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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended:
March 31, 2022
o TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number:
000-52140
Imperalis Holding Corp.
(Exact name of registrant as specified in its charter)
Nevada |
|
20-5648820 |
(State or other jurisdiction of incorporation or
organization) |
|
(I.R.S. Employer Identification
Number) |
11411 Southern Highlands Pkwy,
Suite 240,
Las Vegas,
NV |
89141 |
(949)
444-5464 |
(Address of principal executive
offices) |
(Zip Code) |
(Registrant’s telephone number, including area
code) |
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par
value
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange
Act during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes x No
o
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 x No
o
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.
o Large accelerated Filer |
|
o Accelerated Filer |
x
Non-accelerated Filer |
|
x
Smaller reporting company |
|
|
x
Emerging growth company |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes þ No
o
State the number of shares outstanding of each of the issuer’s
classes of common stock, as of the latest practicable date:
161,704,695 shares of common stock as of May 12, 2022.
TABLE OF CONTENTS
|
|
Page |
|
PART I – FINANCIAL INFORMATION |
|
|
|
|
Item 1. |
Condensed Consolidated Financial
Statements (Unaudited) |
3 |
Item 2. |
Management's Discussion and Analysis
of Financial Condition and Results of Operations |
10 |
Item 3. |
Quantitative and Qualitative
Disclosures About Market Risk |
12 |
Item 4. |
Controls and Procedures |
13 |
|
|
|
|
PART II – OTHER INFORMATION |
|
|
|
|
Item 1. |
Legal Proceedings |
14 |
Item 1A. |
Risk Factors |
14 |
Item 2. |
Unregistered Sales of Equity
Securities and Use of Proceeds |
14 |
Item 3. |
Defaults Upon Senior
Securities |
14 |
Item 4. |
Mine Safety Disclosures |
14 |
Item 5. |
Other Information |
14 |
Item 6. |
Exhibits |
14 |
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Imperalis Holding Corp.
Condensed Consolidated Balance Sheets
(Unaudited)
|
|
March 31,
2022 |
|
|
December 31,
2021 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,859 |
|
|
$ |
15,009 |
|
Cash and cash equivalents held in Trust Account |
|
|
491 |
|
|
|
6,769 |
|
Other receivables |
|
|
11,150 |
|
|
|
- |
|
Total current assets |
|
|
15,500 |
|
|
|
21,778 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
15,500 |
|
|
$ |
21,778 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' deficit |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
7,592 |
|
|
$ |
4,225 |
|
Accrued interest |
|
|
5,305 |
|
|
|
3,676 |
|
Accrued interest - related party |
|
|
2,989 |
|
|
|
451 |
|
Convertible notes payable, net |
|
|
45,000 |
|
|
|
42,083 |
|
Total current liabilities |
|
|
60,886 |
|
|
|
50,435 |
|
|
|
|
|
|
|
|
|
|
Convertible notes payable - related party |
|
$ |
101,529 |
|
|
$ |
101,529 |
|
Total liabilities |
|
|
162,415 |
|
|
|
151,964 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
- |
|
|
|
- |
|
Stockholders'
deficit: |
|
|
|
|
|
|
|
|
Preferred E Stock, par
value $0.001 a share;
20,000
shares authorized:
0
shares issued and outstanding |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Common Stock, par
value $0.001 a share;
200,000,000
shares
authorized: 161,704,695
shares issued and outstanding |
|
|
161,703 |
|
|
|
161,703 |
|
Additional paid-in capital |
|
|
6,034,941 |
|
|
|
6,034,941 |
|
Accumulated deficit |
|
|
(6,343,559 |
) |
|
|
(6,326,830 |
) |
Total stockholders' deficit |
|
|
(146,915 |
) |
|
|
(130,186 |
) |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit |
|
$ |
15,500 |
|
|
$ |
21,778 |
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements
Imperalis Holding Corp
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31, |
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
|
|
2021 |
|
Revenues |
|
$ |
- |
|
|
$ |
- |
|
Cost of sales |
|
|
- |
|
|
|
- |
|
Gross profit |
|
|
- |
|
|
|
- |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Rent |
|
|
- |
|
|
|
1,428 |
|
General & administration |
|
|
9,645 |
|
|
|
21,554 |
|
Depreciation |
|
|
- |
|
|
|
575 |
|
Owners compensation |
|
|
- |
|
|
|
25,000 |
|
Total operating expenses |
|
|
9,645 |
|
|
|
48,557 |
|
|
|
|
|
|
|
|
|
|
Operations loss |
|
|
(9,645 |
) |
|
|
(48,557 |
) |
|
|
|
|
|
|
|
|
|
Other income
(expense) |
|
|
|
|
|
|
|
|
Interest income |
|
|
- |
|
|
|
2 |
|
Amortization of debt
discount |
|
|
(2,917 |
) |
|
|
(9,375 |
) |
Interest expense -
related party |
|
|
(2,538 |
) |
|
|
- |
|
Interest expense |
|
|
(1,629 |
) |
|
|
(3,180 |
) |
Total other income (expense) |
|
|
(7,084 |
) |
|
|
(12,553 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes |
|
|
(16,729 |
) |
|
|
(61,110 |
) |
Provision for income taxes |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(16,729 |
) |
|
$ |
(61,110 |
) |
|
|
|
|
|
|
|
|
|
Net loss
per share-basis and diluted |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding basic and diluted |
|
|
161,704,695 |
|
|
|
142,987,383 |
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements
Imperalis Holding Corp.
Condensed Consolidated Statements of Changes in Stockholders’
Deficit
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Additional
Paid-In Capital |
|
|
Accumulated
Deficit |
|
|
Total Stockholders'
Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2021 |
|
|
161,704,695 |
|
|
$ |
161,703 |
|
|
$ |
6,034,941 |
|
|
$ |
(6,326,830 |
) |
|
$ |
(130,186 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for
period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(16,729 |
) |
|
|
(16,729 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2022 |
|
|
161,704,695 |
|
|
$ |
161,703 |
|
|
$ |
6,034,941 |
|
|
$ |
(6,343,559 |
) |
|
$ |
(146,915 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Additional
Paid-In Capital |
|
|
Accumulated
Deficit |
|
|
Total Stockholders'
Deficit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
|
|
133,702,938 |
|
|
$ |
133,702 |
|
|
$ |
5,932,373 |
|
|
$ |
(6,118,683 |
) |
|
$ |
(52,608 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for
conversion of convertible
note and accrued interest |
|
|
9,284,445 |
|
|
|
9,284 |
|
|
$ |
37,138 |
|
|
|
- |
|
|
|
46,422 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature |
|
|
- |
|
|
|
- |
|
|
|
45,000 |
|
|
|
- |
|
|
|
45,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for
period |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
(61,110 |
) |
|
$ |
(61,110 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2021 |
|
|
142,987,383 |
|
|
$ |
142,986 |
|
|
$ |
6,014,511 |
|
|
$ |
(6,179,793 |
) |
|
$ |
(22,296 |
) |
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements
Imperalis Holding Corp.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
March
31, 2022 |
|
|
March
31, 2021 |
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(16,729 |
) |
|
$ |
(61,110 |
) |
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
- |
|
|
|
575 |
|
Amortization of debt discount |
|
|
2,917 |
|
|
|
9,375 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Increase in other receivables |
|
|
(11,150 |
) |
|
|
- |
|
Increase in accrued interest - related party |
|
|
2,538 |
|
|
|
- |
|
Increase in accrued interest |
|
|
1,629 |
|
|
|
3,179 |
|
Increase in accounts payable |
|
|
3,367 |
|
|
|
- |
|
Net
cash used in operating activities |
|
|
(17,428 |
) |
|
|
(47,981 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from
convertible notes payable |
|
|
- |
|
|
|
85,000 |
|
Repayment on
shareholder loan |
|
|
- |
|
|
|
(7,173 |
) |
Repayment on
convertible notes payable |
|
|
- |
|
|
|
(40,000 |
) |
Proceeds from shareholder loan |
|
|
- |
|
|
|
2,982 |
|
Net cash flows from financing activities: |
|
|
- |
|
|
|
40,809 |
|
|
|
|
|
|
|
|
- |
|
Net decrease in cash
and cash equivalents |
|
|
(17,428 |
) |
|
|
(7,172 |
) |
Cash at beginning
of period |
|
|
21,778 |
|
|
|
29,006 |
|
Cash at end of
period |
|
$ |
4,350 |
|
|
$ |
21,834 |
|
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities |
|
|
|
|
|
|
|
|
Common
stock issued for conversion of note payable and accrued
interest |
|
$ |
46,422
|
|
|
$ |
- |
|
Beneficial conversion feature on convertible notes payable |
|
$ |
45,000
|
|
|
$ |
- |
|
The accompanying notes are an integral part of these unaudited
condensed consolidated financial statements
Imperalis Holding Corp.
Notes to Unaudited Condensed Consolidated Financial
Statements
Three Months Ended March 31, 2022 and 2021
Note 1 – Description of Business, Basis
of Presentation and Summary of Significant Accounting
Policies
Description of
Business
Imperalis Holding Corp. (the “Company” or “IMHC”), a Nevada
corporation formed on April 5,
2005, is a holding company headquartered at 11411 Southern
Highlands Pkwy, Suite 240, Las Vegas, NV 89141. The Company seeks
to acquire businesses with high growth potential in diverse
industries to multiply rates of return through synergism and
consolidating management and accounting information systems.
The Company also holds three subsidiaries whose operations are
currently dormant, CannaCure Sciences, Inc., a Wyoming corporation,
The Crypto Currency Mining Company, a Wyoming corporation, and
Dollar Shots Club, Inc., a Nevada corporation.
Basis of
Consolidation
The consolidated financial statements include 100% of the assets,
liabilities, revenues, expenses, and cash flows of Imperalis
Holding Corp., CannaCure Sciences Inc., The Crypto Currency Mining
Company and Dollar Shots Club, Inc. The operations of CannaCure
Sciences Inc., The Crypto Currency Mining Company and Dollar Shots
Club, Inc. are currently dormant. All intercompany accounts and
transactions have been eliminated in consolidation. The results of
subsidiaries acquired during the respective periods are included in
the consolidated statements of operations from the effective date
of the acquisition.
Use of
Estimates
The preparation of consolidated financial statements in conformity
with U.S. GAAP requires management to make estimates and
assumptions that affect the amounts reported in the financial
statements and footnotes thereto. Actual results could differ from
those estimates. Significant estimates inherent in the preparation
of the accompanying consolidated financial statements include
accounting for depreciation and amortization, intangible assets,
business combinations, equity transactions, and contingencies.
Cash
The Company considers all highly liquid accounts with an original
maturity date of three months or less to be cash equivalents. The
Company maintains bank accounts in US banks which, at times, may
exceed federally insured limits. The Company has not experienced
any losses on such accounts and believes it is not exposed to any
significant risk on bank deposit accounts.
Net Income
(Loss) per Share
In accordance with Accounting Standards Codification (“ASC”) 260,
Earnings Per Share, the basic loss per common share is
computed by dividing net loss available to common stockholders by
the weighted average number of common stock outstanding. Diluted
loss per common share is computed similar to basic loss per common
share except that the denominator is increased to include the
number of additional shares of common stock that would have been
outstanding if the potential common stock had been issued and if
the additional shares of common stock were dilutive. The Company
has 20,512,908
and 17,767,200
of potential common stock equivalents outstanding during the
periods ended March 31, 2022 and 2021 related to convertible notes
payable and accrued interest, respectively.
Stock-Based
Compensation
The Company accounts for stock-based transactions in which the
Company receives services from employees, directors or others in
exchange for equity instruments based on the fair value of the
award at the grant date in accordance with ASC 718 –
Compensation-Stock Compensation.
Income
Taxes
The Company has adopted ASC 740, Income Taxes, which
requires the use of the asset and liability method of accounting
for income taxes. Under the asset and liability method of ASC 740,
deferred tax assets and liabilities are recognized for the future
tax consequences attributable to temporary differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences
are expected to be recovered or settled.
Impairment of
Long-lived Assets
The Company analyzes its long-lived assets for potential
impairment. Impairment losses are recorded on long-lived assets
when indicators of impairment are present and undiscounted cash
flows estimated to be held and used are adjusted to their estimated
fair value, less estimated selling expenses. During the three
months ended March 31, 2022 and 2021, the Company recognized no
impairment of fixed assets and intangibles.
New Accounting
Pronouncements
Certain new accounting pronouncements that have been issued are not
expected to have a material effect on the Company’s financial
statements.
Note 2 – Other
Receivable
Other receivable of $11,150
at March 31, 2022 represents amounts due from Vincent Andreula, the
former chief executive officer of the Company in accordance with
the sales purchase agreement.
Note 3 – Equity
Preferred Stock
The Company has authorized the issuance of up to
20,000 shares of $0.001
par value Series E Preferred Stock. The Series E Preferred Stock is
preferred as to dividends and liquidation over common stock, has a
liquidation value of $1,000
per share, and has a dividend rate of
12% of liquidation value per year. As of March
31, 2022 and December 31, 2021, there were no Series E Preferred
Stock issued or outstanding.
Common Stock
On January 13, 2021 and February 22, 2021, the Company issued a
total
9,284,445 shares of common stock upon conversion of an
outstanding convertible note with a principal balance of $40,000 and $6,422 of
accrued interest. The Company did not engage in any general
solicitation or advertising in connection with the issuance of the
note, and the noteholder was an accredited investor within the
meaning of Rule 501. The issuance of these shares was exempt from
registration pursuant to Rule 506 under Regulation D.
Note 4 – Going
Concern
The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern. The Company has incurred recurring net losses, has
negative working capital and operations have not provided cash
flows. Additionally, the Company does not currently have any
revenue producing operations to cover its operating expenses and
meet its current obligations. In view of these matters, there is
substantial doubt about the Company’s ability to continue as a
going concern. The Company intends to finance its future
development activities and its working capital needs largely
through the sale of equity securities with some additional funding
from other sources, including term notes until such time as funds
provided by operations are sufficient to fund working capital
requirements. The consolidated financial statements of the Company
do not include any adjustments relating to the recoverability and
classification of recorded assets, or the amounts and
classifications of liabilities that might be necessary should the
Company be unable to continue as a going concern.
Note 5 – Convertible Notes
Payable
Convertible Notes Payable – Related Party
Digital Power Lending, LLC (“DPL”) is a wholly owned subsidiary of
Ault Alliance, Inc. Ault Alliance. Inc and the Company are
subsidiaries of BitNile Holdings, Inc and Darren Magot who serves
as the chief executive officer of the Company is also the chief
executive officer of Ault Alliance, Inc. As a result, DPL is deemed
a related party.
On December 15, 2021, the Company entered into an exchange
agreement with DPL, pursuant to which the Company issued the
convertible note to DPL, in the principal amount of $101,529, in exchange
for the promissory notes issued to DPL in the aggregate
principal amount of $100,000, which
promissory notes had accrued interest of
$1,529 as of the closing date. The convertible note accrues
interest at
10% per annum, is due on December 15, 2023,
and the principal, together with any accrued but unpaid interest on
the amount of principal, is convertible into shares of the
Company’s common stock at DPL’s option at a conversion price of
$0.01
per share.
As of March 31, 2022 and December 31, 2021, the total outstanding
principal balance on the convertible notes payable – related party
was $101,529 and nil,
respectively. As of March 31, 2022 and December 31, 2021, the
convertible notes payable – related party had accrued interest of
$2,989 and $451,
respectively.
Convertible Notes Payable
On February 3, 2021 and January 14, 2021, the Company received
$25,000 and
$20,000,
respectively, of financing from Opportunity Fund, LLC under a
Convertible Promissory Note (the “Note”). The Note allows for
advances up to maximum amount of
$75,000,
bears interest at eight percent (10%) per annum, and is due
one year from the
date of issue. An Amendment to the Note dated May 11, 2022 but
effective as of January 14, 2022 extended the maturity to January
14, 2024. The Note is convertible at a conversion price of
$0.005 per share,
with conversions limited such that no conversions will be allowed
to the extent that, following such conversion, the noteholder would
become the beneficial owner of more than 9.99% of our common
stock. The convertible note payable resulted in a beneficial
conversion feature of
$45,000 which was recorded as a debt discount. The discount
was amortized through the original maturity dates.
On October 18, 2019, the Company received an $18,000 loan from
Intermarket Associates, LLC. The Loan had a one year term and
interest at a rate of 10% per
annum. Principal and interest payments will accrue until conversion
of promissory note. The convertible note payable resulted in a
beneficial conversion feature of $18,000 which was
recorded as a debt discount. The discount was amortized through the
maturity date. This note was convertible to common stock at a price
of $0.005
per share. The note matured on October 18, 2020 and
was retired on December 7, 2021.
On July 5, 2019, the Company received a $40,000 loan from GCEF
Opportunity Fund, LLC. The Loan had a one year term and
interest at a rate of 10% per
annum. and interest payments will accrue until conversion of
Promissory Note. The convertible note payable resulted in a
beneficial conversion feature of $40,000
which was principal recorded as a debt discount. The discount was
amortized through the maturity date. On January 13, 2021 and
February 22, 2021, this note and $6,422 of accrued interest
were converted into a total 9,284,445
shares of common stock (see Note 2).
On May 22, 2019, the Company received a $20,000 loan from
Intermarket Associates, LLC. The Loan had a one year term and
interest at a rate of 10% per
annum. Principal and interest payments will accrue until conversion
of promissory note. This note was convertible to common stock at a
price of $0.005
per share. The convertible note payable resulted in a beneficial
conversion feature of $20,000 which was
recorded as a debt discount. The discount was amortized through the
maturity date. The note matured on May 22, 2020 and was
retired on December 7, 2021.
During the three months period ended March 31, 2022 and 2021,
amortization of debt discount amounted to $2,917
and $9,375,
respectively. As of March 31, 2022 and December 31, 2021, the total
outstanding principal balance on the convertible notes payable was
$45,000
and $42,083,
respectively and the remaining unamortized debt discount was
$2,917
and nil, respectively. As of March 31, 2022 and December 31, 2021,
the convertible notes payable had accrued interest of $4,576
and $3,676,
respectively.
Note 6 – Subsequent
Events
In accordance with ASC 855, Subsequent Events, the Company
has analyzed its operations subsequent to March 31, 2022 to the
date these financial statements were issued and has determined that
it does not have any material subsequent events to disclose in
these financial statements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
Certain statements, other than purely historical information,
including estimates, projections, statements relating to our
business plans, objectives, and expected operating results, and the
assumptions upon which those statements are based, are
“forward-looking statements.” These forward-looking statements
generally are identified by the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “intends,” “strategy,”
“plan,” “may,” “will,” “would,” “will be,” “will continue,” “will
likely result,” and similar expressions. Forward-looking statements
are based on current expectations and assumptions that are subject
to risks and uncertainties which may cause actual results to differ
materially from the forward-looking statements. Our ability to
predict results or the actual effect of future plans or strategies
is inherently uncertain. Factors which could have a material
adverse affect on our operations and future prospects on a
consolidated basis include, but are not limited to: changes in
economic conditions, legislative/regulatory changes, availability
of capital, interest rates, competition, and generally accepted
accounting principles. These risks and uncertainties should also be
considered in evaluating forward-looking statements and undue
reliance should not be placed on such statements.
Plan of
Operations
The Company has no operations from a continuing business other than
the expenditures related to running the Company and has no revenue
from continuing operations as of the date of this Quarterly
Report.
On March 20, 2022, BitNile Holdings, Inc. (NYSE American: NILE), a
diversified holding company (“BitNile”) and its subsidiary
TurnOnGreen, Inc., an electronic vehicle (“EV”) charging and power
solutions company (“TurnOnGreen”), entered into a securities
purchase agreement (the “SPA”) with Imperalis, whereby TurnOnGreen
will, upon closing, become a subsidiary of Imperalis (the
“Acquisition”). Upon completion of the Acquisition, which is
contingent upon the completion of an audit of TurnOnGreen and each
party’s satisfaction or waiver of certain customary closing
conditions set forth in the SPA, Imperalis will change its name to
TurnOnGreen and, through an upstream merger whereby the current
TurnOnGreen shall cease to exist, have two operating subsidiaries,
TOG Technologies Inc. and Digital Power Corporation. Promptly
following the closing of the Acquisition, Imperalis will dissolve
its three dormant subsidiaries. Subsequent to the Acquisition,
should it close, BitNile will assist TurnOnGreen in pursuing an
uplisting to the Nasdaq Capital Market, subject to Nasdaq’s
seasoning rules and other criteria for listing. BitNile anticipates
that stockholders of BitNile will in due course receive a dividend
of securities of TurnOnGreen. BitNile expects to distribute to
BitNile stockholders approximately 140 million of its common shares
and an equal number of warrants to purchase such shares of
TurnOnGreen at the time of the record date to be set therefor,
subject to regulatory approval and compliance with US federal
securities laws. Upon the closing of the Acquisition, TurnOnGreen
will continue to be led by its Chief Executive Officer, Amos Kohn
and its Chief Revenue Officer, Marcus Charuvastra.
Management intends, should the Acquisition not close, to explore
and identify business opportunities within the U.S., including a
potential acquisition of an operating entity through a reverse
merger, asset purchase, or similar transaction. Our Chief Executive
Officer has a degree of experience in business consulting and
reverse mergers, though no assurances can be given that he can
identify and implement a viable business strategy or that any such
strategy will result in revenues or profits. Our ability to
effectively identify, develop and implement a viable plan for our
business may be hindered by risks and uncertainties which are
beyond our control, including without limitation, the continued
negative effects of the coronavirus pandemic on the U.S. and global
economies.
We do not currently engage in any business activities that provide
revenue or cash flow. During the next 12-month period we anticipate
incurring costs in connection with the Acquisition or, should the
Acquisition not be consummated, in investigating, evaluating,
negotiating and consummating the potential acquisition of a
suitable target company, as well as filing all requisite SEC
reports.
Given our limited capital resources, we may consider an acquisition
of an entity that has recently commenced operations, is a
developing company or is otherwise in need of additional funds for
the development of new products or services or expansion into new
markets, or is an established business experiencing financial or
operating difficulties and is in need of additional capital.
Alternatively, a transaction may involve the acquisition of, or
merger with, an entity that desires access to the U.S. capital
markets.
Any target business that is selected may be financially unstable or
in the early stages of development. In such event, we expect to be
subject to numerous risks inherent in the business and operations
of a financially unstable or early-stage entity. In addition, we
may effect an acquisition with an entity in an industry
characterized by a high level of risk or in which our management
has limited experience, and, though our management will endeavor to
evaluate the risks inherent in a particular target business, there
can be no assurance that we will properly ascertain or assess all
significant risks.
Our management anticipates that we will likely only be able to
effect one acquisition due to our limited capital. This lack of
diversification will likely pose a substantial risk in investing in
the Company for the indefinite future because it will not permit us
to offset potential losses from one venture or operating territory
against gains from another. The risks we face will likely be
heightened to the extent we acquire a business operating in a
single industry or geographical region.
Based upon our current operations, we do not have sufficient
working capital to fund our operations over the next 12 months. If
we are able to close a reverse merger, it is likely we will need
capital as a condition of closing that acquisition. Because of the
uncertainties, we cannot be certain as to how much capital we need
to raise or the type of securities we will be required to issue. In
connection with a reverse merger, we will be required to issue a
controlling block of our securities to the target’s shareholders
which will be very dilutive. Additional issuances of equity or
convertible debt securities will result in dilution to our current
shareholders. Further, such securities might have rights,
preferences, or privileges senior to our common stock. Additional
financing may not be available upon acceptable terms, or at all. If
adequate funds are not available or are not available on acceptable
terms, we may not be able to take advantage of prospective new
business endeavors or opportunities, which could significantly and
materially restrict our business operations.
We anticipate that we will incur operating losses in the next 12
months, principally costs related to operating any target company
that we may acquire and filing reports with the SEC. Our prospects
must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of
development. Such risks for us include, but are not limited to, an
evolving and unpredictable business model, recognition of revenue
sources, and the management of growth. To address these risks, we
must, among other things, develop, implement, and successfully
execute our business and marketing strategy, respond to competitive
developments, and attract, retain, and motivate qualified
personnel. There can be no assurance that we will be successful in
addressing such risks, and the failure to do so could have a
material adverse effect on our business prospects, financial
condition, and results of operations.
Results of Operations
For the Three Months Ended March 31, 2022 and
2021
|
|
March 31, 2022 |
|
March 31, 2021 |
|
Movement ($) |
|
Movement (%) |
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Cost of sales |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Gross profit |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rent |
|
|
- |
|
|
|
1,428 |
|
|
|
(1,428 |
) |
|
|
(100% |
) |
General &
administration |
|
|
9,645 |
|
|
|
21,554 |
|
|
|
(11,909 |
) |
|
|
(55% |
) |
Depreciation |
|
|
- |
|
|
|
575 |
|
|
|
(575 |
) |
|
|
100% |
|
Owners compensation |
|
|
- |
|
|
|
25,000 |
|
|
|
(25,000 |
) |
|
|
100% |
|
Total operating expenses |
|
|
9,645 |
|
|
|
48,557 |
|
|
|
(38,912 |
) |
|
|
(80% |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from
operations |
|
|
(9,645 |
) |
|
|
(48,557 |
) |
|
|
38,912 |
|
|
|
(80% |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
- |
|
|
|
2 |
|
|
|
(2 |
) |
|
|
(100% |
) |
Amortization of debt
discount |
|
|
(2,917 |
) |
|
|
(9,375 |
) |
|
|
6,458 |
|
|
|
(69% |
) |
Interest expense -
related party |
|
|
(2,538 |
) |
|
|
- |
|
|
|
(2,538 |
) |
|
|
(100% |
) |
Interest expense |
|
|
(1,629 |
) |
|
|
(3,180 |
) |
|
|
1,551 |
|
|
|
(49% |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss before
taxes |
|
|
(16,729 |
) |
|
|
(61,110 |
) |
|
|
44,381 |
|
|
|
(73% |
) |
Provision for income taxes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
before taxes |
|
$ |
(16,729 |
) |
|
$ |
(61,110 |
) |
|
$ |
44,381 |
|
|
|
(73% |
) |
Revenue and Gross Profit
The Company had no revenue or gross profit during the three months
ended March 31, 2022 and 2021.
Operating Expenses
For the three months ended March 31, 2022, general and
administration expenses consisted of accounting fees, legal fees
and filing fees of $5,500, $2,880 and $1,265, respectively. These
costs were mainly incurred in connection with debt financing, SEC
related fillings and Exchange Agreement. For the three months ended
March 31, 2021, general and administration expenses consisted
mainly of legal fees and utilities of $20,000 and $1,554,
respectively. The legal fees were mainly incurred in connection
with debt financing
Owner’s compensation incurred in prior year represents a one-time
payment of $25,000 to our former chief executive officer for
services rendered.
In the three months ended March 31, 2022, amortization of debt
discount on convertible note payable decreased by $6,458, or over
69%, because of partial amortization in the current period relative
to a full three month amortization in the prior period.
Interest expense – related party consisted of interest expense on
convertible note payable. Increase in interest expense by $2,538 or
100% is mainly attributed to convertible note payable financing
issued in December 2021.
Interest expense consisted of interest expense on note payable and
convertible note payable. Decrease in interest expense by $1,551 or
49% is mainly attributed to settlement of note payable and
convertible notes payable that matured during 2021.
Net Loss
We realized a net loss of $16,729 for the three months ended March
31, 2022, compared to a net loss of $61,110 for the three months
ended March 31, 2021, representing a decrease in net loss of
$44,381, or 73%.
Liquidity and Capital Resources
As of March 31, 2022, we had approximately $3,859 in our operating
bank account and $491 in our trust account. To date, our liquidity
has been satisfied through proceeds received from issuance of note
payables, convertible note payables and shareholder loans. Control
of our company was sold on December 16, 2021 to an activist
investor who has a strong track record of raising public and
private debt. Based on the foregoing, management believes that we
will have sufficient working capital and borrowing capacity to meet
our needs through the earlier of the consummation of an acquisition
or one year from this filing. Over this time period, we will be
using our cash for paying existing accounts payable, identifying
and evaluating prospective target companies, performing due
diligence on prospective target companies, paying for travel
expenditures, selecting the target company to merge with or
acquire, and structuring, negotiating and consummating the
acquisition of the target company.
Critical Accounting Estimates
Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States. The accounting
principles we use require us to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date
of the financial statements and amounts of income and expenses
during the reporting periods presented. We believe in the quality
and reasonableness of our critical accounting policies; however,
materially different amounts may be reported under different
conditions or using assumptions different from those that we have
applied. The accounting policies that have been identified as
critical to our business operations and to understanding the
results of our operations pertain valuation of inventories,
valuation of long-lived assets, intangible assets, and valuation
allowances for deferred tax assets. The application of each of
these critical accounting policies and estimates is discussed In
Part II, Item 7, Management’s Discussion and Analysis of
Financial Condition and Results of Operations, of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2021,
from which there have been no material changes.
Recently Issued Accounting Pronouncements
Our management has considered all recent accounting pronouncements
issued since the last audit of our financial statements. Our
management believes that these recent pronouncements will not have
a material effect on our financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
Because we are a smaller reporting company, this section is not
applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
As of March 31, 2022, our management, with the participation and
supervision of our principal executive officer and our principal
financial officer, evaluated our disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act). The term “disclosure controls and procedures,” as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means
controls and other procedures of a company that are designed to
ensure that information required to be disclosed by a company in
the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time
periods specified in the SEC’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by a
company in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the Company’s management,
including its principal executive and principal financial officers,
as appropriate to allow timely decisions regarding required
disclosure. Management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only
reasonable assurance of achieving their objectives and management
necessarily applies its judgment in evaluating the cost benefit
relationship of possible controls and procedures. Based on this
evaluation, our principal executive officer and our principal
financial officer concluded that our disclosure controls and
procedures were effective as of March 31, 2022 to provide
reasonable assurance that information we are required to disclose
in reports that we file or submit under the Exchange Act is
recorded, processed, summarized, and reported within the time
periods specified in SEC rules and forms, and that such information
is accumulated and communicated to our management, including our
principal executive officer and our principal financial officer, as
appropriate, to allow timely decisions regarding required
disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our
internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) occurred during the quarter ended March 31,
2022 that has materially
affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may be subject to legal proceedings. We are
not currently a party to or aware of any proceedings that we
believe will have, individually or in the aggregate, a material
adverse effect on our business, financial condition or results of
operations. Regardless of outcome, litigation can have an adverse
impact on us because of defense and settlement costs, diversion of
management resources, and other factors.
ITEM 1A. RISK FACTORS.
Because we are a smaller reporting company, this section is not
applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES OR USE OF
PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
*Filed herewith.
** This certification will not be deemed “filed” for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or otherwise subject to the liability of that
section. Such certification will not be deemed to be incorporated
by reference into any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except to the extent specifically
incorporated by reference into such filing.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this Annual Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: May 16, 2022
|
IMPERALIS HOLDING CORP. |
|
|
|
By: /s/ Darren
Magot |
|
Darren Magot |
|
Chief
Executive Officer |
|
(Principal Executive Officer) |
|
|
|
By: /s/ David J. Katzoff |
|
David J. Katzoff |
|
Chief Financial
Officer |
|
(Principal Financial and
Accounting Officer) |
15
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