Quantum X Inc 10-K for FY2023

Quantum X Inc. (QUTX)

10-K 2024-04-01 For: 2023-12-31

Added on April 11, 2026

About this 10-K

Quantum X Inc filed this 10-K on April 1, 2024, covering the fiscal year ended December 31, 2023 (FY2023).

Headline figures

Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $783.49K; up 7.1% from $731.3K a year earlier
Net loss: $8.16M; compared with a net loss of $21.69M a year earlier
Diluted EPS: -$0.56; compared with -$229.33 a year earlier

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

	373 Joicey Blvd., North York Ontario, Canada		M5M 2W2
	(Address of Principal Executive Offices)		(Zip Code)

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

	Title of each class	Name of each exchange on which registered
	N/A	N/A

PART I		Page
Item 1.	Business	5
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	15
Item 2.	Properties	15
Item 3.	Legal Proceedings	15
Item 4.	Mine Safety Disclosures	15
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	17
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 8.	Financial Statements and Supplementary Data	26
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	27
Item 9A.	Controls and Procedures	27
Item 9B.	Other Information	27
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	27
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	28
Item 11.	Executive Compensation	31
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	33
Item 13.	Certain Relationships and Related Transactions and Director Independence	34
Item 14.	Principal Accountant Fees and Services	35
PART IV
Item 15.	Exhibits, Financial Statement Schedules	37
Item 16.	Form 10-K Summary	38
	Signatures	38

	Year ended December 31,						Change
	2023 $			2022 $			$		%
Sales		783,489			731,302			52,187		7
Cost of goods sold		721,377			682,109			39,268		6
Gross profit		62,112			49,193			12,919		26
Gross profit %		7.9	%		6.7	%

Quarter Ended	December 31, 2023	September 30, 2023	June 30, 2023	March 31, 2023	December 31, 2022	September 30, 2022	June 30, 2022	March 31, 2022
Sales	$198,266	$212,453	$197,324	$175,446	$168,790	$172,782	$190,691	$199,039
Gross profit	$(20,815)	$55,262	$12,216	$15,449	$21,299	$13,659	$(6,278)	$20,514
Operating expenses	($391,043)	($307,223)	($277,327)	($365,706)	($2,759,699)	($304,452)	($14,021,263)	($759,913)
Other income (expense)	($6,151,405)	($313,869)	($263,974)	($155,227)	($194,174)	($768,587)	($2,320,020)	($614,198)
Net loss for the period	($6,563,263)	($565,830)	($529,085)	($505,484)	($2,932,573)	($1,059,380)	($16,347,561)	($1,353,597)
Basic net income (loss) per share	($0.17)	$1.33	($0.00)	($0.00)	($20.00)	($10.00)	($180.00)	($200.00)
Diluted net loss per share	($0.17)	($0.01)	($0.00)	($0.00)	($20.00)	($10.00)	($180.00)	($200.00)

	December 31, 2023			December 31, 2022
Current assets	$	169,481		$	193,097
Current liabilities		2,158,619			784,473
Working capital (Deficiency)	$	(1,989,138	)	$	(591,376	)

	Cash Required to Implement of Business Plan
General and Administration	$	268,000
Operations		100,000
Total Estimated Cash Expenditures	$	368,000

	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		523,486		523,486		—		—		—
Debt		1,874,236		1,626,374		247,862		—		—
Deferred revenue		—		—		—		—		—
Non-redeemable convertible notes		502,500		—		502,500		—		—
Financial lease Obligations		—		—		—		—		—
Operating leases⁽¹⁾		15,559		8,759		6,800		—		—
Purchase obligations		—		—		—		—		—
Total contractual obligations		2,915,781		2,158,619		757,162		—		—

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	F-2
CONSOLIDATED FINANCIAL STATEMENTS	F-4
Consolidated Balance Sheets	F-5
Consolidated Statements of Operations and Comprehensive Income (Loss)	F-6
Consolidated Statement of Stockholders' Deficit	F-7
Consolidated Statements of Cash Flows	F-8
Notes to Consolidated Financial Statements	F-9


	December 31, 2023			December 31, 2022
ASSETS

Current assets
Cash	$	24,351		$	17,137
Accounts receivable, net		92,561			94,182
VAT taxes receivable		3,080			8,157
Inventory		39,489			73,621
Prepaid expenses		10,000			—
Total current assets		169,481			193,097

Property and equipment, net		9,513			13,667
Operating lease right-of-use asset		15,559			23,438

Total assets	$	194,553		$	230,202

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued liabilities	$	523,486		$	555,220
Due to related party		883,534			185,473
Notes payable		113,333			13,443
Line of credit		629,507			—
Deferred revenue		—			22,107
Current portion of operating lease right-of-use liability		8,759			8,230
Total current liabilities		2,158,619			784,473
Long-term liabilities
Line of credit		—			293,298
Promissory notes		247,862			229,194
Promissory note - related party		—			84,377
Non-redeemable convertible notes, net		502,500			517,621
Operating lease right-of-use liability, net of current portion		6,800			15,208
Total long-term liabilities		757,162			1,139,698

Total liabilities		2,915,781			1,924,171

Commitments and Contingencies		—			—

Temporary equity
Series A convertible preferred stock; $0.01 par value; 200,000 shares designated, 0 shares and 25,000 shares issued and outstanding, respectively		—			249,505
Series B convertible preferred stock; $0.01 par value; 100,000 shares designated, 0 and 11,000 shares issued and outstanding, respectively		—			109,783
Series C convertible preferred stock; $0.001 par value; 150,000 shares designated, 80,000 shares and 90,000 shares issued and outstanding, respectively		76,116			2,584,951
Series D convertible preferred stock; $0.001 par value; 200,000 shares designated, 0 shares issued and outstanding, respectively		—			—
Series E convertible preferred stock; $0.0001 par value; 300,000 shares designated, 0 shares issued and outstanding		—			—
Total temporary equity		76,116			2,944,239

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, 42,090,329 and 137,403 shares issued and outstanding, respectively		4,210			14
Additional paid-in capital		89,278,354			78,909,153
Common stock to be issued		—			336,000
Accumulated other comprehensive income		6,270			39,141
Accumulated deficit		(92,086,178	)		(83,922,516	)
Total stockholders' deficit		(2,797,344	)		(4,638,208	)

Total liabilities and stockholders' deficit	$	194,553		$	230,202

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


		For the year ended December 31,
		2023			2022

Sales	$	783,489		$	731,302
Cost of goods sold		721,377			682,109
Gross profit		62,112			49,193

Operating expenses
General and administrative		1,341,299			17,845,327
Total operating expenses		1,341,299			17,845,327

Loss from operations		(1,279,187	)		(17,796,134	)

Other income (expense)
Amortization of debt discount and interest expense		(159,335	)		(131,828	)
Gain on disposition		50,695			—
Loss on settlement of non-redeemable convertible notes		(6,775,835	)		(3,668,750	)
Initial derivative expense		—			(36,521	)
Change in fair value of derivative liabilities		—			(59,878	)
Total other income (expense)		(6,884,475	)		(3,896,977	)

Net loss attributed to Two Hands Corporation		(8,163,662	)		(21,693,111	)

Add: deemed contribution - Series A Stock modification		190,040			—
Less: deemed dividend - Series A Stock modification		—			(1,396,721	)
Add: deemed contribution - Series B Stock modification		—			1,354,515
Add: deemed contribution - Series C Stock modification		2,211,884			834,001
Add: deemed contribution - Series D Stock modification		—			749,085
Add: deemed contribution - Series E Stock modification		—			57,218

Net loss attributable to Two Hands Corporation common shareholders	$	(5,761,738	)	$	(20,095,013	)

Other comprehensive (loss) income
Foreign exchange (loss) gain		(32,871	)		30,523
Total other comprehensive (loss) income		(32,871	)		30,523

Comprehensive loss	$	(5,794,609	)	$	(20,064,490	)

Net loss per common share - basic and diluted	$	(0.56	)	$	(229.33	)
Weighted average number of common shares outstanding - basic		10,352,044			87,625
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, 2022	137,403	$	14	$	336,000		$	78,909,153	$	39,141		$	(83,922,516	)	$	(4,638,208	)

Rounding on reverse stock split	9,870		—		—			—		—			—			—
Stock issued for conversion of non-redeemable convertible notes	16,920,700		1,694		—			6,892,788		—			—			6,894,482
Stock issued for settlement of debt - related party	7,324		1		—			274,792		—			—			274,793
Stock issued for the conversion of Series A convertible preferred stock	25,000,000		2,500		—			56,965		—			—			59,465
Stock issued for the conversion of Series B convertible preferred stock	11,000		1		—			109,781		—			—			109,782
Stock issued for the conversion of Series C convertible preferred stock	4,000		—		—			296,951		—			—			296,951
Stock issued to settle stock to be issued	32		—		(336,000	)		336,000		—			—			—
Deemed contribution - Series A Stock modification	—		—		—			190,040		—			—			190,040
Deemed contribution - Series C Stock modification	—		—		—			2,211,884		—			—			2,211,884
Foreign exchange loss	—		—		—			—		(32,871	)		—			(32,871	)
Net loss	—		—		—			—		—			(8,163,662	)		(8,163,662	)
Balance, December 31, 2023	42,090,329	$	4,210	$	—		$	89,278,354	$	6,270		$	(92,086,178	)	$	(2,797,344	)


		For the years ended December 31,
		2023			2022
Cash flows from operating activities
Net loss	$	(8,163,662	)	$	(21,693,111	)
Adjustments to reconcile net loss
to cash used in operating activities
Depreciation and amortization		12,662			11,530
Bad debt		(24,868	)		112,822
Stock-based compensation		—			13,504,200
Gain on disposition		(50,695	)		—
Amortization of debt discount		159,335			131,828
Loss on settlement of non-redeemable convertible notes		6,775,835			3,668,750
Initial derivative expense		—			36,521
Change in fair value of derivative liabilities		—			59,878
Change in operating assets and liabilities
Accounts and taxes receivable		(29,575	)		(36,855	)
Prepaid expense		(10,000	)		3,020,527
Inventory		21,648			73,903
Deferred revenue		(22,221	)		23,076
Accounts payable and accrued liabilities		887,881			254,443
Operating lease right-of-use liability		(8,272	)		(8,257	)
Net cash used in operating activities		(451,932	)		(840,745	)

Cash flows from investing activities
Purchase of property and equipment		—			(10,749	)
Net cash used in investing activities		—			(10,749	)

Cash flow from financing activities
Advances from related party		108,383			167,438
Repayment of advances to related party		(34,246	)		(127,616	)
Proceeds from notes payable		105,001			7,692
Repayment of notes payable		(7,037	)		—
Proceeds from promissory notes		286,529			302,680
Net cash provided by financing activities		458,630			350,194

Change in foreign exchange		516			(14,858	)

Net change in cash		7,214			(516,158	)

Cash, beginning of the year		17,137			533,295

Cash, end of the year	$	24,351		$	17,137

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

Supplemental disclosure of non-cash investing and financing activities
Stock issued to settle due to related party	$	188,871		$	—
Stock issued to settle promissory note - related party	$	85,922		$	—
Stock issued to settle non-redeemable convertible notes	$	6,894,482		$	3,772,390
Stock issued for prepaid expense	$	—		$	2,288,000
Transfer of accounts payable and accrued liabilities to promissory notes	$	—		$	85,285
Deemed contribution - Series A Stock modification	$	190,040		$	—
Deemed dividend - Series A Stock modification	$	—		$	1,396,721
Deemed contribution - Series B Stock modification	$	—		$	1,354,515
Deemed contribution - Series C Stock modification	$	2,211,884		$	834,001
Deemed contribution - Series D Stock modification	$	—		$	749,085
Deemed contribution - Series E Stock modification	$	—		$	57,218
The accompanying footnotes are an integral part of these financial statements.

Schedule of accounts receivable and revenue concentrations
	Accounts receivable at December 31, 2023			Revenue for the year ended December 31, 2023
Customer #1		19	%		—
Customer #2		12	%		—
Total concentration		31	%		—	%


	Accounts payable at December 31, 2023			Purchases for the year ended December 31, 2023
Supplier #1		13	%		21	%
Supplier #2		12	%		—
Supplier #3		12	%		—
Supplier #4		10	%		—
Supplier #5		—			17	%
Supplier #6		—			13	%
Total concentration		47	%		51	%

Schedule of operating lease liability
Periods ending December 31,	Operating Lease Commitments
2024	$	10,448
2025		7,836
Total operating lease commitments		18,284
Less: imputed interest		(2,725	)
Total right-of-use liability	$	15,559

Schedule of reconciliation of provision for income tax expenses (recovery)
	2023			2022
Net loss before income taxes per consolidated financial statements	$	(8,163,662	)	$	(21,693,111	)
Income tax rate		21	%		21	%
Income tax recovery		(1,714,400	)		(4,555,500	)
Non-deductible share-based payments		—			3,470,200
Non-deductible interest		33,500			27,600
Loss on settlement of debt		1,422,900			770,400
Initial derivative expense		—			7,700
Change in fair value of derivative expense		—			12,600
Valuation allowance change		258,000			267,000
Income tax expense (recovery)	$	—		$	—

Schedule of significant component of deferred income tax assets
	2023			2022
Net operating loss carry-forward	$	1,585,700		$	1,327,700
Valuation allowance		(1,585,700	)		(1,327,700	)
Net deferred income tax asset	$	—		$	—

Name	Age		Position(s)
Nadav Elituv (1)		60	CEO, President, Secretary, Treasurer and Director (Principal Executive Officer)
Steven Gryfe		55	Chief Financial Officer (Principal Financial and Accounting Officer)
Ryan Wilson (1)		48	Director
Bradley Southam (1)		52	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	2023	$ 808,076	$ -	$-	$ -	$-	$ -	$ -	$ 808,076
	2022	$ 195,551	$ -	$13,504,200	$ -	$-	$ -	$ -	$ 13,699,751
Steven Gryfe, Chief Executive Officer	2023	$ -	$ -	$ -	$ -	$-	$ -	$ -	$ -
	2022	$ -	$ -	$ -	$ -	$-	$ -	$ -	$ -

Name	Fees Earned of Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		All Other Compensation ($)		Total ($)
Ryan Wilson, Director	$	—	$	—	$	—	$	—	$	—
Bradley Southam, Director	$	2,714	$	—	$	—	$	—	$	2,714
Yan Namer, Director	$	—	$	—	$	—	$	—	$	—

	Common Stock
Beneficial Owner (1)	Number of Shares Beneficially Owned	Percentage of Class (2)

Nadav Elituv, Chief Executive Officer and Director	33,097,398 (4)	30.44%

Ryan Wilson, Director	40	0.00%

Bradley Southam, Director	40	0.00%

Steven Gryfe, CFO	40	0.00%

All directors and executive officers (4 persons)	33,097,518	30.44%

	2023		2022
Audit Fees	$	70,177	$	66,500
Audit-Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0
Total	$	70,177	$	66,500

			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
3.9	Certificate of Amendment to the Certificate of Incorporation, As Amended, dated March 21, 2022		8-K	4/25/2022	3.1	4/26/2022
3.10	Certificate of Amendment to the Certificate of Incorporation, As Amended, filed with the Delaware Secretary of State on August 22, 2023.		8-K	9/8/2023	3.1	9/11/2023
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
4.7	Amended and Restated Designation of Series A Convertible Preferred Stock of Two Hands Corporation, dated April 21, 2022		8-K	4/21/2022	3.1	4/26/2022
4.8	Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated July 5, 2022		10-Q	6/30/2022	4.8	8/15/2022
4.9	Certificate of Designation, Preference and Rights of Series E Preferred Stock, dated October 3, 2022		8-K	10/4/2022	3.1	10/11/2022
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: April 1, 2024	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)	April 1, 2024

By: /s/ Steven Gryfe Steven Gryfe	Chief Financial Officer (Principal Financial and Accounting Officer)	April 1, 2024

By: /s/ Ryan Wilson Ryan Wilson	Director	April 1, 2024

By: /s/ Bradley Southam Bradley Southam	Director	April 1, 2024