FLCX flooidCX Corporation (PK)

Notes to the Unaudited Condensed Consolidated Financial Statements

Three Months Ended March 31, 2023 and 2022

(Expressed in U.S. Dollars)

1. Nature of Operations and Continuance of Business

FlooidCX Corp. (formerly Gripevine, Inc. and Baixo Relocation Services, Inc.) (the “Company”) was incorporated in the state of Nevada on January 7, 2014. Prior to the split-off of the MB Holdings, Inc. (“MB Holdings”), subsidiary, the Company was in the business of developing and building an online resolution platform.

Effective June 27, 2022, the Company entered into a split-off agreement with its President and majority shareholder at the time, and MP Special Purpose Corporation (“MP Special”). As part of the agreement the Company transferred its equity interest in MB Holdings, Inc., to the majority shareholder, and the majority shareholder transferred his equity interest in the Company to MP Special in exchange for $600,000. In addition, as part of the transaction, the parties agreed that certain specified debt would remain or be transferred to Flooidcx Corp., and that other specific debt would remain or be transferred to MBE Holdings. Because the Company’s majority shareholder was involved in this transaction, it has been treated as common control transaction, and therefore, the derecognition of the net liabilities of MB Holdings were accounted for as an equity transaction rather than a gain. After the split-off of MBE Holdings, the Company had no operating activities. However, in March 2023, the Company entered into a merger agreement with Quantum Energy, Inc., (See Note 7).

These condensed consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, creditors, and related parties, and the ability of the Company to obtain necessary equity financing to continue operations, and ultimately the attainment of profitable operations. As of March 31, 2023, the Company did not have any operations generating revenue and had stockholders’ deficit of $4.0 million, and was in default of certain loans payable. (refer to Note 3). These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These unaudited interim condensed consolidated financial statements (the “condensed consolidated financial statements”) do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

On March 29, 2023 FlooidCX Corp. (“FLCX”), a Nevada corporation entered into An Agreement and Plan of Merger (the “Agreement”) with Quantum Energy, Inc., a Nevada corporation (“QREE”). (See Note 7)

2. Significant Accounting Policies

(a) Basis of Presentation

These condensed consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in U.S. dollars. These consolidated financial statements include the accounts of the Company and the following entities: Resolution 1, Inc. a wholly-owned subsidiary, and MBE Holdings, Inc., an entity that was wholly-owned subsidiary until the date of the split-off. After the split-off MBE Holdings, Inc. was derecognized in the Company’s financial statements, and the activity of MBE Holdings, Inc. after the date of the split-off is not included in the accompanying financial statements.

The condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for the fair presentation of the condenses consolidated financial statements have been included. Such adjustments are of a normal, recurring nature. The condensed consolidated financial statements and the accompanying notes, are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and do not contain information included in the Company’s Annual Report on Form 10-KT for the period ended December 31, 2022. Therefore, the interim condensed consolidated financial statements should be read in conjunction with that Annual Report on Form 10-KT.

All inter-company balances and transactions have been eliminated.

(b) Discontinued Operations 

In accordance with ASC No. 205-20, Discontinued Operations, for all periods presented, the results of operations and related balance sheet items associated with the MB Holdings are reported in discontinued operations in the accompanying consolidated statements of operations. See Note 6 – Discontinued Operations for further details.

(c) Use of Estimates 

The preparation of these consolidated financial statements in conformity with U.S. generally accepted accounting principles 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. 

(d) Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be affected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The new standard is effective for fiscal years and interim periods within those years beginning after December 31, 2022.

The Company has implemented all new accounting pronouncements that are in effect and that may impact its condensed consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

(e) Net Loss per Share

Net earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period, excluding shares subject to redemption or forfeiture. The Company presents basic and diluted net earnings or loss per share. Diluted net earnings or loss per share reflect the weighted average of common shares issued and outstanding during the period, adjusted for potentially dilutive securities outstanding. Potentially dilutive securities are excluded from the computation of the diluted net loss per share if their inclusion would be anti-dilutive. Potentially dilutive shares outstanding as of March 31, 2023 and December 31, 2022 consist of 127,450,000 common stock equivalents related to convertible Preferred series A and B stock.

(f) Foreign Currency Translation

The Company’s functional and reporting currency is the United States dollar. The functional currency of MBE and Resolution 1 is the Canadian dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Non-monetary assets, liabilities, and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.

3. Notes Payable & Loans - Related Parties

At March 31, 2023 and December 31, 2022, the Company owed $3,816,076 and $3,728,586 to related parties, respectively, which are unsecured, non-interest bearing and due on demand. The amounts due are notes that are held by Quantum Energy, Inc. (“Quantum”) (see Note 7), a company with common board members, and also another company that is controlled by one of Quantum’s board members.

At March 31, 2023 and December 31, 2022, the Company owed $144,057 and $143,914, respectively, to a related party, which is unsecured, bears interest at the default rate of 12% and is due on demand.

4. Other Related Party Transactions

During the three months ended March 31, 2023 and 2022, the Company incurred $nil (2022 – $47,196) in research and development fees paid to the President of the Company.

During the three months ended March 31, 2023 and 2022, the Company issued 915,000 Preferred Series B and 915,000 Preferred Series C shares with a fair value of  $1,006,720 (2021 – $-nil-) to its incoming management and board as part of the Agreement. Such estimate of fair value is based on the super voting rights of the Series C and  the equivalent number of common shares of Series B, which has been recorded as contra equity as such relate to transactions with the Company's officer and other shareholders. If the Merger closes, such consideration will be accounted for in the transaction. As of the filing date of this Form 10-Q, the Company expects the Merger to close in Q3 2023.

5. Equity

Preferred Stock

The preferred stock contains certain rights and preferences as detailed below: There were 1,000,000 shares of Series A outstanding at March 31, 2023 and December 31, 2022.

Preferred A:

In connection with the potential merger (See Note 7), the company established additional series of preferred stock, summarized as follows:

Preferred B: (1,000,000 shares authorized):

Preferred C: (1,000,000 shares authorized):

Preferred D; (1,000,000 shares authorized):

Preferred E; (2,000,000 shares authorized):

6. Discontinued Operations

There was no depreciation expense for the period

7. Potential Merger

On March 29, 2023 FlooidCX Corp. (“FLCX”), a Nevada corporation entered into An Agreement and Plan of Merger (the “Agreement”) with Quantum Energy, Inc., a Nevada corporation (“QREE”). Under the terms of the Agreement, the shares of QREE will be exchanged for the shares of FLCX on the following basis:

Under the terms of the Agreement, the surviving company will change its name from flooidCX Corp. to Quantum Energy, Inc. and management shall apply to change the trading symbol of the surviving corporation from FLCX to QREE.

The Agreement contains representations and warranties of the parties that are common to such agreements. The merger transaction is subject to regulatory approval and applications for such approval would be submitted to all applicable regulatory agencies, including the Securities and Exchange Commission and the Financial Industry Regulatory Authority. In addition, management plans to file a registration statement on SEC Form S-4 to register the shares to be issued to the Quantum shareholders. Under the Agreement, the transaction may not proceed in the event that holders with more than 20% of the number of outstanding shares of QREE shall dissent from the transaction. Certain members of the management of FLCX are also members of the management of QREE. The Merger is nearing the filing of SEC Form S-4, SEC and FINRA comments, and Nevada state corporate filings to complete.

Inductance Energy Corporation, (“IE”), of Wyoming, shall be operated as a subsidiary of the surviving entity, currently IE is operated as a subsidiary of Quantum Energy, Inc. Shareholders of Inductance Energy Corporation will retain their current shareholding in IE.

8. Subsequent Events

On May 19, 2023 the Company issued 3,000 Preferred D shares to Michael Halverson TTEE of The Five Star Trust for marketing to potential distributorships.

On May 22, 2023 amended its articles to:

On May 24, 2023 at the agreement of MP Special Purposes Corporation, the Company cancelled 1,000,000 of its Preferred Series A shares held by MP Special Purposes Corporation.