Pacific Sports Exchange Inc 10-Q for FY2023 Q1
Pacific Sports Exchange Inc. (PSPX)
About this 10-Q
Pacific Sports Exchange Inc filed this 10-Q on January 23, 2023, covering the quarter ended November 30, 2022 (FY2023 Q1).
Headline figures
Quarter ended November 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $6852
- up 35.2% from $5069 a year earlier
- Net loss
- $2489
- compared with a net loss of $25 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended:
Or
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission File Number:
(Exact name of registrant as specified in its charter) |
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(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
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)
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition or Plan of Operation |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INTERIM FINANCIAL STATEMENTS
For the Three Months Ended November 30, 2022
(Unaudited)
INDEX TO UNAUDITED FINANCIAL STATEMENTS
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PACIFIC SPORTS EXCHANGE INC.
BALANCE SHEETS
(UNAUDITED)
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Current Assets |
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Cash |
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Inventory |
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Total Current Assets |
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Total Assets |
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Liabilities and Stockholders’ Deficit |
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Current Liabilities |
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Accounts payable and accrued liabilities |
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Due to related parties |
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Total Current Liabilities |
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Stockholders’ Deficit |
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Preferred stock: |
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Common stock: |
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Additional paid-in capital |
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Accumulated deficit |
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Total Stockholders’ Deficit |
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Total Liabilities and Stockholders’ Deficit |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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PACIFIC SPORTS EXCHANGE INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
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Revenues |
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Cost of goods sold |
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Gross profit |
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Operating Expenses |
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General and administrative |
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Professional fees |
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Total operating expenses |
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Loss from operations |
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Loss before income taxes |
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Provision for income taxes |
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Net loss |
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Basic and diluted loss per common share |
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Basic and diluted weighted average common shares outstanding |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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PACIFIC SPORTS EXCHANGE INC.
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)
For the Three Months Ended November 30, 2022
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Balance - August 31, 2022 |
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Net loss |
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Balance - November 30, 2022 |
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For the Three Months Ended November 30, 2021
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Balance - August 31, 2021 |
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Net loss |
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Balance - November 30, 2021 |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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PACIFIC SPORTS EXCHANGE INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Cash Flows from Operating Activities |
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Net loss |
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Changes in operating assets and liabilities: |
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Accounts payable and accrued liabilities |
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Net cash provided by (used in) operating activities |
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Cash Flows from Financing Activities |
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Proceeds from related party |
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Net cash provided by financing activities |
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Net change in cash for the period |
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Cash at end of period |
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Supplemental Cash Flow Information: |
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Cash paid for income taxes |
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Cash paid for interest |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
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PACIFIC SPORTS EXCHANGE INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION, DESCRIPTION OF BUSINESS AND GOING CONCERN
Pacific Sports Exchange Inc., (“Pacific Sports” “the Company,” “we” or “us”) was incorporated in the state of Delaware on July 2, 2018. It is based in Punta Gorda, Florida. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is August 31.
The Company operates as a sports equipment vendor, specializing in tennis and golf. The Company sources high value new and used equipment and sells it online. The target market is an avid domestic or international customer that is serious about his/her golf or tennis game and will return to the Company for future purchases.
To date, the Company’s activities have included building out its business operations and marketing, acquiring inventory, generating revenue via www.ebay.com, as well as developing supplier and business contacts and services.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of November 30, 2022, the Company has an accumulated deficit and has earned nominal operating revenues.
The ability of the Company to obtain profitability is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional operating funds through equity and/or debt financing. However, there can be no assurance management will be successful in its endeavors.
There are no assurances that the Company will be able to either 1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or 2) obtain additional financing through either private placement, public offerings and/or bank financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available to the Company, it may be required to curtail or cease its operations.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of November 30, 2022, and the results of operations and cash flows for the periods presented. The results of operations for the period ended November 30, 2022, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31,2022 filed with the SEC on November 30, 2022.
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Revenue Recognition
Revenue is earned from the reselling of new and used sports equipment. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations pursuant to each of its equipment sales transactions:
| · | identify the contract with a customer; |
| · | 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. |
The Company operates as an online-only retailer and utilizes eBay Inc. (“eBay”) as its prime marketing channel. The Company currently relies on eBay, a third-party marketplace, to facilitate its sales. Such reliance on any third-party platform to generate revenues carries with it certain risks, including but not necessarily limited to: the Company could violate the terms of service and lose its selling privileges, or the sites themselves could experience technical issues and/or fail. The Company always strives to abide by the policies of any third-party platform and endeavors to provide superior customer service.
Typical sales transactions are usually fulfilled within twenty-four (24) hours of completing the transaction online. Contracts stating the transaction price and our performance obligation to deliver the ordered products are deemed to be entered into via eBay at the time the customer submits payment, which is conducted through the PayPal payment platform. Due to the instantaneous nature of a customer submitting an order online at a stated price and the same or next business day shipment of product, the Company does not anticipate that variable consideration or contract assets or liabilities will arise in the normal course of business.
Revenues are recognized based on the sales contract price, net of sales taxes, when control of the promised goods are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods. Our contracted prices primarily include cost of inventory, shipping and handling, eBay commission fee and our margin, which varies depending on each item. We may provide incentives to our customers from time to time, including discounts, coupons and rewards, which are treated as a reduction in revenue. We may provide sales under a consignment for a client. When acting as an agent, where we do not take delivery of the inventory, we record all costs of sales as a reduction in revenue. The Company does not accept returns and clearly indicates this in our listings. However, if a customer receives an item that is not as described in the eBay listing, we must follow the eBay moneyback guarantee policy which obligates us to issue a full refund within three (3) business days. We do not provide an estimate for returns as we do not anticipate any returns in the normal course of business.
Consignment Sales
The Company, as a consignee, provides a service to sell tennis racquets through its online marketplace with eBay. The Company retains a percentage of the proceeds received as payment for its consignment items, which the Company refers to as its ‘‘take rate.’’ The Company recognizes consignment revenue upon shipment of the consigned good to a customer as its performance obligation of providing consignment services to the consignor is satisfied at that point. The Company reports consignment revenue on a net basis as an agent and not the gross amount collected from a customer. Title to the consigned goods remain with the consignor until transferred to a customer subsequent to purchase of the consigned goods. In any event of damage or loss of consignment items, the Company will recognize an expense and will pay all related disbursements. The Company does not take title of consigned goods at any time.
Other Sales
The Company purchases used golf carts as their own inventory for resale. The Company reports revenue on a gross basis from amounts collected from the customer upon transferring the product to the buyer.
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Cost of Goods Sold
Cost of goods sold includes the following expenses: inventory costs and expenses related to eBay fees, repair and shipping services.
Recent Accounting Pronouncements
The Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective date. Management does not believe that any recently issued, but not yet effective accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.
NOTE 3 – RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders.
During the three months ended November 30, 2022, and 2021 the Company received a loan of $
Preferred Stock
The Company has authorized 20,000,000 shares of Preferred Stock with a par value of $0.001 per share. No preferred stock was issued or outstanding as at August 31, 2022 and 2021.
Common Stock
The Company has authorized
As of November 30, 2022, and August 31, 2022, the Company had
NOTE 5- SUBSEQUENT EVENTS
The Company has evaluated events occurring subsequent to November 30, 2022, through the issuance of the financial statements and determined that there are no additional events requiring disclosure.
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Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.
Any statement that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always using words or phrases such as “believes”, “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates”, or “intends”, or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:
This list is not exhaustive of the factors that may affect the Company’s forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further in this “Management’s Discussion and Analysis” section of this Quarterly Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. The Company cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Pacific Sports disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law. The Company advises readers to carefully review the reports and documents filed from time to time with the Securities and Exchange Commission (the “SEC”), particularly the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
As used in this Quarterly Report, the terms “we,” “us,” “our,” “Pacific Sports,” and the “Company,” mean Pacific Sports Exchange, Inc., unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars, unless otherwise indicated.
Management’s Discussion and Analysis is intended to be read in conjunction with the Company’s financial statements and the integral notes (“Notes”) thereto for the period ending November 30, 2022. The following statements may be forward-looking in nature and actual results may differ materially.
General Overview
We were incorporated in Delaware on July 2, 2018, to engage in the business of re-selling new and used tennis and golf equipment. We have since added used golf carts to our resale inventory and have begun engaging in consignment sales of tennis rackets and golf carts. The concept is to source top-quality, in-demand equipment, and resell it to both domestic and international customers. Our Company has identified popular brands and models that retain value, in new and used condition, across the various markets in which we plan to sell.
We operate as an on-line only entity and utilize eBay Inc. (“eBay”) as our primary marketing channel. We will also optimize our own website for ‘global’ search terms and internally vend equipment through an expanding referral network of repeat customers.
Our principal executive office is located at 2149 Rio De Janeiro Ave., Punta Gorda, FL 33983, and our telephone number is (877) 571-5562. Our corporate website is www.pacificsportsexchange.com.
We have not been subject to any bankruptcy, receivership, or similar proceeding. We do not have any subsidiaries.
Description of Business
We specialize in the reselling of new and used tennis and golf equipment, including reselling used golf carts and engaging in consignment sales of tennis rackets and golf carts. The concept is to source top-quality, in-demand equipment and resell it to both domestic and international customers. We have identified popular brands and models that retain their value in new and used condition.
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To source in-demand equipment, our Company has established relationships with local Southwest Florida sports retailers to purchase their surplus end-of-season inventory and trade-ins. The Company also attends golf and tennis trade shows and monitors re-seller equipment events to pin-point trends in high-demand used equipment. Both Florida and California have been identified as premium geographic locations to search for and secure the desired supply of top-end equipment.
We currently operate as an on-line only entity and utilize eBay as our primary marketing channel. We will also optimize our own website for ‘global’ search terms and internally vend equipment to a worldwide market. Because the Company relies on third-party websites such as eBay to make its sales, such reliance on any third-party platform to generate revenues carries with it certain risks including but not necessarily limited to: the Company could violate the terms of service and lose its selling privileges, or the sites themselves could experience technical issues and/or fail. The Company will always strive to abide by the policies of any third-party platform and will endeavor to provide superior customer service. The Company will also look to improve the marketing and functionality of its own website, to act as a hedge against the risk of relying on third-party partners.
The principals of our Company have experience in both the sports of tennis and golf, and through this experience have identified high-value, high-margin equipment that resells profitably to both international and domestic customers. The goal is to create a unique supply chain that targets niche, valued products and their buyers. Serious golfers and tennis players are very particular about their equipment and will go to considerable lengths to secure what they are looking for in a quest to improve their game; this customer is our prime target market and our marketing approach will be to create a relationship (wherever possible) with this customer and become their ongoing equipment supplier through social media and electronic outreach.
Results of Operations
The following summary of our results of operations should be read in conjunction with our financial statements for the three months ended November 30, 2022, and 2021, which are included herein.
Three months ended November 30, 2022, compared to three months ended November 30, 2021.
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Revenue |
| $ | 6,852 |
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| $ | 5,069 |
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| $ | 1,783 |
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Cost of goods sold |
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| 5,789 |
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| 1,138 |
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| 4,651 |
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Gross profit |
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| 1,063 |
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| 3,931 |
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Operating expenses |
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| 3,552 |
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| 3,956 |
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Net loss |
| $ | 2,489 |
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| $ | 25 |
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| $ | 2,464 |
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Net loss was $2,489 for the three months ended November 30, 2022, and $25 net loss for the three months ended November 30, 2021. The increase in net loss from $25 to $2,489 net loss for the three months ended November 30, 2022, was primarily due to a decrease in gross profit and offset by a decrease in operating expenses.
Cost of goods sold for the three months ended November 30, 2022, and 2021 was $5,789 and $1,138, respectively. Operating expenses for the three months ended November 30, 2022, and 2021 were $3,552 and $3,956, respectively. Operating expenses during the three months ended November 30, 2022, and 2021 were primarily attributed to general and administration expenses of $946 and $146, and professional fees of $2,606 and $3,810, respectively.
Liquidity and Capital
Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business for the foreseeable future. There are no assurances that the Company will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placement, public offerings and/or debt financing necessary to support its working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or debt financing are insufficient, our Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to our Company. If adequate working capital is not available to our Company, it may be required to curtail or cease its operations.
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As of November 30, 2022, and August 31, 2022, we had the following balance sheet amounts:
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Cash |
| $ | 8,767 |
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| $ | 7,899 |
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| $ | 868 |
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Total Assets |
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| 9,214 |
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| 8,436 |
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| 778 |
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Total Liabilities |
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| 74,753 |
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| 71,486 |
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| 3,267 |
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Working Capital (Deficiency) |
| $ | (65,539 | ) |
| $ | (63,050 | ) |
| $ | (2,489 | ) |
As of November 30, 2022, our current and total assets were $9,214, consisting of cash of $8,767 and inventory of $447. As of August 31, 2022, our current and total assets were $8,436, consisting of cash of $7,899 and inventory of $537.
As of November 30, 2022, our total liabilities of $74,753 were all current liabilities, which consisted of accounts payable and accrued liabilities of $61,053 and due to related parties of $13,700. As of August 31, 2022, our total liabilities of $71,486 were all current liabilities, which consisted of $57,786 accounts payable and accrued liabilities and due to related parties of $13,700.
Working Capital
The following table presents our working capital (deficit) position as at November 30, 2022 and August 31, 2022:
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| 2022 |
|
| 2022 |
| ||
Current Assets |
| $ | 9,214 |
|
| $ | 8,436 |
|
Current Liabilities |
|
| 74,753 |
|
|
| 71,486 |
|
Working Capital (Deficiency) |
| $ | (65,539 | ) |
| $ | (63,050 | ) |
As of November 30, 2022, we had a working capital deficiency of $65,539 compared to working capital deficiency of $63,050 as of August 31, 2022. As of November 30, 2022, we had current assets of $9,214 (August 31, 2022 - $8,436) and current liabilities of $74,753 (August 31, 2022 - $71,486).
Cash Flow
We fund our operations with cash generated from sales, capital contributions, debt, and issuances of shares of our Common Stock.
The following table presents our cash flow for the three months ended November 30, 2022, and 2021:
|
| Three Months Ended |
| |||||
|
| November 30, |
| |||||
|
| 2022 |
|
| 2021 |
| ||
Cash provided by (used in) operating activities |
| $ | 868 |
|
| $ | (19,008 | ) |
Cash provided by financing activities |
|
| - |
|
|
| 12,000 |
|
Net Change in Cash for the period |
| $ | 868 |
|
| $ | (7,008 | ) |
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| Table of Contents |
Cash Flows from Operating Activities
For the three months ended November 30, 2022, net cash provided by operating activities was $868 compared to $19,008 net cash used in operating activities during the three months ended November 30, 2021. For the three months ended November 30, 2022, we had a net loss of $2,489, which was reduced by a change in working capital of $3,357. For the three months ended November 30, 2022, we had a net loss of $25, which was increased by a change in working capital of $18,983.
Cash Flows used in Investing Activities
During the three months ended November 30,2022 and 2021, we had no investing activities.
Cash Flows from Financing Activities
For the three months ended November 30, 2022, and 2021, we received $0 and $12,000 advance from related party.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
We prepare our financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) of the United States, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our financial statements.
While we believe that the historical experience, current trends and other factors considered support the preparation of our financial statements in conformity with GAAP, actual results could differ from our estimates and such differences could be material.
Revenue recognition
Revenue is earned from the reselling of new and used sports equipment. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfils its obligations pursuant to each of its equipment sales transactions:
| · | identify the contract with a customer; |
| · | 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. |
The Company operates as an on-line only retailer and utilizes eBay as its prime marketing channel. The Company currently relies on eBay, a third-party marketplace, to facilitate its sales. Such reliance on any third-party platform to generate revenues carries with it certain risks, including but not necessarily limited to: the Company could violate the terms of service and lose its selling privileges, or the sites themselves could experience technical issues and/or fail. The Company always strives to abide by the policies of any third-party platform and endeavours to provide superior customer service.
Typical sales transactions are usually fulfilled within twenty-four (24) hours of completing the transaction online. Contracts stating the transaction price and our performance obligation to deliver the ordered products are deemed to be entered into on eBay at the time the customer submits payment, which is conducted through the PayPal payment platform. Due to the instantaneous nature of a customer submitting an order online at a stated price and the same (or next)-day shipment of product, the Company does not anticipate that variable consideration or contract assets or liabilities will arise in the normal course of business.
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| Table of Contents |
Revenues are recognized based on the sales contract price, net of sales taxes, when control of the promised goods are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods. Our contracted prices primarily include cost of inventory, shipping and handling, eBay commission fee and our margin, which varies depending on each item. We may provide incentives to our customers from time-to-time, including discounts, coupons and rewards, which are treated as a reduction in revenue. The Company does not accept returns and clearly indicates this in our listings. However, if a customer receives an item that is not as described in the eBay listing, we must follow the eBay money-back guarantee policy which obligates us to issue a full refund within three (3) business days. We do not provide an estimate for returns as we do not anticipate any returns in the normal course of business.
Consignment Sales
The Company, as a consignee, provides a service to sell tennis racquets through its online marketplace with eBay. The Company retains a percentage of the proceeds received as payment for its consignment items, which the Company refers to as its ‘‘take rate.’’ The Company recognizes consignment revenue upon shipment of the consigned good to a customer as its performance obligation of providing consignment services to the consignor is satisfied at that point. The Company reports consignment revenue on a net basis as an agent and not the gross amount collected from a customer. Title to the consigned goods remain with the consignor until transferred to a customer subsequent to purchase of the consigned goods. In any event of damage or loss of consignment items, the Company will recognize an expense and will pay all related disbursements. The Company does not take title of consigned goods at any time.
Other Sales
The Company purchases used golf carts as their own inventory for resale. The Company reports revenue on a gross basis from amounts collected from the customer upon transferring the product to the buyer.
Cost of goods sold includes the following expenses: inventory costs and expenses related to eBay fees, repair and shipping services.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of November 30, 2022. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the period ended November 30, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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The specific material weakness identified by our management was ineffective controls over certain aspects of the financial reporting process because of a lack of a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements and inadequate segregation of duties. A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our Company’s annual or interim financial statements would not be prevented or detected on a timely basis.
We expect to be materially dependent upon a third party to provide us with accounting consulting services for the foreseeable future. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP, there are no assurances that the material weaknesses in our disclosure controls and procedures and internal control over financial reporting will not result in errors in our financial statements which could lead to a restatement of those financial statements.
Changes in Internal Controls
There have been no changes in our internal controls over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the quarter ended November 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 8 |
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation, and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we area party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on us.
Item 1A. Risk Factors
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
The following exhibits are filed herewith or incorporated by reference to exhibits previously filed with the SEC.
Exhibit |
|
|
| INCORPORATED BY REFERENCE |
| Filing | ||
Number |
| Exhibit Description |
| Form |
| Exhibit |
| Date |
|
|
|
|
|
|
|
|
|
|
| S-1/A |
| 3.1 |
| 9/30/2019 | ||
|
| S-1/A |
| 3.2 |
| 9/30/2019 | ||
|
| POS AM |
| 3.3 |
| 12/11/2019 | ||
|
| POS AM |
| 3.4 |
| 12/11/2019 | ||
|
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
101* |
| Inline XBRL Document Set for the condensed financial statements and accompanying notes in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q. |
|
|
|
|
|
|
104* |
| Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. |
|
|
|
|
|
|
_____________
* Filed herewith
** Furnished herewith
| 10 |
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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.
| Pacific Sports Exchange Inc. | ||
| (Registrant) | ||
|
| ||
Dated: January 20, 2023 |
| /s/ Timothy Conte | |
| Timothy Conte | ||
| Chief Executive Officer, President, and Director |
| 11 |
EXHIBIT 31.1 / 31.2
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND
PRINCIPAL ACCOUNTING AND FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT AND RULE 13A-14(A)
OR 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934
I, Timothy Conte, certify that:
| 1. | I have reviewed this report on Form 10-Q of Pacific Sports Exchange Inc. for the quarter ended November 30, 2022; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
|
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
|
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: January 20, 2023 | By: | /s/ Timothy Conte |
|
|
|
| Timothy Conte |
|
|
|
| Chief Executive Officer, President, Chief Financial Officer and Director |
|
|
|
| (Principal Executive Officer and Principal Financial Officer) |
|
EXHIBIT 32.1 / 32.2
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Pacific Sports Exchange Inc. (the “Company”) on Form 10-Q for the period ended November 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy Conte, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that;
|
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: January 20, 2023 | By: | /s/ Timothy Conte | |
| Name: | Timothy Conte | ||
| Title: | Chief Executive Officer and Chief Financial Officer | ||
|
| (Principal Executive Officer and Principal Financial Officer) |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.