UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2022
☐ TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________
to _______________
Commission file number 000-56301
OUTDOOR SPECIALTY PRODUCTS, INC.
(Exact name of registrant as specified in charter)
| NEVADA | | 46-4854952 |
(State or other jurisdiction of
incorporation or organization) | | (IRS Employer
Identification No.) |
| 3842 Quail Hollow Drive, Salt Lake City, Utah | | 84109 |
| (Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (801)
560-5184
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 Par Value
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
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. Yes ☒ No ☐
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). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions
of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging
growth company” in Rule 12b-2 of the Exchange Act.
| | Large accelerated filer | ☐ | Accelerated filer | ☐ |
| | Non-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 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 issuer is a
shell company (as defined in rule 12b-2 of the Exchange Act). Yes ☐ No ☒
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price
of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
As of March 31, 2022, the last day of our most recently completed
second fiscal quarter, based on the $0.35 price at which the common equity was sold in our private placement of securities in 2014, the
aggregate market value of the 254,318 shares held by non-affiliates was approximately $89,011.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant
has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution
of securities under a plan confirmed by a court. Yes ☐ No ☐
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the issuer’s
classes of common stock, as of the latest practicable date.
As of December 12, 2022, there were 5,284,318
shares of the issuer’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated
by reference and the part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report
to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities
Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for
fiscal year ended December 24, 1980).
None.
OUTDOOR SPECIALTY PRODUCTS, INC.
TABLE OF CONTENTS TO ANNUAL REPORT ON FORM 10-K
YEAR ENDED SEPTEMBER 30, 2022
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements and information in this report on Form 10-K may
constitute forward-looking statements. The words believe, may, potentially, estimate, continue, anticipate,
intend, could, would, project, plan, expect and similar expressions that convey uncertainty
of future events or outcomes are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties
and other important factors that may cause our actual results, performance, or achievements to be materially different from any future
results, performances or achievements expressed or implied by the forward-looking statements. These forward-looking statements include,
but are not limited to, statements concerning the following:
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our business strategy; |
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our intentions, expectations and beliefs regarding anticipated growth, market penetration and trends in our business; |
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the effects of market conditions on our stock price and operating results; |
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our ability to maintain our competitive technological advantages against competitors in our industry; |
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our ability to timely and effectively adapt our existing technology and have our technology solutions gain market acceptance; |
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our ability to introduce new products and bring them to market in a timely manner; |
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our ability to maintain, protect and enhance our intellectual property; |
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the effects of increased competition in our market and our ability to compete effectively; |
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costs associated with defending intellectual property infringement and other claims; |
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our expectations concerning our relationships with customers and other third parties; |
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the impact of outbreaks, and threat or perceived threat of outbreaks, of epidemics and pandemics, including, without limitation, the coronavirus outbreak, on our sourcing and manufacturing operations as well as consumer spending; |
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risks associated with sourcing and manufacturing; and |
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our ability to comply with evolving legal standards and regulations, particularly concerning requirements for being a public company and United States export regulations. |
These forward-looking statements speak only as of the date of this
Form 10-K and are subject to uncertainties, assumptions, and business and economic risks. As such, our actual results could differ materially
from those set forth in the forward-looking statements. Moreover, we operate in a competitive and changing environment, and new risks
emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business
or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any
forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances
discussed in this Form 10-K may not occur, and actual results could differ materially and adversely from those anticipated or implied
in our forward-looking statements.
You should not rely upon forward-looking statements as predictions
of future events. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee
that the future results, levels of activity, performance or events and circumstances described in the forward-looking statements will
be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking
statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Form 10-K
to conform these statements to actual results or to changes in our expectations, except as required by law.
You should read this Report on Form 10-K and the documents that we
have filed with the SEC as exhibits hereto with the understanding that our actual future results and circumstances may be materially different
from what we expect.
PART I
Item 1. Business
Corporate History
Outdoor Specialty Products, Inc. (the “Company,” “we,”
or “us”) was originally incorporated in the state of Utah on January 31, 2014, and changed its domicile to the state of Nevada
on February 24, 2021. The Company is and has since its inception been engaged in the business of developing, selling, and marketing products
in niche markets within the specialty outdoor products marketplace. We introduced our proprietary “Reel Guard” product in
2014 and continue to offer it for sale. We license the rights to our “SLINKOR” product pursuant to a license agreement entered
into with the inventor in May 2021. We intend to commence manufacturing, marketing, and selling our “SLINKOR” product following
completion of our redesign of the product to change the sinking weight to a material other than lead and utilize molds to permit increased
production. We have no subsidiaries.
The Reel Guard
The Reel Guard is designed to protect fishing reels from scratching,
scuffing, dents, and other damage due to dropping, resting on gravel while servicing the line, being transported with other fishing and
outdoor equipment, and general wear and tear. To date, the primary application for the Reel Guard has been fly fishing reels, but we believe
the Reel Guard may also be suitable for use with some deep-sea fishing reels. The Reel Guard consists of a thin, rubberized material that
is attached to the outer edges of a fishing reel using special adhesive strips that hold the material in place but provide for easy removal
with no damage to the reel. The Reel Guard is designed for reels with up to a 4.25-inch diameter that have square to slightly rounded
edges, and the custom installation procedure makes the Reel Guard suitable for a variety of different reels. The Reel Guard was invented
by Kirk Blosch, the Company’s founder and president, in 2014 to fill a need that he believed was not being met by existing products.
We filed for and obtained a provisional patent for the Reel Guard in 2014 under the name “Reel Bumper Guard” and U.S. Patent
No. 9,872,485 for the device was issued on January 23, 2018. During 2021, we paid the first (fourth year) maintenance fee for the Reel
Guard patent in the amount of $985 to prevent the patent from lapsing. The next maintenance fee will be due on or before July 23, 2025.
The SLINKOR
We entered into a License and Royalty Agreement (the “License
Agreement”), dated as of May 4, 2021, with Stephen Smith (the “Licensor”), for another fishing product referred to as
the “SLINKOR.” The SLINKOR is a slow sinking fishing sinker comprised of a smooth, egg-shaped piece of pre-molded foam with
lead weights compressed into each end using a guide wire that aligns the weights and allows a fishing line to be threaded through the
product. The buoyancy of the foam coupled with the calibrated weight of the lead and the movement of the water causes the SLINKOR to sink
slowly to the bottom of a lake or river allowing the fisherman to control the desired depth for the bait. The SLINKOR is designed for
use with flies, spinners, flatfish, and other types of bait and the weight of the SLINKOR permits the fisherman to make longer casts.
The smooth egg shape of the SLINKOR is designed to let it slide along the bottom of the lake or river while resting on top of moss or
bouncing over rocks and greatly reducing snags. The device permits a fisherman to run his line through the SLINKOR, attach a swivel, and
run 18 to 30 inches of leader from the swivel to the bait based on the current water conditions, the desired depth, and the presence or
absence of moss, rocks, and other obstacles. We anticipate that the SLINKOR will be available in two sizes; the large SLINKOR will be
2 inches long and 1 ¼ inches wide and the small SLINKOR will be 1 ¼ inches long by 1 ¼ inches wide.
The License Agreement generally grants us the non-exclusive, world-wide
right to use and apply the SLINKOR technology and any intellectual property rights thereto and to make, have made, use, lease, sell, market,
or otherwise dispose of the SLINKOR in all markets throughout the world, and the exclusive right to market, sell or otherwise dispose
of the SLINKOR in e-commerce markets throughout the world. The License Agreement reserves to the Licensor the non-exclusive right to continue
to manufacture and sell the SLINKOR in stores, at trade shows, and in other brick and mortar physical locations and to purchase completed
SLINKOR products from us (to the extent available) at our cost plus 10%. In consideration for the rights granted under the License Agreement,
we paid the Licensor a one-time license fee in the amount of $500 and agreed to pay the Licensor the following royalties based on our
net revenue from sales of the SLINKOR: (i) 20% of net revenue from product sales up to $1 Million, (ii) 15% of net revenue from product
sales between $1 Million and $3 Million, and (iii) 10% of net revenue from product sales in excess of $3 Million. We are required to make
minimum royalty payments of $1,000 per year to maintain the exclusive nature of the license and prevent it from reverting to a non-exclusive
license. During the 2022 year, we paid royalties in the minimum amount of $1,000. This summary description of the License Agreement is
qualified in its entirety by reference to the License Agreement, a copy of which is filed as an exhibit to this report.
We have postponed the production of the
SLINKOR product while we attempt to redesign it to replace the lead weight incorporated in the pre-molded foam ball with a weight made
from a non-lead material and to implement a more automated manufacturing process. Over the past several years, there has been an increasing
trend by various states to ban the use of lead weights, split shot, and lead-based lures due to potential lead poisoning and damage to
waterfowl, other aquatic animals, soil, and water. We believe that lead fishing products are now banned in New Hampshire, New York, Maine,
Massachusetts, Vermont, and Washington and that the trend will continue. Our decision to try and move away from the lead weight is motivated
by our desire to be a good public citizen by not manufacturing a product that may be harmful to the environment and our belief that lead
shot will be outlawed in more locations over the coming years and that it will continue to become more expensive and more difficult to
source. We are investigating the replacement of the lead core with a type of steel or resin that would perform in a substantially equivalent
manner to the lead shot. We are also investigating the use of two molded capsules for the product, with one capsule housing the weight
material and the second housing the first capsule. The use of molds would allow us to accelerate the manufacturing process, which we anticipate
would increase production capacity and reduce costs as compared to the manual manufacturing process currently used by the Licensor. No
assurances can be given that we will locate a suitable alternative to the lead weight or that any substitute we select will perform as
anticipated. We do not plan to commence the manufacturing of the SLINKOR until the redesign has been completed and additional debt or
equity funding has been received.
Manufacturing
We own our custom injection mold for the Reel Guard, and we contract
with a third party to manufacture the Reel Guard in minimum lots of 1,000 on an as needed basis. The adhesive strips used to attach the
Reel Guard to the reel are manufactured by a national adhesives manufacturing company and custom ordered in pre-cut lengths from a local
distributor in minimum lots of 1,000. We contract with another third party to print the Reel Guard product information card and package
the Reel Guard product in sale-ready packages. Our Reel Guard inventory consists of both the raw material adhesive strips and the finished,
packaged product units. For the years ended September 30, 2022 and 2021, respectively, we had on hand $2,042 and $2,088 in finished goods
and $2,596 and $2,596 in raw materials.
As discussed above, the production of the SLINKOR has been postponed
pending a redesign of the product, which may change the raw materials utilized and provide for the creation of molds to accelerate the
production process. We plan to use our existing printing and packaging contractor to print the SLINKOR product information and package
the SLINKOR in sale-ready packages.
We maintain an inventory of products which we believe is sufficient
to meet demand. If we should underestimate sales and fail to timely manufacture additional quantities of our products, we could face delays
in providing our products to our customers which could have a negative effect on our reputation and result in a decline in our product
sales. If we should overestimate sales, we will have invested our capital in products that remain in inventory, which will have a negative
effect on our financial condition and results of operations. No assurances can be given that we will be able to accurately predict sales
and maintain an optimal level of inventory in our system.
Although we have purchased substantially all inventories from one supplier
and have been dependent on this supplier for all inventory purchases since we commenced operations, we believe the raw materials for both
the Reel Guard and the SLINKOR are available for purchase from several different sources in the open market. We also believe there are
several other manufacturing, printing, and packaging services capable of performing the services provided by our current contractors at
competitive prices. Our ability to timely obtain raw materials and finished goods may be affected by events beyond our control, such as
the inability of suppliers to timely deliver materials due to work stoppages or slowdowns, or significant weather and health conditions
(such as COVID-19). Any adverse change in our supply chain and manufacturing, such as our relationship with our third-party contractors,
the financial condition of such contractors, and their ability to provide supplies and services to us on a timely basis could have a material
adverse effect on our business, results of operations, and financial condition.
Marketing / Shipping
We currently market and sell the Reel Guard through our website at
“outdoorspecialtyproducts.com,” where we also provide access to marketing materials, instructional videos, and installation
instructions. We also list the Reel Guard for sale on eBay. To date we have sold the Reel Guard to residents of approximately 25 states
and have made one sale outside the U.S. to a resident of Hungary.
When the redesign of the SLINKOR has been completed, we intend to market
it on our website and to expand our website to include marketing materials and SLINKOR instructional videos created by the Licensor.
We believe our business is affected by seasonality, which historically
has resulted in higher sales volume during the spring and summer months.
We currently only accept PayPal as the method of payment for our products
that are sold on our website and eBay’s payment processing for our products that are sold on eBay. Our products are shipped via
U.S. Mail promptly following confirmation from PayPal that payment for an order has been received. Shipping is included in the product
price and a customer pays no additional shipping charges.
Other Products
We have taken initial steps toward the development of a what we believe
to be a unique fishing rod product that involves the ability to attach different upper fly rod portions of varying lengths and weights
to a single rod butt handle that results in a light weight, multi-purpose fly rod. We have conducted preliminary research regarding the
patentability of the proposed product and believe we may be able to obtain patent protection for the product, although no assurances can
be given that the product will be developed or that patent protection will be obtained. We have halted our efforts regarding the development
of this new product until such time as we have sufficient capital on hand to proceed with its development.
We were formed with the belief that there is an underserved marketplace
in the outdoor sporting goods space which can be exploited from multiple fronts. In addition to the Reel Guard and the SLINKOR, we intend
to investigate opportunities to develop additional products and to market third party products in the outdoor sporting goods space on
our website.
Intellectual Property
We hold a U.S. patent on our Reel Guard. We do not hold patents on
any other products, and we do not currently hold any trademarks. No assurance can be given that our patent will provide sufficient protection
against potential competitors and we may be unable to successfully assert our intellectual property rights, or these rights may be invalidated,
circumvented, or challenged. Any such inability or a successful intellectual property challenge or infringement proceeding against us,
could have a material adverse effect on our business.
Facilities
Our operations are currently conducted from at the residence of our
president. Our facilities are furnished to us at no cost and consist of the shared use of approximately 500 square feet of office space
and assembly/storage space. In connection with the commencement of manufacturing of the SLINKOR, we may investigate the desirability of
leasing a small assembly, storage, and office space from a third party.
Competition
The outdoor specialty products industry is intensely competitive with
respect to price, quality, features, and durability, and it is often difficult to entice customers to try a new product. Many of our competitors
are well-established companies with name brand recognition and almost all our competitors have substantially greater financial and other
resources than do we. Such competitors include many national and regional companies and most of our competitors have been in existence
for a substantially longer period than have we and are better established. As such, there can be no assurance that we will be able to
compete effectively in our chosen market. In addition, a change in the pricing, marketing, or promotional strategies or product mix of
one or more of these competitors could have a material adverse impact on our sales and earnings.
Government Regulation
Our operations are subject to numerous federal, state, and local government
regulations. The failure to comply with such requirements or increase in the cost of compliance could adversely affect our operations.
We are also subject to federal and state environmental regulations, but these have not had a material effect on our operations to date.
Our operations are also subject to federal and state laws governing such matters as wages, working conditions, citizenship requirements,
and overtime.
Employees and Consultants
We do not currently have any employees other than our founder and president.
The loss of our president, would have a material adverse impact on our business and there is no assurance that we could locate a qualified
replacement. We have not entered into an employment agreement with our president and we do not carry “key man” life insurance
on his life.
Financing
Following our incorporation in 2014, we completed the private placement
of 285,714 shares of our common stock to accredited investors in a private placement at a price of $0.35 per share for total proceeds
of $100,011. The proceeds from the private placement together with our limited product sales were sufficient to fund our operations through
our fiscal year ended September 30, 2020. On January 4, 2021, we entered into a revolving promissory note agreement with our president
and principal stockholder that provided for total loans of up to $40,000 at an interest rate 3.5% per annum, which was repayable on or
before December 31, 2021. During December 2021, we amended the revolving promissory note agreement to extend the maturity date to June
30, 2022, and during June 2022, we further amended the agreement to increase the maximum principal indebtedness to $55,200 and extend
the maturity date to December 31, 2022. During December 2021, we entered into a revolving promissory note agreement with another principal
stockholder which provided for loans of up to $7,000 at an interest rate of 3.5% per annum, which was repayable on or before June 30,
2022. During June 2022, we amended this agreement to increase the maximum principal indebtedness to $9,750 and extend the maturity date
to December 31, 2022. We received proceeds under the revolving loan agreements of $30,519 during the year ended September 30, 2022, resulting
in a principal balance of $60,769, with accrued interest of $2,088, at September 30, 2022. During November 2022, we amended the revolving
promissory note agreements to extend the maturity dates to December 31, 2023 and increase the maximum principal amount of the note agreement
with our president and the other principal stockholder to $75,000 and $13,240, respectively.
Item 1A. Risk Factors
Not Applicable. The Company is a “smaller reporting company.”
Item 1B. Unresolved Staff Comments.
Not Applicable. The Company is a “smaller reporting company.”
Item 2. Properties.
Our principal office is located at the residence of our President,
Kirk Blosch, 3842 Quail Hollow Drive, Salt Lake City, UT 84109, and such space is provided to us on a rent-free basis. We believe
our office facilities are sufficient for the foreseeable future, although at the time we commence manufacturing of the SLINKOR we may
investigate the desirability of leasing a small assembly, storage, and office space from a third party.
Item 3. Legal Proceedings.
The Company is not a party to any material legal proceedings, and to
our knowledge, no such legal proceedings have been threatened against us.
Item 4. Mine Safety Disclosures.
Not Applicable.
Part II
Item 5. Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
Market Information
Our common stock is currently quoted on the OTC PINK tier of the OTC
Markets Group under the symbol “ODRS.” However, quotations for the stock during the 2022 and 2021 years were limited and sporadic
and there currently is no established trading market for our common stock.
The following table sets forth, for the periods indicated, the high
and low bid prices per share of common stock as set forth in the OTC Market Report. The below quotations represent inter-dealer prices
without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.
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Price Range | |
| Period | |
High | | |
Low | |
| Year Ending September 30, 2022 | |
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| First Quarter | |
$ | 1.79 | | |
$ | 1.79 | |
| Second Quarter | |
$ | 1.79 | | |
$ | 1.79 | |
| Third Quarter | |
$ | 1.79 | | |
$ | 1.79 | |
| Fourth Quarter | |
$ | 1.79 | | |
$ | 1.75 | |
| Year Ended September 30, 2021: | |
| | | |
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| First Quarter | |
$ | 1.75 | | |
$ | 1.75 | |
| Second Quarter | |
$ | 1.75 | | |
$ | 1.75 | |
| Third Quarter | |
$ | 1.75 | | |
$ | 1.75 | |
| Fourth Quarter | |
$ | 1.75 | | |
$ | 1.75 | |
As of December 12, 2022, our shares of common stock were held by 68
stockholders of record as reported by our transfer agent.
Dividends
Holders of our common stock are entitled to dividends when, as, and
if declared by our Board of Directors, out of funds legally available, therefore. We have never declared cash dividends on our common
stock and our Board of Directors does not anticipate paying cash dividends in the foreseeable future as it intends to retain any future
earnings to finance the growth of our business. There are no restrictions in our articles of incorporation or bylaws that restrict us
from declaring dividends.
Securities Authorized for Issuance Under Equity Compensation Plans
As of the end of the latest fiscal year ended September 30, 2022, the
only compensation plans (including individual compensation arrangements) under which our equity securities were authorized for issuance
was our 2021 Stock Incentive Plan, adopted on February 8, 2021, which authorizes the issuance of up to 1,000,000 shares of our common
stock in awards granted as incentive or non-statutory stock options, restricted stock units, stock appreciation rights, or restricted
stock grants. The 10-year plan is administered by our Board of Directors. No awards have been made under the plan to date.
Special Sales Practice Requirements with Regard to “Penny
Stocks”
In order to protect investors from patterns of fraud and abuse that
have occurred in the market for low priced securities commonly referred to as “penny stocks,” the SEC has adopted regulations
that generally define a “penny stock” to be any equity security having a market price (as defined) less than $5.00 per share,
or an exercise price of less than $5.00 per share, subject to certain exceptions. The price of our stock is currently below $5.00 per
share and our stock is subject to the “penny stock” regulations. As a result, broker-dealers selling our common stock are
subject to additional sales practices when they sell our stock to persons other than established clients and “accredited investors.”
For transactions covered by these rules, before the transaction is executed, the broker-dealer must make a special customer suitability
determination, receive the purchaser’s written consent to the transaction and deliver a risk disclosure document relating to the
penny stock market. The broker-dealer must also disclose the commission payable to both the broker-dealer and the registered representative
taking the order, current quotations for the securities and, if applicable, the fact that the broker-dealer is the sole market maker and
the broker-dealer’s presumed control over the market. Monthly statements must be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in penny stocks. Such “penny stock” rules may restrict
trading in our common stock and may deter broker-dealers from effecting transactions in our common stock.
Transfer Agent
The transfer agent of our common stock has been Action Stock Transfer
Corporation, 2469 Fort Union Blvd #214, Cottonwood Heights, UT 84121; telephone (801) 274-1088. We were recently advised that the accounts
of Action Stock Transfer Corporation have been transitioned to Securities Transfer Corporation, 2901 N. Dallas Parkway, Suite 380, Plano,
TX 75093; telephone (469) 633-0101.
Recent Sales of Unregistered Securities
During the three months ended September 30, 2022, we did not sell any
unregistered securities. No sales of unregistered securities were made by us within the past two years.
Issuer Purchases of Equity Securities
We have not adopted a stock repurchase plan and we did not purchase
any shares of our equity securities during our 2022 fiscal year.
Item 6. Reserved.
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
You should read the following discussion in conjunction with our
financial statements, which are included elsewhere in this report.
The following discussion contains forward-looking statements. Forward-looking
statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not
relate strictly to historical or current facts. They use words such as anticipate, estimate, expect, project,
intend, plan, believe, and other words and terms of similar meaning in connection with any discussion of future operating
or financial performance. From time to time, we also may provide forward-looking statements in other materials we release to the public.
Overview
We are and have since our inception in 2014 been engaged in the business
of developing, selling, and marketing products in niche markets within the specialty outdoor products marketplace. We introduced our proprietary
“Reel Guard” product in 2014 and continue to offer it for sale. We have postponed the production of our SLINKOR product pending
completion of a design change in the composition of the weighting component from lead to another material and the use of molded product
components.
The COVID-19 pandemic has had, and continues to have, a significant
impact around the world. The COVID-19 pandemic has resulted in restrictions on travel and business operations, temporary closures of businesses,
quarantine and shelter-in-place orders, and greater uncertainty in global financial markets. As a result of COVID-19 mobility restrictions
globally, there have been changes in consumer behavior. The extent to which the COVID-19 pandemic will impact our business and financial
condition in the future will depend on a number of evolving factors that we cannot predict, including the duration and scope of the pandemic;
any resurgence of the pandemic; the availability and distribution of effective treatments and vaccines; governmental, business and individual
actions that may be taken in response to the pandemic; the impact of the pandemic on national and global economic activity and financial
markets, including the possibility of a national or global recession; and the ability of consumers to pay for products. We expect these
changes in behavior to continue to evolve as the pandemic ebbs and flows. The full impact of the COVID-19 pandemic on the Company remains
inherently uncertain at the time of this report.
Our financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We did not
generate sufficient revenue to generate net income, we have negative working capital, and we have a limited operating history. These factors,
among others, may indicate that there is substantial doubt that we will be unable to continue as a going concern for a reasonable period
of time. Our financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities
that might be necessary should we be unable to continue as a going concern. Our continuation as a going concern is dependent
upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to attain profitability. We
intend to seek additional funding, if and to the extent required, through debt or equity offerings and additional stockholder loans. We
also intend to increase our sales through the addition of our SLINKOR product upon the completion of its redesign. There is no assurance
that we will be successful in raising additional funds or that the SLINKOR product will result in an increase in sales.
Results of Operations
Revenues
From our inception in 2014 through the present, our revenues have resulted
solely from sales of our proprietary Reel Guard product and our costs of sales have also related solely to that product. Our Reel Guard
product is offered for sale on our website and on eBay and sales vary from quarter to quarter based on the number of customers that become
aware of the product and decide to make a purchase. Total sales for the year ended September 30, 2022, were $302, compared to $204 for
the year ended September 30, 2021, an increase of $98, or approximately 48%.
Cost of Sales
Cost of sales for 2022 was $46, compared to $18 for 2021, an increase
of $28, or approximately 156%. The increase in cost of sales in 2022 is partially attributable to the provision of a limited number of
sample/promotional Reel Guard products to fly fishing shops and other potential retail outlets for the product without charge. Such sample/promotional
sales reduce inventory and increase the cost of sales but do not generate revenues. Cost of sales as a percentage of sales was approximately
15.2% for 2022 and 8.8% for 2021, with the increase being primarily attributable to the sample/promotional sales described above.
General and Administrative Expenses
General and administrative expenses consist primarily of legal, accounting,
and Edgar filing expenses. General and administrative expenses were $35,743 for 2022, compared to $39,678 for 2021, a decrease of $3,935
or approximately 9.9%. The decrease is partially attributable to higher legal and accounting expenses in 2021 in connection with our change
of domicile merger and the filing of our Form 10 registration statement.
Depreciation and Amortization Expense
Depreciation and amortization expenses currently are not material to
our business. Depreciation expense was $0 for 2022 and $631 for 2021. Amortization expense was $409 for 2022 and $408 for 2021, resulting
from the amortization of our patent over seventeen years, which is its estimated legal life.
Research and Development Expenses
Research and development expenses are not currently material to our
business. We did not incur research and development expenses in either 2022 or 2021.
Liquidity and Capital Resources
As of September 30, 2022, we had total current assets of $6,337, including
cash of $1,241, and current liabilities of $62,857, resulting in a working capital deficit of $56,520. Our current liabilities include
an outstanding balance of $60,769 under the short-term revolving loan agreements for which the due dates have been extended to December
31, 2022. As of September 30, 2022, we had an accumulated stockholders’ deficit of $156,446. We have financed our operations from
sales of our Reel Guard product, proceeds from our 2014 private placement, and proceeds from the short-term revolving loan agreements.
For 2022, net cash used by operating activities was $35,446, as a result
of a net loss of $37,166, reduced by depreciation and amortization of $409, a decrease in inventory of $46, and an increase in accrued
interest of $1,679, and increased by a decrease in accounts payable of $414. By comparison, for 2021 net cash used by operating activities
was $38,062, as a result of a net loss of $39,901, reduced by depreciation and amortization of $1,039, a decrease in inventory of $18,
an increase in accounts payable of $414, and an increase in accrued interest of 409, and increased by an increase in prepaid expense of
$41.
In 2022 and 2021, we had no cash flows used in or provided by investing
activities.
In 2022, we had net cash provided by financing activities of $30,519
consisting of the proceeds from the revolving loan agreements, and in 2021 we had net cash provided by financing activities of $29,750,
consisting of $30,250 in proceeds from the revolving loan agreements, decreased by $500 for our repurchase of shares of common stock pursuant
to a stockholder’s exercise of dissenters’ rights in connection with our change of domicile merger.
Following our incorporation in 2014, we completed the private placement
of 285,714 shares of our common stock to accredited investors in a private placement at a price of $0.35 per share for total proceeds
of $100,011. The proceeds from the private placement together with our limited product sales were sufficient to fund our operations through
our fiscal year ended September 30, 2020. On January 4, 2021, we entered into a revolving promissory note agreement with our president
and principal stockholder that provided for total loans of up to $40,000 at an interest rate 3.5% per annum, which was repayable on or
before December 31, 2021. During December 2021, we amended the revolving promissory note agreement to extend the maturity date to June
30, 2022, and during June 2022, we further amended the agreement to increase the maximum principal indebtedness to $55,200 and extend
the maturity date to December 31, 2022. During December 2021, we entered into a revolving promissory note agreement with another principal
stockholder which provided for loans of up to $7,000 at an interest rate of 3.5% per annum, which was repayable on or before June 30,
2022. During June 2022, we amended this agreement to increase the maximum principal indebtedness to $9,750 and extend the maturity date
to December 31, 2022. We received proceeds under the revolving loan agreements of $30,519 during the year ended September 30, 2022, resulting
in a principal balance of $60,769, with accrued interest of $2,088, at September 30, 2022. During November 2022, we amended the revolving
promissory note agreements to extend the maturity dates to December 31, 2023 and increase the maximum principal amount of the note agreement
with our president and the other principal stockholder to $75,000 and $13,240, respectively.
We believe we have adequate funds to meet our obligations for the next
twelve months from our current cash, the revolving note agreements, and projected cash flows from operations. Cash flow from operations
has not historically been sufficient to sustain our operations without the above additional sources of capital. Our future working capital
requirements will depend on many factors, including the expansion of our product lines to include the new SLINKOR product. To the extent
our cash, cash equivalents, and cash flows from operating activities and the revolving note agreements are insufficient to fund our future
activities, we may need to raise additional funds through private equity or debt financing. We also may need to raise additional funds
in the event we determine in the future to effect one or more acquisitions of businesses, technologies, and products. If additional funding
is required, we may not be able to affect an equity or debt financing on terms acceptable to us or at all.
In addition, COVID-19 and related measures to contain its impact have
caused material disruptions in both national and global financial markets and economies. The future impact of COVID-19, these containment
measures, and recent increases in the rate of inflation cannot be predicted with certainty and may increase our borrowing costs and other
costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity, and no assurance
can be given that we will have access to external financing at times and on terms we consider acceptable, or at all, or that we will not
experience other liquidity issues going forward.
Requirements
The Company currently has no lease obligations or requirements and
has not entered into any agreements that require a commitment of cash.
Off-Balance Sheet Arrangements
As of September 30, 2022 and 2021, we did not have any off-balance
sheet financing arrangements.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the
amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if
any. We consider our critical accounting policies to be those that require the more significant judgments and estimates in the preparation
of financial statements, including the following:
Accounting Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires 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 could differ from those estimates.
Inventories
Inventories, consisting primarily of injection molded Reel Guards and
Adhesive Strips, are stated at the lower of cost or net realizable value, with cost determined using primarily the first-in-first-out
(FIFO) method. The Company purchased substantially all inventories from one supplier and has been dependent on this supplier for
all inventory purchases since we commenced operations. The Company has $2,042 and $2,088 in finished goods and $2,596 and $2,596 in raw
materials at September 30, 2022 and 2021, respectively.
Patents
Patents consist of the cost of obtaining the patent for the Reel Guard.
Our patents are amortized over their legal life (typically 17 years) and analyzed periodically for impairment in accordance with ASC 350,
Intangibles – Goodwill and Other.
Revenue Recognition
When the Company sells a reel protector, it recognizes revenue in accordance
with ASC 606, Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue upon the transfer of promised goods
to customers in amounts that reflect the consideration to which the Company expects to be entitled. The Company considers revenue earned
when all the following criteria are met: (i) the contract with the customer has been identified, (ii) the performance obligations have
been identified, (iii) the transaction price has been determined, (iv) the transaction price has been allocated to the performance obligations,
and (v) the performance obligations have been satisfied. The Company earned $302 and $204 in revenue during the years ended September
30, 2022 and 2021, respectively.
Recently Enacted Pronouncements
The Company has reviewed all recently issued, but not yet adopted,
accounting standards in order to determine their effects, if any, on its results of operation, financial position or cash flows.
Based on that review, the Company believes that none of these pronouncements will have a significant effect on its current or future earnings
or operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable. The Company is a “smaller reporting company.”
Item 8. Financial Statements and Supplementary Data
The following financial statements are being filed with this report
and are located immediately following the signature page.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
Under the supervision and with the participation
of our management, including our President and Treasurer who serves as our principal executive and principal financial officer, we evaluated
the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934 (“the Exchange Act”) as of September 30, 2022, the end of the period covered by this report.
Based upon that evaluation, our President and Treasurer, concluded that our disclosure controls and procedures as of September 30, 2022
were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to
our management, including our President and Treasurer, as appropriate to allow timely decisions regarding disclosure. A controls system
cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within a company have been detected.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over
financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the preparation
and fair presentation of published financial statements. 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. 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.
Our management, including our principal executive officer / principal
financial officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework
in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on its evaluation under that framework, our management concluded that our internal control over financial reporting was effective
as of September 30, 2022.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting
during the year ended September 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
Item 9B. Other Information
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent
Inspections
Not Applicable.
Part III
Item 10. Directors, Executive Officers and Corporate Governance
The following table sets forth the names and ages of the member of
our Board of Director and our executive officers and the positions held by each.
| Name |
|
Age |
|
Title |
| Kirk Blosch |
|
68 |
|
President, CEO, and Chairman |
Kirk Blosch is the founder of the Company and has been its sole officer
and director since its inception in 2014. Since 2008 he has been the owner and principal broker of B&B Real Estate Group LLC, a Salt
Lake City, Utah, based real estate firm providing sales, consulting, and development services. Mr. Blosch has over 36 years of experience
in evaluating business opportunities, creating business or development plans, funding various projects, and overseeing the construction
and development of real estate projects. He received his Bachelor of Science degree in organizational communication from the University
of Utah in 1976.
Family Relationships
There are no family relationships among our directors, executive officers
or persons nominated or chosen to become directors or executive officers.
Board of Directors
Our board of directors consists of one person, Kirk Blosch. Such person
is not “independent” within the meaning of Rule 5605(a)(2) of the NASDAQ Marketplace because he is an officer of the Company.
Our board of directors has not appointed any standing committees, there
is no separately designated audit committee and the Company’s single, non-independent board member performs the functions that would
customarily be performed by an audit committee. The board of directors does not have an independent “financial expert” because
it does not believe the scope of the Company’s activities to date has justified the expenses involved in obtaining such a financial
expert. In addition, our securities are not listed on a national exchange and we are not subject to the special corporate governance requirements
of any such exchange.
The Company does not have a compensation committee and the Company’s
single, non-independent board member participates in the consideration of executive officer and director compensation. To date, the Company
has not paid any executive or director compensation and has not engaged independent compensation consultants to determine or recommend
the amount or form of executive or director compensation.
The Company does not have a standing nominating committee and the Company’s
single, non-independent board member performs the functions that would customarily be performed by a nominating committee. The board of
directors does not believe a separate nominating committee is required at this time due to the limited size of the Company’s business
operations and the limited resources of the Company that do not permit it to compensate its directors. The board of directors has not
established policies with regard to the consideration of director candidates recommended by security holders or the minimum qualifications
of such candidates.
Code of Ethics
We have not adopted a Code of Ethics that applies to our executive
officers, including our principal executive, financial and accounting officers. We do not believe the adoption of a code of ethics at
this time would provide any meaningful additional protection to the Company because we have only one officer and our business operations
are not extensive or complex.
Director Meetings and Stockholder Meeting Attendance
The Board of Directors held no formal meetings during 2022 and the
sole director took action by written consent in lieu of meetings. Our policy is to encourage, but not require, members of the Board of
Directors to attend annual stockholder meetings. We did not hold an annual stockholder meeting during the 2022 year.
Communications with Directors
Shareholders may communicate with the Board of Directors or any individual
director by sending written communications addressed to the Board of Directors, or any individual director, to: Outdoor Specialty Products,
Inc., Attention: Corporate Secretary, 3842 Quail Hollow Drive, Salt Lake City, Utah 84109. All communications will be compiled by the
corporate secretary and forwarded to the Board of Directors or any individual director, as appropriate. In order to facilitate a response
to any such communication, the Company’s Board of Directors suggests, but does not require, that any such submission include the
name and contact information of the shareholder submitting the communication.
Item 11. Executive Compensation
Kirk Blosch, our President, Secretary and Treasurer, is our only employee.
We did not pay any executive compensation during the fiscal years ended September 30, 2022 and 2021. We have not entered into any employment
agreements with our officers and directors. We reimburse our officers for reasonable costs and expenses incurred by them in connection
with our business.
We have not granted our officers or directors any stock options, stock
awards or other forms of equity compensation.
We do not have any retirement, pension or profit-sharing
plans covering our officers or directors, and we are not contemplating implementing any such plans at this time.
Director Compensation
We did not pay our sole director any compensation for serving in his
capacity as a director during the fiscal years ended September 30, 2022 and 2021.
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
The following table sets forth information regarding the beneficial
ownership of our common stock as of December 12, 2022. The information in this table provides the ownership information for each person
known by us to be the beneficial owner of more than 5% of our common stock, each of our directors, each of our executive officers, and
our executive officers and directors as a group.
Beneficial ownership has been determined in accordance with the rules
and regulations of the SEC and includes voting or investment power with respect to the shares. Unless otherwise indicated, the persons
named in the table below have sole voting and investment power with respect to the number of shares indicated as beneficially owned by
them.
| Name and Address of Beneficial Owner | |
Common
Stock
Beneficially
Owned (1) | | |
Percentage of
Common
Stock
Owned (1) | |
| Principal Stockholders | |
| | |
| |
| Ed Bailey | |
| 760,000 | | |
| 14.4 | % |
| 4685 S. Highland Dr. Salt Lake City, UT 84106 | |
| | | |
| | |
| | |
| | | |
| | |
| Officers and Directors | |
| | | |
| | |
| Kirk Blosch, President and Director (2) | |
| 4,250,000 | | |
| 80.4 | % |
3842 Quail Hollow Drive
Salt Lake City, UT 84109 | |
| | | |
| | |
| | |
| | | |
| | |
| Director and Officer (1 person) | |
| 4,250,000 | | |
| 80.4 | % |
| (1) | Applicable
percentage ownership is based on 5,284,318 shares of common stock outstanding as of December 12, 2022. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect
to securities. |
| (2) | Kirk
Blosch is the only officer, employee, and director of the Company. He has full voting and investment control of the shares beneficially
owned by him. |
Item 13. Certain Relationships and Related Transactions and Director
Independence
On January 4, 2021, we entered into a revolving promissory note agreement
with our president and principal stockholder that provided for total loans of up to $40,000 at an interest rate 3.5% per annum, which
was repayable on or before December 31, 2021. During December 2021, we amended the revolving promissory note agreement to extend the maturity
date to June 30, 2022, and during June 2022, we further amended the agreement to increase the maximum principal indebtedness to $55,200
and extend the maturity date to December 31, 2022. During December 2021, we entered into a revolving promissory note agreement with Ed
Bailey, another principal beneficial owner, which provided for loans of up to $7,000 at an interest rate of 3.5% per annum, which was
repayable on or before June 30, 2022. During June 2022, we amended this agreement to increase the maximum principal indebtedness to $9,750
and extend the maturity date to December 31, 2022. We received proceeds under both revolving loan agreements of $30,519 during the year
ended September 30, 2022, resulting in a principal balance of $60,769, with accrued interest of $2,088, at September 30, 2022.
During November 2022, we amended the revolving promissory note agreements
to extend the maturity dates to December 31, 2023 and increase the maximum principal amount of the note agreement with our president and
the other principal stockholder to $75,000 and $13,240, respectively.
Director Independence
Our board of directors consists of one person, Kirk Blosch. Such person
is not “independent” within the meaning of Rule 5605(a)(2) of the NASDAQ Marketplace because he is an officer of the Company.
Indemnification
Nevada law expressly authorizes a Nevada corporation to indemnify its
directors, officers, employees, and agents against liabilities arising out of such persons’ conduct as directors, officers, employees,
or agents if they acted in good faith, in a manner they reasonably believed to be in or not opposed to the best interests of the company,
and, in the case of criminal proceedings, if they had no reasonable cause to believe their conduct was unlawful. Generally, indemnification
for such persons is mandatory if such person was successful, on the merits or otherwise, in the defense of any such proceeding, or in
the defense of any claim, issue, or matter in the proceeding. In addition, as provided in the articles of incorporation, bylaws, or an
agreement, the corporation may pay for or reimburse the reasonable expenses incurred by such a person who is a party to a proceeding in
advance of final disposition if such person furnishes to the corporation an undertaking to repay such expenses if it is ultimately determined
that he did not meet the requirements. In order to provide indemnification, unless ordered by a court, the corporation must determine
that the person meets the requirements for indemnification. Such determination must be made by a majority of disinterested directors;
by independent legal counsel; or by a majority of the shareholders.
Article X of our Articles of Incorporation provides that we must pay
expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding, involving alleged acts or omissions
of such officer or director in his or her capacity as an officer or director as they are incurred and in advance of the final disposition
of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it
is ultimately determined by a court of competent jurisdiction that he or she is not entitled to be indemnified by us.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the “Act”) may be permitted to directors, officers and controlling persons of our company pursuant to the foregoing
provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
Item 14. Principal Accountant Fees and Services
Pinnacle Accountancy Group of Utah (a dba of the registered firm Heaton
& Company, PLLC) served as the Company’s independent registered public accounting firm for the fiscal years ended September
30, 2022 and 2021.
During the fiscal years ended September 30, 2022 and 2021, fees for
services provided by Pinnacle Accountancy Group of Utah. were as follows:
| | |
Year Ended | |
| | |
September 30, | |
| | |
2022 | | |
2021 | |
| Audit Fees | |
$ | 7,500 | | |
$ | 8,900 | |
| Audit-Related Fees | |
| 400 | | |
| 400 | |
| Tax Fees | |
| - | | |
| - | |
| All Other Fees | |
| - | | |
| - | |
| | |
| | | |
| | |
| Total | |
$ | 7,900 | | |
$ | 9,300 | |
“Audit Fees” consisted of fees billed for services rendered
for the audit of the Company’s annual financial statements, review of financial statements included in the Company’s quarterly
reports on Form 10-Q, and other services normally provided in connection with statutory and regulatory filings. “Audit-Related
Fees” consisted of fees billed for due diligence procedures in connection with acquisitions and divestitures and consultation regarding
financial accounting and reporting matters. “Tax Fees” consisted of fees billed for tax payment planning and tax preparation
services. “All Other Fees” consisted of fees billed for services in connection with legal matters and technical accounting
research.
The Company’s Board of Directors functions as its audit committee.
It is the policy of the Company for all work performed by our principal accountant to be approved in advance by the Board of Directors.
All of the services described above in this Item 14 were approved in advance by our Board of Directors.
Item 15. Exhibit and Financial Statement Schedules
| |
(a) |
List of all financial statements filed as part of this report. |
| |
(b) |
The following documents are included as exhibits to this report. |
(a) Exhibits
| 101.INS |
|
Inline XBRL Instance Document. |
| 101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| (1) |
Incorporated by reference to the Company’s Registration Statement on Form 10-12G filed June 24, 2021. |
| (2) |
Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ending September 30, 2021, filed on December 29, 2021. |
| (3) |
Incorporated by reference to the Company’s Quarterly report on Form 10-Q for the quarter ending June 30, 2022, filed on July 26, 2022. |
Item 16. Form 10-K Summary
None.
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.
| |
Outdoor Specialty Products, Inc. |
| |
|
| Dated: December 21, 2022 |
By |
/s/ Kirk Blosch |
| |
|
Kirk Blosch |
| |
|
President, Secretary and Treasurer |
| |
|
(Principal Executive and Accounting Officer) |
Pursuant to the requirements 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 dates indicated.
| Dated: December 21, 2022 |
By |
/s/ Kirk Blosch |
| |
|
Kirk Blosch |
| |
|
President, Secretary, Treasurer and Director |
| |
|
(Principal Executive and Accounting Officer) |
Index to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
To the Board of Directors and Stockholders
Outdoor Specialty Products, Inc.
Salt Lake City, Utah
Opinion on the Financial Statements
We have audited the accompanying balance sheets
of Outdoor Specialty Products, Inc. (the Company) as of September 30, 2022 and 2021, and the related statements of operations, changes
in 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 September 30, 2022 and 2021, 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 of America.
Consideration of the Company’s Ability
to Continue as a Going Concern
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses since inception, has a
working capital deficit, and has not achieved profitable operations, which raise substantial doubt about its ability to continue as a
going concern. Management’s plans in regard to these matters are described in Note 7. 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
audits. 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 audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits 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 audits, 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 audits 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 audits 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 audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter
communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to
be communicated to the audit committee and that: (1) relates 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 matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Going Concern – Disclosure
The financial statements of the Company are prepared
on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will
be able to realize its assets and discharge its liabilities in the normal course of operations. As noted in “Going Concern Considerations”
above, the Company has a history of recurring net losses, a significant accumulated deficit and currently has net working capital deficit.
The Company has contractual obligations such as commitments for repayments of accounts payable, accrued interest and line of credit –
related party (collectively “obligations”). Currently management’s forecasts and related assumptions illustrate their
intent to meet the obligations through management of expenditures, obtaining additional financing through loans from related and unrelated
parties, and private placements of capital stock for additional funding to meet its operating needs. Should there be constraints on the
ability to access financing through stock issuances, the Company will continue to manage cash outflows and meet the obligations through
related and unrelated party loans.
We identified management’s assessment of
the Company’s ability to continue as a going concern as a critical audit matter. Management made judgments regarding the Company’s
intentions and ability to provide the necessary cash flows to fund the Company’s obligations as they become due. Specifically, the
judgments with the highest degree of impact and subjectivity in determining the Company’s ability to manage expenditures, access
funding from the capital market, and obtain loans from related and unrelated parties. Auditing the judgments made by management required
a high degree of auditor judgment and an increased extent of audit effort.
Addressing the matter involved performing procedures
and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included the
following, among others, evaluating the Company’s ability to: (i) access funding from the capital market; (ii) manage expenditures,
and (iii) obtain loans from related and unrelated parties.
/s/ Pinnacle Accountancy Group of Utah
We have served as the Company’s auditor since 2018.
Pinnacle Accountancy Group of Utah
(a dba of Heaton & Company, PLLC)
Farmington, Utah
December 19, 2022
OUTDOOR SPECIALTY PRODUCTS,
INC.
Balance Sheets
| |
September 30,
2022 | | |
September 30,
2021 | |
| Assets: | |
| | |
| |
| Current Assets: | |
| | |
| |
| Cash | |
$ | 1,241 | | |
$ | 6,168 | |
| Prepaid expense | |
| 458 | | |
| 458 | |
| Invntory | |
| 4,638 | | |
| 4,684 | |
| Total current assets | |
| 6,337 | | |
| 11,310 | |
| | |
| | | |
| | |
| Property, Plant and Equipment, net | |
| - | | |
| - | |
| | |
| | | |
| | |
| Other Assets: | |
| | | |
| | |
| Patents, net | |
| 4,591 | | |
| 5,000 | |
| | |
| | | |
| | |
| Total Assets | |
$ | 10,928 | | |
$ | 16,310 | |
| | |
| | | |
| | |
| Liabilities and Stockholders’ Deficit: | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | - | | |
$ | 414 | |
| Accrued interest | |
| 2,088 | | |
| 409 | |
| Line of credit – related party | |
| 60,769 | | |
| 30,250 | |
| Total Liabilities | |
| 62,857 | | |
| 31,073 | |
| | |
| | | |
| | |
| Stockholders’ Deficit: | |
| | | |
| | |
| Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding | |
| - | | |
| - | |
| Common stock, $0.001 par value, 190,000,000 shares authorized, 5,284,318 shares issued and outstanding | |
| 5,285 | | |
| 5,285 | |
| Additional paid-in capital | |
| 99,232 | | |
| 99,232 | |
| | |
| | | |
| | |
| Accumulated deficit | |
| (156,446 | ) | |
| (119,280 | ) |
| Total Stockholders’ Deficit | |
| (51,929 | ) | |
| (14,763 | ) |
| | |
| | | |
| | |
| Total Liabilities and Stockholders’ Deficit | |
$ | 10,928 | | |
$ | 16,310 | |
The accompanying notes are an integral part of
these audited financial statements.
OUTDOOR SPECIALTY PRODUCTS,
INC.
Statements of Operations
| | |
For the Year Ended
September 30, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Revenue | |
$ | 302 | | |
$ | 204 | |
| Cost of sales | |
| (46 | ) | |
| (18 | ) |
| Gross Profit | |
| 256 | | |
| 186 | |
| | |
| | | |
| | |
| Operating Expenses: | |
| | | |
| | |
| General and administrative | |
| 35,743 | | |
| 39,678 | |
| Total Operating Expenses | |
| 35,743 | | |
| 39,678 | |
| Loss from Operations | |
| (35,487 | ) | |
| (39,492 | ) |
| | |
| | | |
| | |
| Other Expense: | |
| | | |
| | |
| Interest expense | |
| 1,679 | | |
| 409 | |
| Total other expense | |
| 1,679 | | |
| 409 | |
| Net Loss | |
$ | (37,166 | ) | |
$ | (39,901 | ) |
| Net loss per share of common stock - basic and diluted | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
| Weighted average number of common shares outstanding - basic and diluted | |
| 5,284,318 | | |
| 5,284,318 | |
The accompanying notes are an integral part of
these audited financial statements.
OUTDOOR SPECIALTY PRODUCTS,
INC.
Statements of Changes in Stockholders’
Deficit
Years Ended September 30, 2022 and 2021
| |
|
Common Stock |
|
|
Additional
Paid-in |
|
|
Accumulated |
|
|
Total
Stock-
holders’ |
|
| |
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Deficit |
|
| Balance, September 30, 2020 |
|
|
5,285,747 |
|
|
$ |
5,286 |
|
|
$ |
99,731 |
|
|
$ |
(79,379 |
) |
|
$ |
25,638 |
|
| Dissenter shares repurchased and cancelled |
|
|
(1,429 |
) |
|
|
(1 |
) |
|
|
(499 |
) |
|
|
- |
|
|
|
(500 |
) |
| Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(39,901 |
) |
|
|
(39,901 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance September 30, 2021 |
|
|
5,284,318 |
|
|
$ |
5,285 |
|
|
$ |
99,232 |
|
|
$ |
(119,280 |
) |
|
$ |
(14,763 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(37,166 |
) |
|
|
(37,166 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, September 30, 2022 |
|
|
5,284,318 |
|
|
$ |
5,285 |
|
|
$ |
99,232 |
|
|
$ |
(156,446 |
) |
|
$ |
(51,929 |
) |
The accompanying notes are an integral part of
these audited financial statements.
OUTDOOR
SPECIALTY PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
| | |
For the Year Ended
September 30, | |
| | |
2022 | | |
2021 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |
| | |
| |
| Net Loss | |
$ | (37,166 | ) | |
$ | (39,901 | ) |
| Adjustments to Reconcile Net Loss | |
| | | |
| | |
| To Net Cash Used by Operating Activities | |
| | | |
| | |
| Depreciation and Amortization | |
| 409 | | |
| 1,039 | |
| Changes in Operating Assets and Liabilities: | |
| | | |
| | |
| Increase in prepaid expense | |
| - | | |
| (41 | ) |
| Decrease in inventory | |
| 46 | | |
| 18 | |
| Increase (decrease) in accounts payable | |
| (414 | ) | |
| 414 | |
| Increase in accrued interest | |
| 1,679 | | |
| 409 | |
| Net Cash Used by Operating Activities | |
| (35,446 | ) | |
| (38,062 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
| Net Cash Used by Investing Activities | |
| - | | |
| - | |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
| Proceeds from line of credit - related party | |
| 30,519 | | |
| 30,250 | |
| Repurchase of common shares | |
| - | | |
| (500 | ) |
| Net Cash Provided by Financing Activities | |
| 30,519 | | |
| 29,750 | |
| | |
| | | |
| | |
| Net Decrease in Cash | |
| (4,927 | ) | |
| (8,312 | ) |
| Cash at Beginning of Period | |
| 6,168 | | |
| 14,480 | |
| Cash at End of Period | |
$ | 1,241 | | |
$ | 6,168 | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURES: | |
| | | |
| | |
| Cash Paid For: | |
| | | |
| | |
| Interest | |
$ | - | | |
$ | - | |
| Income taxes | |
$ | - | | |
$ | - | |
The accompanying notes are an integral part of
these audited financial statements.
OUTDOOR SPECIALTY PRODUCTS,
INC.
Notes to Financial Statements
September 30, 2022 and 2021
Note 1 – Organization and Summary of Significant
Accounting Policies
Organization – Outdoor Specialty
Products, Inc. (the “Company”) was incorporated in the State of Utah on January 31, 2014 and changed its domicile to the state
of Nevada on February 24, 2021. The Company is in the business of developing and selling outdoor products with its first product focused
on a reel protector for fishing reels. The Company also will be selling third party products through its website. The Company has elected
a September 30 fiscal year end.
Accounting Estimates – The preparation
of financial statements in conformity with generally accepted accounting principles in the United States of America requires 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 could differ from those estimates.
Cash and Cash Equivalents – For the
purpose of the financial statements, the Company considers all highly liquid instruments purchased with original maturities of three months
or less to be cash equivalents.
Inventories – Inventories, consisting
primarily of injection molded Reel Guards and Adhesive Strips, are stated at the lower of cost or net realizable value, with cost determined
using primarily the first-in-first-out (FIFO) method. The Company purchased substantially all inventories from one supplier and
has been dependent on this supplier for all inventory purchases since we commenced operations. The Company has $2,042 and $2,088 in finished
goods and $2,596 and $2,596 in raw materials at September 30, 2022 and 2021, respectively.
Patents – Patents consist of the
cost of obtaining a patent for the Company’s reel protector. Our patents are amortized over their legal life (typically 17 years)
and analyzed periodically for impairment in accordance with ASC 350, Intangibles – Goodwill and Other.
Revenue Recognition – When the Company
sells a reel protector, it recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, the Company
recognizes revenue upon the transfer of promised goods to customers in amounts that reflect the consideration to which the Company expects
to be entitled. The Company considers revenue earned when all the following criteria are met: (i) the contract with the customer has been
identified, (ii) the performance obligations have been identified, (iii) the transaction price has been determined, (iv) the transaction
price has been allocated to the performance obligations, and (v) the performance obligations have been satisfied.
The Company earned $302 and $204 in revenue during
the years ended September 30, 2022 and 2021, respectively.
OUTDOOR SPECIALTY PRODUCTS, INC.
Notes to Financial Statements
September 30, 2022 and 2021
Note 1 – Organization and Summary of Significant
Accounting Policies (continued)
Recently Enacted Pronouncements –
The Company has reviewed all recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on
its results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements
will have a significant effect on its current or future earnings or operations.
Basic and Diluted Loss Per Share – Basic
loss per share is computed by dividing net loss attributable to common shares by the weighted average number of common shares outstanding
during the period. Diluted loss per share is computed by dividing net income attributable to common shares for the period by the weighted
average number of common and potential common shares outstanding during the period. Potential common shares are included in the calculation
of diluted net income per share, when they are present in the financial statements, to the extent such shares are dilutive. During the
years ended September 30, 2022 and 2021, the Company did not have any stock options, warrants, or other convertible or potentially-dilutive
instruments issued and outstanding.
NOTE 2 – Income Tax
The Company follows ASC 740-10, which clarifies
the accounting for uncertainty in income taxes recognized in a company’s financial statements. This standard requires a company
to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits
of the position. If the more-likely-than- not threshold is met, a company must measure the tax position to determine the amount to recognize
in the financial statements.
Deferred taxes are provided on a liability method
whereby deferred tax assets are recognized for deductible temporary differences and operating loss, and tax credit carry-forwards and
deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company’s corporate
tax rate is 21%.
OUTDOOR SPECIALTY PRODUCTS, INC.
Notes to Financial Statements
September 30, 2022 and 2021
NOTE 2 – Income Tax (continued)
Deferred tax asset and valuation allowance are
as follows at September 30:
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Approximate net operating loss carryforward | |
$ | 38,800 | | |
$ | 31,000 | |
| Valuation allowance | |
| (38,800 | ) | |
| (31,000 | ) |
| | |
| | | |
| | |
| Deferred tax asset | |
$ | - | | |
$ | - | |
The components of income tax expense (benefit) are as follows:
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Current federal tax (21%) | |
$ | (7,800 | ) | |
$ | (8,400 | ) |
| Current state tax (0% and 5%, respectively) | |
| - | | |
| (2,000 | ) |
| Change in valuation allowance | |
| 7,800 | | |
| 10,400 | |
| | |
$ | - | | |
$ | - | |
At September 30, 2022, the Company had net operating
loss carryforwards of approximately $156,800 that may be offset against future taxable income as long as the “continuity of ownership”
test is met. No tax benefit has been reported in the September 30, 2022 financial statements since the potential tax benefit
is offset by a valuation allowance of the same amount. The years 2019-2022 are open to examination by the IRS. No reserves
for uncertain tax positions have been recorded.
The Company adopted changes issued by FASB which
prescribed a recognition threshold and measurement attribute for financial statement recognition and measurement of an uncertain tax position
taken or expected to be taken in a tax return. Under the guidance, an uncertain income tax position must be recognized at the largest
amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.
OUTDOOR SPECIALTY PRODUCTS, INC.
Notes to Financial Statements
September 30, 2022 and 2021
NOTE 3 – Long Lived Assets
Property, Plant, and Equipment
The Company’s capital asset consists of
molding equipment stated at cost. Depreciation is calculated using the straight-line method over the estimated useful life
which is determined to be seven years. Expenditures for additions and improvements are capitalized, while repairs and maintenance
costs are expensed as incurred. The cost and related accumulated depreciation of any capital assets that are sold or otherwise
disposed of are removed from the accounts and any gain or loss is recorded in the year of disposal.
The following is a summary of property, plant,
and equipment less accumulated depreciation as of September 30:
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Mold | |
$ | 5,300 | | |
$ | 5,300 | |
| Total property, plant and equipment | |
| 5,300 | | |
| 5,300 | |
| | |
| | | |
| | |
| Less: accumulated depreciation | |
| (5,300 | ) | |
| (5,300 | ) |
| | |
| | | |
| | |
| Property, plant, equipment, net | |
$ | - | | |
$ | - | |
Depreciation expense for the years ended September
30, 2022 and 2021 was $0 and $631, respectively.
Patent
The following is a summary of patents less accumulated
amortization as of September 30:
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Patent | |
$ | 6,943 | | |
$ | 6,943 | |
| Total patent | |
| 6,943 | | |
| 6,943 | |
| | |
| | | |
| | |
| Less: accumulated amortization | |
| (2,352 | ) | |
| (1,943 | ) |
| | |
| | | |
| | |
| Patent, net | |
$ | 4,591 | | |
$ | 5,000 | |
Amortization expense for the year ended September
30, 2022 and 2021 was $409 and $408, respectively.
OUTDOOR SPECIALTY PRODUCTS, INC.
Notes to Financial Statements
September 30, 2022 and 2021
NOTE 3 – Long Lived Assets
(continued)
Patent (continued)
Future amortization of patent are as follows:
| Year Ending September 30, | | |
| |
| 2022 | | |
$ | 408 | |
| 2023 | | |
| 408 | |
| 2024 | | |
| 408 | |
| 2025 | | |
| 408 | |
| 2026 | | |
| 408 | |
| Thereafter | | |
| 2,551 | |
| | | |
| | |
| | | |
$ | 4,591 | |
The Company has reviewed the patent for impairment
and has determined that no impairment loss has been incurred. The cost is being amortized over 17 years, which is the estimated legal
life of the patent.
NOTE 4 – Line of Credit – Related
Party
During the year ending September 30, 2022, the
Company amended the revolving promissory note agreement with its related party to extend the maturity date to December 31, 2022 and increase
the principal indebtedness from $40,000 to $55,200. The revolving promissory note bears interest at the rate of 3.5%. The Company received
proceeds under the line of credit of $21,793 during the year ended September 30, 2022, resulting in balances of $52,043 and $30,250, with
accrued interest of $1,909 and $409, at September 30, 2022 and 2021, respectively.
Also, during the year ended September 30, 2022,
the Company entered into a new revolving promissory note agreement with another principal stockholder providing for loans of up to $9,750
at an interest rate of 3.5% per annum, which is repayable on or before December 31, 2022. During the year ended September 30, 2022, we
borrowed an aggregate principal amount of $8,726 under this second revolving loan agreement. The
balance on this line of credit at September 30, 2022, was $8,726 with accrued interest of $179.
NOTE 5 – Stockholders’ Equity
During the year ending September 20, 2021, the
Company increased its authorized common shares from 90,000,000 to 190,000,000. Also, during the year ending September 30, 2021, the Company
repurchased 1,429 shares of our common stock from a shareholder for $500 upon the shareholders’ exercise of dissenters’ rights,
which shares were cancelled.
OUTDOOR SPECIALTY PRODUCTS, INC.
Notes to Financial Statements
September 30, 2022 and 2021
NOTE 6 – Basic and Diluted Loss Per Share
The following table sets forth the computation
of basic and diluted loss per share for the years ended September 30:
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Loss (numerator) | |
$ | (37,166 | ) | |
$ | (39,901 | ) |
| Weighted average shares (denominator) | |
| 5,284,318 | | |
| 5,284,318 | |
| | |
| | | |
| | |
Net loss per share – basic and diluted | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
NOTE 7 – Going Concern
The accompanying financial statements have been
prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course
of business. As shown in the accompanying financial statements, the Company did not generate sufficient revenue to generate
net income, has a negative working capital, and has a limited operating history. These factors, among others, indicate that there is substantial
doubt that the Company will be able to continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments
relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue
as a going concern. 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 and ultimately to attain profitability. The Company intends to seek additional
funding through equity offerings to fund its business plan. There is no assurance that the Company will be successful in raising
additional funds.
NOTE 8 – Subsequent Events
During
November 2022, we amended the revolving promissory note agreements to extend the maturity dates to December 31, 2023 and increase the
maximum principal amount of the note agreement with our president and the other principal stockholder to $75,000 and $13,240, respectively.
The Company has evaluated subsequent events from
the balance sheet date through the date of the financial statements were issued and determined that there are no additional events requiring
disclosure.
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