ITEM 1 |
Financial Statements |
RENEWABLE
INNNOVATIONS, INC.
CONSOLIDATED
BALANCE SHEETS
The
accompanying unaudited notes should be read in conjunction with these unaudited condensed consolidated financial statements.
RENEWABLE
INNOVATIONS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
The
accompanying unaudited notes should be read in conjunction with these unaudited condensed consolidated financial statements.
RENEWABLE
INNOVATIONS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
The
accompanying unaudited notes should be read in conjunction with these unaudited consolidated condensed consolidated financial statements.
RENEWABLE
INNOVATIONS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
The
accompanying unaudited notes are an integral part of these unaudited condensed consolidated financial statements.
RENEWABLE
INNOVATIONS, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation and Preparation
The condensed consolidated financial statements include the accounts of
Renewable Innovations, Inc. (a Nevada Corporation) formerly named Nestbuilder.com Corp. and its wholly owned subsidiary, Renewable Innovations
Corp. (a Delaware corporation) formerly known as Renewable Innovations Inc. The Consolidated entity is hereafter referred to as “we,”
“us,” “Renewable Innovations,” or the “Company”. In the opinion of the Company’s management,
the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair
financial statement presentation. Amounts related to inventory, contract assets, contract liabilities, and
expenses in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s
presentation. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the
Renewable Innovations Inc. Delaware corporation annual financial statements and accompanying notes included in its Nestbuilder.com Corp
second Amended Form 8-K/A file on June 9, 2023.
The
unaudited condensed consolidated statement of operations for the period ended February 28, 2023 and the unaudited consolidated
balance sheet as of February 28, 2023 include the operations, assets, and liabilities of Nestbuilder.com Corp. and NB Merger Corp.
The effects of the merger with Nestbuilder.com are included herein. Any intercompany transactions have been eliminated in
consolidation.
We
describe our significant accounting policies in Note 2 of the notes to financial statements in our second Amended 8-K/A
for the year ended November 30, 2022. During the three-month period ended February 28, 2023, there were no significant changes to those
accounting policies.
On
December 1, 2022, Renewable Innovations, Inc. (a Delaware corporation) was acquired by Nestbuilder.com Corp, in a transaction
accounted for as a recapitalization of Renewable Innovations Inc. (a Delaware corporation). The effects of the recapitalization were retrospectively applied to all periods presented in the accompanying unaudited consolidated financial
statements. We discuss the acquisition in further
detail in Note 8.
Certain
amounts presented on the comparative 2022 financial statements reflect restated numbers from the 10-K/A and 8-K/A filed on June 9,
2023.
On February 28, 2023 all operations of Nestbuilder.com
Corp were discontinued. Management does not believe this will have a material impact on the financial operations of the Company moving
forward.
Use of Estimates
The preparation of the 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 and disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Significant accounting estimates reflected in
the Company’s financial statements include allowance for doubtful accounts, revenue recognition, contract liabilities, useful lives
of property, plant and equipment and fair value of lease liability and right of use assets, and inventory obsolescence. The Company utilizes
fair value estimates for the calculation of stock-based compensation for applicable warrants and restricted stock awards. Actual results
could differ from those estimates.
Recent
Accounting Pronouncements
In
August 2020, the Financial Statement Accounting Board (the “FASB”) issued ASU 2020-06 which simplifies the accounting for
convertible instruments and its application of the derivatives scope exception for contracts in an entity’s own equity. For contracts
in an entity’s own equity, the new guidance eliminates some of the current requirements for equity classification such as the requirement
that settlement in unregistered shares is permitted. In addition, the new guidance reduces the number of accounting models that require
separating embedded conversion features from convertible instruments, including eliminating the requirement to recognize a beneficial
conversion feature if the conversion feature is in the money and does not require bifurcation as a derivative liability. As a result,
only conversion features accounted for under the substantial premium model and those that require bifurcation will be accounted for separately.
The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires
enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. The Company adopted the
new standards on December 1, 2022. The adoption of this standard may allow the Company, in the future and in certain circumstances, to
avoid derivative treatment of warrants and avoid beneficial conversion treatment of certain convertible preferred shares. Adoption of
this standard had no effect on the Company’s financial statements.
In
June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial
Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected
loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried
at amortized cost, such as insurance premium finance loans held for investment, at the net amount expected to be collected. The measurement
of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable
and supportable forecasts that affect the collectability of the reported amount. This ASU is effective December 1, 2023 for the Company.
The Company is evaluating the impact on the adoption of this standard.
All
other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable.
Net
Loss Per Common Share
Net
loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic net loss per common share (“EPS”)
is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period.
Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential
common shares were issued, unless doing so is anti-dilutive. The weighted-average number of common shares outstanding for computing basic
EPS for the three-months ended February 28, 2023 and 2022 were 6,135,302 and 0 respectively. For the quarter ended February 28,
2023, the diluted net loss per share of common stock is the same as basic net loss per share of common stock because the effects of potentially
dilutive securities are antidilutive. The following table puts forth the potentially dilutive securities excluded from the computation
of diluted net loss per share for the quarter ended February 28, 2023, because such securities have an anti-dilutive impact due to losses
reported.
SCHEDULE
OF POTENTIALLY DILUTIVE SECURITIES
| |
February 28, 2023 | |
Series A preferred stock | |
| 215,568,400 | |
Warrants to purchase common stock | |
| 10,135,000 | |
Total shares excluded from diluted net loss per share | |
| 225,703,400 | |
The
diluted earnings per share for the quarter ended February 28, 2022 included 2,155,684 shares of preferred stock that were convertible
to 215,568,400 shares of common stock.
NOTE
2 – GOING CONCERN
The
accompanying financial statements have been prepared assuming that we will continue as a going concern. As of February 28, 2023, the
Company had an accumulated deficit of $3,903,403 and a net loss of $371,262 for the quarter then ended. These facts and others raise
substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this
filing. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its
obligations on a timely basis. The financial statements do not include any adjustments that might be necessary if the Company is unable
to continue as a going concern.
Management’s
plan of operations includes, but is not limited to, the following:
|
● |
The
creation of additional sales and profits across its product lines; |
|
|
|
|
● |
The
continuation of improving cash flow by maintaining moderate cost reductions; |
|
|
|
|
● |
Requiring
50% deposit on all purchase orders; |
|
|
|
|
● |
Continuing
positive cash flows from operating activities; |
|
|
|
|
● |
Potential
issuances of additional common stock to existing shareholders and through PIPE financing. |
NOTE
3 – CONCENTRATIONS
For
the three-months ended February 28, 2023 and 2022, two customers accounted for 97% and 100% respectively, of the Company’s revenues.
Accounts
receivable at February 28, 2023 and November 30, 2022 are made up of trade receivables due from customers in the ordinary course of business.
Three customers account for 98% of the accounts receivable balance at February 28, 2023 and two customers represented 100% of the balance
of accounts receivable at November 30, 2022.
For
the three months ended February 28, 2023 three vendors made up 80% of our purchases. For the three months ended February 28, 2022 one
vendors made up 74% or our purchases.
NOTE
4 – ACCOUNTS RECEIVABLE
Accounts
receivable consisted of the following:
SCHEDULE
OF ACCOUNTS RECEIVABLES
| |
February 28, 2023 | | |
November 30, 2022 | |
Trade Accounts Receivable | |
$ | 38,378 | | |
$ | 81,667 | |
Less Allowance for doubtful accounts | |
| (7,500 | ) | |
| (7,500 | ) |
Total Accounts Receivable (net) | |
$ | 30,878 | | |
$ | 74,167 | |
The
accounts receivable balance is made up of trade receivables due from customers in the ordinary course of business.
NOTE
5 – INVENTORY
As
of February 28, 2023 and November 30, 2022 inventory consisted of $561,491, and $347,207, respectively in Raw Materials Inventory.
NOTE
6 – SHORT-TERM NOTE PAYABLE
During
the quarter ended February 28, 2023 the Company engaged in negotiations with an outside investor to acquire debt. While the negotiations
were taking place, before a contract was settled, the investor lent the Company $300,000 on February 13, 2023. There was no contract,
no interest, and no payment schedule associated with this loan. This amount was included as part of the principal on the debt when the
contract was finalized subsequent to the reporting period—see Note 9 for more details.
NOTE
7 – STOCKHOLDERS’ EQUITY
On December 1, 2022, the
Company amended the Series A Preferred Stock to be designated “Series A Convertible Preferred Stock.” These Series A Convertible
Preferred Stock shares have preferential dividend rights in noncumulative dividends in an amount equal to any dividends or other Distribution
on the Common Stock. Holders of these Series A Preferred Stock are to be treated for this purpose as holding the number of shares of Common
Stock to which the holders thereof would be entitled if they converted their shares of Series A Convertible Preferred Stock at the time
of such dividend. Series A Convertible Preferred Stock shares are also amended to have liquidation rights where holders of each share
shall be entitled to participate with the holders of shares of common stock then outstanding, pro rata according to the number and preferences
of the shares of common stock and Series A Convertible Preferred Stock as converted to common stock shares. Series A Convertible Preferred
Stock shares are also amended to have an optional right of conversion into one hundred shares of common stock, and automatic conversion
rights. Automatic conversion rights shall be exercised into one hundred shares of common stock at the earliest of (i) a reorganization
or any other consolidation or merger of the Company with or into any other person, (ii) any sale, conveyance, transfer or other disposition
of all or substantially all of the property, assets or business of the Company (iii) the effectuation of a transaction or series of related
transactions in which more than fifty percent of the voting power of the Company is disposed of, (iv) a Form S-1 registration statement
filed by the Company with the U.S. Securities and Exchange Commission or other securities regulator for the contemplated sale of securities
of the Company has been declared effected, or (v) the Company’s shares have been listed for trading on a Trading Market (other than
the OTCQB Marketplace, the OTC Pink Marketplace or any other tier operated by OTC Markets Group Inc.). If the Company takes any action
to increase or decrease the number of outstanding shares of common stock, then the number of shares of common stock issuable upon the
conversion of the Series A Convertible Preferred Stock shall be proportionately increased or decreased as the case may be, so that, upon
conversion into Common Stock, the percentage interest of any holder of shares of Series A Convertible Preferred Stock shall not be modified
from what his, or her or its then current percentage interest in the Company would have been if the Series A Convertible Preferred Stock
had been converted into Common Stock immediately prior to any such capital change, effective in either case at the close of business on
the date that the capital change becomes effective. Series A Preferred Convertible Preferred Stock were also amended to have the number
of votes to which the holders thereof would be entitled if they converted their shares of Series A Convertible Preferred Stock at the
time of voting.
As part of the recapitalization,
the Company is deemed to have issued 6,090,580 common shares to the original shareholders of Nestbuilder. See further details in Note
8.
During
the quarter ended February 28, 2023, the Company issued 75,000 shares of common stock to a marketing firm in exchange for marketing services.
This stock was issued in 25,000-share increments on three separate occasions. These shares were valued at $109,750, which was based on
the market value of the common stock on the date of each transaction, multiplied by the number of shares issued.
NOTE
8 – REVERSE ACQUISITION
On December
1, 2022, pursuant to an Agreement and Plan of Merger, dated as of December 1, 2022, by and among Nestbuilder (“Parent”), NB
Merger Corp. (the “Merger Sub”) a Delaware corporation and a direct, wholly owned subsidiary of Nestbuilder, Renewable Innovations,
Inc. (the “Company”), a Delaware corporation, Lynn Barney, as the representative of the Company’s securityholders, and Alex
Aliksanyan, as the Parent representative, the Parent acquired the Company through the merger of the merger sub with and into the Company
(the “Merger”), with the Company
continuing as the surviving corporation and becoming a wholly owned subsidiary of the Parent.
In
connection with the Merger, the Parent filed articles of merger with the Nevada Secretary of State to change its name to Renewable Innovations,
Inc. pursuant to a parent/subsidiary merger between Parent and the Company as a wholly owned non-operating subsidiary, which was established
for the purpose of giving effect to this name change.
Immediately
prior to the Merger, there were 6,090,580 shares of Parent Common Stock issued and outstanding and warrants outstanding to acquire up
to an aggregate of 10,135,000 shares of Parent Common Stock. As a result of the Merger, Parent issued to the shareholders of the Company
an aggregate of 2,155,684 shares of Parent Series A Convertible Preferred Stock, par value $0.0001 per share, each share of which is
convertible into 100 shares of Parent Common Stock and votes on an as converted basis, which represents a 97% voting interest immediately following
the Merger. As a result of the foregoing transactions, Parent underwent
a change of control on December 1, 2022, which will be accounted for as a reverse merger and recapitalization of the Company.
The
unaudited condensed statements of operations for the three months ended February 28, 2022 do not include the revenue and earnings from
Nestbuilder.com Corp. If it had, the revenue would have increased by $11,456 and the net loss would have increased by $162,928.
NOTE
9 – SUBSEQUENT EVENTS
On
March 6, 2023, the Company issued a note payable to investors for cash, of which the principal amount totaled $630,000, which included the $300,000
discussed in note 7 above. Principal and accrued interest is due at the end of 12 months, and it carries an interest rate of ten percent
(10%) per annum.
On
April 30, 2023, we entered into a Line of Credit Promissory Note with Robert L. Mount, our Chief Executive Officer, President, and a
member of our Board of Directors. Pursuant to the Note, upon mutual agreement between the parties, Mount may advance funds to us. The
Note bears interest at the rate of ten percent (10%) per annum, and can be prepaid at any time by us. Any outstanding principal and interest
must be repaid 24 months after the execution date.
Also subsequent to year end, 600,000 warrants were exercised in a
cashless option. This resulted in the issuance of 568,540
shares of common stock, and no additional cash to the Company.
ITEM
2 |
Management’s
Discussion and Analysis of Financial Condition and Results of Operations |
Our
Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking
(within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking
statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general
economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully
make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations
and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business
disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be
detailed from time to time in our filings with the Securities and Exchange Commission.
Although
the forward-looking statements in this Quarterly Statement reflect the good faith judgment of our management, such statements can only
be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to
risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking
statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports
as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of
operations and prospects.
The
following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in
conjunction with, its unaudited financial statements and related notes elsewhere in this Form 10-Q, which have been prepared in accordance
with accounting principles generally accepted in the United States.
Summary
Overview
We
were incorporated on June 28, 2019 and commenced operations in 2021. We had sales of $370,341 in the year ended November 30, 2021, and
$2,430,194 in the year ended November 30, 2022.
On
December 1, 2022, pursuant to an Agreement and Plan of Merger, we were acquired by Nestbuilder.com Corp through the merger of NB Merger
Corp. with and into Renewable Innovations, Inc., with Renewable Innovations, Inc. continuing as the surviving wholly owned subsidiary
of Nestbuilder.com Corp. Renewable Innovations, Inc., a Delaware corporation (the wholly owned subsidiary), changed its name to Renewable
Innovations Corp., and Nestbuilder.com Corp (the parent corporation) changed its name to Renewable Innovations, Inc.
Overview
We
are focused on designing, optimizing, developing, and producing modular, scalable, zero-carbon green renewable solutions. Applications
for scalable power vary from primary power to emergency power and mobile power.
Our
initial focus is on mobile and stationary electric vehicle rapid charging.
Going
Concern
From inception (June 28, 2019) through November 30, 2022, we have an accumulated deficit of $3,532,141
and for the year ended November 30, 2022, we had a net loss of $2,353,113. In order to continue as a going concern we must effectively
balance many factors and generate more revenue so that we can fund our operations from our sales and revenues. If we are not able to
do this we may not be able to continue as an operating company. At our current revenue and burn rate, we have an immediate cash need,
and thus we must raise capital by issuing debt or through the sale of our stock. However, there is no assurance that our existing cash
flow will be adequate to satisfy our existing operating expenses and capital requirements.
Results
of Operations for the Three Months Ended February 28, 2023 and 2022
Introduction
We had sales of $1,098,598 for the three months ended
February 28, 2023, compared to $1,333,245 for the three months ended February 28, 2022, a decrease of $234,647, or 18%. Our cost of sales
was $593,266 for the three months ended February 28, 2023 (54% of sales), compared to $684,319 for the three months ended February 28,
2022 (51% of sales), a decrease of $91,053, or 13%.
Sales
and Net Operating Loss
Our
sales, operating expenses, and net operating loss for the three months ended February 28, 2023 and 2022 were as follows:
| |
Three Months Ended
February 28, 2023 | | |
Three Months Ended
February 28, 2022 | | |
Increase/
(Decrease) | |
| |
| | |
| | |
| |
Sales | |
$ | 1,098,598 | | |
$ | 1,333,245 | | |
$ | (234,647 | ) |
Cost of sales | |
| 593,266 | | |
| 684,319 | | |
| (91,053 | ) |
| |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | |
Sales, general and administrative | |
| 787,264 | | |
| 171,283 | | |
| 615,981 | |
Depreciation | |
| 89,330 | | |
| 89,332 | | |
| (2 | ) |
Total operating expenses | |
| 876,594 | | |
| 260,615 | | |
| 615,979 | |
| |
| | | |
| | | |
| | |
Net operating income (loss) | |
| (371,262 | ) | |
| 388,311 | | |
| (759,573 | ) |
Other income/(expense) | |
| - | | |
| 84,900 | | |
| (84,900 | ) |
| |
| | | |
| | | |
| | |
Net gain/(loss) | |
$ | (371,262 | ) | |
$ | 473,211 | | |
$ | (844,473 | ) |
Sales
We
had sales of $1,098,598 for the three months ended February 28, 2023, compared to $1,333,245 for the three months ended February 28,
2022, a decrease of $234,647, or 18%. Of our sales for the three months ended February 28, 2023, $1,070,724, or 97% of sales, was from
the sales of products, with the remainder from sales of services.
Two
customers accounted for 97% of our sales for the three months ended February 28, 2023, compared to 100% for the three months ended February
28, 2022. These contracts were not completed during the applicable three month period, but partial payments were collected.
Cost
of Sales
Our
cost of sales was $593,226 for the three months ended February 28, 2023 (54% of sales), compared to $684,319 for the three months ended
February 28, 2022 (51% of sales), a decrease of $91,053, or 13%. Our costs of sales includes raw materials and in-house manufacturing
costs for the products we manufacture.
Gross
Margin
Our
gross margin
Sales,
general and Administrative
Sales,
general and administrative expense was $787,264 for the three months ended February 28, 2023, compared to $171,283 for the three months
ended February 28, 2022, an increase of $615,981, or 360%. In the three months ended February 28, 2023, our sales, general and administrative
expense consisted primarily of contractor expense of $454,878, payroll of $104,142, and rent of $57,890. In the three months ended February
28, 2022, our sales, general and administrative expense consisted primarily of payroll of $55,849, rent of $29,761, and legal fees of
$25,393.
Depreciation
Operating
depreciation was $89,330 for the three months ended February 28, 2023, compared to $89,332 for the three months ended February 28, 2022,
a decrease of $2, or 0%. Our operating depreciation expense remained constant because we did not purchase additional operating equipment.
Net
Operating Gain/Loss
As
a result of the items discuss above, our net operating loss was $371,262 for the three months ended February 28, 2023, compared to net
operating income of $388,311 for the three months ended February 28, 2022, a decrease of $759,573, or 196%.
Other
Income and Expense
Other
income (expense) for the three months ended February 28, 2023 was $0, compared to $84,900 for the three months ended February 28, 2022,
a decrease of $84,900. In the three months ended February 28, 2022, our other income (expense) consisted of rental income of $84,900.
Net
Gain/Loss
Our
net loss for the three months ended February 28, 2023, was $371,262, compared to a net gain of $473,211 for the three months ended February
28, 2022, a decrease of $844,473, or 178%.
Liquidity
and Capital Resources
Introduction
During
the three months ended February 28, 2023 we had significant negative operating cash flows. We covered our cash flow deficit by using
our existing cash and issuing promissory notes. Our need to purchase property and equipment in order to fulfill our sales orders will
continue in the future, and thus we will continue to face short-term and long-term cash needs. We anticipate that these needs will be
satisfied through the issuance of debt or the sale of our securities until such time as our cash flows from operations will satisfy our
cash flow needs.
Our
cash, current assets, total assets, current liabilities, and total liabilities as of February 28, 2023 and November 30, 2022, respectively,
are as follows:
| |
February 28, 2023 | | |
November 30, 2022 | | |
Change | |
| |
| | |
| | |
| |
Cash | |
$ | 260,461 | | |
$ | 1,260,199 | | |
$ | (999,738 | ) |
Total Current Assets | |
| 2,219,126 | | |
| 2,309,233 | | |
| (90,107 | ) |
Total Assets | |
| 8,851,320 | | |
| 9,147,675 | | |
| (296,355 | ) |
Total Current Liabilities | |
| 4,261,569 | | |
| 4,016,500 | | |
| 245,069 | |
Total Liabilities | |
$ | 7,966,730 | | |
$ | 7,892,645 | | |
$ | 74,085 | |
Our
cash decreased by $999,738 as of February 28, 2023 compared to November 30, 2022. Our total current assets also decreased by $90,107
during the same period, and our total assets decreased by $296,355 during the same period.
Our
total current liabilities increased by $245,069 as of February 28, 2023 compared to November 30, 2022. Our total liabilities increased
by $74,085 during the same period.
In
order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources. There
is no assurance, however, that we will be successful in these efforts.
Cash
Requirements
Our
total cash on hand as of February 28, 2023 was $260,461. Our net cash used in operating activities was $1,232,303 for the three months
ended February 28, 2023. We incurred $70,006 in expenses related to the purchase of property and equipment, acquired $2,571 in the acquisition
of Nestbuilder.com Corp, and raised $300,000 from the issuance of promissory notes, for net negative cash flow of $999,738 for the year.
We anticipate that our expenses related to the purchase of property and equipment will continue to exceed our net cash provided by operating
activities in the future. We anticipate that our short-term and medium-term cash flow needs will be satisfied through the issuance of
debt or the sale of our securities until such time as our cash flows from operations will satisfy our cash flow needs.
Sources
and Uses of Cash
Operations
Our
net cash used in operating activities was $1,232,303 and $127,727 for the three months ended February 28, 2023 and 2022, respectively,
an increase of $1,104,576. Our net cash used in operating activities for the three months ended February 28, 2023 consisted primarily
of our net loss of $371,262, plus changes in contract asset of $540,490, contract liabilities of $427,184, inventories of $214,284, and
prepaid expenses and other current assets of $198,146, offset by changes in accounts payable of $193,607, adjustments in lease amortization
of $161,876, adjustments in depreciation and amortization of $114,377, and stock based settlement expense of $109,750. Our net used in
operating activities for the three months ended February 28, 2022 consisted primarily of our net income of $473,211, plus changes in
inventories of $218,078 and changes in lease amortization of $116,930, offset by changes in contract liabilities of $624,173, accounts
payable of $299,093, and right of use asset and lease liability, net of $111,442.
Investments
Our net cash provided by (used in) investing activities was ($67,435) and
$(20,597) for the three months ended February 28, 2023 and 2022, respectively, a decrease of $46,838. Our net cash used in investing activities
for the three months ended February 28, 2023 consisted of $2,571 cash acquired in reverse merger, offset by $70,006 for the purchase of
property and equipment.
Financing
Our
net cash provided by financing activities was $300,000 and $150,000 for the three months ended February 28, 2023 and 2022, respectively,
an increase of $150,000. Our net cash provided by financing activities for the three months ended February 28, 2023 consisted entirely
of proceeds from the issuance of a short-term note payable.