| 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” within
the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. 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. We intend such forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including
this statement for purposes of complying with those safe-harbor provisions. 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 effect on our operations and future prospects 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.
Company Overview
Corporate History
Next Meats Holdings, Inc. (we, us, our, or the
"Company"), formerly known as Turnkey Solutions, Inc., was incorporated on April 15, 2020 in the State of Nevada.
On
April 15, 2020, Paul Moody was appointed Chief Executive Officer, Chief Financial Officer, and Director of the Company, at the time known
as “Turnkey Solutions, Inc.”
On
October 1, 2020, the Company, at the time known as “Turnkey Solutions, Inc.” (the “Company” or “Successor”)
announced on Form 8-K plans to participate in a holding company reorganization (“the Reorganization” or “Merger”)
with Intermedia Marketing Solutions, Inc. (“IMMM” or “Predecessor”) and Intermedia Marketing Solutions Merger
Sub, Inc. (“Merger Sub”) collectively (the “Constituent Corporations”) pursuant to NRS 92A.180, NRS A.200, NRS
92A.230 and NRS 92A.250. Immediately prior to the Reorganization, the Company was a direct and wholly owned subsidiary of Intermedia Marketing
Solutions, Inc. and Intermedia Marketing Solutions Merger Sub, Inc. was a direct and wholly owned subsidiary of the Company.
The
effective date and time of the Reorganization was October 28, 2020 at 4PM PST (the “Effective Time”). The entire plan of Merger
is on file with Nevada Secretary of State (“NSOS”) and included in the Articles of Merger pursuant to NRS 92A.200 Nevada Secretary
of State (“NSOS”) and attached to and made a part thereof to the Articles of Merger pursuant to NRS 92A.200 filed with NSOS
on October 16, 2020. At the Effective Time, Predecessor merged with and into its indirect and wholly owned subsidiary, Merger Sub with
Predecessor as the surviving corporation resulting in Predecessor as a wholly owned subsidiary of the Company.
Concurrently
and after the Effective Time, the Company cancelled all of its stock held in Predecessor resulting in the Company as a stand-alone and
separate entity with no subsidiaries, no assets and negligible liabilities. The assets and liabilities of Predecessor, if any, remained
with Predecessor. The Company abandoned the business plan of its Predecessor and resumed its former business plan of a blank check company
after completion of the Merger.
Full
details pertaining to the Reorganization can be viewed in the Company’s Form 8-K filed with the Securities and Exchange
Commission on October 29, 2020.
On
November 18, 2020 our now former controlling shareholder, Flint Consulting Services, LLC sold 35,000,000 shares of common stock to
Next Meats Co., Ltd., a Japan Company. Next Meats Co., Ltd. is a Japanese Company that operates in the “alternative
meat” industry. It currently offers, and plans to continue to offer, amongst other things, plant based food products. As will
be described later on, Next Meats Co., Ltd. is now a wholly owned subsidiary of the Company.
On
November 18, 2020, Paul Moody resigned from his position of Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer
and Director.
Simultaneous
to Paul Moody’s resignations, Ryo Shirai was appointed as our Chief Executive Officer and Director, Hideyuki Sasaki as our Chief
Operating Officer and Director, and Koichi Ishizuka as our Chief Financial Officer.
On
January 8, 2021 our now former majority shareholder, Next Meats Co., Ltd., a Japan Company, along with our Board of Directors, took
action to ratify, affirm, and approve a name change of the Company from Turnkey Solutions, Inc., to Next Meats Holdings, Inc. The
Company filed a Certificate of Amendment with the Nevada Secretary of State (“NVSOS”) to enact the name change with an
effective date of January 19, 2021. This was previously disclosed in the Form 8-K we filed with the Securities and Exchange
Commission on January 25, 2021.
Also
on January 8, 2021, our now former majority shareholder Next Meats Co., Ltd., along with our Board of Directors took action to ratify,
affirm, and approve a change of the Company’s ticker symbol from TKSI to NXMH.
Pursuant
to the above, the Company carried out a FINRA corporate action. As a result of the aforementioned actions the Company’s CUSIP number
was changed from 90043H102 to 65345L 100. The change in
CUSIP, name change, and symbol change were posted on the FINRA daily list on January 25, 2021 with a market effective date of January
26, 2021.
On
January 28, 2021, Next Meats Co., Ltd., along with our Board of Directors, took action to ratify, affirm, and approve the issuance of
452,352,298 shares of restricted common stock to Next Meats Co., Ltd. The shares were issued for services rendered to the Company.
On
June 9, 2021 the Company entered into a “Share Cancellation and Exchange Agreement” (referred to herein as “the Agreement”)
with Next Meats Co., Ltd., a Japan Company. Pursuant to the Share Cancellation and Exchange Agreement, effective on December 16,
2021, Next Meats Holdings, Inc. acquired Next Meats Co., Ltd. as a wholly owned subsidiary. Commensurate with this action, there was
a conversion of the Next Meats Holdings, Inc. percentile share interest in exchange for the Company’s 100% share interest in Next
Meats Co., Ltd. Immediately prior to the effective time, each (now former) shareholder of Next Meats Co., Ltd. cancelled and exchanged
their percentile share interest in Next Meats Co., Ltd. for an equivalent percentile share interest in Next Meats Holdings, Inc. at a
pro rata percentage. As a result of the Share Cancellation and Exchange Agreement, we now own 100% of the issued and outstanding shares
of Next Meats Co., Ltd., which constitutes 1,000 shares of common stock.
We
believe that the aforementioned transaction(s) relating to the Share Cancellation and Exchange Agreement described above constituted a
tax-free organization pursuant to Section 368(a)(1) of the Internal Revenue Code. Full details of the Share Cancellation and Exchange
Agreement are contained within our Form 8-K filed with the Securities and Exchange Commission on December 16, 2021.
Following
the acquisition of Next Meats Co., Ltd. on December 16, 2021, we ceased to be a shell company. Currently, and going forward, we
intend to act as a holding company for our subsidiaries which develop and sell plant based food products.
On
or about July 20, 2021 we had acquired 5,000 shares of Series Z Preferred Stock of Dr. Foods, Inc., formerly known as
“Catapult Solutions, Inc.,” a Nevada Company, from CRS Consulting, LLC, a Wyoming Limited Liability Company
(“CRS”).
On
December 28, 2021, Ryo Shirai resigned as our Chief Executive Officer and was appointed Chairman of the Board of Directors.
The
resignation of Mr. Ryo Shirai, as Chief Executive Officer, was not the result of any disagreement with the Company on any matter
relating to its operations, policies, or practices.
On
December 28, 2021, Mr. Koichi Ishizuka was appointed Chief Executive Officer of the Company.
On
December 28, 2021 we filed an amendment to our Articles of Incorporation with the Nevada Secretary of State, resulting in an increase
to our authorized shares of Common Stock from 500,000,000 to 1,000,000,000.
On
or about December 29, 2021, we sold 270,929 shares of restricted Common Stock to Demic Co., Ltd.., a Japanese Company, at a price of $2.00
per share of Common Stock. The total subscription amount paid by Demic Co., Ltd. was approximately $541,858. Demic Co., Ltd. is not considered
a related party to the Company.
The
proceeds from the sale of shares went to the Company to be used as working capital.
On
or about December 29, 2021, we sold 882,257 shares of restricted Common Stock to Kiyoshi Kobayashi, a Japanese Citizen, at a price of
$2.00 per share of Common Stock. The total subscription amount paid by Kiyoshi Kobayashi was approximately $1,764,513. Kiyoshi Kobayashi
is not considered a related party to the Company.
The
proceeds from the sale of shares went to the Company to be used as working capital.
On
or about February 4, 2022, we sold 208,855 shares of restricted Common Stock to Daisuke Kuroika, a Japanese Citizen, at a price of $2.10
per share of Common Stock. The total subscription amount paid by Daisuke Kuroika was approximately $438,596. Daisuke Kuroika is not considered
a related party to the Company.
The
proceeds from the sale of shares went to the Company to be used as working capital.
On
or about March 7, 2022, we sold 668,780 shares of restricted Common Stock to Yakuodo Co., Ltd., a Japanese Company, at a price of $1.30
per share of Common Stock. The total subscription amount paid by Yakuodo Co., Ltd. was approximately $869,414. Yakuodo Co., Ltd. is not
considered a related party to the Company.
The
proceeds from the sale of shares went to the Company to be used as working capital.
On
or about March 29, 2022, we sold 133,779 shares of restricted Common Stock to Hidemi Arasaki, a Japanese Citizen, at a price of $1.30
per share of Common Stock. The total subscription amount paid by Hidemi Arasaki was approximately $173,913. Hidemi Arasaki is not a related
party to the Company.
The
proceeds from the sale of shares went to the Company to be used as working capital.
On
or about April 5, 2022, we sold 91,000 shares of restricted Common Stock to Interwoos Co., Ltd., a Japanese Company, at a price of $0.90
per share of Common Stock. The total subscription amount paid by Interwoos Co., Ltd. was approximately $81,900. Interwoos Co., Ltd. is
not a related party to the Company.
The
proceeds from the sale of shares went to the Company to be used as working capital.
The
aforementioned sales of shares detailed above were conducted pursuant to Regulation S of the Securities Act of 1933, as amended ("Regulation
S"). The sales of shares were made only to non-U.S. persons/entities (as defined under Rule 902 section (k)(2)(i) of Regulation S), pursuant
to offshore transactions, and no directed selling efforts were made in the United States by the issuer, a distributor, any of their respective
affiliates, or any person acting on behalf of any of the foregoing.
On
or about July 1, 2022, we sold the 5,000 shares of Series Z Preferred Stock of Dr. Foods, Inc., a Nevada Company (“DRFS”),
to White Knight Co., Ltd., a Japan Company (“WK”), at a price of approximately $147,624 USD (20,000,000 Japanese Yen) (“The
Share Purchase Agreement”). White Knight Co., Ltd. is owned and controlled by our Chief Executive Officer, Koichi Ishizuka. White
Knight Co., Ltd. is deemed to be an accredited investor. The purchase of shares was made for investment purposes. The consummation of
the transaction contemplated by the Share Purchase Agreement resulted in us no longer having an equity position in DRFS and with WK becoming
the largest controlling shareholder of DRFS.
We
intend to use the proceeds from the aforementioned sale for working capital.
The
Board of Directors of NXMH, WK, and DRFS unanimously approved the above transaction.
The
aforementioned sale of shares was conducted pursuant to Regulation S of the Securities Act of 1933, as amended ("Regulation S"). The sale
of shares was made only to non-U.S. persons/entities (as defined under Rule 902 section (k)(2)(i) of Regulation S), pursuant to offshore
transactions, and no directed selling efforts were made in the United States by the issuer, a distributor, any of their respective affiliates,
or any person acting on behalf of any of the foregoing.
On
July 12, 2022, Mr. Ryo Shirai resigned as the Company’s Chairman of the Board of Directors and as a Director. Mr. Shirai's resignations
are a result of personal health issues. The resignations of Mr. Ryo Shirai were not the result of any disagreement with the Company on
any matter relating to its operations, policies, or practices.
The
Company’s Board of Directors is now only comprised of two members.
On or about November 28, 2022, we sold 306,680 shares of restricted Common Stock to Motohiro Tomiyama, a Japanese Citizen, at a price
of $0.67 per share of Common Stock. The total subscription amount paid by Motohiro Tomiyama was approximately $205,470. Motohiro Tomiyama
is not a related party to the Company. The proceeds from this sale are to be used by the Company for working capital. Following the sale
of restricted common shares to Motohiro Tomiyama, we now have 502,562,280 shares of Common Stock issued and outstanding.
On
November 22, 2022, Ryo Shirai sold 8,229,451 shares of restricted Common Stock of the Issuer to White Knight Co., Ltd., a Japanese Company
owned and controlled by Koichi Ishizuka, the Chief Executive Officer, Chief Financial Officer, and Chairman of the Board of Directors
of the Company, at a price of $0.001 per share of Common Stock. The total subscription amount paid by White Knight Co., Ltd. was approximately
$8,229. Ryo Shirai was formerly the Company’s Chief Executive Officer and Chairman of the Board of Directors, until his resignations
on December 28, 2021.
On
November 22, 2022, Ryo Shirai sold 79,521,051 shares of restricted Common Stock of the Issuer to Koichi Ishizuka, a Japanese Citizen,
at a price of $0.001 per share of Common Stock. The total subscription amount paid by Koichi Ishizuka was approximately $79,521.
On
November 22, 2022, Ryo Shirai sold 25,112,780 shares of restricted Common Stock of the Issuer to Hiroki Tajiri, a Japanese Citizen, at
a price of $0.001 per share of Common Stock. The total subscription amount paid by White Knight Co., Ltd. was approximately $25,113. Hiroki
Tajiri is a board member of Next Meats Co., Ltd., a subsidiary of Next Meats Holdings, Inc.
On
November 22, 2022, Hideyuki Sasaki sold 112,863,282 shares of restricted Common Stock of the Issuer to White Knight Co., Ltd., a Japanese
Company owned and controlled by Koichi Ishizuka, at a price of $0.001 per share of Common Stock. The total subscription amount paid by
White Knight Co., Ltd. was approximately $112,863. Hideyuki Sasaki is currently the Chief Operating Officer, and a Director, of the Company.
As
a result of the sales of Common Stock conducted by Ryo Shirai and Hideyuki Sasaki, the controlling shareholder of the Company is now Koichi
Ishizuka, directly and through his control of White Knight Co., Ltd.
Following
the above transactions, Ryo Shirai retains 50,225,560 shares of restricted common stock of the Company while Hideyuki Sasaki also retains
50,225,560 shares of restricted common stock of the Company.
The
aforementioned sale of shares was conducted pursuant to Regulation S of the Securities Act of 1933, as amended ("Regulation S"). The sale
of shares was made only to non-U.S. persons/entities (as defined under Rule 902 section (k)(2)(i) of Regulation S), pursuant to offshore
transactions, and no directed selling efforts were made in the United States by the issuer, a distributor, any of their respective affiliates,
or any person acting on behalf of any of the foregoing.
In December of 2022, we dissolved NextMeats France, a French Entity. We do not believe there to be a great enough demand for our products
in France and surrounding areas, although we do still intend to offer our products in areas of Europe in the future.
-3-
Table of Contents
Assets
As of October 31, 2022, we had cash and cash equivalents of $58,140. As
of April 30, 2022, we had cash and cash equivalents of $620,297. We believe that we had our cash and cash equivalents decreased as of
October 31, 2022, when compared to April 30, 2022, because our revenues have continued to decrease over the past twelve months, resulting
in less available cash on hand. Information regarding our revenue is detailed below in the section titled, “Revenue”.
Our total current assets were $1,946,486 as of October 31, 2022, and $3,842,764
as of April 30, 2022. As of October 31, 2022 we had $145,991 in short terms loans receivable, compared to none as of April 30, 2022. As
of October 31, 2022, we had $136,395 in advance payments and prepaid expenses, compared to $1,335,832 as of April 30, 2022. In addition
to a decrease in available cash and cash equivalents, a decrease in advance payments was a primary contributor to our lesser current assets
as of October 31, 2022 when compared to April 30, 2022.
Our non-current assets were $1,353,621 as of October 31, 2022 and $1,885,836
as of April 30, 2022. As of October 31, 2022, we had fewer non-current assets, when compared to April 30, 2022, which we attribute to
various factors which include, but are not limited to, lesser net depreciation, construction in progress, land and improvements, no deferred
assets, lesser security deposits, and no stock (invested securities) held.
Our cash balance is not sufficient to fund our limited levels of operations
for any period of time. In order to implement our plan of operations for the next twelve-month period, we require further funding. After
a twelve-month period we may need additional financing but currently do not have any arrangements for such financing.
Revenue
For the three-month period ended October 31, 2022 we realized revenues
of $465,868, cost of revenues of $422,604 and gross profits of $43,264. For the three-month period ended October 31, 2021 we realized
revenues of $3,815,510, cost of revenues of $3,805,247 and gross profits of $10,263. While our gross profit increased for the three-month
period ended October 31, 2022, when compared to the three-month period ended October 31, 2021, we realized significantly less revenue
over the same period.
For the six-month period ended October 31, 2022 we also realized a dramatic
decrease in revenue over the same period for the year prior. For the six-month period ended October 31, 2022 we realized revenues of $871,315,
cost of revenues of $767,460 and a gross profit of $103,855. For the six-month period ended October 31, 2021 we realized revenues of $5,184,080,
cost of revenues of $5,075,142 and a gross profit of $108,938.
Globally speaking, many markets, industries, and nations have been affected
by rising costs, inflation, and a decreased demand for products. We believe the products we offer, and continue to offer, to be a ‘premium’
alternative to traditional food options, which typically coincides with increased costs. Given the condition of the global economy, we
believe there is likely less demand for premium alternatives to traditional food products, such as those we currently offer. Over the
course of the last year, we believe we have been affected by decreased demand for our products, resulting in less revenue for the three
and six months ended October 31, 2022.
Previously, we also had a wider selection of food options and other facets
of our business which we believe drove revenues. Specifically, from time to time we would engage in the wholesale sale of rice, however
we no longer engage in the wholesale sale of rice because our previous sole supplier is no longer in business. We believe that due to
the current downtrend in the global economy, that such efforts should not recommence, if at all, until the global economy recovers to
pre-pandemic levels.
At this time, we also no longer offer “Next Milk” which we
believed would gain popularity in the near term. Various components of the products we offered, or seek to continue to offer, are either
not available, or available at price points that are as attractive. As a result, at this time, it is difficult for us to produce cost
effective products that we believe would rival the cost of generic food products, and thus bolster our revenues. We believe many consumers
are purchasing more cost-effective options. Because of this, we are exploring means to lessen the cost of our product lineup while maintaining
what we believe to be the same quality products, but we cannot forecast with any level of certainty if such efforts will be successful.
Much of these endeavors rely on our ability to source ingredients at a lesser cost, which, at this time, is a challenge.
If we need additional cash and cannot raise it, we will either have to
suspend operations until we do raise the cash we need, or cease operations entirely. Given our revenue is not sufficient to cover our
operating expenses we have and expect to continue to rely on related party contributions by our officers and directors, as well as proceeds
from the sale of shares of our common stock that we may sell from time to time.
Expenses
For the three-month period ended October 31, 2022 we incurred total operating
expenses of $789,375, which was comprised of $7,913 in depreciation and $781,375 in general and administrative expenses. For the three-month
period ended October 31, 2021 we incurred total operating expenses of $1,174,651, which was comprised of $13,119 in depreciation and $1,161,532
in general and administrative expenses. As a result of, primarily, a significant decrease in general and administrative expenses, our
total operating expenses for the three months ended October 31, 2022 have decreased compared to our total operating expenses for the three
months ended October 31, 2021.
For the six-month period ended October 31, 2022 we incurred total operating
expenses of $1,750,845, which was comprised of $17,982 in depreciation and $1,732,864 in general and administrative expenses. For the
six-month period ended October 31, 2021 we incurred total operating expenses of $2,395,997, which was comprised of $24,750 in depreciation
and $2,371,247 in general and administrative expenses. For this period of time, we also believe that as a result of, primarily, a significant
decrease in general and administrative expenses, our total operating expenses for the six months October 31, 2022 have decreased compared
to our total operating expenses for the six months ended October 31, 2021.
Net Loss
For the three months ended October 31, 2022, we incurred a net loss of
$786,740, whereas for the three-month period ended October 31, 2021 we incurred a net loss of $1,165,033. For the six months ended October
31, 2022 we incurred a net loss of $1,729,238, whereas for the six months ended October 31, 2021 we incurred a net loss of $2,329,537.
For both of the aforementioned periods, the variance in net loss is a result of our decreased business activity.
Corporate Plans
To remediate some of the above issues, notably those regarding decreased
revenue, we intend to continue to roll out new products which we believe may have a broader appeal and more attractive price points. We
are currently exploring a few new products based upon “Oats”. We believe such products might appeal to a wider audience and
result in an ability to offer such products at a lower price point.
It should be emphasized that we currently offer, and intend to offer, products
that are plant based. Not all products we offer, or intend to continue to offer, are strictly replacements or substitutes to traditional
meat products.
Additional information regarding the Company, its products, and its mission
can be found on its website: www.nextmeats.co.jp
Other Corporate Updates
In December of 2022 we dissolved NextMeats France, a French Entity. We
do not believe there to be a great enough demand for our products in France and surrounding areas, although we do still intend to offer
our products in areas of Europe in the future.
We have also paused efforts to pursue selling products in Hong
Kong under our wholly owned subsidiary, Next Meats HK Co. Limited (“Next Meats HK”), a Hong Kong Company. We do not believe
the current market would be conducive to our business objectives in this area at this point in time. However, we will reassess this decision
in the future, although we cannot specifically identity when that may be. Next Meats HK Co. Limited remains a wholly owned subsidiary
of the Company.
Going
Concern
The
Company demonstrates adverse conditions that raise substantial doubt about the Company's ability to continue as a going concern for
one year following the issuance of these financial statements for the period ending October 31, 2022. These adverse conditions are
negative financial trends, specifically operating loss, working capital deficiency, and other adverse key financial
ratios.
The
Company has not recorded enough revenue to cover its operating costs. Currently, management plans to fund some operating expenses
with related party contributions to capital, or through the sale of equity, until there is sufficient revenue to cover all operating
expenses. There is no assurance that management's plans will be successful. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be
necessary in the event that the Company cannot continue as a going concern.