SUPA Consolidated Inc 10-Q for FY2023 Q1
SUPA Consolidated Inc. (SFCX)
About this 10-Q
SUPA Consolidated Inc filed this 10-Q on May 22, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).
Headline figures
Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $458.04K
- compared with a net loss of $506.21K a year earlier
- Diluted EPS
- $0.01
- unchanged from $0.01 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 PURSUANT TO 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)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
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). Yes ☐
Securities registered pursuant to section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered |
| Not applicable | Not applicable | Not applicable |
The number of shares outstanding of the registrant’s common stock on May 19, 2023 was .
TABLE OF CONTENTS
| 2 |
PART I – FINANCIAL INFORMATION
| Item 1. | Financial Statements |
Consolidated Financial Statements
Tribal Rides International Corp.
INDEX TO FINANCIAL STATEMENTS
| 3 |
TRIBAL RIDES INTERNATIONAL CORP.
BALANCE SHEETS
March 31, 2023 (Unaudited) | December 31, 2022 (Audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Total current assets | ||||||||
| Software and equipment, net | ||||||||
| Patents, net | ||||||||
| Total noncurrent assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Deferred revenue | ||||||||
| Notes payable, net of debt discount | ||||||||
| Due to related party | ||||||||
| Total current liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | ||||||||
| Common stock to be issued, and shares as of March 31, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
See accompanying Notes to Financial Statements
| 4 |
TRIBAL RIDES INTERNATIONAL CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended 2023 | For the Three Months Ended 2022 | |||||||
| Operating expenses: | ||||||||
| Selling and marketing | $ | $ | ||||||
| General and administrative (includes stock-based expense of $ and $, respectively) | ||||||||
| Total operating expense | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Amortization of debt discount | ( | ) | ||||||
| Gain (loss) on extinguishment of debt | ( | ) | ||||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Weighted average shares basic and diluted | ||||||||
| Weighted average basic and diluted loss per common share | $ | ( | ) | $ | ( | ) | ||
See accompanying Notes to Financial Statements
| 5 |
TRIBAL RIDES INTERNATIONAL CORP.
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
| Common Stock | Common
Stock To Be Issued | Additional Paid-In | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance – December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Shares issuable with PPM | – | |||||||||||||||||||||||||||
| Warrant issuable with PPM | – | – | ||||||||||||||||||||||||||
| Shares issuable for services | ||||||||||||||||||||||||||||
| Stock award shares | ( | ) | ( | ) | ||||||||||||||||||||||||
| Cancelled shares | ( | ) | ( | ) | – | |||||||||||||||||||||||
| Loss on extinguishment of debt | – | |||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance – March 31, 2023 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Common Stock | Common
Stock To Be Issued | Additional Paid-In | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance – December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Shares issued with debt | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance – March 31, 2022 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
See accompanying Notes to Financial Statements
| 6 |
TRIBAL RIDES INTERNATIONAL CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended 2023 | For the Three Months Ended 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Shares issued for services | ||||||||
| Shares issued and issuable pursuant to employment agreements | ||||||||
| Loss on extinguishment of debt | ||||||||
| Amortization of software and equipment | ||||||||
| Amortization of debt discount | ||||||||
| Changes in operating assets/liabilities: | ||||||||
| Accounts payable and accrued liabilities | ( | ) | ||||||
| Deferred revenue | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from PPM sale of shares – non-related | ||||||||
| Borrowings from related parties | ||||||||
| Net cash from financing activities | ||||||||
| Net change in cash | ( | ) | ( | ) | ||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental disclosures of cash flow information | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Taxes | $ | $ | ||||||
See accompanying Notes to Financial Statements
| 7 |
TRIBAL RIDES INTERNATIONAL CORP.
NOTES TO FINANCIAL STATEMENTS
| 1. | Organization and Business |
Organization and Business
We were incorporated on May 19, 2014 in the State of Nevada as Trimax Consulting, Inc. with an initial business plan of providing real estate consulting services and purchasing tax liens. On March 16, 2017, Newfield Global Holdings Limited acquired 25.0 million shares of our common stock representing 96.3% of our then outstanding shares. Upon election of a new Board of Directors and appointment of new management, we altered our business plan to provide end-to-end Human Resource services. On May 8, 2017, we filed an Amendment to our Articles of Incorporation changing our name to Xinda International Corp.
On February 24, 2021, we filed an Amendment to our Articles of Incorporation changing our name to Tribal Rides International Corp. On February 23, 2022, we filed an application with the Financial Industry Regulatory Authority (“FINRA”) to change our ticker symbol. Until that change is made, our ticker symbol remains XNDA. On March 13, 2023, we amended our Articles of Incorporation to increase the total number of authorized common shares to five hundred million () shares.
We are engaged in the business of digital transformation of transportation. The digital transportation enablement and enhancement platform provides fully automated dispatching and bookings management built for taxi companies, limousine companies and ride-sharing service providers. The platform gives customers an app-based experience and provides service providers a range of functions which include customer booking, accounts management, driver tracking, real-time notifications, auto dispatching algorithms, accounting and settlements, corporate account management as well as providing reporting and analytics. The platform has also shown to have a direct application in the B2B space in providing corporations with a more efficient taxi chit solution to combat fraud and excessive administration costs.
Although we have made progress on our platform, it is continuing to undergo beta testing while we await additional funding. We hope to launch the next phase of release during the year ended December 31, 2023. We have focused on expanding some of the transportation capabilities and bug fixing. One significant addition to the financial transaction capabilities of our platform is the successful registration and qualification for using the Paypal financial transaction features to supplement our current Stripe capabilities.
| 2. | Summary of Significant Accounting Policies |
Basis of Presentation
We have prepared the accompanying unaudited financial statements in conformity with generally accepted accounting principles in the United States of America pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Our Company’s year-end is December 31.
| 8 |
Going Concern Considerations
The accompanying financial statements
have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation
of our Company as a going concern. We currently have no revenues, have incurred net losses, and have an accumulated deficit of $
The accompanying financial statements do not include any adjustments that might be necessary if our Company is unable to continue as a going concern.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Internal Use Software Development
We account for costs incurred to develop or purchase computer software for internal use in accordance with Accounting Standards Codification (“ASC”) 350-40 "Internal-Use Software" or ASC 350-50 "Website Costs". As required by ASC 350-40, we capitalize the costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation, and testing.
Costs incurred during the preliminary project stage along with post-implementation stages of internal use computer software are expensed as incurred. Capitalized development costs, once placed into service, are amortized on a straight-line basis over a period of five years, management’s estimate of the economic life. Costs incurred to maintain existing product offerings are expensed as incurred. Our software platform has not yet been placed into service. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life.
Intellectual Property
We have patent and patent pending technologies with a focus on artificial intelligence (“AI”), machine learning with optimization and Smart Deployment algorithms. It involves anticipating demand for passengers and dispatching cars in advance – to reduce wait-time, increasing utilization of vehicles, and decrease cost. It includes new and efficient system for tracking and charging customers with preferred rates, supply and demand rates, and “specific” community engagement.
Patent expenses, consisting mainly of patent filing fees, have been capitalized and are shown as an asset on our balance sheet. We amortize our Patent asset over the remaining life of the Patent, which is approximately ten (10) years.
| 9 |
Fair Value of Financial Instruments
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of our Company. Unobservable inputs are inputs that reflect our Company’s assumptions about the factors that market participants would use in valuing the asset or liability. The fair value hierarchy consists of the following three levels of inputs that may be used to measure fair value:
| Level 1 | — | Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | ||||
| Level 2 | — | Inputs other than quoted prices included in Level 1 that are observable in the marketplace either directly (i.e., as prices) or indirectly (i.e., derived from prices). | ||||
| Level 3 | — | Unobservable inputs which are supported by little or no market activity. |
For assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued liabilities maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.
Fair Value Hierarchy of assets and liabilities that are recognized and measured at fair value in the financial statements as of March 31, 2023 and December 31, 2022 (level 3 inputs are not applicable):
| Fair Value Measurement Using | ||||||||
| Level 1 | Level 2 | |||||||
| As of March 31, 2023: | ||||||||
| Liabilities: | ||||||||
| Due to related parties – recognized at fair value (1) | $ | $ | ||||||
| As of December 31, 2022: | ||||||||
| Liabilities: | ||||||||
| Due to related parties – recognized at fair value (1) | $ | $ | ||||||
____________
| (1) |
During the three months and year ended March 31, 2023 and December 31, 2022, respectively there were no transfers between Levels 1, 2 or 3.
Financial risk factors
As our software platform has not yet been launched, we believe our activities do not yet expose us to any market, credit or liquidity risk.
Long-lived Assets
We follow ASC 360-10-15-3, Impairment or Disposal of Long-lived Assets, which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
| 10 |
Revenue Recognition
At our inception, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606). Under this guidance, operating revenue is recognized at the time a good or service is transferred to a customer and the customer receives the service performed. Our revenue arrangements with customers are predominantly short-term in nature involving a single performance obligation related to the delivery of the service and generally provide for transfer of control at the time payment for the service is received.
We exclude from the measurement of the transaction price, if applicable, all taxes imposed on and concurrent with a specific revenue-producing transaction and collected by us from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). Sales taxes which may be collected are not recognized as revenue but are included in accounts payable on the balance sheets as they would ultimately be remitted to governmental authorities. No such taxes have yet been charged or collected.
We have elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to recognize the promised amount of consideration without adjusting for the effects of a significant financing component if the contract has a duration of one year or less. Our revenue arrangements are short-term in nature and do not have significant financing components, therefore we have not adjusted consideration.
Debt Issued with Common Stock/Warrants
Debt and common stock issued with common stock/detachable warrants is accounted for under the guidelines established by ASC 470-20 – Accounting for Debt With Conversion or Other Options. We record the relative fair value of debt or common stock and warrants related to the issuance of debt as a debt discount or premium in the case of debt and as additional paid-in capital in the case of common stock. Debt discount or premium is subsequently amortized to interest expense over the expected term of the debt.
Common Stock Issued for Services
Our accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of Emerging Issues Task Force (“EITF”) 96-18, Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, codified into ASC 505 Equity. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement at various performance completion dates, and for unvested instruments, at each reporting date. Compensation expense, once recorded, may not be reversed.
Stock option grants are valued using a Black-Scholes option valuation model. The assumptions include the risk-free rate of interest, expected dividend yield, expected volatility, and the expected term of the award. The risk-free rate of interest was based on the U.S. Treasury bond rates appropriate for the expected term of the award. There are no expected dividends as we do not currently plan to pay dividends on our common stock. Expected stock price volatility was based on historical volatility levels of our common stock. The expected term is estimated by using the actual contractual term of the option grants and the expected length of time for the employees to exercise the options.
Stock awards issuable pursuant to employment agreements are valued at the fair market value of our stock at the date on which each award, or portion thereof, vests.
| 11 |
Income Taxes
We account for income taxes in accordance with ASC 740 - Income Taxes, which requires us to provide a net deferred tax asset/liability equal to the expected future tax benefit/expense of temporary reporting differences between book and tax accounting methods and any available operating loss or tax credit carry forwards. Tax law and rate changes are reflected in income in the period such changes are enacted. We record a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. We include interest and penalties related to income taxes, including unrecognized tax benefits, within the provision for income taxes.
We compute net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Diluted EPS excludes all potential dilutive shares if their effect is anti-dilutive. As of March 31, 2023 and 2022, we had potentially dilutive shares.
New Accounting Pronouncements
We have reviewed all accounting pronouncements recently issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC and have determined that they are either not applicable or are not believed to have a material impact on our present or future financial statements.
| 3. | Software and Equipment, net |
Software and equipment, net consists of the following:
| Schedule of software and equipment | ||||||||
March 31, 2023 | December 31, 2022 | |||||||
| Software for internal use | $ | $ | ||||||
| Equipment | ||||||||
| Less accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Beginning in the fourth quarter of 2021, we began developing our digital transportation enablement and enhancement platform for customer use. Once the software is installed and fully tested and we begin to use it for its intended purposes, which we estimate will be later in calendar 2023, the costs will be amortized over a five-year period, which is the expected useful life. Additional costs to maintain the software will be expensed.
Equipment consists of computers.
Depreciation and amortization
of software and equipment amounted to $
| 12 |
| 4. | Patents |
We have patent and patent pending technologies with a focus on artificial intelligence (“AI”), machine learning with optimization and Smart Deployment algorithms. The technologies involve anticipating demand for passengers and dispatching cars in advance – to reduce wait-time, increasing utilization of vehicles, and decrease cost. It includes new and efficient system for tracking and charging customers with preferred rates, supply and demand rates, and “specific” community engagement.
We currently own the following patents which have been issued and which are pending:
| · | U.S. Patent 9,984,574, issued May 29, 2018, claims priority to provisional application filed on Jan. 21, 2014; | |
| · | Pending U.S. application, published as US 2018/0366004 A1, claims priority to provisional application filed on Jan. 21, 2014; and | |
| · | Pending U.S. application, unpublished, claims priority to three provisional applications filed on Nov. 4, 2019. |
The software platform that underlies
the patents have not created any revenue to date and there is no assurance that any revenue will be created from the patent technologies.
As a result, we have recorded the patent asset at the cost of patent fees and other expenses incurred to produce and file the patents.
During the three months ended March 31, 2023 and 2022, we recorded patent amortization expense of $
| 5. | Related Parties Transactions |
Due to Related Parties
Amounts owed to related parties are as follows:
| Schedule of amounts owed to related parties | ||||||||
March 31, 2023 | December 31, 2022 | |||||||
| Joe Grimes | $ | $ | ||||||
| Sanjay Prasad | ||||||||
| Don Smith | ||||||||
| KeptPrivate.com | ||||||||
| $ | $ | |||||||
Mr. Grimes is our CEO and Director as well as our largest shareholder. Certain amounts owed to Mr. Grimes are represented by notes payable with zero interest rates.
Mr. Prasad, one of our
Directors, has made various patent filings for our Company in recent years, which amounts have been recorded in Patents, net on the
accompanying Balance Sheet. Amounts charged by Mr. Prasad for the three-month periods ended March 31, 2023 and 2022, totaled $
Mr. Smith is our CFO and is a
party to a November 17, 2021 employment agreement, as amended, with our Company under which Mr. Smith is to receive monthly cash payments
of $3,500. The amounts charged by Mr. Smith for services for the three-month periods ended March 31, 2023 and 2022, totaled $
| 13 |
KeptPrivate.com is owned by
Mr. Steven Ritacco, a Director of our Company. Mr. Ritacco is a party to a November 17, 2021 employment agreement, as amended, with
our Company under which Mr. Ritacco, through his company KeptPrivate.com, is to receive monthly cash payments of $
Amount due to related parties bear no interest, are unsecured and are repayable on demand. Imputed interest on amounts owed is immaterial.
| 6. | Notes Payable |
Notes payable consists of the following:
| Schedule of notes payable | ||||||||
March 31, 2023 | December 31, 2022 | |||||||
| Convertible promissory note | $ | $ | ||||||
| Promissory notes | ||||||||
| Subtotal | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long-term portion | $ | $ | ||||||
Convertible Promissory Note
On November 10, 2021 (the “Issue
Date”), we entered into a Securities Purchase Agreement (the “SPA”) with a third party (the “Lender”), for
the purchase of a Convertible Promissory Note (the “Note”) in the principal amount of $
In addition to the issuance of the Note, we were obligated to issue to the Lender, as a commitment fee, restricted shares of our common stock (the “Commitment Shares”). Along with the issuance of the Commitment Shares, we were required to issue to the Lender a warrant to purchase shares of our common stock (the “Warrant”). All or any part of the Warrant is immediately exercisable at $1.00 per share and expires three years from the Issue Date. The Warrants are subject to adjustments as provided in the warrant agreement. The Commitment Shares and Warrant were issued in February 2022.
We allocated the proceeds from
the Note between the Note, the Commitment Shares and the Warrant and recorded a debt discount of $
| 14 |
On May 22, 2022, pursuant to our Company’s request, the Note was extended for six months until November 10, 2022. Subsequent to this extension, the Lender further agreed to modify the maturity date of the Note as follows:
| · | On November 22, the lender agreed to extend the maturity date of the Note to | |
| · | On January 31, the lender agreed to an additional extension of the Note to |
The Note is convertible only upon an event of default (as defined in the Note) and is then convertible, in whole or in part, into shares of the our common stock at a conversion price equal to the lesser of 90% multiplied by the lowest trading price (i) during the previous 20 trading day period ending on the Issue Date, or (ii) during the previous 20 trading day period ending on the date of conversion of the Note (the “Conversion Price”). The Conversion Price is subject to various adjustments, as specified in the Note. There has been no event of default to date.
While the Note is issued and outstanding, our Company is required at all times to have authorized and reserved five times the number of shares that are actually issuable upon full conversion of the Note (based on the Conversion Price of the Note in effect from time to time) (the “Reserved Amount”). If, at any time we do not maintain or replenish the Reserved Amount within three business days of the request of the Lender, the principal amount of the Note will increase by $5,000 per occurrence. If we fail to maintain our status as “DTC Eligible” for any reason, or, if the Conversion Price is less than $0.01 at any time after the Issue Date, the principal amount of the Note will be increased by $5,000 and the Conversion Price will be redefined to mean 50% multiplied by the Market Price (as defined in the Note), subject to adjustments (which includes an adjustment for anti-dilutive issuances). The Note and the SPA also contain various restrictions and grant to the Lender various rights.
Upon an Event of Default, the Note will become immediately due and payable, and our Company will pay to the Lender the Default Sum (as defined in the Note) or the Default Amount (as defined in the Note).
We amortized the debt discount
over the initial six-month term of the Note resulting in amortization of $
During the three months ended
March 31, 2023 and 2022, we recorded interest expense for this note of $
Promissory Notes
On August 1, 2022, we issued a
promissory note to a non-related third party in the principal amount of $
| 15 |
| 7. | Agreements |
SRAX
Effective February 10, 2023, we
entered into an agreement with SRAX, Inc. under which SRAX agreed to provide investor relations services to us. The term of the agreement
is one year. Under the agreement, we agreed to compensate SRAX in shares of our common stock valued at $
Igala/Waterford Agreements
On March 2, 2023, we entered into
a Consulting Agreement with Igala Commonwealth Limited under which Igala agreed to provide web development and copywriting services for
the purpose of marketing our Company’s products and services. The term of the agreement is for one month with an option to extend
it on the mutual agreement of the parties. Under the agreement, we agreed to compensate Igala with shares of our common stock,
the value of which is $
Also on March 2, 2023, we entered into a services agreement with Alta Waterford LLC, the owner of Igala. Under the agreement, Alta Waterford will perform investor awareness services for the one-month term of the agreement. The compensation for these services is $.
| 8. | Capital Stock |
Common Stock
On March 13, 2023, we amended our Articles of Incorporation to increase the total number of authorized common shares from fifty million () to five hundred million (), $ par value.
In 2022, we discovered an error whereby we previously reported our par value as $ per share. In accordance with Staff Accounting Bulletin (“SAB”) 99, Materiality, and SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, we evaluated the materiality of the error from qualitative and quantitative perspectives, and concluded that the error was immaterial to the Balance Sheet as of December 31, 2021 and Statement of Operations, Changes in Stockholders’ Equity (Deficit), and Cash Flows for the year ended December 31, 2021. We have corrected this error by making an out-of-period adjustment as of December 31, 2022, reducing Balance Sheet accounts for both Common Stock and Common Stock to be Issued, and increasing the Balance Sheet account Additional Paid-In Capital.
Private Placement Agreement
On January 5, 2023, we entered
into a Private Placement Subscription Agreement (“PPM”) with a non-related third party (the “Subscriber”) under
which the Subscriber agreed to purchase units with each unit consisting of one share of our common stock and a warrant to purchase
one additional share. The consideration received was $
| 16 |
Employment Agreement Shares
During the three months ended March 31, 2023, common shares became vested for each of Don Smith, our CFO, and Steve Ritacco, our CIO, (total of shares) as stock awards under the terms of their employment agreements. The shares were valued at $, or $ per share, which was the fair market value of the shares on November 17, 2021, the date they were awarded. This amount was recorded as a general and administrative expense during the three-month period ended March 31, 2023.
Other Common Stock Activity
Other common stock activity for the three months ended March 31, 2023 and 2022 was as follows:
March 31, 2023
| 1. | On November 11, 2022, we issued shares each to Don Smith, our CEO, and Steve Ritacco, our CIO, in accordance with the terms of their employment agreements. The total of shares, which became vested on July 1, 2022, were valued at $ or $ per share which was the value of our stock on their date of grant. | |
| 2. | In connection with the employment agreements for Messrs. Smith and Ritacco, we were obligated to issue shares to each individual on their vesting date of December 31, 2022. The total of shares were issued in January 2023. | |
| 3. | On November 22, 2022, we became obligated to issue shares to the holder of the convertible promissory note as explained in Note 6. The shares have not yet been issued but we are working with our transfer agent to have them issued. | |
| 4. | In November 2022, we became obligated to issue shares to a promissory note holder as explained in Note 6. The shares have not yet been issued but we are working with our transfer agent to have them issued. | |
| 5. | In February 2023, four stockholders agreed to cancel a total of shares of our common stock they held. We paid no consideration to the stockholders for the cancellation of their shares. |
March 31, 2022
| 1. | In connection with our issuance of the Convertible Promissory Note described in Note 6, we were committed to issue shares. The shares were issued on February 28, 2022. |
2020 Stock Incentive Plan
Effective June 20, 2020, our Board of Directors adopted the 2020 Stock Incentive Plan (the “Plan”) authorizing a total of shares of our common stock for future issuances under the Plan. Under the Plan, the exercise price of a granted option shall not be less than 100% of the fair market value on the date of grant (110% of the fair market value in the case of a 10% stockholder). Additionally, no option may be exercisable more than ten (10) years after the date it is granted (no more than five (5) years in the case of a 10% stockholder).
Stock Options
On June 20, 2020, we granted options to purchase of our common shares to each of Messrs. Grimes, Prasad, and Ritacco, all Officers and/or Directors of our Company. The options are exercisable at $0.01 per share, expire five (5) years from the date of grant, and vest ratably beginning December 20, 2021 over the term of the option.
| 17 |
Activity related to stock options through March 31, 2023 is as follows:
| Schedule of option activity | ||||||||||||||||
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, January 1, 2020 | ||||||||||||||||
| Granted during 2020 | $ | |||||||||||||||
| Outstanding, December 31, 2020 | $ | |||||||||||||||
| Outstanding, December 31, 2021 | $ | |||||||||||||||
| Outstanding, December 31, 2022 | $ | |||||||||||||||
| Outstanding, March 31, 2023 | $ | |||||||||||||||
| Exercisable, end of period | $ | $ | ||||||||||||||
Warrants
In connection with the transaction
with the third-party lender discussed in Note 6, we issued the lender a three-year warrant to purchase
| 18 |
In connection with the PPM, we
issued the Subscriber a three-year warrant to purchase
The assumptions used in determining the fair value of the PPM warrant were as follows:
| Share-based compensation valuation table | ||||
| March 31, 2023 | ||||
| Expected term in years | years | |||
| Risk-free interest rate | % | |||
| Annual expected volatility | % | |||
| Dividend yield | % | |||
Risk-free interest rate: We use the risk-free interest rate of a U.S. Treasury Bill with a similar term on the date of the option grant.
Volatility: We estimate the expected volatility of the stock price based on the corresponding volatility of our historical stock price.
Dividend yield: We use a 0% expected dividend yield as we have not paid dividends to date and do not anticipate declaring dividends in the near future.
Remaining term: The remaining term is based on the remaining contractual term of the warrant.
Activity related to the warrants for the three months ended March 31, 2023 is as follows:
| Schedule of warrant activity | ||||||||||||||||
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Aggregate Intrinsic Value | |||||||||||||
| Outstanding, December 31, 2022 | $ | |||||||||||||||
| Granted during the three months ended March 31, 2023 | ||||||||||||||||
| Outstanding, March 31, 2023 | $ | |||||||||||||||
| Exercisable, end of period | $ | $ | ||||||||||||||
| 9. | Subsequent Events |
Stock Awards
In April 2023, we granted stock awards of 250,000 and 100,000 common shares to Don Smith, our CFO, and to a consultant, respectively.
| 19 |
Independent Contractor Agreement
In April 2023, we entered into an Independent Contractor Agreement with an unrelated individual. Under the agreement, the individual will assist in the preparation of our business plan, financial forecasts and go-to-market advertising and social media plans. In addition, the individual will assist and advise on strategy plans, funding needs and programs in connection with our SRAX relationship. The term of the agreement runs through March 2024.
The agreement requires us to issue 2,100,000 shares of our common stock to the individual on contract execution. In addition, we agreed to make monthly payments of $5,000 once funding of the first $500,000 has been achieved.
Services Agreement
In April 2023, we entered into a Services Agreement with a company under which the company agreed to provide services relating to finishing the development of our software platform and making it scalable. The estimated cost of providing the services is $136,500 for platform development and $128,400 for post-release development and six months of maintenance. Payments for the platform development phase will be required upon the reaching of milestones defined in the agreement and payments for the post-release development and maintenance phase will be made in six monthly payments of $21,400.
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| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events; are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. Factors that may cause differences between actual results and those contemplated by forward-looking statements include, but are not limited to, those discussed herein. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements
Basis of Presentation
The accompanying financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”).
Forward-Looking Statements
Statements in this management’s discussion and analysis of financial condition and results of operations contain certain forward-looking statements. To the extent that such statements are not recitations of historical fact, such statements constitute forward- looking statements which, by definition involve risks and uncertainties. Where in any forward-looking statements, if we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.
Factors that may cause differences between actual results and those contemplated by forward-looking statements and are not limited to the following:
| · | the unprecedented impact of COVID-19 pandemic on our business, customers, employees, subcontractors, consultants, service providers, stockholders, investors and other stakeholders; | |
| · | the impact of conflict between the Russian Federation and Ukraine on our operations; | |
| · | geo-political events, such as the crisis in Ukraine, government responses to such events and the related impact on the economy both nationally and internationally; | |
| · | general market and economic conditions; | |
| · | our ability to acquire customers; | |
| · | our ability to meet the volume and service requirements of our customers; | |
| · | industry consolidation, including acquisitions by us or our competitors; | |
| · | success in developing new products; | |
| · | timing of our new product introductions; | |
| · | new product introductions by competitors; | |
| · | the ability of competitors to more fully leverage low-cost geographies for manufacturing or distribution; | |
| · | product pricing, including the impact of currency exchange rates; | |
| · | effectiveness of sales and marketing resources and strategies; | |
| · | adequate manufacturing capacity and supply of components and materials; | |
| · | strategic relationships with suppliers; | |
| · | product quality and performance; | |
| · | protection of our products and brand by effective use of intellectual property laws; | |
| · | the financial strength of our competitors; | |
| · | the outcome of any future litigation or commercial dispute; | |
| · | barriers to entry imposed by competitors with significant market power in new markets; and | |
| · | government actions throughout the world. |
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You should not rely on forward-looking statements in this document. This managements’ discussion contains forward-looking statements that involve risks and uncertainties. We use words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” and similar expressions to identify these forward-looking statements. Readers should not place undue reliance on these statements, which apply only as of the date of this document. Our actual results could differ materially from those anticipated in these forward-looking statements.
Critical Accounting Policies and Estimates
The following discussions are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States.
Going Concern Considerations
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation of our Company as a going concern. We currently have no revenues, have incurred net losses, and have an accumulated deficit of $2,478,448 as of March 31, 2023. The continuation of our Company as a going concern is dependent upon our ability to raise equity or debt financing, and the attainment of profitable operations from any future business we may acquire. There are no assurances that we will be successful in obtaining sufficient capital to continue as a going concern. If our working capital needs are not met and we are unable to obtain adequate capital, we could be forced to cease operations.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Intellectual Property
We have patent and patent pending technologies with a focus on artificial intelligence (“AI”), machine learning with optimization and Smart Deployment algorithms. It involves anticipating demand for passengers and dispatching cars in advance to reduce wait-time, increasing utilization of vehicles, and decreasing cost. It includes a new and efficient system for tracking and charging customers with preferred rates, supply and demand rates, and “specific” community engagement.
Patent expenses, consisting mainly of patent filing fees, have been capitalized and are shown as an asset on our balance sheet. We amortize our Patent asset over the remaining life of the Patent, which is approximately 10 years.
Long-lived Assets
We follow ASC 360-10-15-3, Impairment or Disposal of Long-lived Assets, which established a “primary asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
| 22 |
Common Stock Issued for Services
Our accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of Emerging Issues Task Force (“EITF”) 96-18, Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, codified into ASC 505 Equity. The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement at various performance completion dates, and for unvested instruments, at each reporting date. Compensation expense, once recorded, may not be reversed.
Recently Issued Accounting Standards
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position and result of operations.
Trends and Uncertainties
Demand for our products is dependent on general economic conditions, which are cyclical in nature. Because a major portion of our activities are the receipt of revenues from our services and products, our business operations may be adversely affected by competitors and prolonged recessionary periods.
There are no other known trends, events or uncertainties that have, or are reasonably likely to have, a material impact on our short-term or long-term liquidity. Sources of liquidity will come from the sale of our products and services. There are no material commitments for capital expenditure at this time. There are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. There are no significant elements of income or loss that do not arise from the registrant’s continuing operations. There are no other known causes for any material changes from period to period in one or more line items of our financial statements.
Impact of COVID-19
During the year 2021, the effects of a new coronavirus (“COVID-19”) and related actions to attempt to control its spread began to impact our business. The impact of COVID-19 on our operating results for the period ended March 31, 2023 was limited, in all material respects, due to the government mandated numerous measures, including closures of businesses, limitations on movements of individuals and goods, and the imposition of other restrictive measures, in its efforts to mitigate the spread of COVID-19 within the country.
On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Governments around the world have mandated, and continue to introduce, orders to slow the transmission of the virus, including but not limited to shelter-in-place orders, quarantines, significant restrictions on travel, as well as work restrictions that prohibit many employees from going to work. Uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets.
Product Release
Phase 2 (2023): After successfully achieving phase 1’s major milestones in 2022, we have redesigned and added important and enhanced features sets, as well as identifying the bugs and shortcoming to the Minimum Viable Product. Once the applications are “hardened” and additional feature sets incorporated, we will be releasing both applications and encouraging new Drivers and Riders to use our applications within our Tribal Rides platform. Phase 2 is enabling us to rewrite the applications to be more scalable with improved transparency for financial transactions, incorporating our improved understanding of driver and rider preferences, enhance the application, incorporate additional patent and patent-pending technologies, and to plan on additional transportation alternatives.
| 23 |
Current Release of Tribal Rides Driver and Rider applications for both Apple and Android phones and tablets is scheduled for the July/August 2023 timeframes.
Phase 3 (2024): phase 3 is planned to provide a stable and enhanced application for both Drivers and Riders, while planning for and incorporating next-generation self-driving car capabilities as well as other transportation alternatives.
Marketing and Early Adoption of our Applications
Our marketing plan successfully reached out through various social media outlets to communicate directly with drivers and riders who will be interested in our new and innovative features and functions for shared rides.
As of May 2023, we have received 799 requests for our Tribal Rides Driver application which is scheduled to be released 3rd quarter 2023. We are very encouraged by these early adopters and view these requests as confirmation of our design approach and the availability of an untapped market segment that is not being addressed by the other major shared-ride applications.
We expect that our business relationship with recently engaged SRAX, Inc., a firm that specializes in investor relations and public awareness campaigns through a sophisticated targeted marketing platform, will significantly increase our product exposure and will encourage many more requests for both the Tribal Rides Driver and Rider applications. Preliminary discussions with several high volume shared-ride drivers confirm our approach, but more importantly, suggest that the shared-ride driver network which exists informally, will spread news of our application virally.
Sales Forecast 2023 and 2024
Based upon the initial 799 driver requests for our application and the currently scheduled release date of 3rd quarter 2023, we estimate the range of revenue to be from $250,000 up to $500,000 in 2023 and upwards of $10,000,000 in 2024. This forecast is based upon a modest initial adoption rate of 35% of these 799 requests and a growth rate of 25%.
Results of Operations for the Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022
For both three months ended March 31, 2023 and 2022, we had no revenues.
Our operating expenses for the three months ended March 31, 2023 were $338,849 compared to $351,614 for the three months ended March 31, 2022. In 2023, we incurred an expense of $150,000 for common stock issuable to our Chief Financial and Chief Information Officers in connection with the terms of their amended employment agreements. In 2023, we also incurred an expense of $122,000 for common stock issuable to SRAX and a consultant as described in Note 7 to the accompanying financial statements. In 2022 the expense related to an agreement with SRAX for investor relations services was $310,627. Also in 2023, we recorded a $34,400 expense to a firm to assist us with the design and marketing of certain aspects of our software platform. Finally, in 2023 we experienced a reduction of $17,962 in our accounting fees.
Our other income/expense for the three months ended March 31, 2023 totaled net expenses of $119,193 compared to $151,696 in net expenses in the 2022 period. The 2023 period included interest expense of $9,193 versus $7,497 in 2022. Also in 2023, we recorded a loss on extinguishment of debt of $110,000 which resulted from a debt extension agreement for our convertible promissory note described in Note 6 to the accompanying financial statements. The 2022 period included debt discount amortization of $144,199 related to the convertible promissory note.
Our net loss for the three months ended March 31, 2023 of $458,042 ($0.01 per share) compares to a net loss of $506,205 ($0.01 per share) in the previous period.
| 24 |
Liquidity and Capital Resources
We have previously raised capital through debt financing, advances from related parties and private placements of our common stock to meet operating needs. During the three months ended March 31, 2023, we issued a Private Placement Memorandum (“PPM”) to an individual and received $25,000 in proceeds. As of March 31, 2023, we have $49 in cash, and we will need to raise additional funds to execute our current plan of operation. If we are unable to raise sufficient funds to execute our plan of operation, we intend to scale back our operations commensurately with the funds available to us. If we are unable to obtain adequate capital, we could be forced to cease operations.
We have no plant or significant equipment to sell, nor are we going to buy any plant or significant equipment during the next 12 months.
Balance Sheets
As of March 31, 2023, we had cash of $49 and total assets of $133,000 compared with cash of $4,213 and total assets of $137,652 as of December 31, 2022. From December 31, 2022 to March 31, 2023, our total liabilities increased by $46,390 due to increases in accounts payable and accrued liabilities ($26,798) and related party advances ($19,592).
During the three months ended March 31, 2023 we issued or became obligated to issue shares of our common stock as follows: 250,000 shares in connection with the PPM, 500,000 shares to our CFO and CTO in accordance with the terms of their employment agreements, 2,650,559 shares for services and 1,000,000 shares for the extension of the maturity date of our convertible note payable. In addition, four shareholders agreed to cancel 2,145,000 shares they owned. No consideration was paid for the cancellation of the shares.
Cash Flows
During the three months ended March 31, 2023, we used cash of $48,756 in our operating activities versus $57,976 in the comparable 2022 period. This use of cash in the 2023 period was caused by our net loss of $458,042 offset to some degree by the total non-cash items of shares issued for services, shares issued in accordance with terms of employment agreements, loss on extinguishment of debt, and changes in accounts payable and accrued liabilities, and deferred revenue. In the 2022 period, our net loss of $506,205 was offset mainly by non-cash items of shares issued for services amortization of debt discount, and changes in accounts payable and accrued liabilities.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity capital expenditures or capital resources.
| 25 |
Emerging Growth Company
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Certain specified reduced reporting and other regulatory requirements that are available to public companies that are emerging growth companies include:
| 1. | an exemption from the auditor attestation requirement in the assessment of our internal controls over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002; | |
| 2. | an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies; | |
| 3. | an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about our audit and our financial statements; and | |
| 4. | reduced disclosure about our executive compensation arrangements. |
We have elected to take advantage of the exemption from the adoption of new or revised financial accounting standards until they apply to private companies. As a result of this election, our financial statements may not be comparable to public companies required to adopt these new requirements.
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
As a smaller reporting company, we have elected not to provide the disclosure required by this item.
| Item 4. | Controls and Procedures |
Disclosure Controls and Procedures
We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and, as such, is accumulated and communicated to our Chief Executive Officer, Joseph Grimes who serves as our principal executive officer, and our Chief Financial Officer, Don Smith who serves as our principal accounting and financial officer, as appropriate, to allow timely decisions regarding required disclosure. Messrs. Grimes and Smith evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of March 31, 2023. Based on their evaluation, Messrs. Grimes and Smith concluded that, due to a material weakness in our internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of March 31, 2023. In light of the material weakness in internal control over financial reporting, we completed substantive procedures, including validating the completeness and accuracy of the underlying data used for accounting prior to filing this Quarterly Report on Form 10-Q.
These additional procedures have allowed us to conclude that, notwithstanding the material weakness in our internal control over financial reporting, the consolidated financial statements included in this report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during our most recent fiscal quarter ended March 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| 26 |
PART II—OTHER INFORMATION
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
During the three months ended March 31, 2023, 250,000 common shares became vested for each of Don Smith, our CFO, and Steve Ritacco, our CIO, (total of 500,000 shares) as stock awards under the terms of their employment agreements.
On January 5, 2023, we entered into the PPM with the Subscriber under which the Subscriber agreed to purchase 250,000 units with each unit consisting of one share of our common stock and a warrant to purchase one additional share. The consideration received was $25,000. The warrants are exercisable immediately at $0.10 per share, which was the fair market value of our common stock on the date of the agreement and expire in three years from the date of issuance.
On January 31, AJB Capital Investments, LLC agreed to an additional extension of the Note to August 31, 2023. Under the terms of this letter, we agreed to issue the noteholder 1,000,000 restricted shares of our common stock
Effective February 10, 2023, we entered into an agreement with SRAX, Inc. under which SRAX agreed to provide investor relations services to us. Under the agreement, we agreed to compensate SRAX in 1,850,559 shares of our common shares.
On March 2, 2023, we entered into a Consulting Agreement with Igala Commonwealth Limited under which Igala agreed to provide web development and copywriting services for the purpose of marketing our Company’s products and services. Under the agreement, we agreed to compensate Igala with 800,000 shares of our common stock.
The securities above were issued in reliance upon the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the Securities Act of 1933, as amended, based in part on the representations of the investors and recipients. There were no sales commissions paid pursuant to these transactions. The sales were not as a result of any general solicitation.
| Item 6. | Exhibits |
| SEC Ref. No. | Title of Document | |
| 10.1* | Modification-Extension of Maturity Date dated January 31, 2023 with AJB Capital Investments, LLC | |
| 31.1* | Rule 13a-14(a) Certification by Principal Executive Officer | |
| 31.2* | Rule 13a-14(a) Certification by Principal Financial and Accounting Officer | |
| 32.1** | Section 1350 Certification of Principal Executive Officer | |
| 32.2** | Section 1350 Certification of Principal Financial and Accounting Officer | |
| 101.INS* | XBRL Instance Document | |
| 101.SCH* | XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* |
Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101) |
__________________
*Filed with this Report.
**Furnished with this Report.
| 27 |
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.
| TRIBAL RIDES INTERNATIONAL CORP. | ||
| Date: May 22, 2023 | By: | /s/ Joseph Grimes |
Joseph Grimes, Chief Executive Officer (Principal Executive Officer) | ||
| Date: May 22, 2023 | By: | /s/ Don Smith |
Don Smith, Chief Financial Officer (Principal Financial and Accounting Officer) | ||
| 28 |
Exhibit 10.1
January 31 , 2023
Tribal Rides International Corp.
26060 Acero
Mission Viejo, CA 92691
VIA ELECTRONIC MAIL
Re: Modification- Extension of Maturity Date
Dear Sirs:
Reference is made to that certain Securities Purchase Agreement, dated November 10, 2021 (the "Purchase Agreement"), between Tribal Rides International Corp. (the "Company") and AJB Capital Investments, LLC (the "Purchaser"; and, together with the Company, the "Parties"). Defined te1ms used herein but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.
For good and valuable consideration, including the Modification Fee Shares (as described below), the receipt and adequacy of which are hereby acknowledged, the Purchaser consents to extend the maturity date of the Purchaser's Note to August 10, 2023 (the "One-time Modification") and the Parties confirm and acknowledge that monthly interest payments under the Purchaser's Note shall continue at the rate of twelve (12%) percent per annum and payments shall be made by the fifth (5th) day of each month during the term of the Purchaser's Note. The Purchaser also consents to extend the date that the Company is required to register the 600,000 previously-issued modification fee shares in the Company's next registration statement, which shall be (i) filed with the Securities and Exchange Commission no later than August 10, 2023 and (ii) declared effective no later than October 31, 2023.
In consideration for the foregoing One-time Modification, no later than ten (10) Business Days following the date of the execution and delivery of this Letter Agreement by both Parties, the Company shall issue to Purchaser 1,000,000 restricted shares of the Company's Common Stock at a price per share of $0.11 (the "Modification Fee Shares," which shares shall have no adjustment rights). The Company shall instruct its transfer agent (the "Transfer Agent") to issue a certificate or book entry statement representing the Modification Fee Shares, issuable to the Purchaser immediately upon the Company's execution of this letter agreement (the "Letter Agreement") and shall cause its Transfer Agent to deliver such certificates or book entry statements to Purchaser. The Purchaser shall never be in possession of an amount of Common Stock greater than 4.99% of the issued and outstanding Common Stock of the Company; provided, however, that this ownership restriction described in this paragraph may be waived by Purchaser, in whole or in part, upon 61 days' prior written notice. In the event such certificates or book entry statement representing the Modification Fee Shares issuable hereunder shall not be delivered to the Purchaser (unless they cannot be issued due to the 4.99% limitation), it shall be an immediate default under Section 3.2 of the Purchaser Note and the other Transaction Documents. The Modification Fee Shares, when issued, shall be deemed to be validly issued, fully paid, and non-assessable shares of the Company's Common Stock. The Modification Fee Shares shall be deemed fully earned as of the date hereof. The Company shall register the Modification Fee Shares in the Company's next registration statement, which shall be (i) filed with the Securities and Exchange Commission no later than August 10, 2023 and (ii) declared effective no later than October 31, 2023.
The One-time Modification set forth in this letter constitutes a one-time extension in the Purchaser's Note maturity date and extension of the registration of previously-issued modification fee shares and is limited to the matters expressly set forth herein and should not be construed as an indication that the Purchaser has agreed to any other modifications to, consents of, or waivers of any other terms or provisions of the Purchase Agreement or any Transaction Document or of the terms of any other agreement, instrument or security or any modifications to, consents of, or waivers of any default that may exist or occur thereunder and all terms and conditions of the Transaction Documents remain in full force and effect, including, without limitation, the Company's obligations under Section 4(o) of the Purchase Agreement.
| 1 |
The Company hereby represents and warrants and covenants to the Purchaser that nothing contained herein or otherwise disclosed to the Purchaser by the Company connection herewith constitutes material non-public information. As of the date hereof, the Company shall have disclosed all material, non-public information (if any) provided up to the date hereof to the Purchaser by the Company or any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents, that has not previously been publicly disclosed by the Company in a filing with the Securities and Exchange Commission.
The Company hereby covenants and agrees that, as of the date hereof, (i) the Purchaser has no confidentiality or similar obligation under any agreement to the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agents and (ii) the Purchaser has not made any agreement with the Company, any of its Subsidiaries or any of their respective officers, directors, employees, affiliates or agent not to purchase or sell, long and/or short, the Common Stock or any other securities of the Company.
This Letter Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without regard to choice of law principles. Any dispute arising under or relating to or in connection with this Letter Agreement shall be subject to the exclusive jurisdiction and venue of the State and/or Federal courts located in New York. This Letter Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument.
| Very truly yours, | ||
| AJB Capital Investments, LLC | ||
| By: | /s/ Ari Blaine | |
| Name: | Ari Blaine | |
| Title: | Partner | |
| Acknowledged and Agreed: | ||
| Tribal Rides International Corp. | ||
| By: | /s/ Joseph Grimes | |
| Name: | Joseph Grimes | |
| Title: | CEO | |
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Exhibit 31.1
CERTIFICATION
I, Joseph Grimes, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Tribal Rides International Corp. |
| 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. | The registrant's other certifying officer(s) and I are 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our 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 our 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 (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (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. |
| Date: May 22, 2023 | /s/ Joseph Grimes |
|
Joseph Grimes, Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION
I, Don Smith, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Tribal Rides International Corp. |
| 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. | The registrant's other certifying officer(s) and I are 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 our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us 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 our 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 our 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 (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
| 5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
| (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. |
| Date: May 22, 2023 | /s/ Don Smith |
|
Don Smith, Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION 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 Tribal Rides International Corp. (the "Company") on Form 10-Q for the period ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Joseph Grimes, Chief Executive Officer (Principal Executive 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 result of operations of the Company. |
/s/ Joseph Grimes
Joseph Grimes, Chief Executive Officer
(Principal Executive Officer)
May 22, 2023
Exhibit 32.2
CERTIFICATION 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 Tribal Rides International Corp. (the "Company") on Form 10-Q for the period ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Don Smith, Chief Financial Officer (Principal Financial and Accounting 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 result of operations of the Company. |
/s/ Don Smith
Don Smith, Chief Financial Officer
(Principal Financial and Accounting Officer)
May 22, 2023