UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarterly period ended
or
For the transition period from __________ to __________
Commission file number
(Exact name of registrant as specified in its charter)
| 7372 | ||||||
| (State or Other Jurisdiction of Incorporation or Organization) |
(IRS Employer Identification Number) |
(Primary Standard Industrial Classification Code Number) | ||||
|
234 901 8927 Phone: + Email: principal@tofla.top |
||||||
| (Address, including Zip Code, and Telephone Number, including Area Code, of Registrant's Principal Executive Office) | ||||||
| Securities registered under Section 12(b) of the Exchange Act: | ||||
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| N/a | N/a | N/a | ||
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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.
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).
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 (check one):
| Large accelerated filer | [ ] | Accelerated filer | [ ] |
| [X] | Smaller reporting company | ||
| (Do not check if a smaller reporting company) | 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 7(a)(2)(B) of the Securities Act.
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ]
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: common shares issued and outstanding as of March 8, 2024.
TOFLA MEGALINE INC.
FORM 10-Q
Quarterly Period Ended January 31, 2024
INDEX
| Page | ||
| PART I | FINANCIAL INFORMATION: | |
| Item 1. | Condensed Financial Statements (Unaudited) | 5 |
| Condensed Balance Sheets as of January 31, 2024 (Unaudited) and July 31, 2023 | 6 | |
| Condensed Statements of Operations for the three and six months ended January 31, 2024 and 2023 (Unaudited) | 7 | |
| Condensed Statements of Stockholders' Equity (Deficit) for the three and six months ended January 31, 2024 and 2023 (Unaudited) | 8 | |
| Condensed Statements of Cash Flows for the six months ended January 31, 2024 and 2023 (Unaudited) | 9 | |
| Notes to the Condensed Financial Statements (Unaudited) | 10 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 18 |
| Item 4. | Controls and Procedures | 18 |
| PART II | OTHER INFORMATION: | |
| Item 1. | Legal Proceedings | 19 |
| Item 1A | Risk Factors | 19 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 19 |
| Item 3. | Defaults Upon Senior Securities | 19 |
| Item 4. | Mine Safety Disclosures | 19 |
| Item 5. | Other Information | 19 |
| Item 6. | Exhibits | 19 |
| Signatures | 20 |
PART I - FINANCIAL INFORMATION
| Item 1. | Financial Statements |
The accompanying interim financial statements of Tofla Megaline Inc. (“the Company”, “we”, “us” or “our”), have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted principles have been condensed or omitted pursuant to such rules and regulations.
The interim financial statements are condensed and should be read in conjunction with the Company’s latest annual financial statements.
In the opinion of management, the financial statements contain all material adjustments, consisting only of normal adjustments considered necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.
5
TOFLA MEGALINE INC.
CONDENSED BALANCE SHEETS
| January 31, 2024 | July 31, 2023 | |||
| (Unaudited) | ||||
| ASSETS | ||||
| Current Assets | ||||
| Cash | $ | $ | ||
| Prepaid Expenses | ||||
| Total Current Assets | ||||
| Intangible Assets, Net | ||||
| TOTAL ASSETS | $ | $ | ||
| LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT) | ||||
| Liabilities | ||||
| Current Liabilities | ||||
| Accounts Payable | $ | $ | ||
| Related Party Loan | ||||
| Total Current Liabilities | ||||
| Total Liabilities | ||||
| Stockholders’ Equity (Deficit) | ||||
Common Stock, $ par value, shares authorized, shares issued and outstanding as of January 31, 2024 and July 31, 2023 |
||||
| Additional Paid-in Capital | ||||
| Accumulated Deficit | ( |
( | ||
| Total Stockholders’ Equity (Deficit) | ( |
|||
| TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ |
The accompanying notes are an integral part of these condensed financial statements.
6
TOFLA MEGALINE INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
|
Three months ended January 31, 2024 |
Three months ended January 31, 2023 |
Six months ended January 31, 2024 |
Six months ended January 31, 2023 | |||||
| Revenues | ||||||||
| Software Sales | $ | $ | $ | $ | ||||
| Total Revenues | ||||||||
| Operating Expenses | ||||||||
| General and Administrative Expenses | ||||||||
| Amortization Expense | ||||||||
| Server Rental | ||||||||
| Total Operating Expenses | ||||||||
|
Net Income (Loss) from Operations |
( |
( |
( | |||||
| Income Tax Expense | ||||||||
| Net Income (Loss) | $ | $ | ( |
$ | ( |
$ | ( | |
| Income (Loss) per Common Share – Basic & Diluted | $ | $ | ( |
$ | ( |
$ | ( | |
| Weighted Average Number of Common Shares Outstanding-Basic & Diluted | ||||||||
The accompanying notes are an integral part of these condensed financial statements.
7
TOFLA MEGALINE INC.
CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
For the three and six months ended January 31, 2024 and 2023
(Unaudited)
| Common Stock | Additional Paid-in-Capital |
Accumulated Deficit |
Total | |||||||||
| Shares | Amount | |||||||||||
| Balance as of July 31, 2022 | $ | $ | $ | ( |
$ | ( | ||||||
| Common shares issued for cash | ||||||||||||
| Net loss for the period | - | ( |
( | |||||||||
| Balance as of October 31, 2022 | ( |
( | ||||||||||
| Common shares issued for cash | ||||||||||||
| Net loss for the period | - | ( |
( | |||||||||
| Balance as of January 31, 2023 | $ | $ | $ | ( |
$ | ( | ||||||
| Balance as of July 31, 2023 | $ | $ | $ | ( |
$ | |||||||
| Net loss for the period | - | ( |
( | |||||||||
| Balance as of October 31, 2023 | ( |
( | ||||||||||
| Net income for the period | - | |||||||||||
| Balance as of January 31, 2024 | $ | $ | $ | ( |
$ | ( | ||||||
The accompanying notes are an integral part of these condensed financial statements.
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TOFLA MEGALINE INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
Six months ended January 31, 2024 |
Six months ended January 31, 2023 | |||
| OPERATING ACTIVITIES | ||||
| Net Income (Loss) | $ | ( |
$ | ( |
| Adjustments to reconcile Net Income to net cash provided by operations: |
||||
| Amortization | ||||
| Changes in operating assets and liabilities: | ||||
| Prepaid Expense | ||||
| Accounts Payable | ( |
|||
| Cash Flows Provided by (Used in) Operating Activities | ( |
( | ||
| INVESTING ACTIVITIES | ||||
| Purchase of Intangible Assets | ( |
( | ||
| Cash Flows Used in Investing Activities | ( |
( | ||
| FINANCING ACTIVITIES | ||||
| Proceeds from the sale of common stock | ||||
| Repayments on related party loan | ( |
( | ||
| Proceeds from related party loan | ||||
| Cash Flows Provided by Financing Activities | ||||
| Net cash increase (decrease) for period | ( |
|||
| Cash at beginning of period | ||||
| Cash at end of period | $ | $ | ||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||
| Cash paid during the period for: | ||||
| Interest | $ | $ | ||
| Income taxes | $ | $ | ||
The accompanying notes are an integral part of these condensed financial statements.
9
TOFLA MEGALINE INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
JANUARY 31, 2024
(Unaudited)
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Tofla Megaline Inc. (“the Company” or “we”) was incorporated under the laws of the State of Nevada, U.S. on August 31, 2018 (Inception). We are a development stage Company and have commenced operations in the business of developing software for security systems in Mexico.
NOTE 2 - GOING CONCERN
The unaudited condensed financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.
The Company
incurred net loss of $
The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with loans from directors and/or the private placement of common stock.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company are presented in US dollars and the Company has adopted a July 31 fiscal year-end.
The accompanying unaudited condensed financial statements have been prepared in accordance with the rules and regulations (Regulation S-X) of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the six months ended January 31, 2024, are not necessarily indicative of the operating results that may be expected for the year ending July 31, 2024. These unaudited condensed financial statements should be read in conjunction with the July 31, 2023 audited financial statements and notes thereto.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes.
Fair Value of Financial Instruments
ASC 820 "Fair Value Measurements and Disclosures" establishes a three-tier fair value hierarchy, which prioritizes the inputs in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.
These tiers include:
Level 1: defined as observable inputs such as quoted prices in active markets;
Level 2: defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
Level 3: defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The carrying value of cash and the Company's loan from shareholder approximates fair value due to their short-term maturity.
Impairment of Long-Lived Assets
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
Property and Equipment
Property and equipment are stated at cost and depreciated on the straight-line method over the estimated life of the asset, which is three years.
Intangible Asset
The Company accounts for its intangible assets in accordance with ASC Subtopic 350-40, Internal-Use Software-Computer Software Developed or Obtained for Internal Use, and ASC Subtopic 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. ASC Subtopic 350-40 requires assets to be recorded at the cost to develop the asset and requires an intangible asset to be amortized over its useful life and for the useful life to be evaluated every reporting period to determine whether events or circumstances warrant a revision to the remaining period of amortization. If the estimate of useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. Costs incurred to renew or extend the life of an intangible asset are expensed as incurred. The Company recognizes amortization in the month after the asset is placed in service.
In September 2021 the Company capitalized website development costs of $6,325, which is being amortized over a three-year life. As of January 31, 2024, the accumulated amortization for the software was $4,943.
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The Company also purchased video recording software at a cost of $10,000, which will be amortized over three years. As of January 31, 2024, the accumulated amortization related to the software was $5,417.
In November 2022 the Company purchased software for solutions for designing a perimeter security system at a cost of $15,500 which will be amortized over three years. In August 2023 the Company bought features for the software at a cost of $20,000 which will be amortized over three years As of January 31, 2024, the accumulated amortization for the software was $9,361.
In January 2023 the Company purchased a Global Brandmauer for remote management via the internet at a cost of $7,000 which will be amortized over three years. As of January 31, 2024, the accumulated amortization for the software was $2,333.
The Company had the following intangible assets as of January 31, 2024 and July 31, 2023:
| As of January 31, 2024 | As of July 31, 2023 | |||
| Website Development Costs | $ | 6,325 | $ | 6,325 |
| Video Recording Software | 10,000 | 10,000 | ||
| Software for Solutions for Designing a Perimeter Security System | 15,500 | 15,500 | ||
| Features for Software | 20,000 | - | ||
| Global Brandmauer for Remote Management via the Internet | 7,000 | 7,000 | ||
| Accumulated Amortization | (22,054) | (12,250) | ||
| Intangible Assets, Net | $ | $ | ||
During the three months ended January 31, 2024 and
2023 the Company recorded amortization expense of $4,902 and $2,221, respectively. During the six months ended January 31, 2024 and 2023
the Company recorded amortization expense of $
The Company expects to recognize amortization expense for the remainder of fiscal year ending July 31, 2024 of $9,804, amortization expense of $17,411 for the fiscal year ending July 31, 2025, and amortization expense of $9,556 for the fiscal year ending July 30, 2026.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Revenue Recognition
The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers”. The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract with the customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4. Allocate the transaction price. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
12
The Company generates revenue through the sale of software and by providing consulting or technical support services. For the sale of software, revenue is recognized at the point in time when the ownership of software (as approved by the customer) is transferred per the terms of a contract. The Company shall not be liable for any failure to perform its obligations if such failure is due to circumstances beyond its reasonable control. Any liability of the Company shall be limited to the total of all amounts paid by the customer for services under the contract. For consulting or technical support services, revenue is recognized as the services are provided.
The Company generally collects payment from customers
prior to transferring ownership of software or at the end of any service period and may require deposits from customers at the time an
order is placed. When deposits are collected prior to transferring ownership of software or before services are performed the Company
recognizes deferred revenue until the transfer is made or services are provided. During the six months ended January 31, 2024 and 2023,
the Company’s revenue was $
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 ‘Earnings per Share, which requires the presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.
Recent Accounting Pronouncements
The Company has reviewed all the recent accounting pronouncements issued to date of the issuance of these financial statements, and does not believe any of these pronouncements will have a material impact on the Company’s financial reporting.
The Company has 75,000,000 common shares authorized with a par value of $0.001 per share.
During August 2022 the Company issued 40,834 shares of common stock for cash proceeds of $1,225 at $0.03 per share.
During September 2022 the Company issued 29,333 shares of common stock for cash proceeds of $880 at $0.03 per share.
During October 2022 the Company issued 168,134 shares of common stock for cash proceeds of $5,044 at $0.03 per share.
During November 2022 the Company issued 328,400 shares of common stock for cash proceeds of $9,852 at $0.03 per share.
During December 2022 the Company issued 285,334 shares of common stock for cash proceeds of $8,560 at $0.03 per share.
As of January 31, 2024 and July 31, 20223 the Company had shares issued and outstanding.
13
NOTE 5 – RELATED PARTY TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders or directors. Amounts represent advances or amounts paid in satisfaction of liabilities.
Effective August 31, 2018 the Company’s CEO
and sole director formally agreed to advance funds to the Company to pay for professional fees and operating expenses under a $50,000
Loan Agreement. Effective April 20, 2022 the Company’s CEO and sole director formally agreed to advance additional funds to the
Company to pay for professional fees and operating expenses under a second $50,000 Loan Agreement. Both loan agreements are non-binding
and discretionary, bear no interest, are unsecured, and have no fixed due date, therefore, any amounts outstanding under these agreements
are considered due on demand. The Company’s CEO and sole director was due $
NOTE 6 – COMMITMENTS AND CONTINGENCIES
Contractual Commitments
The Company has entered into no contractual commitments as of January 31, 2024.
Litigation
The Company was not subject to any legal proceedings during the period from August 31, 2018 (Inception) to January 31, 2024 and no legal proceedings are currently pending or threatened to the best of our knowledge.
NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events from January 31, 2024 to the date the financial statements were issued and has determined that it does not have any material subsequent events to disclose in these financial statements.
14
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
DESCRIPTION OF BUSINESS
In General
Tofla Megaline Inc. (“Tofla” or “we” or "the Company") was incorporated in the state of Nevada on August 31, 2018. Tofla has only one officer and director who is Rodolfo Guerrero Angulo. We are a development stage Company and operate in the business of software development for robotic devices. We provide easy-to-use, high quality and cost-effective automation AI solutions. Tofla is focused on both stand-alone and integrated solutions in order to cover a broader selection of services, especially in the surveillance area. Using autonomous robotic units as a means of surveillance is a new tendency all over the globe. Robotic units can be used for patrolling warehouses, malls, backyards, office areas, buildings, etc. Our focus is on developing specialized software for the units that will cover all the necessary functionality for surveillance and data transfer. We have initiated business activities and have generated revenues, however, there is no assurance that we will be successful in developing our marketable product.
We specialize in software development for control equipment and security systems, with a focus on enhancing navigation capabilities, optimizing patrol routes, and seamless integration with existing surveillance systems. Our solutions can be integrated with established control equipment and security systems, or used as independent versions. Our current projects involve software integration with security and video surveillance systems, along with the development of customizable solutions that support long-distance navigation, and task completion. We also consider developing software solution that enables autonomous charging and docking, allowing robots autonomously return to charging stations, as well as enhancing gesture and voice recognition features.
Software Description
The software programs robotic units to follow specific routes while recording current situation with built-in cameras and analyzing them. Our system allows for real-time image transmission to the owner's device and features a GSM alarm function, enabling remote control over the internet to command the robot to respond to triggered sensors. The robotic units' patrol routes dynamically adapt based on emerging alarm situations, ensuring swift response to potential threats. The robotic units are able to detect security violations and send notifications or pursue trespassers in order to identify and gather their parameters, which may then be used for law enforcement purposes.
The software enables robotic units to operate both indoors and outdoors on different surfaces. Such robotic units may be easily stored at any location when not needed. However, their main focus is patrolling shopping centers, supermarkets, parking lots, large company offices, educational institutions, warehouses, private property, and other locations. Depending on customers’ requirements, we are planning to install additional functions and tune the standard ones.
15
Potential clients
We plan to offer our product to owners of big spaces such as parking lots, shopping malls, factories, corporate facilities, warehouses, restricted areas, private areas, airports, stations, educational and state institutions.
Marketing
We believe that the key marketing strategy for our type of business is online marketing. We plan to advertise our Company on the Internet via Google AdWords and Yahoo Ad Manager technologies using several online marketing strategies to attract users to our promotional website. It is going to contain information about the software we will develop, its applicable features, advantages, and contact information. Tofla is also going to create and maintain profiles in social networking websites like Twitter, Facebook, and Instagram.
We intend to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its target market. We plan to sell our software through direct emails, phone calls, business meetings and corporate presentations as well. Our sole officer and director, Rodolfo Guerrero Angulo, will be responsible for marketing of our product. Even if we are able to obtain sufficient number of customers to buy our software, there is no guarantee that it will cover our costs and that we will be able to retain enough customers to justify our expenditures. If we are unable to generate a significant amount of revenue, it would materially affect our financial condition and our business could be harmed. We will rely heavily on our clients recommending our technology to others in our target market.
Competition
The software development market is rapidly growing day by day and there is a big number of companies operating in this domain. Our key feature is developing software for security purposes, ranging from surveillance and transferring visual data to a remote server to pursuing potential trespassers. Entry level barriers of the industry are relatively low and accessible, which leads to an extremely high level of competition. We believe there are not too many developers of security software in Mexico and there is a niche to be occupied. We intend to focus and attend to individual needs of each of our potential clients.
We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs, a judgment could be rendered against us that could cause us to cease operations.
Employees; Identification of Certain Significant Employees.
We are a development stage Company and currently have 1 (one) employee who is Rodolfo Guerrero Angulo, our sole officer and director. We may hire employees on an as needed basis following the process of implementing our business plan.
Offices
Our business office is located at Blvd Porta Trento 122 CP, Blvd Porta Fontana. C.P., Leon, Guanajuato, Mexico, 37134. This office space is provided by our President for the Company's needs at no cost. There is no formal rent agreement. Our telephone number is +525541607366.
16
Government Regulation
We will be required to comply with all regulations, rules, and directives of governmental authorities and agencies applicable to our business in any jurisdiction which we would conduct activities. We do not believe that regulation will have a material impact on the way we conduct our business.
Results of Operations for the three and six months ended January 31, 2024 and 2023:
Revenue
During the three months ended January 31, 2024 and 2023 we generated $21,700 and $3,850 of revenue, respectively.
During the six months ended January 31, 2024 and 2023 we generated $21,700 and $6,950 of revenue, respectively.
Operating expenses
Total operating expenses for the three months ended January 31, 2024 and 2023 were $14,392 and $9,413, respectively. The operating expenses for the three months ended January 31, 2024 and 2023 included General and Administrative expenses of $4,690 and $3,398; Amortization Expense of $4,902 and $2,221; and Server Rental of $4,800 and $3,794, respectively.
Total operating expenses for the six months ended January 31, 2024 and 2023 were $31,982 and $16,480, respectively. The operating expenses for the six months ended January 31, 2024 and 2023 included General and Administrative expenses of $12,578 and $6,913; Amortization Expense of $9,804 and $3,582; and Server Rental of $9,600 and $5,985, respectively.
Increases in general and administrative and server rental expenses were due to the overall growth of the Company and its increased operations and the increase in amortization expense was due to the acquisition of intangible assets over time.
Income tax expense for the three months ended January 31, 2024 and 2023 was $137 and $0, respectively.
Income tax expense for the six months ended January 31, 2024 and 2023 was $137 and $0, respectively.
Net Income (Loss)
Our net income (loss) for the three months ended January 31, 2024 and 2023 was $7,171 and $(5,563), respectively.
Our net income (loss) for the six months ended January 31, 2024 and 2023 was $(10,419) and $(9,530), respectively.
17
Liquidity and Capital Resources and Cash Requirements
As of January 31, 2024, the Company had cash of $0 ($22,010 as of July 31, 2023) and had a negative working capital of $46,040 as of January 31, 2024.
During the six months ended January 31, 2024, the Company used $6,615 of cash in operating activities due to its net loss of $10,419, a decrease in accounts payable of $6,000 and offset by amortization expense of $9,804.
During the six months ended January 31, 2023, the Company used $4,794 of cash in operating activities due to its net loss $9,530 and increase in prepaid expense of $985, accounts payable of $169, offset by accumulated amortization of $3,582.
During the six months ended January 31, 2024 and 2023, the Company used $20,000 and $22,500 of cash in investing activities, respectively to acquire intangible assets.
During the six months ended January 31, 2024 the Company generated $4,605 of cash in financing activities due to proceeds from related party loans of $27,955, offset by repayments on related party loans of $23,350.
During the six months ended January 31, 2023 the Company generated $ 28,318 of cash from financing activities, made up of $25,561 received from the sale of common stock and $5,857 of proceeds from related party loans, offset by $3,100 in repayments to related parties.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support, or other benefits.
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Not Applicable.
| Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation as of January 31, 2024, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, who are one and the same, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(f) and 15d–15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
18
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
| Item 1. | Legal Proceedings |
During the period ending January 31, 2024, there were no pending or threatened legal actions against us.
| Item 1A. | Risk Factors |
As a smaller reporting company, we are not required to provide the information required by this Item.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Not Applicable.
| Item 3. | Defaults Upon Senior Securities |
Not Applicable.
| Item 4. | Mine Safety Disclosures |
Not Applicable.
| Item 5. | Other Information |
There is no other information required to be disclosed under this item that has not previously been reported.
| Item 6. | Exhibits |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TOFLA MEGALINE INC. | ||
| Date: March 8, 2024 | By: | /s/ Rodolfo Guerrero Angulo |
|
Rodolfo Guerrero Angulo Chief Executive Officer President, Treasurer and Secretary (Principal Executive, Financial and Accounting Officer) | ||
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