ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information should be read in conjunction with our financial statements and related notes thereto included in Part I, Item 1, above.
Forward Looking Statements
Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:
·our future strategic plans
·our future operating results;
·our business prospects;
·our contractual arrangements and relationships with third parties;
·the dependence of our future success on the general economy;
·our possible future financing; and
·the adequacy of our cash resources and working capital.
·the Covid-19 Pandemic.
From time to time, we or our representatives have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but not limited to, press releases, oral statements made with the approval of an authorized executive officer or in various filings made by us with the Securities and Exchange Commission. Words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project or projected", or similar expressions are intended to identify "forward-looking statements". Such statements are qualified in their entirety by reference to and are accompanied by the above discussion of certain important factors that could cause actual results to differ materially from such forward-looking statements.
Covid-19 Pandemic
Management is currently aware of the global and domestic issues arising from the Covid-19 pandemic and the possible direct and indirect effects on the company's operations which could have a material adverse effect on the company's current financial position, future results of operations, or liquidity, because its current operations are limited. However, investors should also be aware of factors, which includes the possibility of Covid-19 effects on operational status, could have a negative impact on the company's prospects and the consistency of progress in the areas of revenue generation, liquidity, and generation of capital resources, once it begins to implement its business plan. These may include: (i) variations in revenue, (ii) possible inability to attract investors for its equity securities or otherwise raise adequate funds from any source should the company seek to do so, (iii) increased governmental regulation or significant changes in that regulation, (iv) increased competition, (v) unfavorable outcomes to litigation involving the company or to which the company may become a party in the future, and (vi) a very competitive and rapidly changing operating environment.
The risks identified here are not all inclusive. New risk factors emerge from time to time and it is not possible for management to predict all of such risk factors, nor can it assess the impact of all such risk factors on the company's 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. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.
The financial information set forth in the following discussion should be read with the financial statements of BioForce NanoSciences Holdings, Inc. included elsewhere herein.
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Business
BioForce Nanosciences Holdings, Inc. (“BioForce or the “Company”) was previously in the business of manufacturing nano-particular measurement devices and molecular printers, but due to a lack of profitability, the subsidiary of the company that owned that technology filed for bankruptcy. That subsidiary and related technology was later bought out of bankruptcy by an unrelated third party. Subsequently, new management came into the Company to pursue a better business model and now the Company’s mission is to become a leading provider of natural vitamins, minerals and other nutritional supplements, powders and beverages, formulated to promote a healthier lifestyle for active individuals in all age ranges. The Company private labels products with key distributors and manufacturing providers.
BioForce entered into the supplement business in or about 2015. These supplements, powders and beverages offer vitamins and minerals to complement a healthy intake of protein and carbohydrates for active individuals and participants in sports.
BioForce recently changed its business plan and it is in the process of establishing a dynamic marketing campaign to achieve brand awareness of its product offerings to drive business growth through sales of nutrition supplements to retailers, sporting goods retailers, supermarkets, mass merchandisers, and online. BioForce currently markets its products through social media and telemarketing. The Company plans to expand marketing efforts with a direct marketing and B2B (Business to Business) sales campaign, with the eventual expectation to expand throughout the entire United States.
The Company proactively seeks to expand its “BioForce Eclipse” nutritional powder for use into households throughout the U.S., and the Company will approach retail stores, including health food and sporting goods stores to create a vendor relationship. During this phase, the Company will continue to try to advance its social media platform with direct online and targeted advertisements to health conscience individuals.
Nutrition retailers, grocery stores, retail pharmacies, and online stores, like Amazon, will be important channels for the Company’s Eclipse product-lines. In The USA, there are thousands of direct outlets like grocery stores, pharmacies, hospitals, department stores, medical clinics, surgery clinics, universities, nursing homes, prisons, and other facilities which are all targets of potential sales of the vitamin and mineral supplemental products.
BioForce Nanosciences Holdings, Inc. sells the BioForce Eclipse powder multivitamin and mineral supplement without non-compete and non-disclosure agreements. The Company currently private labels the powder through a manufacturer located in Virginia. The Company has a Supplier Agreement with this manufacturer that gives the Company non-exclusion rights to market the product. The distributor owns the rights to the formula for this product. If the Company can source product in a more cost-effective way without diminished quality, the Company would evaluate such opportunities when presented. Currently, the distributor who provides the private label powder provides “Consignment Terms,” which allows us to only pay for the product when it is sold.
The FDA has rules regarding the fitness for consumption of foods as well as vitamins and supplements sold to the public, and those laws apply to our product. However, our product does not require pre-clearance like a drug in order to be sold into the marketplace.
The Company in May 2020, formed a wholly-owned subsidiary, Element Acquisition Corporation, a Wyoming corporation,with unlimited common shares authorized, par value $0.001. Element Acquisition Corporation was formed to pursue potential acquisitions in the media, entertainment, media technology and sports sectors.
The Company on October 15, 2020 changed the name of its wholly-owned subsidiary Element Acquisition Corporation, a Wyoming corporation, to BioForce Nanosciences Holdings, Inc., a Wyoming corporation. Management intends to redomicile BioForce Nanosciences Holdings, Inc., a Nevada corporation, into a Wyoming corporation using its wholly-owned BioForce Nanosciences Holdings, Inc., a Wyoming corporation as the entity for the redomicile corporate action.
On December 14, 2021, the Company changed the name of its wholly-owned subsidiary, BioForce Nanosciences Holdings, Inc., a Wyoming corporation, to its new name, Element Global, Inc.
Memorandum of Understanding ("MOU")
June 02, 2021, Bioforce Nanosciences Holdings, Inc. entered into another Memorandum of Understanding (MOU) with Element Global, Inc. (ELGL), a Utah Corporation. This MOU contemplates a proposed transaction between the entities that provides for BFNH to acquire all of the assets controlled by ELGL. The closing of the transaction is subject to due diligence and the execution of a definitive agreement. As of the date of this filing the MOU is still active.
Officer Appointments
On November 29, 2021, the Board of Directors (the “Board”) of BioForce Nanosciences Holdings, Inc. (the “Company”) appointed both Mr. Steve Gagnon and Mr. John LaViolette as Co-Chief Executive Officers (Co-CEOs), effective November 30, 2021. In addition, on November 29, 2021, the Board of Directors of BioForce Nanosciences Holdings, Inc. appointed Sasha Shapiro as President, effective November 30, 2021. On November 29, 2021, the Board of Directors accepted the resignation of Mr. Merle Ferguson as Chief Executive Officer and President, effective November 30, 2021. Mr. Ferguson remains Chairman of the Board of Director of BioForce Nanoscience, Inc. There were no disagreements, no arguments, no conflicts and no disputes with the Company’s officers, directors, auditors, and other professional service providers on his decision to step down as CEO and President.
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Transfer Agent
Our transfer agent is Transfer Online, Inc. whose address is 512 SE Salmon Street, Portland, Oregon 97214, and telephone number (503) 227-2950.
Company Contact Information
Our principal executive and subsidiary offices are located at 2020 General Booth Blvd., Unit 230, Virginia Beach, VA 23454, telephone (757) 306-6090. The information to be contained in our Internet website, www.bioforceeclipse.com, shall not constitute part of this report.
Current Directors
The following table provides information concerning our officers and directors. All directors hold office until the next annual meeting of stockholders or until their successors have been elected and qualified.
| |
Merle Ferguson
| Director
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Richard Kaiser
| Director/CFO/Secretary
|
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Steve Gagnon
| Co-CEO
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John LaViolette
| Co-CEO
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Sasha Shapiro
| President
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overall Operating Results:
Three Months – June 30, 2022 and 2021 Statements
The Sales Revenue from the Company’s BioForce Eclipse vitamin supplements for the three months ended June 30, 2022 and for the three months ended June 30, 2021 were $-0- and $-0-, respectively. During the three months ended June 30, 2022 and 2021 the Company received no orders, -0- units of its Bioforce Eclipse supplement product.
The Cost of Goods Sold for the three months ended June 30, 2022 and 2021 was $-0- .
Gross Margins for the three months ended June 30, 2022 and 2021 was 0% from the sale of -0- units of the BioForce Eclipse supplement product.
Gross Profit for the three months ended June 30, 2022 and 2021 was $-0- .
Operating expenses for three months ended June 30, 2022 totaled $115,784 from Board of Director compensation and General and Administrative Expenses, compared to $122,315 for the three months ended June 30, 2021. This decrease in June 30, 2022 compared to the same period ended June 30, 2021was attributed to
lower expenses from professional services rendered.
Six Months – June 30, 2022 and 2021 Statements
The Sales Revenue from the Company’s "BioForce Eclipse" vitamin supplement for the six months ended June 30, 2022 and 2022 were $-0-, Company sold no units of its Bioforce Eclipse" vitamin supplement.
The Cost of Sales for the six months ended June 30, 2022 and 2021 were $-0-.
Gross Margins for the six months ended June 30, 2022 and 2021 were 0% from the sale of -0- units of the “BioForce Eclipse” supplement product.
Gross Profit for the six months ended June 30, 2022and 2021 were $-0-.
Operating expenses for six months ended June 30, 2022, totaled $248,192 for Board of Director Compensation and General and Administrative Expenses, compared to $267,394 for the six months ended June 30, 2021. This decrease during the same six month period ended June 30, 2021 was attributed to a decrease in professional service fees.
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Net Loss:
Net loss for the three month ended June 30, 2022 and 2021 were $115,784 and $122,315 , respectively. Net loss for the six month ended June 30, 2022 and 2021 were $248,192 and $267,394, respectively.
Liquidity and Capital Resources:
As of June 30, 2022, the Company’s assets totaled $9,230, which consisted of cash. Our total liabilities were $1,119,285 from accounts payable and accrued expenses, accrued director compensation expenses and amounts due to related parties. As of June 30, 2022, the Company had an accumulated deficit of $159,781,127 and working capital deficit $1,110,055.
As indicated herein, we need capital for the implementation of our business plan, and we will need additional capital for continuing our operations. We do not have sufficient revenues to pay our operating expenses at this time. Unless the company is able to raise working capital, it is likely that the Company will either have to cease operations or substantially change its methods of operations or change its business plan (See Note 4 in Financial Statements). For the next 12 months the Company has a written commitment from its CEO in Mr. Merle Ferguson's employment contract to advance funds as necessary in meeting the Company's operating requirements.
BioForce NanoSciences Holdings, Inc. does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company, or any of its subsidiaries’ operating results, financial position, or cash flow.
Cash Provided by (Used in) Operating Activities
Net cash used in operating activities for the six months ended June 30, 2022 and 2021 were $42,565 and $60,052, respectively. The decrease amount was attributed from lower General and Administrative cost that were used in operational and professional service fee expenses.
Cash Flows from Investing Activities
Net cash used in investing activities was $-0- for both the six month periods ended June 30, 2022 and 2021.
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Cash Provided by Financing Activities
Net cash provided by financing activities was $40,690 for six month ended June 30, 2022 from proceeds from Related Parties, and was $47,492 for six month ended June 30, 2021 from proceeds from Related Parties.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
New Accounting Pronouncements
BioForce Nanosciences Holdings, Inc. does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company, or any of its subsidiaries' operating results, financial position, or cash flow.
Accounting Principals
Our consolidated financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. Critical accounting policies include revenue recognition and impairment of long-lived assets.
Revenue Recognition
In accordance with ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), revenues are recognized when control of the promised goods or services is transferred to our clients, in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps: (1) Identify the contract with a client; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate the transaction price to performance obligations in the contract; and (5) Recognize revenues when or as the company satisfies a performance obligation.
We adopted this ASU on January 1, 2018. Although the new revenue standard is expected to have an immaterial impact, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities within them.
Reverse Stock Split
We were authorized to issue 900,000,000 shares of our common stock, of which 15,270,588 shares were outstanding taking into account the one-for-five (1-for-5) reverse stock split effective February 28, 2020. Our shares of common stock are held by approximately 230 stockholders of record. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of our common stock whose shares are held in the names of various securities brokers, dealers, and registered clearing agencies. In addition to our authorized common stock, BioForce Nanosciences Holdings, Inc. is authorized to issue 100,000,000 shares of preferred stock, par value at $0.001 per share. Based on the amended Articles of Incorporation the Company has 10,000,000 Series 'A' Preferred which have voting and conversion rights of 100 common shares, par value $0.001; leaving a balance of 90,000,000 "Blank Check" Preferred. There are no Series 'A' Preferred shares issued or outstanding.
Going Concern
We have incurred net losses since our inception. We anticipate incurring additional losses before realizing growth in revenue and we will depend on additional financing in order to meet our continuing obligations and ultimately to attain profitability. Our ability to obtain additional financing, whether through the issuance of additional equity or through the assumption of debt, is uncertain. Accordingly, our independent auditors' report on our financial statements for the year ended December 31, 2021 includes an explanatory paragraph regarding concerns about our ability to continue as a going concern, including additional information contained in the notes to our financial statements describing the circumstances leading to this disclosure. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Based on our evaluation, our Principal Executive Officer and Principal Financial Officer, after considering the existence of material weaknesses identified, determined that our internal control over financial reporting disclosure controls and procedures were not effective as of June 30, 2022.
Evaluation of 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 Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of our management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, including our Principal Executive Officer and Principal Financial Officer, assessed the effectiveness of our internal control over financial reporting as of June 30, 2022. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control – Integrated Framework (2013).
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We identified the following deficiencies which together constitute a material weakness in our assessment of the effectiveness of internal control over financial reporting as of June 30, 2022:
- The Company has inadequate segregation of duties within its cash disbursement control design.
- During the period ended June 30, 2022, the Company internally performed all aspects of its financial reporting process, including, but not limited to the underlying accounting records and the recording of journal entries and for the preparation of financial statements. This process was deficient, because these duties were performed often times by the same people, and therefore a lack of review was created over the financial reporting process that might result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.
It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control system, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
This report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management's report in this annual report.
We regularly review our system of internal control over financial reporting to ensure that we maintain an effective internal control environment. If deficiencies appear in our internal controls, management will make changes that address those deficiencies.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company's internal control over financial reporting that occurred during the reporeting period ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Coronavirus Impact (COVID-19)
Due to the recent outbreak of the coronavirus reported in many countries worldwide, local and federal governments have issued travel advisories, canceled large scale public events and closed schools. In addition, companies have begun to cancel conferences and travel plans and require employees to work from home. Global financial markets have also experienced extreme volatility and disruptions to capital and credit markets.
We are unable to predict the impact of the coronavirus on our operations at this time. Adverse events such as health-related concerns about working in our offices, the inability to travel, potential impact on our business partners and customers, and other matters affecting the general work and business environment could harm our business and delay the implementation of our business strategy. The adverse events may also adversely impact our ability to raise capital or to continue as a going concern. We continue to monitor the recent outbreak of the coronavirus on our operations. The global economic slowdown and the other risks and uncertainties associated with the pandemic could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition, to the extent the ongoing COVID-19 pandemic adversely affects the Company's business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties which the Company faces.
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