WNLV 10-Q
Winvest Group Ltd (WNLV)
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended:
OR
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) |
(IRS Employer Identification No.) |
(Issuer’s telephone number including area code)
(Former name, former address, and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
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).
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Indicate by check mark whether the registrant 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.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☐ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date.
As of November 20, 2023 there were common shares outstanding.
WINVEST GROUP LTD.
CONTENTS
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PART 1 – FINANCIAL INFORMATION
Item 1. Financial Statements
WINVEST GROUP LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Accounts receivable other | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Investments | ||||||||
| Security deposit | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES & STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Deferred revenue | ||||||||
| Project advances | ||||||||
| Loan payable | ||||||||
| Notes payable-related parties | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock Series A, $ par value , shares authorized, , shares issued and outstanding as of September 30, 2023, and December 31, 2022, respectively | ||||||||
| Common stock, Par Value $, shares authorized, and issued and outstanding as of September 30, 2023, and December 31, 2022 | ||||||||
| Additional paid in capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ (Deficit) | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ (Deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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WINVEST GROUP LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended September 30, 2023 |
Three months ended September 30, 2022 |
Nine months ended September 30, 2023 |
Nine months ended September 30, 2022 |
|||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of sales -related party | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Gross margin | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Administrative expenses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income | ||||||||||||||||
| Other expenses, net | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted loss per common share | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of shares outstanding | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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WINVEST GROUP LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Unaudited)
| Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Value | Shares | Value | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Reverse split rounding adjustment | ( | ) | ||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, March 31,2022 | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Issuance of common stock for acquisitions | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| Preferred Stock | Common Stock | Additional Paid-In | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||||||
| Shares | Value | Shares | Value | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Common stock issued for services | ||||||||||||||||||||||||||||
| Misc. common stock adjustment | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Common shares issued as investment | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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WINVEST GROUP LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine months ended September 30, 2023 |
Nine months ended September 30, 2022 |
|||||||
| Cash flows used in operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Amortization of intangible assets | ||||||||
| Stock based compensation | ||||||||
| Changes in assets and liabilities | ||||||||
| Accounts receivable | ||||||||
| Accounts receivable-other | ( | ) | ||||||
| Prepaid expenses | ||||||||
| Other assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued liabilities and project advances | ( | ) | ||||||
| Deferred revenue | ||||||||
| Net cash (used in) operating activities | ( | ) | ( | ) | ||||
| Cash flows provided (used in) investing activities | ||||||||
| Acquisition of a business, net of cash | ||||||||
| Net cash provided by investing activities | ||||||||
| Cash flows provided used by financing activities | ||||||||
| Loan proceeds | ||||||||
| Repayments of related party loans | ( | ) | ||||||
| Proceeds from related party loans | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ||||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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WINVEST GROUP LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Winvest Group Ltd, “the Company” (formerly known as Zyrox Mining International Inc. until December 2021) was incorporated in the State of Nevada on June 3, 2009. Winvest Group Ltd began formal operations on June 3, 2009, with the principal purpose of developing, marketing, and selling software products through the Internet, and to provide web based services for individuals and small business. During 2010, this business was discontinued and management focused on developing a biodegradable plastic opportunity.
The Company began trading as Riverdale Capital, Ltd. under the symbol “RICP” on June 3, 2009.
On August 17, 2010, the then Chief Executive Officer resigned and appointed Carl H. Kruse as sole Director and Chief Executive Officer. Carl H. Kruse became the majority shareholder at that time by virtue of a Stock Purchase Agreement with the majority shareholder, resulting in a change of control of the Issuer.
On November 8, 2010, the Company entered into an agreement to acquire
The Company finalized the acquisition of a biodegradable plastic manufacturer, WSPVA,
Bio Products International, LLC, a Nevada LLC, on March 12, 2012, for common shares, of which
Effective April 30, 2012, the Company changed its name to Diversified Energy & Fuel International, Inc and changed its name to Zyrox Mining International, Inc. on August 15, 2012.
During the period from November 2012 through April 2020, the Company was dormant.
The Company’s accounting year-end is December 31.
David Lazar, the principal of Custodian Ventures, LLC conducted due diligence on the Company and determined that the Company would be a potential Custodianship candidate, based upon previous management appearing to have abandoned the Company approximately eleven years ago. Mr. Lazar then chose to buy shares of the Company on the open market and start a Custodianship proceeding.
On December 27, 2019 Custodian Ventures, LLC was appointed as the custodian of the Company by the Eighth Judicial Court of Nevada pursuant to Case No. A-19-805642-B.
On March 5, 2021, as a result of a private transaction, shares of Series A Preferred Stock, $ par value per share (the “Shares”) of the Company, were transferred from Custodian
Ventures, LLC (the “Seller”) to Wan Nyuk Ming, Ng Chian Yin, and Jeffrey Wong Kah
Mun, respectively, based on their ownership of Winvest Group Limited (Cayman) (collectively,
the “Purchaser”). As a result, the Purchaser became approximately
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Other than as described below, there are no arrangements or understandings between either the former and new control persons and their associates with respect to the election of directors of the Company or other matters.
On April 14, 2021, the existing director and officer resigned immediately. Accordingly, David Lazar, serving as a director and an officer, ceased to be the Company’s Chief Executive Officer, Chief Financial Officer, President, Treasurer, Secretary, and a Director.
On September 14, 2021, The Board of Directors of Zyrox Mining International, Inc. voted to change the Company’s fiscal year end from May 31 to December 31 in order to align it with its intended acquisition target. The Board of Directors of the Company approved this change on September 14, 2021.
On December 17, 2021, Zyrox Mining International, Inc (the “Company”), amended its articles of incorporation change its name to Winvest Group Ltd. (the “Name Change”). The change was made in anticipation of entering into a new line of business operations.
Also on December 17, 2021, Zyrox Mining International, Inc. amended its articles of incorporation to
reverse split its common stock at a rate of
On December 29, 2021, FINRA declared the Name Change and the Reverse effective. Also on December 29, 2021, the Company was informed by FINRA that the Company’s ticker symbol would be changed to WNLV in twenty business days. The Company’s stock symbol changed to WNLV on January 27, 2022.
On September 14, 2021, the Board of Directors of the Company approved a change to its fiscal year end from May 31 to December 31. The change in fiscal year became effective for the Company’s 2021 fiscal year, which began June 1, 2021 and ended December 31, 2021. Accordingly, the Company is filing this transition report on Form 10-KT for the seven-month period from June 1, 2021 through December 31, 2021.
On December 17, 2021 Zyrox Mining International, Inc. amended its articles of incorporation to change its name to Winvest Group Ltd. (the “Name Change”). The change was made in anticipation of entering into a new line of business operations.
Also on December 17, 2021, Zyrox Mining International, Inc. amended its articles of incorporation to reverse split its common stock at a rate of 1 for 250 (the “Reverse”).
On December 29, 2021, FINRA declared the Name Change and the Reverse effective. Also on December 29, 2021, the Company was informed by FINRA that the Company’s ticker symbol would be changed to WNLV in twenty business days. The symbol change occurred on January 27, 2022
On May 16, 2022, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with The Catalyst Group Entertainment, LLC (“TCG”), a California limited liability company, Joseph Lanius (“Lanius”), Nicholas Burnett (“Burnett”), and Khiow Hui Lim (“Khiow,” “Burnett” and together with Lanius, the “TCG Shareholders”), the sole officers, directors, and shareholders of TCG, IQI Media Inc. (“IQI”), a California corporation, solely women-owned company, Khiow, Lanius, Charlene Logan Kelly (“Kelly”), Burnett, Connie Tsai (“Tsai”), and Amy Morton (“Morton”), as the officers, directors and shareholders of IQI (the “IQI Shareholders”). Under the Share Exchange Agreement, One Hundred Percent (100%) of the ownership interest of TCG and IQI was exchanged for shares of common stock of the Company at the Closing issued to the TCG Shareholders and the IQI Shareholders. The transaction has been accounted for as a recapitalization of the Company, whereby WNLV is the accounting acquirer.
Immediately after completion of such share exchange, the Company had a total of issued and outstanding shares, with authorized share capital for common share of .
Consequently, the Company has ceased to fall under the definition of shell company as define in Rule 12b-2 under the Exchange Act of 1934, as amended (the “Exchange Act”) and TCG and IQI are now wholly owned subsidiaries.
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On May 25, 2022, the Board of Directors of Winvest Group Ltd. (the “Company”) appointed Khiow Hui, Lim as the Corporation’s Chief Strategic Officer and Charlene Logan Kelly as the Corporation’s Chief Intellectual Officer.
On June 13, 2022, the Board of Directors of Winvest Group Ltd. (the “Company”) appointed Khiow Hui, Lim to the Corporation’s Board of Directors.
On June 29, 2022, the Board of Directors of Winvest Group Ltd. (the “Company”) accepted the resignation of Tham Yee Wen as the Company’s Secretary. Also, on June 29, 2022, the Board of Directors of the Company appointed Khiow Hui, Lim as the Company’s Secretary.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Change in Fiscal Year-End
On September 14, 2021, the Company’s Board of Directors approved the change in the Company’s fiscal year end from May 31 to December 31.
Basis of Presentation
The accompanying condensed financial statements have been prepared in accordance with the Financial Accounting Standards Board (“FASB”) “FASB Accounting Standard Codification™” (the “Codification”) which is the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of condensed financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States.
Reverse Split
On January 27, 2022, the Company effected a
Management’s Representation of Interim Condensed Financial Statements
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and disclosures normally included in condensed financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements include all of the adjustments, which in the opinion of management are necessary for a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year.
Going Concern
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going
concern, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business for the twelve months following the date of these condensed consolidated financial statements. The Company has incurred operating losses since its inception.
As of September 30, 2023, the Company had a working capital deficit of $
7
Use of Estimates
The preparation of condensed financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities at the date of the condensed consolidated financial statements. The most significant estimates relate to income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these condensed financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.
Revenue Recognition
On July 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). Results for reporting periods beginning after January 1, 2018, are presented under ASC 606. As of September 30, 2023, the condensed financial statements were not impacted due to the application of Topic 606.
Production – Cost of Revenue
The cost of revenue is comprised of labor expense calculated based on an hourly labor rate provided by consultants and employees to produce revenue, as well as portion of office expense which is allocated to each project. Additionally, the cost of revenue includes direct expenses related to the revenues provided, such as managing the client’s Amazon sales channel through the creation of promotional advertisements to increase sales, translation of content into different languages, coordination of projects with different work teams to maximize client benefits, production crew for celebrity endorsements and video shooting, and salaries and wages of employees involved in creating and delivering these services.
Administrative Expense
Administrative expenses include office expenses, legal, accounting and other professional fees and other expenses and fess associated with being a public company. These expense are recorded as incurred. A small portion of the office expense is allocated to the cost of revenue.
Business Combinations
Under the acquisition method of accounting, we allocate the fair value of the total consideration transferred to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The fair values assigned, defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants, are based on estimates and assumptions determined by management. These valuations require us to make significant estimates and assumptions, especially with respect to intangible assets. We record the excess consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, as goodwill.
If the initial accounting for a business combination is incomplete by the end of a reporting period that falls within the measurement period, we report provisional amounts in our condensed consolidated financial statements. During the measurement period, we adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date and we record those adjustments to our condensed consolidated financial statements.
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Goodwill and Intangible Assets
Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. Initially the Company measures goodwill based upon the value of the consideration paid plus or minus net assets assumed. This initial measurement is subject to adjustment based on an independent third party valuation study performed within one year of the acquisition date. The goodwill arising from the Company’s acquisition is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The Company’s amortizable intangible assets consist primarily of customer relationships. The useful life of these customer relationships is estimated to be three years.
Goodwill is not amortized but is subject to annual impairment testing unless circumstances
dictate more frequent assessments. The Company performs an annual impairment assessment
for goodwill during the fourth quarter of each year and more frequently whenever events
or changes in circumstances indicate that the fair value of the asset may be less
than the carrying amount. Goodwill impairment testing compares the fair value of the
reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair
values calculated under the income approach and market approaches are weighted based
on circumstances surrounding the reporting unit. Under the income approach, the Company
determines fair value based on estimated future cash flows of the reporting unit,
which are discounted to the present value using discount factors that consider the
timing and risk of cash flows. For the discount rate, the Company relies on the capital
asset pricing model approach, which includes an assessment of the risk-free interest
rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company specific risks. Other significant assumptions
used in the income approach include the terminal value, growth rates, future capital
expenditures and changes in future working capital requirements. The market approaches
use key multiples from guideline businesses that are comparable and are traded on
a public market. If the fair value of the reporting unit is greater than its carrying
amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then an impairment loss is recognized in
an amount equal to the excess. As of December 31, 2022 the Company determined that goodwill and intangible assets had been fully
impaired. As a result the Company recorded an impairment charge of $
Cash and cash equivalents
The Company considers all highly liquid temporary cash investments with an original
maturity of three months or less to be cash equivalents. On September 30, 2023, and December 31, 2022, the Company’s cash equivalents totaled $
Prepaid expenses
Prepaid expenses are amounts paid to secure the use of assets or the receipt of services at a future date or continuously over one or more future periods. When the prepaid expenses are eventually consumed, they are charged to expense. Prepaid expenses are recorded at fair market value.
Accrued liabilities
Accrued liabilities include credit card liabilities, and payroll and payroll taxes.
Income taxes
The Company accounts for income taxes under FASB ASC 740, “Accounting for Income Taxes”. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, “Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.
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The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions quarterly to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.
Project advances
Project advances represent unsecured, interest-free advances made by investors to
help the Company fund film projects. If the film is successful the investor can recoup
the money advanced as well as earning a royalty based upon the revenues generated
by the film. The terms of this arrangement vary by film and by investor. The Company
records royalties payable when it becomes probable that royalties will be payable.
As of September 30, 2023 and December 31, 2022 the amount of project advances were $
Stock-based Compensation
The Company accounts for stock-based compensation using the fair value method following the guidance outlined in Section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.
Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard.
We adopted ASC 842 on June 1, 2020. The adoption of this guidance did not have any impact on our condensed financial statements because we have no leases.
NOTE 3. BUSINESS ACQUISITION
On May 16, 2022, the Company entered into a share exchange agreement with The Catalyst Group Entertainment, LLC (“TCG”) and IQI Media, Inc (“IQI”) - see Note 1 to the condensed financial statements.
Immediately after completion of such share exchange, the Company had a total of issued and outstanding shares, with authorized share capital for common share of .
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Consequently, the Company has ceased to fall under the definition of shell company as define in Rule 12b-2 under the Exchange Act of 1934, as amended (the “Exchange Act”) and TCG and IQI are now wholly owned subsidiaries.
For the acquisition of TCG and IQI, the following table summarizes the acquisition date fair value of consideration paid, identifiable assets acquired and liabilities assumed:
Consideration paid:
| Common stock, 900,000 shares of the Company restricted common stock valued at $2.20 per share | $ | |||
| Net liabilities assumed | ||||
| Fair value of total consideration paid | $ |
Net assets acquired and liabilities assumed:
| Cash and cash equivalents | $ | |||
| Other current assets | ||||
| Total assets | $ | |||
| Accounts payable | $ | |||
| Due to related party | ||||
| Total liabilities | $ | |||
| Net liabilities assumed | $ |
The Company did not incur any issuance costs to issue debt or equity instruments used
to effect the business combination. The Company’s acquisition related costs for legal and accounting expenses were approximately $
The Company allocated the fair value of the total consideration paid of $
NOTE 4. NOTES PAYABLE
As of September 30, 2023 and December 31, 2022, the balance of notes payable was $
NOTE 5. NOTES PAYABLE-RELATED PARTIES
As of September 30, 2023, and December 31, 2022, the balance of notes payable to related parties was $
The Company’s financing subsequent to the change of control on June 30, 2021 primarily has come from the Winvest Group Limited (Cayman), an affiliate with
the same name as the Company, and based in the Cayman Islands; and from the CEO of
the Company’s IQI subsidiary. Winvest Group Limited (Cayman) is an equity holdings company in
the wellness industry and shares the same board of directors as the Company. As of
September 30, 2023, the balance of notes payable was comprised of $
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NOTE 6. PROJECT ADVANCES
Project advances represent unsecured, interest-free advances made by investors to
help the Company fund film projects. If the film is successful the investor can recoup
the money advanced as well as earning a royalty based upon the revenues generated
by the film. The terms of this arrangement vary by film and by investor. The Company
records royalties payable when it becomes probable that royalties will be payable.
As of September 30, 2023 and December 31, 2022 the amount of project advances were $
NOTE 7. COMMITMENTS AND CONTINGENCIES
The Company did
NOTE 8. EQUITY
Common Stock
As of September 30, 2023, the Company had authorized shares of Common Stock with a par value of $. As of September 30, 2023, and December 31, 2022, there were and shares of Common Stock issued and outstanding, respectively.
During the six months ended June 30, 2023, the Company issued
During the three months ended the Company issued shares of its common stock in exchange for shares of Series A Preferred A Stock of Infinity Fund Australia PTY LTD (“Infinity”). Since Infinity is a privately held entity without any published financial information, the Infinity shares were valued at par value of the Company’s stock or $, and recorded as an investment on the Company’s balance sheet.
Preferred Stock
During 2020 the Company had shares of Preferred Series A Stock outstanding. This Class of Preferred had a 1 for 1 conversion ratio to common stock. During 2021 this class of Series A Preferred Stock was converted to shares of common stock prior to the reverse split. On a post-split basis of 250 to 1, this amounted to common shares. In March 2021 the Company designated a new class of Series A Preferred Stock.
As of September 30, 2023, the Company has authorized shares of Preferred Series A Stock. As of September 30, 2023, and December 31, 2022, there were and Preferred Series A shares issued and outstanding, respectively.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the related notes thereto. The management’s discussion and analysis contains forward-looking statements, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q. The following discussion should be read in conjunction with our audited financial statements and the related notes that appear in our Annual Report on Form 10-KT, as filed with the Securities and Exchange Commission on March 24, 2021.
Overview
Our financial statements accompanying this Report have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. We have a minimal operating history and no revenues or earnings from operations. We have no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues for the immediate future.
On May 16, 2022, the Company entered into a share exchange agreement with The Catalyst Group Entertainment, LLC (“TCG”) and IQI Media (“IQI”) -see Note 1 to the financial statements.
Results of Operations for the Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022
Revenue
For the nine months ended September 30, 2023, we recorded $214,978 in revenue compared to $8,350 during the nine months ended September 30, 2022. The majority of the revenue during the nine months ended September 30, 2023 was generated by the Company’s IQI subsidiary which was a newly acquired entity in 2022 that was just beginning operations. We are in the process of developing our strategic business plan going forward and, therefore, revenue may vary from period to period.
Operating expenses
Operating expenses for the nine month ended September 30, 2023 was $918,160 compared to $401,237 during the nine months ended September 30, 2022. Operating expenses for the nine months ended September 30, 2023 includes $458,040 in non-cash stock based compensation compared to $-0- during the same period in 2022. Excluding stock based compensation, operating expenses in the 2023 period and 2022 period were $460,120 and $401,327, respectively. Excluding stock based compensation, the significant increase in operating expenses in the nine months ended September 30, 2022 compared to the same period in 2022 is due to the extra expenses associated with becoming an operating company in 2023.
Net loss
As a result of the foregoing, we had a loss of $834,203 or $0.05 per share for the nine months ended September 30, 2023, compared to $394,122 or $0.02 per share for the nine months ended September 30, 2022.
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Liquidity and Capital Resources
We had $43,811 in cash on hand as of September 30, 2023.
Net cash used in operating activities was $225,094 for the nine months ended September 30, 2023, compared to $254,214 for the nine months ended September 30, 2022. The decrease in cash used in operating activities during the nine months ended September 30, 2023 was primarily due to changes in assets and liabilities in the 2023 period compared to 2022.
Net cash provided by financing activities was $231,757 for the nine months ended September 30, 2023, compared to $252,425 for the nine months ended September 30, 2022. The decrease is attributable to lower levels of loans received net of repayments in the 2023 period offset by new loan proceeds in 2023, compared to 2022.
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 effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
Critical Accounting Principles
The preparation of financial statements in accordance with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can, and in many cases will, differ from those estimates. We have not identified any critical accounting policies.
New Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard.
We adopted ASC 842 on September 1, 2020. The adoption of this guidance did not have any impact on our financial statements because we have no leases.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the sensitivity of income or loss to changes in interest rates, foreign exchanges, commodity prices, equity prices, and other market-driven rates or prices. We are not presently engaged in any substantive commercial business. Accordingly, the risks associated with foreign exchange rates, commodity prices, and equity prices are not significant. Our debt obligations contain interest rates that are fixed and we do not enter into derivatives or other financial instruments for trading or speculative purposes.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures were not effective such that the information relating to us required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s former management abandoned all operations for many years, and only recently did the Company appoint new management to make filings with the SEC on behalf of the Company. As of September 30, 2023 we have concluded that our disclosure controls and procedures were not effective.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our 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 accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Our Company has been dormant since November 2012. As a result, our management did not evaluate the effectiveness of our internal control over financial reporting as of September 30, 2023, and September 30, 2022 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). without such an evaluation, our management concluded that we did not maintain effective internal control over financial reporting as of September 30, 2023, based on the COSO framework criteria, as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the PCAOB were: (1) lack of a functioning audit committee, (2) lack of a majority of outside directors on our Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; (4) complete lack of management of the company from November 2012 until September 30, 2023; and (5) lack of disclosure controls. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officer in connection with the review of our financial statements as of September 30, 2023.
Management believes that the material weaknesses set forth above did not have an effect on our financial results because the activity during this period was nominal. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside Directors on our Board of Directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the periods ended September 30, 2023 and September 30, 2023, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
Item 1a. Risk Factors
We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K.
Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds
During the nine months ended September 30, 2023, the Company issued 114,510 restricted common shares to various individuals for services provided. These shares were valued at $4.00 each, based on the trading price of the Company’s common stock on the date the share issuance was approved by the company’s Board of Directors. As a result, the Company recorded stock based compensation expense of $458,040 for the nine months ended September 30, 2023.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
| 31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2 | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 10.1 | Share Exchange Agreement (Incorporated by reference to the Company’s Current Report on Form 8-K, Exhibit 4.1 filed with the SEC on May 16, 2022) | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Winvest Group Ltd. | ||
| (Registrant) | ||
| November 20, 2023 | By: | /s/ Jeffrey Wong Kah Mun |
| Jeffrey Wong Kah Mun, CEO and CFO | ||
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