IMHC Imperalis Holding Corporation (PK)

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.

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.