SUPA Consolidated Inc 10-K for FY2021
SUPA Consolidated Inc. (SFCX)
About this 10-K
SUPA Consolidated Inc filed this 10-K on April 6, 2022, covering the fiscal year ended December 31, 2021 (FY2021).
Headline figures
Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $350.14K
- compared with a net loss of $39.3K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the fiscal year ended
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) |
Issuer’s telephone number, including area
code:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| N/A | N/A | N/A |
Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par Value $0.0001
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐
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. (1) Yes ☒ No ☐
(2)
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, 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. (Check one)
| 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
The aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant as of the last business day of its most recently completed second fiscal quarter
based upon the price at which the common equity was last sold was $
As of March 21, 2022, there were shares of the registrant’s Common Stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
TABLE OF CONTENTS
| i |
Forward-Looking Statements
The statements contained in this report that are not historical facts are forward-looking statements that represent management’s beliefs and assumptions based on currently available information. Forward-looking statements include the information concerning possible or assumed future operations, business strategies, need for financing, competitive position, potential growth opportunities, ability to retain and recruit personnel, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believes,” “intends,” “may,” “should,” “anticipates,” “expects,” “could,” “plans,” or comparable terminology or by discussions of strategy or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements.
Factors that may cause differences between actual results and those contemplated by forward-looking statements may include, but 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. |
Although the forward-looking statements in this Annual Report on Form 10-K (the “Annual Report”) are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as maybe be required by law, to update this Annual Report or otherwise make public statements updating our forward-looking statements.
Introductory Comment
Unless otherwise indicated, any reference to “the Company”, “our company”, “we”, “us”, or “our” refers to Tribal Rides International Corp., a Nevada corporation.
| ii |
PART I
| ITEM 1. | BUSINESS |
Tribal Rides International Corp., a Nevada corporation (the “Company”, “we”, or “us”), was incorporated on May 19, 2014 as “Trimax Consulting, Inc.” On May 8, 2017, we changed our name to “Xinda International Corp.”
From incorporation through January 2020, we were principally engaged in the business of marketing an array of property tax lien services including (a) identifying property tax lien auctions and property tax liens for sale; (b) providing valuation services with regards to real property subject to property tax liens; and (c) providing consultative and advisory services to property tax lien investors in regards to purchasing property tax liens, servicing property tax liens and adjudicating property tax liens.
On January 18, 2020, we entered into an Asset Purchase Agreement with Tribal Rides, Inc., a Nevada corporation (“Tribal Rides”), pursuant to which we purchased certain assets of Tribal Rides in exchange for the issuance of 25,000,000 shares of our Common Stock. On February 24, 2021, we changed our name to “Tribal Rides International Corp.”
After the asset purchase, we are now engaged in a business that is in the research and development stage of disrupting current ride-sharing paradigms. We are a transportation technology company creating the future of personal mobility with a unique, patented focus on autonomous vehicles. We believe that the mobility ecosystem and marketplace we are creating, based upon our innovative patent and patent-pending technologies, will enable us to address current ridesharing demands and those of the rapidly emerging autonomous vehicle personal mobility market. We are focused on having a significant impact in the emerging self-driving car marketplace.
Our Principal Products or Services and Markets
We are developing a cloud-based Systems as a Solution (“SaaS”) interface for a comprehensive social network and mobile application. Our planned E-commerce module will enable users to create and manage their own highly personalized transportation experience; to form and/or join groups; collaborate on cost-saving strategies; find, schedule, obtain transportation services from within the groups in which they belong, and easily and securely conduct financial transactions.
We believe that the approximately 10-14 million shared-ride drivers in the United States are possible customers for our SaaS services and software and they too may be able to move forward with the autonomous vehicles and their expanded scope of services.
Autonomous Driving Vehicle Global Market:
Autonomous vehicles are slowly gaining market share. While in 2019, there were some 31 million vehicles with at least some level of automation in operation worldwide, that number is expected to surpass 54 million in 2024. Correspondingly, the global autonomous car market is projected to grow as well. Although the market shrank by around 3% in 2020 due to the economic slowdown caused by the Covid-19 pandemic, it is forecast that between 2020 and 2023, the market will grow by almost 60%.[1]
Some estimate that the autonomous vehicle industry is expected to generate global revenue of $173 billion in the next three years and autonomous ride-sharing is widely seen as the next big step for the industry. The development of autonomous vehicles is set to generate global revenue of $173 billion dollars by 2023 with the ride-sharing market playing a primary role in the development and marketing of the technology.[2] The industry is forecasted to be $2.195 billion in 2030.
_________________________
1 https://www.statista.com/statistics/428692/projected-size-of-global-autonomous-vehicle-market-by-vehicle-type/
2 https://policyadvice.net/insurance/guides/self-driving-car-insurance/
| 1 |
Shared-Ride and Taxi Market (UBER/Lyft/Didi, etc.) (Domestic)
| · | $117 billion forecasted for 2021. | |
| · | $220 billion forecasted by 2025; CAGR of 20.2%. | |
| · | Smartphone penetration into the market is the key to industry businesses’ success. | |
| · | A quarter of the U.S. population uses ride-sharing for transport at least once a month. | |
| · | There are great differences between drivers in different segments of the industry. |
Shared-Ride and Taxi Market (UBER/Lyft/Didi, etc.) (International)
| · | The global ride share market is projected to grow at a CAGR of 16.6% during the forecast period, from an estimated $85.8 billion in 2021 to $185.1 billion by 2026. Ride sharing services were the most preferred services before the pandemic, as they offered a convenient and cost-effective means of personal mobility with the help of a transportation network system. | |
| · | The autonomous vehicle market is projected to be approximately 15+ times that of the Shared-Ride and Taxi Market by 2030.[3],[4] |
Environmental, Social and Governance
The world’s cities are expanding with a resulting suburban daily automobile commute that is un-scalable and over-crowding infrastructure. The average commuter spends nearly as much annually on vehicles, their maintenance and fuel as they do on housing. We believe that this is proving to be unsustainable both fiscally and environmentally.
While electric vehicles reduce some of the environmental burden, they do not improve our clogged roadways nor greatly reduce the cost burden of vehicle ownership. We believe the emergence of self-driving cars enhanced by our Unified Transportation Ecosystem and Marketplace will bring another wave of societal and environmental transformation, making carpooling safer, optimized and convenient resulting in fewer vehicles on the road, and a corresponding reduction in congestion and damaging emissions. Furthering this benefit, we believe that our patented “Anticipatory Deployment” algorithms will help anticipate demand and may deploy cars in a more optimized and efficient manner than current methods.
We also believe that creating, developing and rewarding a cooperative community of users, developers and vendors through ownership stock grants will inspire loyalty to our platform, create a priority of use and commitment, and will provide for financial advancement while reducing the costs of vehicle use and ownership.
Distribution
We are developing a cloud-based SaaS shared-ride application and interface for a comprehensive social network and mobile application for both Drivers and Riders.
______________________________
3 https://www.prnewswire.com/news-releases/global-outlook-for-the-autonomous-vehicle-market-to-2030-sale-of-autonomous-vehicles-is-forecast-to-reach-58-million-units-by-2030-301198944.html
4 https://www.marketwatch.com/press-release/ride-sharing-market-size-soaring-at-cagr-of-2021-by-2026-2021-03-12
| 2 |
Our current plans are to release our Driver and Rider applications in three phases.
Phase 1 (February 2022): The first phase was the release of a Minimum Viable Product (“MVP”) for both approved drivers and riders which included GPS, routing, financial transaction capabilities, rider/driver selections and reservation, fixed fee and variable route costs, and will have various payment options. Although extremely functional, it will not include many planned, patent-pending and more complex algorithms. Both Driver and Rider applications were released on Apple and Android Operating systems and are available on the associated “stores.” Although both applications can be downloaded, only drivers approved by us will be able to participate in this first phase roll-out and only those located in Southern California. Our plan is to continuously update both applications with more of these feature enhancements and “bug fixes.”
Phase 2 (2nd Quarter 2022): Once the applications are “hardened” and additional feature sets incorporated, we will be releasing and encouraging new Drivers and Riders to use our applications within our Unified Transportation Ecosystem. Phase 2 will enable us to scale the application and transactions, better understand the driver and rider preferences, enhance the application, incorporate additional patent and patent-pending technologies, and to plan on additional transportation alternatives.
Phase 3: provides 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
Although still in its infancy, 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. We plan on continuing and enhancing these activities through 2022 and 2023.
Status of Our Publicly Announced Products or Services
Our SaaS interface is still in the development stage.
Competition
We believe that our disruptive technology and ecosystem has many unique capabilities, we will be competing with the current shared-ride provider community, both domestically and internationally. Although not a complete listing, the following are what we believe are our competition, which is comprised of the large shared ride companies, specifically: Uber, Lyft, Wingz, Gett, Getaround, BlaBlaCar, RelayRides, Ridejoy, and JustshareIt.
Intellectual Property
We have patents and pending applications directed to ride sharing including using artificial intelligence (“AI”), machine learning with optimization and Smart Deployment algorithms. Our patents and pending applications involve anticipating demand for passengers and dispatching cars in advance – to reduce wait-time, increasing utilization of vehicles, and decrease cost. We also have an application pending that describes a new and efficient system for tracking and charging customers with preferred rates, supply and demand rates, and “specific” community engagement.
Our current patent portfolio includes:
| · | U.S. Patent 9,984,574, issued May 29, 2018, which claims priority to provisional application filed on Jan. 21, 2014; | |
| · | U.S. Patent 11,217,101, issued January 4, 2022, which claims priority to a provisional application filed on Jan. 21, 2014; | |
| · | Pending U.S. application, unpublished, which 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. |
| 3 |
Government Regulation and Effects on Our Business
Once we have developed our products and services, we will operate in a particularly complex legal and regulatory environment. Our business will be subject to a variety of U.S. federal, state, local and foreign laws, rules, and regulations, including those related to Internet activities, privacy, cybersecurity, data protection, intellectual property, competition, consumer protection, payments, labor and employment, transportation services, transportation network companies, licensing regulations and taxation. These laws and regulations are constantly evolving and may be interpreted, applied, created, or amended, in a manner that could harm our business.
Employees
As of March 23, 2022, we had two full-time employees, Steven Ritacco and Donald Smith, respectively, and no part-time employees. The remainder of our work is currently being accomplished by sub-contractors.
| ITEM 1A. | RISK FACTORS |
Not applicable to “smaller reporting companies.”
| ITEM 1B. | UNRESOLVED STAFF COMMENTS |
None.
| ITEM 2. | PROPERTIES |
Our current corporate offices are located at 26060 Acero, Mission Viejo, CA 92691. We have entered into a month-to-month agreement for lease of our corporate offices at a cost of $394 per month. Our telephone number is (949) 434-7259.
| ITEM 3. | LEGAL PROCEEDINGS |
We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results. From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
| ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
| 4 |
PART II
| ITEM 5. | MARKET FOR COMPANY’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
Our common stock is quoted on the OTC Pink under the symbol “XNDA.” The table below sets forth for the periods indicated the quarterly high and low bid prices as reported by OTC Markets. Limited trading volume has occurred during these periods. These quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.
| Quarter | High | Low | ||||||||||
| FISCAL YEAR ENDING DECEMBER 31, 2022 | First | $ | 1.07 | $ | 0.30 | |||||||
| Quarter | High(1) | Low(1) | ||||||||||
| FISCAL YEAR ENDED DECEMBER 31, 2021 | First | $ | 6.10 | $ | 1.50 | |||||||
| Second | $ | 4.02 | $ | 0.99 | ||||||||
| Third | $ | 1.50 | $ | 0.02 | ||||||||
| Fourth | $ | 1.50 | $ | 0.30 | ||||||||
| Quarter | High | Low | ||||||||||
| FISCAL YEAR ENDED DECEMBER 31, 2020 | First | $ | 5.00 | $ | 5.00 | |||||||
| Second | $ | 5.00 | $ | 5.00 | ||||||||
| Third | $ | 5.00 | $ | 5.00 | ||||||||
| Fourth | $ | 5.00 | $ | 5.00 | ||||||||
____________________
(1) The first trade of our Common Stock did not occur until January 1, 2021.
Our common stock is considered to be penny stock under rules promulgated by the SEC. Under these rules, broker-dealers participating in transactions in these securities must first deliver a risk disclosure document which describes risks associated with these stocks, broker-dealers’ duties, customers’ rights and remedies, market and other information, and make suitability determinations approving the customers for these stock transactions based on financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing, provide monthly account statements to customers, and obtain specific written consent of each customer. With these restrictions, the likely effect of designation as a penny stock is to decrease the willingness of broker-dealers to make a market for the stock, to decrease the liquidity of the stock and increase the transaction cost of sales and purchases of these stocks compared to other securities.
Holders
As of the close of business on March 21, 2022, we had approximately 33 holders of our common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. We have appointed Olde Monmouth Stock Transfer Co Inc., 200 Memorial Parkway, Atlantic Highlands, NJ 07716, to act as transfer agent for the common stock.
Dividends
We have never declared a cash dividend on our common stock and our Board of Directors does not anticipate that we will pay cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board of directors and will depend upon our financial condition, operating results, capital requirements, restrictions contained in our agreements and other factors which our Board of Directors deems relevant.
| 5 |
Securities Authorized for Issuance under Equity Compensation Plans
Equity Compensation Plan Information
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted-average exercise price of outstanding options, warrants and rights |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders | – | – | – | |||||||||
| Equity compensation plans not approved by security holders | 1,050,000 | (1)(2) | $ | 0.72 | 2,200,000 | (3) | ||||||
| Total | 1,050,000 | $ | 0.72 | 2,200,000 | ||||||||
______________________
| (1) | Effective June 20, 2020, the Company granted options to purchase an aggregate of 300,000 shares of the Company’s Common Stock, exercisable at $0.01 per share, with 100,000 options awarded to each of Messrs. Grimes, Prasad, and Ritacco. |
| (2) | On November 10, 2021, the Company issued warrants to purchase up to 750,000 shares of the Company’s Common Stock, exercisable at $1.00 per share to AJB Capital Investments, LLC pursuant to the Securities Purchase Agreement dated November 10, 2021. |
| (3) | Effective June 20, 2020, the Company approved and authorized the 2020 Stock Incentive Plan (the “Plan”), which authorized 2,500,000 shares of the Company’s Common Stock for future issuances under the Plan. |
2020 Stock Incentive Plan
Effective June 20, 2020, the Board of Directors adopted the Plan. The purposes of the Plan are (a) to enhance our ability to attract and retain the services of qualified employees, officers, directors, consultants, and other service providers upon whose judgment, initiative and efforts the successful conduct and development of our business largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of our company, by providing them an opportunity to participate in the ownership of our Company and thereby have an interest in the success and increased value of our Company.
The Plan is administered by our board of directors; however, the board of directors may designate administration of the Plan to a committee consisting of at least two independent directors. Only employees of our Company or of an “Affiliated Company”, as defined in the Plan, (including members of the board of directors if they are employees of our Company or of an Affiliated Company) are eligible to receive incentive stock options under the Plan. Employees of our Company or of an Affiliated Company, members of the board of directors (whether or not employed by our company or an Affiliated Company), and “Service Providers”, as defined in the Plan, are eligible to receive non-qualified options, restricted stock units, and stock appreciation rights under the Plan. All awards are subject to Section 162(m) of the Internal Revenue Code.
No option awards may be exercisable more than ten years after the date it is granted. In the event of termination of employment for cause, the options terminate on the date of employment is terminated. In the event of termination of employment for disability or death, the optionee or administrator of optionee’s estate or transferee has six months following the date of termination to exercise options received at the time of disability or death. In the event of termination for any other reason other than for cause, disability or death, the optionee has 30 days to exercise his or her options.
| 6 |
The Plan will continue in effect until all the stock available for grant or issuance has been acquired through exercise of options or grants of shares, or until ten years after its adoption, whichever is earlier. Awards under the Plan may also be accelerated in the event of certain corporate transactions such as a merger or consolidation or the sale, transfer or other disposition of all or substantially all our assets.
There are 2,500,000 shares authorized for issuance under the Plan.
As of December 31, 2021, the Board had granted options to purchase 300,000 shares Common Stock under the Plan.
Stock Options
We have issued options to purchase 300,000 shares of our common stock, as described herein.
Recent Sales of Unregistered Securities
On June 1, 2021, we issued 125,000 shares of Common Stock to SRAX Inc. pursuant to the Platform Account Contract dated March 21, 2021. The securities were issued without registration under the Securities Act of 1933, as amended, by reason of the exemption from registration afforded by the provisions of Section 4(a)(2) thereof as a transaction by an issuer not involving any public offering. No selling commissions were paid in connection with the issuance of the securities.
| ITEM 6. | SELECTED FINANCIAL DATA. |
Not applicable to a smaller reporting company.
| ITEM 7. | 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.
| 7 |
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. |
You should not rely on forward-looking statements in this document. This management’s 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. Prospective investors 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. Through December 31, 2021, we have had no revenues, have incurred net losses, and have an accumulated deficit of $528,893 as of December 31, 2021. 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.
| 8 |
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.
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 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. 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 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.
Debt Issued with Common Stock/Warrants
Debt issued with common stock/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 common stock and warrants related to the issuance of debt as a debt discount or premium. The discount or premium is subsequently amortized to interest expense over the expected term of the debt.
| 9 |
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 years 2020 and 2021, the effects of a new coronavirus and its variants (“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 years ended December 31, 2020 and 2021 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.
Results of Operations for the Year Ended December 31, 2021 compared to the year ended December 31, 2020
For both years ended December 31, 2021 and 2020, we had no revenues.
Our operating expenses for the year ended December 31, 2021 were $304,024 compared to $37,296 for the year ended December 31, 2020. In 2021 our professional fees increased a total of $94,616 over the 2020 period, primarily because of costs incurred in the initial audits and reviews of our annual and quarterly financial statements. Also included in the professional fees increase was a broker fee paid to a third party. Additionally, in the 2021 period, we incurred an expense of $166,000 related to the investor relations agreement with SRAX, Inc. as described in Note 10 to the accompanying financial statements. Finally, the following expenses were higher in 2021 than 2020: internet fees up $3,857 due to domain and website costs and filing fees up $5,360 due to filing requirements for our financial statements.
| 10 |
Our other income/expense for the year ended December 31, 2021 totaled $46,116 compared to $2,000 in the 2020 period. The 2021 year included debt discount amortization of $81,713 related to the convertible promissory note described in Note 7 to the accompanying financial statements. The 2021 period also included interest expense of $6,317 versus $2,000 in 2020, with the increase primarily related to the convertible promissory note referred to above. Finally, these expenses were offset by a gain on extinguishment of debt of $41,914 in connection with the payoff of the promissory note – service provider also discussed in Note 7.
Our net loss for the year ended December 31, 2021 of $350,140 ($0.01 per share) compares to a net loss of $39,296 ($0.00 per share) in the previous year.
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. In 2021, we issued promissory notes to two lenders and received $249,450 in proceeds. As of December 31, 2021, we have $121,481 in cash, but we will need to raise additional funds to execute our current plan of operation. We currently have no written commitment from anyone to contribute additional funds to our Company. 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 December 31, 2021, we had cash of $121,481, a prepaid expense of $334,000 related to our transaction with SRAX, Inc. and total assets of $505,313 compared with no cash and total assets of $3,273 as of December 31, 2020. Our total liabilities increased in the 2021 period compared to 2020 by $107,730 due to increases in accounts payable and accrued liabilities, notes payable and related party advances.
During the year ended December 31, 2021, we issued 125,000 shares of our common stock to SRAX, Inc. in connection with our agreement for investor relations services. We also were committed to issue 1,320,000 of our common shares in connection with the convertible promissory note as described in Note 7 to the accompanying financial statements. In the December 31, 2020 year, we issued 25,000,000 shares of our common stock in connection with the Asset Purchase Agreement.
Cash Flows
In the year ended December 31, 2020, there were no cash flows from operating, investing, or financing activity.
During the year ended December 31, 2021, we used $75,675 in our operating activities. This use of cash was caused by our net loss of $350,140 offset to some degree by the total non-cash items of shares issued for services, amortization of debt discount, higher accounts payable and advances from related parties and the gain on extinguishment of debt. In the 2021 period, our investing activities used $47,294 primarily in connection with the development of our digital transportation platform. Our financing activities in 2021 produced cash of $244,450 from the convertible promissory note discussed in Note 7.
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.
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
As a “smaller reporting company,” we are not required to furnish information under this Item 7A.
| 11 |
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
The financial statements and supplementary data required by this item are included following the signature page of this Annual Report.
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
None.
| ITEM 9A. | 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 December 31, 2021. 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 December 31, 2021. 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 Annual Report.
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.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed 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.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021 based upon Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
During its evaluation, management noted certain matters involving internal control and its operation that we consider to be significant deficiencies or material weaknesses under standards of the Public Company Accounting Oversight Board (“PCAOB”). A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
| 12 |
We noted deficiencies involving lack of segregation of duties, lack of governance/oversight, and lack of internal control documentation that we believe to be material weaknesses.
Because of this material weaknesses, management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2021, based on criteria described in Internal Control – Integrated Framework (2013) issued by COSO.
Remediation of the Material Weakness
We are evaluating the material weaknesses and developing a plan of remediation to strengthen our overall internal control over financial reporting. The remediation plan will include the creation and adoption of a formal policy manual specifically dealing with financial controls.
We are committed to maintaining a strong internal control environment and we believe that these remediation efforts will represent significant improvements in our controls. Some of these steps will take time to be fully integrated and confirmed to be effective and sustainable. Additional controls may also be required over time. Until the remediation steps set forth above are fully implemented and tested, the material weakness described above will continue to exist.
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 December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Important Considerations
The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.
| ITEM 9B. | OTHER INFORMATION. |
None.
| 13 |
PART III
| ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
Current Management
The following table sets forth information concerning our executive officers and directors:
| Name | Position | Director Since | Age | ||||
| Executive Officers and Directors | |||||||
| Joseph Grimes | Chief Executive Officer and Director | January 18, 2020 | 64 | ||||
| Don Smith | Chief Financial Officer | - | 58 | ||||
| Steven Ritacco | Director and Chief Technology Officer | June 1, 2020 | 57 | ||||
| Sanjay Prasad | Director | June 1, 2020 | 57 | ||||
Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. A majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all members of the Board of Directors individually or collectively consent in writing to the action.
Business Experience of Executive Officers and Directors
The principal occupation and business experience during the past five years for our executive officers and directors is as follows:
Joseph Grimes: Mr. Grimes has served as our Chief Executive Officer and director since January 18, 2020. Mr. Grimes has over 20 years of executive and managerial level positions leading large teams who successfully executed complex business strategies. His notable achievements include launching new products and companies, and establishing new software development and manufacturing enterprises domestically and overseas. For 12 years, he was founder and President of ISERA Group, where he directed efforts resulting in 12 Small Business Innovative Research Grants, managed five teams of software designers and developed sophisticated Decision Support Software Systems (DSSS) for Commercial, Military and Government sectors. He is the Founder and CEO of Tribal Rides, Inc from 2014 to present.
He has programming experience in OOP in C++ and VB with Access and SQL Server, DBMS.
Don Smith: Mr. Smith has served as our Chief Financial Officer since November 18, 2021. From January 1998 to the present, Mr. Smith has served as President of Emerald Palms LLC Consulting and Professional Tax & Accounting. From January 2019 to February 2020, Mr. Smith served as Vice-President Sales and Business Development at Singlepoint, Inc. From October 2016 to October 2018, Mr. Smith served as Vice President, Chief Operating Officer, and a director of Smart Cannabis Inc. (OTC: SCNA).
Steven Ritacco: Mr. Ritacco has served as a director since June 1, 2020 and as our Chief Technology Officer since November 18, 2021. From April 2001 until the present, Mr. Ritacco has served as President of KeptPrivate Inc./Proxemi. From September 2015 until March 2018, Mr. Ritacco served as Chief Technology Officer of Blue NRGY Group Ltd. Mr. Ritacco received an undergraduate degree from the University of Rhode Island.
Sanjay Prasad: Mr. Prasad has served as a director since June 1, 2020. Mr. Prasad has served in a variety of roles as an attorney and advisor to companies around the world. From July 2020 until the present, Mr. Prasad has been a partner at Appleton Luff, a boutique international law firm. From July 2013 until July 2020, Mr. Prasad was a principal at Prasad IP, PC., a law firm specializing in intellectual property. Prior to that Mr. Prasad has served as chief patent counsel at Oracle Corporation and in various executive roles in intellectual property commercialization. Mr. Prasad received a law degree from the Syracuse University College of Law, and graduate and undergraduate degrees in computer and electrical engineering, respectively, from Boston University.
| 14 |
Legal Proceedings
During the past ten years there have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any of our directors or executive officers, and none of these persons has been involved in any judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business entity, any judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws or regulations, or any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization.
Family Relationships
There are no family relationships between any of our directors and executive officers.
Director Independence
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.”
We currently have not established any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, other than as described above, no security holders have made any such recommendations. The entire Board of Directors performs all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and allocate responsibilities accordingly.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the Commission reports regarding initial ownership and changes in ownership. Directors, executive officers, and greater than 10% stockholders are required by the Commission to furnish the Company with copies of all Section 16(a) forms they file.
During the year ended December 31, 2021, each of our executive officers and directors had obligations to file Form 3s; however, none of the reports were filed.
Code of Ethics
We have not adopted a Code of Ethics. We have had minimal operations or business and have not generated any revenues and have limited members of management, including one sole executive officer. Due to this, we feel that the adoption of a Code of Ethics would not serve the primary purpose of such a code to provide a manner of conduct as the development, execution and enforcement of such a code would be by the same persons and only persons to whom such code applied. At such time as we commence more significant business operations, the current officers and directors will recommend that such a code be adopted.
| 15 |
| ITEM 11. | EXECUTIVE COMPENSATION. |
The following table sets forth information concerning the annual compensation awarded to, earned by, or paid to the following named executive officers for all services rendered in all capacities to our company and its subsidiaries for the years ended December 31, 2021 and 2020.
Summary Compensation Table
| Name and principal position | Year |
Stock Awards ($) |
Total ($) | |||
| Joseph Grimes, Chief Executive Officer | 2021 | 0 | 0 | |||
| 2020 | 1,000(1) | 1,000 |
____________________
| (1) | Effective June 20, 2020, the Company granted options to purchase 100,000 shares of the Company’s Common Stock, exercisable at $0.01 per share, to Mr. Grimes. |
Equity Awards
The following table sets forth information concerning as of the year ended December 31, 2021 for our named executive officers.
Outstanding Equity Awards at Fiscal Year-End
| Stock awards | ||||||||||
| Name | Number of shares or units of stock that have not vested (#) |
Market value of shares of units of stock that have not vested ($) |
Equity incentive Number of |
Equity incentive Market or |
||||||
| Joseph Grimes | 66,667 | 667(1) | 66,667 | 667(1) | ||||||
______________________
| (1) | The fair market value was deemed $0.01 per share. |
Director Compensation
| Name | Year |
Salary ($) |
Total ($) | |||
| Steven Ritacco | 2021 | 20,000(1) | 20,000 |
____________________
| (1) | $16,000 in monthly salary for November and December 2021 and $4,000 as a signing bonus. |
During the year ended December 31, 2021, there was no compensation awarded to, earned by, or paid to our directors for all services rendered in their capacities to our Company.
CTO Employment Agreement
Effective November 17, 2021, we entered into an Employment Agreement with Steven Ritacco (the “CTO Agreement”), our Chief Technology Officer. Pursuant to the CTO Agreement, Mr. Ritacco is entitled to monthly cash compensation of $8,000 per month. In addition, beginning January 1, 2022, Mr. Ritacco will be awarded 1,000,000 shares of Common Stock of the Company annually for three years (the “CTO Shares”). The CTO Shares will vest monthly. The CTO Agreement may be terminated, for any reason, by either party upon written notice to the other party.
| 16 |
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
The following table and footnotes thereto sets forth information regarding the number of shares of common stock beneficially owned by (i) each director and named executive officer of our company, (ii) each person known by us to be the beneficial owner of 5% or more of its issued and outstanding shares of common stock, and (iii) named executive officers, executive officers, and directors of the Company as a group as of March 21, 2022. In calculating any percentage in the following table of common stock beneficially owned by one or more persons named therein, the following table assumes 37,838,832 shares of common stock outstanding. Unless otherwise further indicated in the following table, the footnotes thereto and/or elsewhere in this report, the persons and entities named in the following table have sole voting and sole investment power with respect to the shares set forth opposite the shareholder’s name, subject to community property laws, where applicable. Unless as otherwise indicated in the following table and/or the footnotes thereto, the address of our named executive officers and directors in the following tables is: 26060 Acero, Mission Viejo, CA 92691.
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) |
Percent of Class(1) |
|||||||||
| Named Executive Officers and Directors | |||||||||||
| Joseph Grimes | 21,612,833(2) | 57.07% | |||||||||
| Sanjay Prasad | 1,433,333(3) | 3.78% | |||||||||
| Steven Ritacco | 506,665(4) | 1.33% | |||||||||
| Executive Officers, Named Executive Officers, and Directors as a Group (4 Persons) | 23,886,163(5) | 62.41% | |||||||||
| 5% Beneficial Holders (Not Named Above) | |||||||||||
|
GG Capital and Investment Corp 123 West Nye Lane #129 Carson Coty, NV 89706 |
2,000,000 | 5.29% | |||||||||
|
Baywall Inc 140 Charles St, Suite 11D New York, NY 10014 |
2,200,000 | 5.81% | |||||||||
| ___________________________ | |||||||||||
*Less than 1%
| (1) | Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the above table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on the March 21, 2022. | |
| (2) | Includes 1,579,500 shares owned by Tribal Rides, Inc. of which Mr. Grimes is Chief Executive Officer. Also includes options to purchase 33,333 shares of the Company’s Common Stock which have vested. | |
| (3) | Includes options to purchase 33,333 shares of the Company’s Common Stock which have vested. | |
| (4) | Includes options to purchase 33,333 shares of the Company’s Common Stock which have vested. Also includes 166,666 shares which will vest within 60 days of March 21, 2022. | |
| (5) | Includes 166,666 shares owned by Don Smith, our CFO. Also includes 166,666 shares awarded to Don Smith, our CFO, which will vest within 60 days of March 21, 2022. |
| 17 |
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE. |
Certain Relationships and Related Transactions
For transactions with our executive officers, please see the disclosure under “Item 11. Executive Compensation.” above.
Asset Purchase with Tribal Rides, Inc.
On January 18, 2020, we entered into an Asset Purchase Agreement with Tribal Rides pursuant to which we purchased certain assets of Tribal Rides in exchange for the issuance of 25,000,000 shares of the Company’s Common Stock. Mr. Grimes, our CEO, is also the CEO of Tribal Rides. Mr. Grimes is also a shareholder of Tribal Rides.
On January 13, 2022, Tribal Rides transferred 20,000,000 shares to Mr. Grimes.
CFO Employment Agreement
Effective November 17, 2021, we entered into an Employment Agreement with Don Smith (the “CFO Agreement”), our Chief Financial Officer. Pursuant to the CFO Agreement, Mr. Smith is entitled to monthly cash compensation of $3,500 per month. In addition, beginning January 1, 2022, Mr. Smith will be awarded 1,000,000 shares of Common Stock of the Company annually for three years (the “CFO Shares”). The CFO Shares will vest monthly. The CFO Agreement may be terminated, for any reason, by either party upon written notice to the other party.
Director Independence
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.” Although we have not have adopted the independence standards any national securities exchange to determine the independence of directors, the NYSE MKT LLC provides that a person will be considered an independent director if he or she is not an officer of the company and is, in the view of our board of directors, free of any relationship that would interfere with the exercise of independent judgment. Under this standard, our board of directors has determined that Messrs. Prasad and Ritacco would meet this standard, and therefore, would be considered to be independent.
| 18 |
| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Fees Paid
Audit Fees
The aggregate fees billed for professional services rendered by our principal accountants for the audit of our annual financial statements, review of financial statements included in the quarterly reports and other fees that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the year ended December 31, 2021 were $28,000 and $12,000 for the period ended December 31, 2020.
Audit-Related Fees
There were no fees billed for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of the financial statements, other than those reported above, for the years ended December 31, 2021 and 2020.
Tax Fees
There were no fees billed for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning in the years ended December 31, 2021 and 2020.
All Other Fees
There were no other fees billed for products or services provided by the principal accountants, other than those previously reported above, for the years ended December 31, 2021 and 2020.
Audit Committee
We do not have an Audit Committee; therefore, the Board of Directors has considered whether the non-audit services provided by our auditors to us are compatible with maintaining the independence of our auditors and concluded that the independence of our auditors is not compromised by the provision of such services. Our Board of Directors pre-approves all auditing services and permitted non-audit services, including the fees and terms of those services, to be performed for us by our independent auditor prior to engagement.
| 19 |
PART IV
| ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES. |
Financial Statements
The following financial statements are filed with this Annual Report:
Report of Independent Registered Public
Accounting Firm (PCAOB ID:
Balance Sheets at December 31, 2021 and 2020
Statements of Operations for the years ended December 31, 2021 and 2020
Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2021 and 2020
Statements of Cash Flows for the years ended December 31, 2021 and 2020
Notes to Financial Statements
| 20 |
Exhibits
The following exhibits are included with this Annual Report:
| Incorporated by Reference | ||||||||||||
| Exhibit Number |
Exhibit Description | Form | File No. | Exhibit | Filing Date |
Filed or Furnished Herewith | ||||||
| 2.1 & 10.1 | Asset Purchase Agreement dated January 18, 2020 | 10-K | 333-200344 | 2.1 & 10.1 | 9/27/21 | |||||||
| 3.1 | Articles of Incorporation filed May 19, 2014 | S-1/A | 333-200344 | 3.1 | 1/30/15 | |||||||
| 3.2 | Articles of Amendment filed May 8, 2017 | 8-K | 333-200344 | 3.1 | 7/10/17 | |||||||
| 3.3 | Certificate of Amendment filed February 25, 2021 | 10-K | 333-200344 | 3.3 | 9/27/21 | |||||||
| 3.4 | Bylaws | S-1 | 333-200344 | 3.2 | 11/18/14 | |||||||
| 4.1 | 2020 Stock Incentive Plan | 10-K | 333-200344 | 4.1 | 9/27/21 | |||||||
| 4.2 | Convertible Promissory Note Issued November 10, 2021 to AJB Capital Investments, LLC in the principal amount of $290,000 | 8-K | 000-56366 | 4.1 | 11/19/21 | |||||||
| 10.2 | Stock Option Agreement | 10-K | 333-200344 | 10.2 | 9/27/21 | |||||||
| 10.3* | Employment Agreement dated effective November 17, 2021 with Don Smith | X | ||||||||||
| 10.4* | Employment Agreement dated effective November 17, 2021 with Steven Ritacco | X | ||||||||||
| 10.5 | Securities Purchase Agreement dated November 10, 2021 with AJB Capital Investments, LLC | X | ||||||||||
| 10.6 | Security Agreement dated November 10, 2021 with AJB Capital Investments, LLC | X | ||||||||||
| 10.7 | Common Stock Purchase Warrant dated November 10, 2021 Issued to AJB Capital Investments, LLC | X | ||||||||||
| 10.8 | Platform Account Contract dated March 21, 2021 with SRAX, Inc. |
X | ||||||||||
| 31.1 | Rule 13a-14(a) Certification by Principal Executive Officer | X | ||||||||||
| 31.2 | Rule 13a-14(a) Certification by Principal Financial Officer | X | ||||||||||
| 32.1** | Section 1350 Certification of Principal Executive Officer | X | ||||||||||
| 32.2** | Section 1350 Certification of Principal Financial Officer | X | ||||||||||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | X | ||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | X | ||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||||
| 104 | Cover Page Interactive Data File (formatted in inline XBRL and contained in Exhibit 101). | X | ||||||||||
_________________
*Management contract or compensatory plan or arrangement.
**These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended, and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act, except as shall be expressly set forth by specific reference in such filing.
| ITEM 16. | FORM 10-K SUMMARY. |
None.
SIGNATURE PAGE FOLLOWS
| 21 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: April 6, 2022 | By: | /s/ Joseph Grimes |
| Joseph Grimes, Chief Executive Officer (Principal Executive Officer) | ||
| Date: April 6, 2022 | By: | /s/ Don Smith |
| Don Smith, Chief Financial Officer (Principal Financial and Accounting Officer) | ||
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
| NAME | TITLE | DATE | ||
| /s/ Joseph Grimes | Chief Executive Officer and Director | April 6, 2022 | ||
| Joseph Grimes | ||||
| /s/ Don Smith | Chief Financial Officer | April 6, 2022 | ||
| Don Smith | ||||
| /s/ Sanjay Prasad | Director | April 6, 2022 | ||
| Sanjay Prasad, Esq. | ||||
| /s/ Steven Ritacco | Director, Chief Technology Officer | April 6, 2022 | ||
| Steven Ritacco |
| 22 |
INDEX TO FINANCIAL STATEMENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Tribal Rides International Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Tribal Rides International Corp. (the “Company”) as of December 31, 2021 and 2020, the related statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Going Concern Matter
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has no revenue, suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| F-2 |
Critical Audit Matter Description
As discussed in Notes 7 to the financial statements, the Company had issued convertible promissory note in November of 2021. In addition to the note, the Company was obligated to issue to the lender 1,320,000 of commitment shares and warrant to issue 750,000 shares of common stock. Management evaluated the required accounting, significant estimates, and judgments around the valuation of the note. Management also allocated the proceeds of the note between the note, the commitment shares and the warrant in accordance with ASC 470-20.
Our principal audit procedures performed to address this critical audit matter included the following:
| · | Inspected Board minutes and other appropriate documentation of authorization to assess whether the transactions were appropriately authorized; | |
| · | Verified note amount, interest rate and maturity date to the supporting documentation and debt agreement, and examined terms and conditions of the note and confirmed the ending balance to the note holder; | |
| · | Evaluated the management’s analysis on bifurcation of the convertible debt into debt, beneficial conversion feature and embedded derivatives; | |
| · | Examined and tested the management’s analysis on the fair value model used, significant assumptions, and underlying data input used in the model ; | |
| · | Examined the allocation of proceeds from convertible debt issued with commitment shares and warrant based on relative fair value; and | |
| · | Considered the adequacy of the disclosures in the financial statements in relation to convertible debt. |
/s/ TAAD LLP
We have served as the Company’s auditor since 2021
April 6, 2022
| F-3 |
TRIBAL RIDES INTERNATIONAL CORP.
(formerly XINDA INTERNATIONAL CORP.)
BALANCE SHEETS
| December 31, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Software and equipment, net | ||||||||
| Patents, net | ||||||||
| Total noncurrent assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| 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 at December 31, 2021 and 2020, respectively | ||||||||
| Common stock to be issued, and shares at December 31, 2021 and 2020, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ||||||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | $ | ||||||
See accompanying Notes to Financial Statements
| F-4 |
TRIBAL RIDES INTERNATIONAL CORP.
(formerly XINDA INTERNATIONAL CORP.)
STATEMENTS OF OPERATIONS
For the Twelve Months Ended 2021 | For the Twelve Months Ended December 31, 2020 | |||||||
| Operating expenses: | ||||||||
| Selling and marketing | $ | $ | ||||||
| General and administrative | ||||||||
| Total operating expense | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Amortization of debt discount | ( | ) | ||||||
| Gain 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
| F-5 |
TRIBAL RIDES INTERNATIONAL CORP.
(formerly XINDA INTERNATIONAL CORP.)
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
| Common Stock | Common Stock To Be Issued | Additional Paid-In | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance – December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Shares issued in connection with Asset Purchase Agreement | – | |||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance – December 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Shares issued for services | – | |||||||||||||||||||||||||||
| Shares and warrant issuable with debt | – | |||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance – December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
See accompanying Notes to Financial Statements
| F-6 |
TRIBAL RIDES INTERNATIONAL CORP.
(formerly XINDA INTERNATIONAL CORP.)
STATEMENTS OF CASH FLOWS
For the Twelve Months Ended December 31, 2021 | For the Twelve Months Ended December 31, 2020 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustment to reconcile net loss to net cash used in operating activities: | ||||||||
| Shares issued for services | ||||||||
| Gain on extinguishment of debt | ( | ) | ||||||
| Amortization of software and equipment | ||||||||
| Amortization of debt discount | ||||||||
| Changes in operating assets/liabilities: | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Due to related parties | ||||||||
| 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 note payable – non-related | ||||||||
| Repayment of note payable – non-related | ( | ) | ||||||
| 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 | $ | $ | ||||||
| Supplemental disclosures of non-cash investing and financing activities: | ||||||||
| Debt discount on convertible promissory note | $ | 244,450 | $ | – | ||||
| Shares issued for Asset Purchase Agreement | $ | $ | ||||||
See accompanying Notes to Financial Statements
| F-7 |
TRIBAL RIDES INTERNATIONAL CORP.
(formerly XINDA INTERNATIONAL CORP.)
NOTES TO FINANCIAL STATEMENTS
| 1. | 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 including recruitment, executive search, campus recruitment, training, and a complete range of Human Resource outsourcing solutions to clients. 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. Our ticker symbol is XNDA.
As reported in our Form 8-K dated January 18, 2020, we entered into an Asset Purchase Agreement (the “Agreement”) effective January 10, 2020 with Tribal Rides, Inc., a Nevada corporation (“TribalRides”), and the shareholders of TribalRides (the “Shareholders”). Under the Agreement, we agreed to purchase a majority of the assets of TribalRides, consisting of patent and patent pending technologies in the area of digital transformation of transportation, in exchange for the issuance of 25,000,000 shares of our common stock. See Note 3 for further information.
As a result of our asset purchase described above, we are now engaged, in the business of digital transformation of transportation. Our digital transportation enablement and enhancement platform, which is currently in development, 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.
| 2. | Summary of Significant Accounting Policies |
Basis of Presentation
We have prepared the accompanying 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”). Our Company’s year-end is December 31.
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.
| F-8 |
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.
Cash and Cash Equivalents
We consider all short-term
investments readily convertible to cash, without notice or penalty, with an initial maturity of 90 days or less to be cash equivalents.
There was $
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 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. 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.
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. There are 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 | - Other inputs that are directly or indirectly observable in the marketplace. | |
| Level 3 | - Unobservable inputs which are supported by little or no market activity. |
As previously noted, the fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
| F-9 |
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2021 and 2020. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include accounts payable and accrued liabilities and related-party advances. Fair values for these items were assumed to approximate carrying values because of their short-term nature or their status of being payable on demand.
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.
Debt Issued with Common Stock/Warrants
Debt issued with common stock/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 common stock and warrants related to the issuance of debt as a debt discount or premium. The 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.
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.
Our income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While we believe we have appropriate support for the positions taken on our tax returns, we regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes. We continually assess the likelihood and amount of potential adjustments and adjust the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.
| F-10 |
We compute net income (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 December 31, 2021 and 2020, 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. | Asset Purchase Agreement |
As described in Note 1, we
entered into the Agreement with Tribal Rides and its shareholders to purchase the patent and patent pending technologies owned by Tribal
Rides in exchange for our Company’s issuance of of our common shares. We have valued the shares issued in this transaction
at the recorded value of the patent assets purchased which was $
| 4. | Software and Equipment, net |
Software and equipment, net consists of the following at December 31:
| Schedule of Software and equipment | ||||||||
| 2021 | 2020 | |||||||
| 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. During the fourth quarter, we capitalized $44,000 of such costs representing costs incurred in the application development stage, which include costs to design and program the software configuration and interfaces, coding, installation and testing. Once the software is installed and fully tested and we begin to use it for its intended purposes, 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 a laptop computer.
Depreciation and amortization
of software and equipment amounted to $
| 5. | 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.
| F-11 |
As of December 31, 2021 we owned the following patents which have been issued and which were 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; | |
| · | Pending U.S. application, unpublished, which 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 years ended December 31, 2021 and 2020, we recorded patent amortization expense of $
| 6. | Related Parties Transactions |
Due to Related Parties
Amounts owed to related parties as of December 31, 2021 and 2020 are as follows:
| Schedule of Amounts owed to related parties | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
| Joe Grimes | $ | $ | ||||||
| Sanjay Prasad | ||||||||
| $ | $ | |||||||
Mr. Grimes is our CEO and Director as well as our largest shareholder. Mr. Grimes is also the majority owner of Tribal Rides from whom we purchased certain of our patent and patent pending technologies as discussed in Note 3.
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 years 2021 and 2020 totaled $
KeptPrivate.com is owned
by Mr. Steven Ritacco, a Director of our Company. His company performs services related to the development of our digital transportation
enablement and enhancement platform, which amounts are included in Software and Equipment, net on the accompanying Balance Sheet. The
amount charged for services for the years ended December 31, 2021 and 2020 totaled $
Amount due to related parties bear no interest, are unsecured and are repayable on demand. Imputed interest is considered insignificant.
| 7. | Notes Payable |
Notes payable consists of the following at December 31, 2021 and 2020:
| Schedule of notes payable | ||||||||
December 31, 2021 | December 31, 2020 | |||||||
| Convertible promissory note | $ | $ | ||||||
| Less debt discount on amounts borrowed | ( | ) | ||||||
| Promissory note | ||||||||
| Promissory note – service provider | ||||||||
| Subtotal | ||||||||
| Less current portion | ( | ) | ( | ) | ||||
| Long-term portion | $ | $ | ||||||
| F-12 |
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 $
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 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 $
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).
In addition to the
issuance of the Note, we were obligated to issue to the Lender, as a commitment fee,
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
At any time following the
issuance of the Commitment Shares, the Lender may deliver to our Company a reconciliation statement showing the net proceeds actually
received by the Lender from the sale of the Commitment Shares by the Lender and the shares issued upon the exercise of the Warrants (the
“Reconciliation”). If, as the date of the Reconciliation, the Lender has not realized net proceeds from the sale of the Commitment
Shares equal to at least $
If the Note is repaid in full on or prior to the initial maturity date (without extension), we will have the right to redeem shares of the Commitment Shares for $ per share. The Lender is subject to a leak-out provision for one year from the Issue Date that provides that it will not sell shares of our common stock greater than (i) 20,000 shares, or (ii) 20% of the average trading volume of our common stock for the five preceding trading days.
We allocated the proceeds of the Note between the Note, the Commitment Shares and the Warrant in accordance with ASC 470-20 and recorded an additional debt discount of $ in connection with the transaction.
We are amortizing the debt
discount over the six-month term of the Note resulting in amortization of $
During the year ended December
31, 2021, we recorded interest expense of $
| F-13 |
Promissory Note
On June 10, 2021, we issued
a promissory note to a non-related third party in the principal amount of $
Promissory Note – Service Provider
On May 29, 2018, we issued
a note payable to a service provider in the principal amount of $
During the years ended December
31, 2021 and 2020, we recorded interest expense of $
| 8. | Capital Stock |
Common Stock
We are authorized to issue shares of our $ par value common stock and each holder is entitled to one (1) vote on all matters subject to a vote of stockholders.
Common stock activity for the year ended December 31, 2021 was as follows:
| 1. | We issued in connection with our agreement with SRAX, Inc. as described in Note 10. | |
| 2. | In connection with our issuance of the Convertible Promissory Note described in Note 7, we were committed to issue shares. The shares were issued subsequent to December 31, 2021. |
During the year ended December 31, 2020, we issued shares of our common stock to Tribal Rides and its shareholders in accordance with the Agreement as described in Note 3.
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 $ per share, expire five (5) years from the date of grant, and vest ratably beginning December 20, 2021 over the term of the option.
| F-14 |
The fair value of each stock option was estimated on the date of grant using the Black-Scholes option pricing model and resulted in a de minimis valuation. The assumptions used in determining the fair value of the stock options were as follows:
| Share-based compensation valuation table | ||||
| December 31, 2020 | ||||
| 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 stock options.
Activity related to stock options for the years ended December 31, 2021 and 2020 is as follows:
| Option activity table | ||||||||||||
| 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 | $ | |||||||||||
| Exercisable, end of period | $ | $ | ||||||||||
Warrant
In connection with the transaction with the third-party
lender discussed in Note 7, we issued the lender a three-year warrant to purchase
| December 31, 2021 | ||||
| Expected term in years | 3 years | |||
| Risk-free interest rate | 0.32% | |||
| Annual expected volatility | 1,222.7% | |||
| Dividend yield | 0.00% | |||
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 warrant 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.
| F-15 |
Activity related to the warrant for the year ended December 31, 2021 is as follows:
Schedule of warrant activity
| Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life in Years |
Aggregate Intrinsic Value | |||||||||
| Outstanding, January 1, 2021 | ||||||||||||
| Granted during 2021 | $ | |||||||||||
| Outstanding, December 31, 2021 | $ | |||||||||||
| Exercisable, end of period | $ | $ | ||||||||||
| 9. | Income Taxes |
Our Company has not filed
any federal income tax returns and we are currently not subject to state income tax filing requirements. As of December 31, 2021, we have
net operating loss carryforwards, on a book basis, of $
The following table presents the current income tax provision for federal and state income taxes for the years ended December 31, 2021 and 2020:
| Provision for income taxes | ||||||||
| 2021 | 2020 | |||||||
| Current tax provisions: | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Total provision for income taxes | $ | $ |
Reconciliations of the U.S. federal statutory rate to the actual tax rate for the years ended December 31, 2021 and 2020:
| Reconciliation of income taxes | ||||||||
| 2021 | 2020 | |||||||
| US federal statutory income tax rate | ||||||||
| Stock issued for services | - | - | ||||||
| Gain on extinguishment of accounts payable | ||||||||
| Debt discount amortization | - | |||||||
| Other | - | |||||||
| Increase in valuation reserve | - | - | ||||||
| Total provision for income taxes | ||||||||
The components of our deferred tax assets as of December 31, 2021 and 2020 consisted of the following:
| Deferred taxes | ||||||||
| 2021 | 2020 | |||||||
| Net operating loss carry forwards | $ | $ | ||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
During the year ended December
31, 2021, the valuation reserve increased $
As noted above, we have not filed any federal tax returns, but we plan on bringing our tax filings current as soon as is practical.
| F-16 |
| 10. | Agreement |
Platform Account Contract
Effective March 21,
2021, we entered into a Platform Account Contract 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 with
The parties agreed that SRAX would begin providing the services in October 2021, as this would give our Company time to finalize the filing of public financial information and give SRAX time to review such information in order to most effectively communicate our Company’s story to the investing public.
For the year ended December
31, 2021, the value of the services provided by SRAX was $
Employment Agreement – Steve Ritacco
Effective November 17, 2021, we entered into an Employment Agreement with Steve Ritacco as our Chief Technology Officer. Under the agreement, Mr. Ritacco will receive monthly cash payments of $8,000 and, beginning January 1, 2022, will receive 1,000,000 shares of our common stock in each of the calendar years 2022, 2023 and 2024 so long as he continues to provide services as required under the agreement. The common stock compensation will vest monthly at the rate of 83,333 shares per month (1/12th of the total shares) and we will issue the vested shares to Mr. Ritacco every six months. Mr. Ritacco’s employment will be “at-will” and either party may terminate the Employment Agreement at any time, with or without cause, upon written notice.
Employment Agreement – Don Smith
Effective November 17, 2021, we entered into an Employment Agreement with Don Smith as our Chief Financial Officer. Under the agreement, Mr. Smith will receive monthly cash payments of $3,500 and, beginning January 1, 2022, will receive 1,000,000 shares of our common stock in each of the calendar years 2022, 2023 and 2024 so long as he continues to provide services as required under the agreement. The common stock compensation will vest monthly at the rate of 83,333 shares per month (1/12th of the total shares) and we will issue the vested shares to Mr. Smith every six months. Mr. Smith’s employment will be “at-will” and either party may terminate the Employment Agreement at any time, with or without cause, upon written notice.
| 11. | Subsequent Events |
Stock and Warrant Issuance
As noted in Notes 7 and 12, subsequent to December 31, 2021 we issued a lender 1,320,000 of our common shares and a warrant to purchase 750,000 of our common shares as required under our agreements with the lender.
Employment Agreements
Subsequent to December 31, 2021, 250,000 shares of our common stock became vested to each of Messrs. Ritacco and Smith as required under their Employment Agreements described in Note 10 (a total of 500,000 shares). These shares will be issued to Messrs. Ritacco and Smith, along with any additional shares that become vested, effective June 30, 2022.
| F-17 |