Quantum X Inc 10-Q for FY2021 Q3

Quantum X Inc. (QUTX)

10-Q 2021-11-15 For: 2021-09-30

Added on April 11, 2026

About this 10-Q

Quantum X Inc filed this 10-Q on November 15, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

Quarter ended September 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $241.42K; up 340.2% from $54.84K a year earlier
Net loss: $8.05M; compared with a net loss of $2.25M a year earlier

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Delaware		42-1770123
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

1035 Queensway East, Mississauga, ON, Canada		L4Y 4C1
(Address of Principal Executive Offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

PART I		PAGE
Item 1.	Financial Statements (Unaudited)	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	26
PART II
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mining Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
	Signatures	29

TWO HANDS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2021			December 31, 2020
ASSETS	(Unaudited)

Current assets
Cash	$	805,748		$	21,843
Accounts receivable		133,770			41,097
Taxes receivable		510			8,824
Prepaid expense		1,086,958			891,889
Total current assets		2,026,986			963,653

Property and equipment, net		4,128			3,444

Total assets	$	2,031,114		$	967,097

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	256,614		$	162,536
Non-redeemable convertible notes, net		-			75,040
Due to related party		14,737			106,928
Notes payable		5,547			83,332
Convertible note, net		4,145			7,833
Derivative liabilities		66,200			172,261
Total current liabilities		347,243			607,930
Long-term liabilities
Promissory notes		232,561			85,796
Promissory notes - related party		227,512			194,485
Non-redeemable convertible notes, net		582,286			766,949
Total long-term liabilities		1,042,359			1,047,230

Total liabilities		1,389,602			1,655,160

Commitments and Contingencies		-			-

Temporary equity
Series A convertible preferred stock; $0.01 par value; 200,000 shares designated, 120,000 and 30,000 shares issued and outstanding, respectively		350,500			33,000
Series B convertible preferred stock; $0.01 par value; 100,000 shares designated, 4,000 shares issued and outstanding, respectively		1,520,000			1,520,000
Series C convertible preferred stock; $0.001 par value; 30,000 shares designated, 10,500 shares and 5,000 shares issued and outstanding, respectively		1,187,500			542,857
Series D convertible preferred stock; $0.001 par value; 200,000 shares designated, 40,000 shares and 0 shares issued and outstanding, respectively		789,006			-
Total temporary equity		3,847,006			2,095,857

Stockholder's deficit
Preferred stock; $0.001 par value; 1,000,000 shares authorized, 0 issued and outstanding		-			-
Common stock; $0.0001 par value; 6,000,000,000 shares authorized, 4,701,967,834 and 695,575,506 shares issued and outstanding, respectively		470,199			69,560
Additional paid-in capital		54,810,901			42,703,888
Common stock to be issued		336,000			336,000
Accumulated deficit		(58,822,594	)		(45,893,368	)
Total stockholders' deficit		(3,205,494	)		(2,783,920	)

Total liabilities and stockholders' deficit	$	2,031,114		$	967,097

The accompanying footnotes are an integral part of these unaudited financial statements.

TWO HANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	For the three months ended September 30,						For the nine months ended September 30,
	2021			2020			2021			2020

Sales	$	241,417		$	54,838		$	605,498		$	62,831
Cost of goods sold		201,609			52,494			527,385			58,531
Gross profit		39,808			2,344			78,113			4,300

Operating expenses
General and administrative		693,259			1,626,144			1,997,004			4,688,678
Total operating expenses		693,259			1,626,144			1,997,004			4,688,678

Loss from operations		(653,451	)		(1,623,800	)		(1,918,891	)		(4,684,378	)

Other income (expense)
Amortization of debt discount and interest expense		(130,594	)		(106,939	)		(261,560	)		(185,312	)
Loss on settlement of debt		(7,360,278	)		(464,351	)		(10,817,203	)		(1,473,733	)
Initial derivative expense		-			(114,462	)		(126,322	)		(258,863	)
Change in fair value of derivative liabilities		93,626			56,542			194,750			383,219
Total other income (expense)		(7,397,246	)		(629,210	)		(11,010,335	)		(1,534,689	)

Net loss	$	(8,050,697	)	$	(2,253,010	)	$	(12,929,226	)	$	(6,219,067	)

Net loss per common share - basic and diluted	$	(0.003	)	$	(0.012	)	$	(0.007	)	$	(0.068	)

Weighted average number of common shares outstanding - basic and diluted		2,998,954,553			190,493,425			1,854,661,108			91,887,054

The accompanying footnotes are an integral part of these unaudited financial statements.

TWO HANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
For the three and nine months ended September 30, 2021 and 2020
(Unaudited)

	Common Stock				Common Stock to		Additional Paid-in		Accumulated			Total Stockholders'
	Shares		Amount		be Issued		Capital		Deficit			Deficit
Balance, June 30, 2021		1,903,792,512	$	190,382	$	336,000	$	46,712,776	$	(50,771,897	)	$	(3,532,739	)

Stock issued for conversion of non-redeemable convertible notes		2,459,980,000		245,997		-		7,320,193		-			7,566,190
Stock issued for conversion of convertible notes		83,195,322		8,320		-		220,004		-			228,324
Stock issued for the conversion of Series C Stock		225,000,000		22,500				486,428		-			508,928
Stock issued for officer and director compensation		30,000,000		3,000		-		71,500		-			74,500
Net loss		-		-		-		-		(8,050,697	)		(8,050,697	)
Balance, September 30, 2021		4,701,967,834	$	470,199	$	336,000	$	54,810,901	$	(58,822,594	)	$	(3,205,494	)


	Common Stock				Common Stock to		Additional Paid-in		Accumulated			Total Stockholders'
	Shares		Amount		be Issued		Capital		Deficit			Deficit
Balance, December 31, 2020		695,575,506	$	69,560	$	336,000	$	42,703,888	$	(45,893,368	)	$	(2,783,920	)

Stock issued for conversion of non-redeemable convertible notes		3,552,024,783		355,202		-		10,795,222		-			11,150,424
Stock issued for conversion of convertible notes		146,867,545		14,687		-		431,763		-			446,450
Stock issued for the conversion of Series C Stock		225,000,000		22,500				486,428		-			508,928
Stock issued for consulting		40,500,000		4,050		-		286,950		-			291,000
Stock issued for officer and director compensation		42,000,000		4,200		-		106,650		-			110,850
Net loss		-		-		-		-		(12,929,226	)		(12,929,226	)
Balance, September 30, 2021		4,701,967,834	$	470,199	$	336,000	$	54,810,901	$	(58,822,594	)	$	(3,205,494	)

TWO HANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	For the nine months ended September 30,
	2021			2020
Cash flows from operating activities
Net loss	$	(12,929,226	)	$	(6,219,067	)
Adjustments to reconcile net loss
to cash used in operating activities
Depreciation and amortization		1,281			1,149
Amortization of prepaid expense		974,268			1,602,097
Stock-based compensation		511,850			2,773,300
Amortization of debt discount		261,560			185,312
Loss on settlement of debt		10,817,203			1,473,733
Initial derivative expense		126,322			258,863
Change in fair value of derivative liabilities		(194,750	)		(383,219	)
Change in operating assets and liabilities
Accounts and taxes receivable		(85,273	)		(41,785	)
Prepaid expense		(15,986	)		-
Accounts payable and accrued liabilities		232,718			72,059
Net cash used in operating activities		(300,033	)		(277,558	)

Cash flows from investing activities
Purchase of property and equipment		(1,945	)		(2,229	)
Net cash used in investing activities		(1,945	)		(2,229	)

Cash flow from financing activities
Advances by related party		90,680			79,412
Repayment of advances to related party		(83,747	)		(55,780	)
Proceeds from notes payable		14,895			136,853
Repayments of notes payable		-			(117,170	)
Proceeds from issuance of shares		789,006			-
Proceeds from promissory notes		19,151			290,000
Proceeds from non-redeemable convertible		15,823			-
Proceeds from convertible notes		225,000			-
Net cash provided by financing activities		1,070,808			333,315

Change in foreign exchange		15,075			-

Net change in cash		783,905			53,528

Cash, beginning of the period		21,843			293

Cash, end of the period	$	805,748		$	53,821

Cash paid during the year
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-

Supplemental disclosure of non-cash investing and financing activities
Stock issued to settle accrued liabilities	$	207,500		$	-
Stock issued to settle non-redeemable convertible notes	$	11,150,424		$	1,348,418
Stock issued to settle convertible notes	$	446,450		$	395,197
Stock issued for prepaids	$	1,153,571		$	725,000
Stock issued for warrant liability	$	-		$	111,800
Initial debt discount from derivative	$	225,000		$	290,000
Transfer of notes payable to promissory notes	$	91,192		$	-
Transfer of accounts payable and accrued liabilities to promissory notes	$	29,450		$	-
Transfer of due to related party to promissory notes	$	19,572		$	-
The accompanying footnotes are an integral part of these unaudited financial statements.

	September 30, 2021
	Level 1	Level 2	Level 3
Description	$	$	$
Derivative liabilities	-	-	66,200

	December 31, 2020	February 23, 2021	March 31, 2021	June 30, 2021	September 30, 2021
Closing share price	$0.0031	$0.0068	$0.0027	$0.0019	$0.0024
Conversion price	$0.0019	$0.0037	$0.0018	$0.0012	$0.0017
Risk free rate	0.09% to 0.10%	0.13%	0.12%	0.10% to 0.12%	0.07%
Expected volatility	228% to 284%	276%	273%	185% to 196%	160%
Dividend yield	0%	0%	0%	0%	0%
Expected life	0.53 to 1.19 years	1.5 years	1.4 years	0.91 to 1.15 years	0.65 years

			Incorporated by reference
Exhibit	Exhibit Description	Filed herewith	Form	Period ending	Exhibit	Filing date
3.1	Certificate of Incorporation, dated April 3, 2009		S-1		3.1	6/22/2010
3.2	Bylaws, dated April 3, 2009		S-1		3.2	6/22/2010
3.3	Certificate of Amendment to the Certificate of Incorporation, dated August 8, 2013		10-Q	6/30/2013	3.3	8/14/2013
4.1	Specimen Stock Certificate		S-1		4.1	6/22/2010
4.2	Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, dated August 6, 2013		10-Q	6/30/2013	4.2	8/14/2013
4.3	Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, dated December 13, 2019		8-K		3.1	12/19/2019
4.4	Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated October 7, 2020		8-K		3.1	10/8/2020
4.5	Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated June 24, 2021		8-K		3.1	7/1/2021
10.1	Innovative Product Opportunities Inc. Trust Agreement		S-1		10.1	6/22/2010
10.2	Side Letter Agreement, The Cellular Connection Ltd., dated January 8, 2018		10-K	12/31/2017	10.2	3/29/2018
10.3	Side Letter Agreement, Stuart Turk, dated January 8, 2018		10-K	12/31/2017	10.3	3/29/2018
10.4	Side Letter Agreement, Jordan Turk, dated April 12, 2018		10-Q	3/31/2018	10.4	5/21/2018
10.5	Side Letter Agreement, Jordan Turk, dated May 10, 2018		10-Q	3/31/2018	10.5	5/21/2018
10.6	Side Letter Agreement, Jordan Turk, dated September 13, 2018		10-K	12/31/2018	10.6	4/1/2019
10.7	Side Letter Agreement, Cellular Connection Ltd., dated January 31, 2019		10-K	12/31/2018	10.7	4/1/2019
10.8	Side Letter Agreement, Stuart Turk, dated January 31, 2019		10-K	12/31/2018	10.8	4/1/2019
31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	XBRL Instance Document	*
101.SCH	XBRL Taxonomy Extension Schema Document	*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Definition	*
104	Cover page formatted as Inline XBRL and contained in Exhibit 101	*

	TWO HANDS CORPORATION

November 15, 2021	By: /s/ Nadav Elituv Nadav Elituv, President, Chief Executive Officer and Director (Principal Executive Officer)

	By: /s/ Steven Gryfe Steven Gryfe, Chief Financial Officer (Principal Financial and Accounting Officer)