Quantum X Inc 10-K for FY2021

Quantum X Inc. (QUTX)

10-K 2022-03-31 For: 2021-12-31

Added on April 11, 2026

About this 10-K

Quantum X Inc filed this 10-K on March 31, 2022, covering the fiscal year ended December 31, 2021 (FY2021).

Headline figures

Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $930.1K; up 484.9% from $159.03K a year earlier
Net loss: $16.34M; compared with a net loss of $7.67M 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, Ontario, Canada		L4Y 4C1
	(Address of Principal Executive Offices)		(Zip Code)

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer x	Smaller reporting company x
Emerging Growth Company x

PART I		Page
Item 1.	Business	4
Item 1A.	Risk Factors	5
Item 1B.	Unresolved Staff Comments	15
Item 2.	Properties	15
Item 3.	Legal Proceedings	15
Item 4.	Mine Safety Disclosures	16
PART II
Item 5.	Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	16
Item 6.	[Reserved]	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 8.	Financial Statements and Supplementary Data	27
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	52
Item 9A.	Controls and Procedures	52
Item 9B.	Other Information	52
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	52
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	53
Item 11.	Executive Compensation	56
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	57
Item 13.	Certain Relationships and Related Transactions and Director Independence	59
Item 14.	Principal Accountant Fees and Services	60
PART IV
Item 15.	Exhibits, Financial Statement Schedules	61
Item 16.	Form 10-K Summary	63
	Signatures	63

·	Uncertain consumer demand due to the impacts of the global pandemic on local economies as well as the global economy. While sales are mainly through the Company’s gocart.city platform, the Company may incur significant sales losses as overall customer demand and consumer spending may decline in response to COVID-19 and its related economic impacts.

·	Restrictions to protect the safety of the Company’s customers and employees may limit both the number of customers it can serve and the volume of goods it is able to fulfill through its distribution points. More severe government-imposed restrictions, including restrictions and lockdowns, could further restrict the Company’s ability to service its customers.

·	The Company may also face supply chain challenges if there are disruptions in service at its distribution points, suppliers, or logistics providers. Increased market demand for logistic providers may continue to increase the Company’s operating costs and/or limit its ability to fulfill sales.

·	The Company’s method of delivering grocery items to customers through contactless delivery may continue to face challenges as employees’ comfort and exposure to COVID-19 may be heightened as waves of the virus continue to occur.

·	The Company’s cost of operating its distribution points may continue to increase due to enhanced health and safety measures taken to protect its employees, including the increased costs of personal protective equipment and disinfectants.

·	The competition to the Company from other similar businesses since COVID-19 has increased as more businesses have started to offer delivery of grocery items and meal kits. The Company also competes directly against other meal delivery companies, including both national brands and regional brands.

·	The COVID-19 health crisis may negatively affect demand for the Company’s products from restaurants if there are further government-imposed restrictions on restaurants in response to a new wave of COVID-19 infections.

·	Changes in prices of the Company’s products due to increased cost of sales could negatively affect the Company’s overall sale of product, resulting in decreased revenues in operations and expenses that could be incurred to ensure the protection of staff. In addition, modification of payment terms with key suppliers and the risk of key suppliers shifting focus to higher volume competitors of the Company could result in customers seeking other alternatives.

·	As the COVID-19 pandemic continues for an extended period of time, it may negatively affect the price and availability of the Company’s grocery items and/or packaging materials and impact the Company’s supply chain.

	●	Issued 69,500 shares of Series A Convertible Preferred Stock, with a fair value of $244,622, for settlement of advances and promissory notes.
	●	Issued 17,000 shares of Series B Convertible Preferred Stock, with a fair value of $44,100, for settlement of accounts payable and promissory note.
	●	Issued 25,000,000 shares of common stock for the conversion of 500 shares of Series C Convertible Preferred Stock.
	●	Issued 1,000,570,627 shares of common stock, with a fair value of $2,177,285, for the settlement of non-redeemable convertible notes.
	●	Issued 67,461,539 shares of common stock, with a fair value of $105,985, for the settlement of convertible notes.
	●	Issued 5,000,000 shares of common stock, with a fair value of $12,500, for stock-based compensation – officers and directors.
	●	Issued 200,000,000 shares of common stock, with a fair value of $519,000, for consulting services.

	Years ended December 31						Change
	2021 $			2020 $			$		%
Sales		930,096			159,025			771,071		485
Cost of goods sold		832,816			138,405			694,411		502
Gross profit		97,280			20,620			76,660		372
Gross profit %		10.5	%		13.0	%

Quarter Ended	December 31, 2021	September 30, 2021	June 30, 2021	March 31, 2021	December 31, 2020	September 30, 2020	June 30, 2020	March 31, 2020
Sales	$324,748	$241,417	$174,774	$189,157	$96,194	$54,838	$7,993	$0
Gross profit	$19,117	$39,808	$19,808	$18,547	$16,320	$2,344	$1,956	$0
Operating expenses	($1,270,225)	($693,259)	($446,806)	($856,989)	($836,932)	($1,626,144)	($1,195,530)	($1,867,003)
Other income (expense)	($2,155,703)	($7,397,246)	($1,560,110)	($2,052,979)	($626,383)	($629,210)	($320,193)	($585,287)
Net loss for the period	($3,406,811)	($8,050,697)	($1,987,108)	($2,891,421)	($1,446,995)	($2,253,010)	($1,513,767)	($2,452,290)
Basic and diluted net loss per share	($0.001)	($0.003)	($0.00)	($0.00)	($0.003)	($0.012)	($0.02)	($0.16)

	December 31, 2021		December 31, 2020
Current assets	$	1,608,848	$	963,653
Current liabilities		552,998		607,930
Working capital	$	1,055,850	$	355,723

	Cash Required to Implement of Business Plan
Estimated remaining prospectus costs	$	50,000
Mobile application development		5,000
Operations and Logistics		40,000
General and Administration		186,500
Total Estimated Cash Expenditures	$	281,500

	Payments Due by Period
Contractual obligations	Total $		Less than 1 year $		1 - 3 years $		4 – 5 years $		After 5 years $
Accounts payable and accrued liabilities		498,428		498,428		—		—		—
Debt		256,615		46,088		45,552		164,975		—
Non-redeemable convertible notes		517,717		—		—		517,717		—
Financial lease Obligations		—		—		—		—		—
Operating leases⁽¹⁾		33,612		8,482		25,130		—		—
Purchase obligations		—		—		—		—		—
Total contractual obligations		1,306,372		552,998		70,682		682,692		—

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (3627)	29
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets	31
Consolidated Statements of Operations	32
Consolidated Statement of Stockholders' Deficit	33
Consolidated Statements of Cash Flows	35
Notes to Consolidated Financial Statements	36


	December 31, 2021			December 31, 2020

ASSETS
Current assets
Cash	$	533,295		$	21,843
Accounts receivable, net		163,197			41,097
Taxes receivable		24,563			8,824
Inventory		154,848			—
Prepaid expense		732,945			891,889
Total current assets		1,608,848			963,653

Property and equipment, net		6,974			3,444
Right-of-use asset		33,612			—

Total assets	$	1,649,434		$	967,097

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	498,428		$	162,536
Non-redeemable convertible notes, net		—			75,040
Due to related party		39,985			106,928
Notes payable		6,103			83,332
Convertible note, net		—			7,833
Derivative liabilities		—			172,261
Right-of-use liability		8,482			—
Total current liabilities		552,998			607,930
Long-term liabilities
Promissory note		210,527			85,796
Promissory notes - related party		—			194,485
Non-redeemable convertible notes, net		517,717			766,949
Right-of-use liability		25,130			—
Total long-term liabilities		753,374			1,047,230

Total liabilities		1,306,372			1,655,160

Commitments and Contingencies		—			—

Temporary equity
Series A convertible preferred stock; $0.01 par value; 200,000 shares designated, 189,500 and 30,000 shares issued and outstanding, respectively		595,122			33,000
Series B convertible preferred stock; $0.01 par value; 100,000 shares designated, 21,000 and 4,000 shares issued and outstanding, respectively		1,564,100			1,520,000
Series C convertible preferred stock; $0.001 par value; 30,000 shares designated, 10,000 shares and 5,000 shares issued and outstanding, respectively		1,130,952			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		4,079,180			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; 12,000,000,000 shares authorized, 6,000,000,000 and 695,575,506 shares issued and outstanding, respectively		600,002			69,560
Additional paid-in capital		57,552,415			42,703,888
Common stock to be issued		336,000			336,000
Accumulated other comprehensive income		4,870			0
Accumulated deficit		(62,229,405	)		(45,893,368	)
Total stockholders' deficit		(3,736,118	)		(2,783,920	)

Total liabilities and stockholders' deficit	$	1,649,434		$	967,097

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


		For the year ended December 31,
		2021			2020

Sales	$	930,096		$	159,025
Cost of goods sold		832,816			138,405
Gross profit		97,280			20,620

Operating expenses
General and administrative		3,267,279			5,525,609
Total operating expenses		3,267,279			5,525,609

Loss from operations		(3,169,999	)		(5,504,989	)

Other income (expense)
Amortization of debt discount and interest expense		(357,213	)		(239,312	)
Loss on settlement of debt		(12,890,764	)		(2,053,055	)
Initial derivative expense		(126,322	)		(258,863	)
Change in fair value of derivative liabilities		208,261			390,157
Total other income (expense)		(13,166,038	)		(2,161,073	)

Net loss	$	(16,336,037	)	$	(7,666,062	)

Net loss per common share - basic and diluted	$	(0.01	)	$	(0.04	)

Weighted average number of common shares outstanding - basic and diluted		2,820,093,528			206,466,594

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


	Common Stock				Common Stock to be		Additional Paid-in		Accumulated Other Comprehensive		Accumulated			Total Stockholders'
	Shares		Amount		Issued		Capital		Income		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	4,552,595,410		455,260		—		12,872,448		—		—			13,327,708
Stock issued for conversion of convertible notes	214,329,084		21,432		—		531,002		—		—			552,434
Stock issued for the conversion of Series C Stock	250,000,000		25,000		—		540,477		—		—			565,477
Stock issued for consulting	240,500,000		24,050		—		785,950		—		—			810,000
Stock issued for officer and director compensation	47,000,000		4,700		—		118,650		—		—			123,350
Foreign exchange gain	—		—		—		—		4,870		—			4,870
Net loss	—		—		—		—		—		(16,336,037	)		(16,336,037	)
Balance, December 31, 2021	6,000,000,000	$	600,002	$	336,000	$	57,552,415	$	4,870	$	(62,229,405	)	$	(3,736,118	)

	December 31, 2020
	Level 1		Level 2		Level 3
Description	$		$		$
Derivative liabilities		—		—		172,261

Operating Lease Liability Maturity
Year ending December 31,		Operating Lease Commitments
	2022	$	10,950
	2023		10,950
	2024		10,950
	2025		8,212
	Total operating lease commitments		41,062
	Less: imputed interest		(7,450	)
	Total right-of-use liability	$	33,612

Fair Value of Convertible Promissory Note Derivative Liabilities
	December 31, 2019	January 20, 2020	February 3, 2020	April 14, 2020	July 13, 2020	September 11, 2020	December 31, 2020
Closing share price	$0.20	$0.18	$0.115	$0.0559	$0.0105	$0.0037	$0.0031
Conversion price	$0.0683	$0.0488	$0.0587	$0.0338	$0.0068	$0.0024	$0.0019
Risk free rate	1.60%	1.57%	1.60%	2.40%	0.16%	0.13%	0.09% to 0.10%
Expected volatility	294%	351%	434%	330%	294%	270%	228% to 284%
Dividend yield	0%	0%	0%	0%	0%	0%	0%
Expected life	0.67 years	0.5 years	1.49 years	1.5 years	1.0 years	1.5 years	0.53 to 1.19 years

	February 23, 2021	May 27, 2021	December 2, 2021
Closing share price	$0.0068	$0.0026	$0.0014
Conversion price	$0.0037	$0.0017	$0.0011
Risk free rate	0.13%	0.13%	0.08%
Expected volatility	276%	194%	152%
Dividend yield	0%	0%	0%
Expected life	1.5 years	1.0 years	0.48 years

Fair Value of Warrant Liability
	December 31, 2019	April 14, 2020
Closing share price	$0.20	$0.0559
Exercise price	$0.20	$0.20
Risk free rate	1.59%	1.59%
Expected volatility	338%	310%
Dividend yield	0%	0%
Expected life	1.17 years	0.88 years

Schedule of Reconciliation of Provision for Income Tax Expenses (Recovery)
	2021			2020
Net loss before income taxes per consolidated financial statements	$	(16,336,037	)	$	(7,666,062	)
Income tax rate		21	%		21	%
Income tax recovery		(3,430,600	)		(1,610,000	)
Non-deductible share-based payments		497,400			1,062,100
Non-deductible interest		75,000			50,300
Loss on settlement of debt		2,707,100			431,200
Initial derivative expense		26,500			54,400
Change in fair value of derivative expense		(43,100	)		(82,000	)
Valuation allowance change		167,700			94,000
Income tax expense (recovery)	$	—		$	—

Schedule of Significant Component of Deferred Income Tax Assets
	2021			2020
Net operating loss carry-forward	$	1,060,700		$	893,000
Valuation allowance		(1,060,700	)		(893,000	)
Net deferred income tax asset	$	—		$	—

Name	Age		Position(s)
Nadav Elituv		58	CEO, President., Secretary, Treasurer and Director (Principal Executive Officer)
Steven Gryfe		53	Chief Financial Officer (Principal Financial and Accounting Officer)
Ryan Wilson		46	Director
Bradley Southam		50	Director

	●	any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
	●	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
	●	being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities;
	●	being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
	●	being subject of, or a party to, any federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
	●	being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Name & Principal Position	Year		Salary ($)		Bonus ($)		Stock Awards ($)	Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Nadav Elituv, Principal Executive Officer, President, Chairman and Director (3)		2021	$	129,600	$	—	$198,850 (3)	$	—	$	—	$	—	$	—	$	328,450
		2020	$	75,600	$	—	$491,450 (3)	$	—	$	—	$	—	$	—	$	567,050
Steven Gryfe, Chief Executive Officer (1)		2021	$	—	$	—	$ 11,500 (3)	$	—	$	—	$	—	$	—	$	11,500
		2020	$	—	$	—	$ 468,450 (3)	$	—	$	—	$	—	$	—	$	468,450

Name	Fees Earned of Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		All Other Compensation ($)		Total ($)
Ryan Wilson, Director	$	—	$	11,500	$	—	$	—	$	11,500
Bradley Southam, Director	$	10,054	$	11,500	$	—	$	—	$	2,,554

	Common Stock		Series A Convertible Preferred Stock
Beneficial Owner (1)	Number of Shares Beneficially Owned	Percentage of Class (2)	Number of Shares Beneficially Owned	Percentage of Class (3)

Nadav Elituv, Chief Executive Officer and Director	307,000,000 (4)	4.24%	189,500 (5)	100%

Ryan Wilson, Director	42,500,000	0.61%	0	-

Bradley Southam, Director	42,500,000	0.61%	0	-

Steven Gryfe, CFO	42,500,000	0.61%	0	-

All directors and executive officers (4 persons)	434,500,000 (4)	6.00%	189,500	100%

	2021		2020
Audit Fees	$	61,450	$	50,975
Audit-Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0
Total	$	61,450	$	50,975

			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
3.4	Certificate of Amendment to the Certificate of Incorporation, dated July 27, 2016		8-K	9/1/2016	3.1	9/1/2016
3.5	Certificate of Amendment to the Certificate of Incorporation, dated August 27, 2018		8-K	9/10/2018	3.1	9/10/2018
3.6	Certificate of Amendment to the Certificate of Incorporation, dated November 18, 2019		8-K	12/12/2019	3.1	12/12/2019
3.7	Certificate of Amendment to the Certificate of Incorporation, dated July 16, 2021		8-K	7/16/2021	3.1	7/22/2021
3.8	Certificate of Amendment to the Certificate of Incorporation, dated January 3, 2022		8-K	1/3/2022	3.1	1/6/2022
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 12, 2019		8-K	12/12/2019	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	10/07/2020	3.1	10/08/2020
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	6/24/2021	3.1	7/1/2021
4.6	Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, dated September 1, 2021		8-K	9/1/2021	3.1	9/1/2021
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, The 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 – the instance document does not appear in the Interactive Data Files as its XBRL tags are embedded within the Inline XBRL document	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Definition	X
104	Cover page formatted as Inline XBRL and contained in Exhibit 101	X


	TWO HANDS CORPORATION

Dated: March 31, 2022	By: /s/ Nadav Elituv Name: Nadav Elituv Title: President, Chief Executive Officer and Director (Principal Executive Officer)

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

SIGNATURE	TITLE	DATE


By: /s/ Nadav Elituv Nadav Elituv	President, Chief Executive Officer and Director (Principal Executive Officer)	March 31, 2022

By: /s/ Steven Gryfe Steven Gryfe	Chief Financial Officer (Principal Financial and Accounting Officer)	March 31, 2022

By: /s/ Ryan Wilson Ryan Wilson	Director	March 31, 2022

By: /s/ Bradley Southam Bradley Southam	Director	March 31, 2022