Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| Net cash used in operating activities | $ | (139,406 | ) | $ | (186,051 | ) | ||
| Net cash provided by financing activities | 92,600 | - | ||||||
| Net decrease in cash | (46,806 | ) | (186,051 | ) | ||||
| Cash - beginning of the period | 74,889 | 462,729 | ||||||
| Cash - end of the period | $ | 28,083 | $ | 276,678 | ||||
Cash Flows from Operating Activities
Net cash used in operating activities totaled $139,406 and $186,051 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $46,645, or 25.1%.
Net cash used in operating activities for the six months ended June 30, 2024 primarily reflected a net loss of $223,916 adjusted for the add-back (reduction) of non-cash items consisting of stock-based professional fees of $50,000, offset by changes in operating assets and liabilities primarily consisting of an increase in inventory of $1,052, an increase in prepaid expenses and other current assets of $1,925, a decrease in prepaid expenses – related party of $20,870, and an increase in accounts payable of $16,617.
Net cash used in operating activities for the six months ended June 30, 2023 primarily reflected a net loss of $533,980, adjusted for the add-back (reduction) of non-cash items consisting of stock-based professional fees of $338,426, offset by changes in operating assets and liabilities primarily consisting of a decrease in inventory of $1,148, a decrease in prepaid expenses and other current assets of $25,000, an increase in prepaid expenses – related party of $14,500, and a decrease in accounts payable of $2,145.
Cash Flows from Investing Activities
For the six months ended June 30, 2024 and 2023, there was no net cash used in or provided by investing activities.
Cash Flows from Financing Activities
Net cash provided by financing activities for the six months ended June 30, 2024 was $92,600. This primarily consists of proceeds from the sale of common stock of $76,000 and sale of common stock yet to be issued of $26,600, offset by payment of deferred offering cost of $10,000. There was no cash used in or provided by financing activities for the six months ended June 30, 2023.
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure controls and procedures
We maintain “disclosure controls and procedures,” as that term is defined in Rule 13a-15(e) and 15d-15(e), promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Our management, with the participation of our principal executive officer and principal financial officer, evaluated our company’s disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of June 30, 2024, our disclosure controls and procedures were not effective. The ineffectiveness of our disclosure controls and procedures was due to material weaknesses, which we identified in our report on internal control over financial reporting.
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Internal control over financial reporting
Management’s quarterly report on internal control over financial reporting
Our management, including our principal executive officer and principal financial officer, are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our internal control over financial reporting as of June 30, 2024. Our management’s evaluation of our internal control over financial reporting was based on the 2013 framework in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that as of June 30, 2024, our internal control over financial reporting was not effective.
The ineffectiveness of our disclosure controls and procedures was due to the following material weaknesses in our internal control over financial reporting:
(1) We do not have sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge and experience in the application of accounting principles generally accepted in the United States commensurate with our financial reporting requirements. To mitigate the current limited resources and limited employees, we rely heavily on the use of external legal and accounting professionals.
(2) a lack of adequate segregation of duties as a result of our limited financial resources to support hiring of personnel.
Until such time as we expand our staff to include additional accounting and executive personnel, it is likely we will continue to report material weaknesses in our internal control over financial reporting.
A material weakness is a deficiency or a combination of control deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Limitations on Effectiveness of Controls
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting can also be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting during the first quarter of our fiscal year ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business.
We are not involved in any pending or threatened legal proceedings that it believes could reasonably be expected to have a material adverse effect on its financial condition, results of operations, or cash flows.
ITEM 1A. RISK FACTORS
Risk factors that affect our business and financial results are discussed in Part I, Item 1A “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on April 15, 2024 (“Annual Report”). There have been no material changes in our risk factors from those previously disclosed in our Annual Report. You should carefully consider the risks described in our Annual Report, which could materially affect our business, financial condition or future results. The risks described in our Annual Report are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results. If any of the risks actually occur, our business, financial condition, and/or results of operations could be negatively affected.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On June 26, 2024, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an institutional and accredited investor (the “Investor”), pursuant to which we agreed to sell an aggregate of 33,250 shares (the “Shares”) of our common stock, par value $0.0001 per share, for an aggregate purchase price of $26,600.
On June 12, 2024, we entered into a Consulting Product Sales Development Agreement (the “Consulting Agreement”) with the same institutional and accredited investor (the “Consultant”), pursuant to which we agreed to compensate the services rendered by the consultant an aggregate of 10,000 shares (the “Shares”) of our common stock, par value $0.0001 per share, for an aggregate purchase price of $10,000.
Our shares were offered and sold in reliance on the exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”) provided by Section 4(a)(2) and Regulation D (Rule 506) under the Securities Act.”
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the SEC.
| + | Indicates a management contract or any compensatory plan, contract or arrangement. |
| * | Filed herewith |
| ** | Furnished herewith |
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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.
| MIAMI BREEZE CAR CARE INC. | ||
| Date: August 9, 2024 | By: | /s/ Wolfgang Ruecker |
| Wolfgang Ruecker | ||
| Chief Executive Officer, Chief Financial Officer, and Chairman of the Board | ||
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