UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. | |
| For
the Fiscal Year Ended | |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT | |
| For the transition period from ________ to ________ |
(Exact Name of Registrant as Specified in Its Charter)
| (State
or Other Jurisdiction of Incorporation or Organization) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices, Zip Code & Telephone Number)
Securities registered pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to section 12(g) of the Act:
Common Stock, Par Value $0.001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act
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.
Yes
☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).
Yes
☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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 ☐ |
| 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 13(a) of the Exchange Act ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None. | N/A | None. |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which
the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant’s
most recently completed fiscal quarter for non-affiliates. $
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant’s only class of common stock, as of July 31, 2022, was shares of its $.001 par value common stock.
Documents
incorporated by reference:
BioQuest Corp.
TABLE OF CONTENTS
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Part I
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:
| ● | The availability and adequacy of our cash flow to meet our requirements; | |
| ● | Economic, competitive, demographic, business and other conditions in our local and regional markets; | |
| ● | Changes or developments in laws, regulations, or taxes in our industry; | |
| ● | Actions taken or omitted to be taken by third parties including our suppliers and competitors, as well as legislative, regulatory, judicial and other governmental authorities; | |
| ● | Competition in our industry; | |
| ● | The loss of or failure to obtain any license or permit necessary or desirable in the operation of our business; | |
| ● | Changes in our business strategy, capital improvements or development plans; | |
| ● | The availability of additional capital to support capital improvements and development; and | |
| ● | Other risks identified in this report and in our other filings with the Securities and Exchange Commission or the SEC. |
This report should be read completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future, and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Use of Term
Except as otherwise indicated by the context, references in this report to “Company”, “BioQuest”, “BQST,” “we”, “us” and “our” are references to BioQuest Corp. All references to “USD” or United States Dollars refer to the legal currency of the United States of America.
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Item 1. Business
Description of the Business
The following description of our business contains forward-looking statements relating to future events or our future financial or operating performance that involve risks and uncertainties, as set forth above under “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors described in this Annual Report, including those set forth above in the Special Cautionary Note Regarding Forward-Looking Statements or under the heading “Risk Factors” or elsewhere.
Business Overview
The Company had previously intended to market, package, and distribute, Hemp-CBD based products. Our mission was to Create High End, Unique Content and aggregate all relevant CBD content in the Nutraceutical and Pharmaceutical markets. In 2022, after the effects of Covid, the Company decided to change direction and acquire companies in the green energy sector
On June 23, 2022, the Company executed a Letter of Intent with the shareholders of Progressus Clean Technologies, Inc. (“Progressus”), whereby the Company shall acquire substantially all of the issued and outstanding shares of Progressus, a private company incorporated in Delaware.
Progressus is a venture stage green technology company focused on the development of novel hydrogen generation and separation technologies. Progressus owns the rights to exclusive intellectual property that can enable the extraction of dilute amounts of hydrogen at high purity from a variety of different gas streams – often called “syngas”. Utilizing its unique cell design, fabrication, and membrane technology, oxygen free electrolysis is possible at industry leading efficiencies with an improved safety profile.
Green power and green hydrogen often wasted and/or curtailed because it is produced at off-peak periods, too dilute, or in such small quantities that it can’t be extracted and used in a meaningful way. As such, it is often burned or deemed a contaminant. Governments, natural gas utilities, large industrials and the public are all calling for technological innovation and Progressus has a solution. Progressus has partnered with industry leading experts that have allowed accelerated technology development that is capable of addressing these problems.
Progressus, which is the Latin word for advancement, is very appropriate because the company has the goal to transform the way the world thinks about green energy. For homes, businesses, and industry alike, Progressus technology can assist with meeting the green energy demands of the future.
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Environmental Laws and Regulations
Our operations and properties are subject to laws and regulations relating to environmental protection, including those governing air emissions, water discharges and waste management, and workplace health and safety. In addition, certain of our proposed products are regulated by the U.S. Environmental Protection Agency and comparable state regulatory agencies.
Seasonality
We do not expect any seasonality in our business.
Our fiscal year end is April 30.
Employees
We have no active employees as all existing consulting contracts were put on hold at September 30, 2021. We anticipate we can reactivate some of these individuals or additional employees in the next 12 months, as needed. We do not feel that we would have any unmanageable difficulty in locating needed staff. None of the employees is represented by a labor union for purposes of collective bargaining. The Company considers its relations with the employees to be good.
Bankruptcy or Similar Proceedings
There has been no bankruptcy, receivership, or similar proceeding.
WHERE YOU CAN GET ADDITIONAL INFORMATION
We file annual, quarterly, and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, DC 20549. You can obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC’s web site, www.sec.gov.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
An investment in the Company’s common stock involves a high degree of risk. One should carefully consider the following risk factors in evaluating an investment in the Company’s common stock. If any of the following risks actually occurs, the Company’s business, financial condition, results of operations or cash flow could be materially and adversely affected. In such case, the price of the Company’s common stock could decline, and one could lose all or part of one’s investment. One should also refer to the other information set forth in this report, including the Company’s consolidated financial statements and the related notes.
Our business and future operations may be adversely affected by epidemics and pandemics, such as the recent COVID-19 outbreak.
We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases, which could result in a widespread health crisis that could adversely affect general commercial activity and the economies and financial markets of the country as a whole. For example, the recent outbreak of COVID-19, has been declared by the World Health Organization to be a “pandemic,” has spread across the globe, including the United States of America. A health epidemic or pandemic or other outbreak of communicable diseases, such as the current COVID-19 pandemic, poses the risk that we, or potential business partners may be disrupted or prevented from conducting business activities for certain periods of time, the durations of which are uncertain, and may otherwise experience significant impairments of business activities, including due to, among other things, operational shutdowns or suspensions that may be requested or mandated by national or local governmental authorities or self-imposed by us, our customers or other business partners. While it is not possible at this time to estimate the impact that COVID-19 could have on our business, our customers, our potential customers, suppliers or other current or potential business partners, the continued spread of COVID-19, the measures taken by the local and federal government, actions taken to protect employees, and the impact of the pandemic on various business activities could adversely affect our results of operations and financial condition.
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The Accompanying Financial Statements Have Been Prepared Assuming the Company Will Continue as A Going Concern.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of its assets and the liquidation of its liabilities in the normal course of business. However, the Company has generated no revenues, has accumulated a loss since formation and currently lacks the capital to effectively pursue its business plan. This raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.
We May Continue to Lose Money, And If We Do Not Achieve Profitability, We May Not Be Able to Complete the pending Acquisition of Progressus Green Technologies.
Since our formation, we have generated no revenues from operations, and have incurred expenses and losses. In addition, we expect to continue to incur operating losses for the foreseeable future. As a result, we will need to generate sufficient revenues to achieve profitability, which may not occur. Even if we do achieve profitability, we may be unable to sustain or increase profitability on a quarterly or annual basis in the future. We expect to have quarter-to-quarter fluctuations in revenues, expenses, losses, and cash flow, some of which could be significant. Results of operations will depend upon numerous factors. Some of these factors, such as market acceptance of our product and competition, are beyond our control.
The Company Is Subject to The Risks Inherent in The Creation of a New Business.
The Company is subject to substantially all the risks inherent in the creation of a new business. The implementation of our business strategy is still in the development stage. Our business and operations should be considered to be in the development stage and subject to all of the risks inherent in the establishment of a new business venture. Accordingly, our intended business and operations may not prove to be successful in the near future, if at all. Any future success that we might enjoy will depend upon many factors, several of which may be beyond our control, or which cannot be predicted at this time, and which could have a material adverse effect upon our financial condition, business prospects, and operations and the value of an investment in the Company.
We May Be Subject to Government Laws and Regulations Particular to Our Operations with Which We May Be Unable to Comply.
We may not be able to comply with all current and future government regulations which are applicable to our business. Our business operations are subject to all government regulations normally incident to conducting business (e.g., occupational safety and health acts, workmen’s compensation statutes, unemployment insurance legislation, income tax, and social security laws and regulations, environmental laws and regulations, consumer safety laws and regulations, etc.) as well as to governmental laws and regulations applicable to small public companies and their capital formation efforts. Although we will make every effort to comply with applicable laws and regulations, we can provide no assurance of our ability to do so, nor can we predict the effect of those regulations on our proposed business activities. Our failure to comply with material regulatory requirements would likely have an adverse effect on our ability to conduct our business and could result in our cessation of active business operations.
Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.
Our independent registered public accounting firms have issued their reports, which includes an explanatory paragraph for going concern uncertainty on our consolidated financial statements as of and for the years ended April 30, 2022, and 2021. Because we have not yet generated revenues from our operations our ability to continue as a going concern is currently heavily dependent upon our ability to obtain additional financing to sustain our operations. Such financing may take the form of the issuance of common or preferred stock or debt securities or may involve bank financing. The fact that our auditors have issued a “going concern” opinion may hinder our ability to obtain additional financing in the future. Currently, we have no commitments to obtain any additional financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all.
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If we encounter unforeseen difficulties with our business or operations in the future that require us to obtain additional working capital, and we cannot obtain additional working capital on favorable terms, or at all, our business may suffer.
Our cash, on hand totaled approximately $33,540 at April 30, 2022. To date, we have relied primarily upon cash from the private sale of equity securities to generate the working capital needed to finance our operations.
We may encounter unforeseen difficulties with our business or operations in the future that may deplete our capital resources more rapidly than anticipated. As a result, we may be required to obtain additional working capital in the future through bank credit facilities, public or private debt or equity financings, or otherwise. We have not identified other sources for additional funding and cannot be certain that additional funding will be available on acceptable terms, or at all. If we are required to raise additional working capital in the future, such financing may be unavailable to us on favorable terms, if at all, or may be dilutive to our existing stockholders. If we fail to obtain additional working capital as and when needed, such failure could have a material adverse impact on our business, results of operations and financial condition. Furthermore, such lack of funds may inhibit our ability to respond to competitive pressures or unanticipated capital needs, or may force us to reduce operating expenses, which could significantly harm the business and development of operations. Because our independent auditors have expressed doubt as to our ability to continue as a “going concern,” as reported in their report on our financial statements, our ability to raise capital may be severely hampered. Similarly, our ability to borrow any such capital may be more expensive and difficult to obtain until this “going concern” uncertainty is resolved.
We operate in a highly competitive environment, and if we are unable to compete with our competitors, our business, financial condition, results of operations, cash flows and prospects could be materially adversely affected.
We operate in a highly competitive environment. Our competition includes all other companies that are in the business of selling cannabis-based products or other related items. A highly competitive environment could materially adversely affect our business, financial condition, results of operations, cash flows and prospects.
We may not be able to compete successfully with other established companies offering the same or similar products and, as a result, we may not achieve our projected revenue and user targets.
If we are unable to compete successfully with other businesses in our planned markets, we may not achieve our projected revenue and/or customer targets. We compete with both start-up and established companies. Compared to our business, some of our competitors may have greater financial and other resources, have been in business longer, have greater name recognition and be better established in our markets of choice.
We have yet to achieve a profit and may not achieve a profit in the near future, if at all.
We have not yet produced a net profit and may not in the near future, if at all. We have not achieved profitability and cannot be certain that we will be able to sustain our current growth rate or realize sufficient revenue to achieve profitability. Further, many of our competitors have a significantly larger user base and revenue stream but have yet to achieve profitability. Our ability to continue as a going concern may be dependent upon raising capital from financing transactions, increasing revenue throughout the year, and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.
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Our lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and officers.
In the future we may be subject to additional litigation, including potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date, we have not obtained directors and officers liability (“D&O”) insurance. Without adequate D&O insurance, the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our lack of adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which could adversely affect our business
We expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.
We estimate that it will cost approximately $250,000 annually to maintain the proper management and financial controls for our filings required as a public company. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our stock price and adversely affect our ability to raise capital.
We have limited or no control over the manufacturing and quality of the products we plan to sell.
We will not directly manufacture any of the proposed products that we currently plan to sell. Consequently, we have limited or no control over manufacturing practices at the suppliers from whom we procure the products we plan to sell. We put forth considerable efforts to ensure that the products we plan to sell are safe and comply with all applicable regulations. In spite of these efforts, there is a risk that we could inadvertently resell products which fail to comply with applicable regulations or have other quality defects. If this were to occur, we could be forced to conduct a product recall, defend regulatory or civil claims, or take other actions, any of which could have a material adverse effect upon our business.
We face an inherent risk of exposure to product liability claims in the event that the products we manufacture or sell allegedly cause personal injury.
We face an inherent risk of exposure to product liability claims in the event that the products we plan to sell allegedly cause personal injury. Although we have not experienced any significant losses due to product liability claims, we may experience such losses in the future. While our suppliers maintain insurance against product liability claims but cannot be certain that such coverage will be adequate to cover any liabilities that we may incur, or that such insurance will continue to be available on acceptable terms. A successful claim brought against us in excess of available insurance coverage, or any claim that results in significant adverse publicity, could have a material adverse effect upon our business.
We may be unable to keep pace with changes in the industries that we serve and advancements in technology as our business and market strategy evolves.
As changes in the industries, we serve occur or macroeconomic conditions fluctuate we may need to adjust our business strategies or find it necessary to restructure our operations or businesses, which could lead to changes in our cost structure, the need to write down the value of assets, or impact our profitability. We will also make investments in existing or new businesses, including investments in technology and expansion of our business plans. These investments may have short-term returns that are negative or less than expected and the ultimate business prospects of the business may be uncertain.
As our business and market strategy evolves, we also will need to respond to technological advances and emerging industry standards in a cost-effective and timely manner in order to remain competitive, such as adaptive learning technologies, better and more interactive products and web accessibility standards. The need to respond to technological changes may require us to make substantial, unanticipated expenditures. There can be no assurance that we will be able to respond successfully to technological change.
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If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
The Company plans on relying on trade secrets, including unpatented know-how, technology, and other proprietary information, to maintain our competitive position. We will seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. We will seek to protect our confidential proprietary information, in part, by entering into confidentiality and invention or patent assignment agreements with our employees and consultants; currently no such agreements have been entered into with relevant parties. Moreover, to the extent we enter into such agreements, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.
We rely in part on trade secrets to protect our technology, and our failure to obtain or maintain trade secret protection could limit our ability to compete.
We rely on trade secrets to protect some of our technology and proprietary information, especially where we believe patent protection is not appropriate or obtainable. However, trade secrets are difficult to protect. Litigating a claim that a third party had illegally obtained and was using our trade secrets would be expensive and time consuming, and the outcome would be unpredictable. Moreover, if our competitors independently develop similar knowledge, methods, and know-how, it will be difficult for us to enforce our rights and our business could be harmed.
Our products may not gain commercial or market acceptance, which would prevent us from achieving increased revenues and market share.
The development of a successful market for our products may be adversely affected by a number of factors, many of which are beyond our control, including:
| ● | our failure to produce products that compete favorably against other products on the basis of cost, quality, and performance. |
| ● | any limitations or warnings on our products approved labeling. |
| ● | the willingness of the target population to try our new technology and whether or not customers will accept our new technology. |
| ● | our failure to develop and maintain successful relationships with distributors, project developers and other resellers, as well as strategic partners; and |
| ● | the strength of marketing and distribution support and timing of market introduction. |
If our products fail to gain market acceptance, we would be unable to realize revenues, gain or increase market share and achieve and sustain profitability.
Our Common Stock May Be Considered a “Penny Stock” And Be Subject to the “Penny Stock” Rules of The Securities Exchange Commission.
Our common stock may be subject to the “penny stock” rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on The NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.
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Future sales of our common stock could put downward selling pressure on our common stock, and adversely affect the per share price. There is a risk that this downward pressure may make it impossible for an investor to sell shares of common stock at any reasonable price, if at all.
Future sales of substantial amounts of our common stock in the public market or the perception that such sales could occur, could put downward selling pressure on our common stock and adversely affect its market price.
We do not anticipate paying dividends in the foreseeable future.
We do not anticipate paying dividends on our common stock in the foreseeable future, but plan rather to retain earnings, if any, for the operation, growth, and expansion of our business. Because the Company does not anticipate paying cash dividends in the foreseeable future which may lower expected returns for investors, and as such our stockholders will not be able to receive a return on their investment unless they sell their shares of common stock.
Risks Relating to the Internet
Changing technology could adversely affect the operation of our website.
The Internet, online commerce and online advertising markets are characterized by rapidly changing technologies, evolving industry standards, frequent new product, and service introductions, and changing customer preferences. Our future success will depend on our ability to adapt to rapidly changing technologies and address its customers’ changing preferences. However, we may experience difficulties that delay or prevent us from being able to do so.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our executive office is located at 4570 Campus Drive, Suite 23, Newport Beach, CA 92660. The telephone number at our principal executive office is (714) 978-4425. This space is leased directly by the CEO of the Company who is reimbursed by Company. Our website is www.bioquestcorp.com, and our email address is business@bioquestcorp.com.
We do not have any investments or interests in any real estate. We do not invest in real estate mortgages, nor do we invest in securities of, or interests in, persons primarily engaged in real estate activities.
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Item 3. Legal Proceedings
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer, or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
Item 4. Mine Safety Disclosures
Not Applicable.
Part II
Item 5. Market for Common Equity and Related Stockholder Matters
The shares of our common stock are not currently listed for sale on any exchange, although we do plan to attempt to have our shares quoted for sale or the OTC Bulletin Board. However, there can be no assurance that we will be successful in having our shares quoted or traded on any public market.
The following table sets forth the high and low bid prices for our Common Stock per quarter for the past two years as reported by the OTC Markets, based on our fiscal year end April 30, and taking into effect the 1-2000 reverse split that occurred on November 14, 2019. These prices represent quotations between dealers without adjustment for retail markup, markdown or commission and may not represent actual transactions.
| Price Ranges | ||||||||
Fiscal Year Ended April 30, 2022 | High | Low | ||||||
| First Quarter | $ | 1.25 | $ | 0.75 | ||||
| Second Quarter | 1.00 | .65 | ||||||
| Third Quarter | .75 | .52 | ||||||
| Fourth Quarter | .52 | .52 | ||||||
| Fiscal Year Ended April 30, 2021 | ||||||||
| First Quarter | $ | 27.00 | $ | 22.00 | ||||
| Second Quarter | 22.00 | 4.20 | ||||||
| Third Quarter | 5.50 | .75 | ||||||
| Fourth Quarter | 1.95 | .59 | ||||||
Our transfer agent is Globex Transfer, LLC, whose address is 780 Deltona Blvd., Suite 202, Deltona, FL 32725, telephone number (813) 344-4490, and email mt@globextransfer.com.
Record Holders
As of April 30, 2022, there were 11,310,230 shares of the registrant’s $0.001 par value common stock issued and outstanding and were owned by approximately 200 holders of record and 1,350,8387 shares in the public float.
Penny Stock Regulation
Shares of our common stock will probably be subject to rules adopted by the SEC that regulate broker-dealer practices in connection with transactions in “penny stocks”. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the SEC, which contains the following:
| ● | a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; |
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| ● | a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of securities’ laws; | |
| ● | a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the “bid” and “ask” price; | |
| ● | a toll-free telephone number for inquiries on disciplinary actions; | |
| ● | definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and | |
| ● | such other information and is in such form (including language, type, size, and format), as the SEC shall require by rule or regulation. |
Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:
| ● | the bid and offer quotations for the penny stock; | |
| ● | the compensation of the broker-dealer and its salesperson in the transaction; | |
| ● | the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and | |
| ● | monthly account statements showing the market value of each penny stock held in the customer’s account. |
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Holders of shares of our common stock may have difficulty selling those shares because our common stock will probably be subject to the penny stock rules.
Description of Registrant’s Securities
We have authorized capital stock consisting of 500,000,000 shares of common stock, $0.001 par value per share (“Common Stock”), and no shares of preferred stock.
Equity Compensation Plans
The Company has registered its 2021 Equity Compensation Plan, with the SEC on June 29, 2021. The Plan authorizes up to 2,000,000 S-8 shares of company common stock to be issued to its officers, directors, consultants, and any other persons whom the Board of Directors wishes to incentivize to contribute to the Company. The Company had issued 1,392,251 shares under this plan as of July 22,2022 with 607,749 available for further issuance.
Warrants, Options and Convertible Securities
The Company issued multiple notes payable in the amount of $40,000 due in January and February 2022, with interest at 6% and convertible in common shares at $1.00 per share. The notes were in technical default at April 30, 2022. The Company extended these notes in July 2022 to September 30, 2022, for which the Company agreed to compensate the holders through the issuance of 40,000 shares of the Company’s common stock.
The Company issued a note payable in September 2020 due in one year in the amount of $27,500 including interest at 10%. The note is convertible at a 40% discount to market price after 90 days. The company recorded a note discount of $2,500. In November 2020 the Company issued an additional note payable due in one year in the amount of $30,800 including interest at 10%. The note is convertible at a 60% discount to market price. The Company recorded a note discount of $2,800.
In March 2022 the Company issued a note payable for $85,000 due on March 1, 2023, and which may be converted in 170,000 of the Company’s common stock.
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Other than the aforementioned we do not have any outstanding warrants, options, or convertible securities.
Recent Sales of Unregistered Securities
During the year ended April 30, 2022, the Company issued 65,000 shares for $65,000 cash. The Company issued 2,514,497 on October 29, 2021, shares for settlement of amounts due to Officers and consultants. 1,257,251 were S-8 Registered shares and 1, 257,246 were unregistered. The Company issued 40,000 shares of unregistered shares for extension of notes payable on July 14, 2022.
In March 2022, the Company received proceeds of $85,000 in exchanged for the issuance of a convertible promissory note with a principal balance of $85.000. The convertible note bears interest at 8% per annum and matures on the 12-month anniversary from issuance. The note is convertible into at the option holder at $0.50 per share.
Repurchase of Equity Securities
None.
Dividends
We have never declared or paid any cash dividends on our common stock. For the foreseeable future, we intend to retain any earnings to finance the development and expansion of our business, and we do not anticipate paying any cash dividends on our common stock. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon then existing conditions, including our financial condition and results of operations, capital requirements, contractual restrictions, business prospects, and other factors that the board of directors considers relevant.
Section Rule 15(g) of the Securities Exchange Act of 1934
The Company’s shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one-page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers “spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
Item 6. Selected Financial Data
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. You should read this report completely and with the understanding that actual future results may be materially different from what we expect. The forward-looking statements included in this report are made as of the date of this report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future, and we assume no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Working Capital
Results of Operations
Working Capital
| April 30, 2022 | April 30, 2021 | |||||||
| $ | $ | |||||||
| Current assets | 33,540 | 17,097 | ||||||
| Current liabilities | 466,530 | 1,786,638 | ||||||
| Working capital deficit | (432,990 | ) | (1,769,541 | ) | ||||
Cash Flows
| Year Ended | Year Ended | |||||||
| April 30, 2022 | April 30, 2021 | |||||||
| Cash flows used in operating activities | $ | (116,720 | ) | $ | (193,206 | ) | ||
| Cash flows provided by financing activities | 150,000 | 193,300 | ||||||
| Cash flows used in investing activities | - | - | ||||||
| Net increase (decrease) in cash during period | $ | 33,280 | $ | 94 | ||||
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For the years ended April 30,2022 compared to the year ended April 30, 2021
Operating Revenue
The Company had no revenue for the years ended April 30,2022 and 2021.
Cost of Revenues
The Company had no cost of revenues for the years Ended April 30, 2022, and 2021
Operating Expenses
Compensation was $467,570 for the year ended April 30,2022 and $1,408,000 for the year ended April 30, 2021. In September 2021, the Company and its employees and contractors entered into a settlement agreement in which the Company agreed to issue shares of common stock in settlement of accrued compensation. As part of that settlement, the employees and contractors also agreed to end their compensation under their respective agreements until the board determined that the Company could pay for compensation incurred.
Stock Payable Compensation was $206,700 for the year ended April 30,2022 as compared with $530,000 for the year ended April 30,2021. The $206,700 incurred in the year ended April 30, 2022, represents compensation payable in common shares granted in the period but not issued in the period.
Professional Fees were $87,375 for the year ended April 30,2022 as compared with $152,162 for the year ended April 30,2021. The Company expects future professional fees to increase over 2022 levels as the Company works towards completion of potential acquisitions.
General and administrative expenses consisted primarily of marketing, product development and general expenses. These totaled $56,275 for the year ended April 30,2022 as compared to $110,387 for the year ended April 30, 2021. The Company expects future professional fees to increase over 2022 levels as the Company works towards completion of potential acquisitions.
Derivative gain was $75,516 for the year ended April 30,2022 compared to derivative expense of $85,775 for the year ended April30,2021. Changes in gains or losses will primarily be dependent upon changes in the underlying price of shares of our common stock traded on the OTC Markets bulletin board.
Interest expense was $78,618 for the year ended April 30,2022 compared to $37,638 for the year ended April 30, 2021,
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Net (Loss)
The Company had a net loss of $821,022 for the year ended April 30,2022 as compared to a net loss of $2,323,962 for the year ended April 30,2021.
Liquidity and Capital Resources
The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its inception, the Company has been funded by related parties through capital investment and borrowing of funds.
As of April 30,2022, the Company had total current assets of $33,540 consisting of cash. As of April 30, 2022 the Company had total current liabilities of $466,530. Current liabilities consisted primarily of accounts payable and accrued liabilities and amounts due from convertible notes outstanding. This resulted in a working capital deficit of $432,990 at April 30,2022
Cash used in Operating Activities
For the year ended April 30,2022 the Company used cash in operating activities of $116,720 compared to cash used of $193,206 for the year ended April 30, 2021
Cash flow from Financing Activities
For year ended April 30,2022 cash provided by financing activities was $ 150,000 compared to $193,300 for the year provided for the same period ended April 30, 2021.
Subsequent Events
On June 23, 2022, the Company executed a Letter of Intent with the shareholders of Progressus Clean Technologies, Inc. (“Progressus”).whereby the Company shall acquire all of the issued and outstanding shares of Progressus, a private company incorporated in Delaware.
Progressus is a venture stage green technology company focused on the development of novel hydrogen generation and separation technologies. Progressus owns the exclusive rights and intellectual property pertaining to the Advanced Electrolyzer System for the production of hydrogen from dilute syngas.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and development activities.
Since inception, we have financed our cash flow requirements through issuance of common stock and loans to third parties. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of revenues. Additionally, we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. In the future we will need to generate sufficient revenues from sales in order to eliminate or reduce the need to sell additional stock or obtain additional loans. There can be no assurance we will be successful in raising the necessary funds to execute our business plan.
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We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth.
To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop and upgrade our business model and website, 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 can have a material adverse effect on our business prospects, financial condition, and results of operations.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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Item 8. Financial Statements and Supplemental Data
BioQuest Corp.
Index to Financial Statements
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Directors and
Stockholders of Bioquest Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Bioquest Corp., (the “Company”) as of April 30, 2022, and the related statements of operations, stockholders’ deficit, and cash flows for the year ended April 30, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2022, and the results of its operations and its cash flows for the year ended April 30, 2022, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Opinion - Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company suffered net losses from operations from inception, has a working capital deficit of approximately $433,000 and has an accumulated deficit of approximately $10,665,000 as of April 30, 2022 which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 3. We believe that our audits provide a reasonable basis for our opinion.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
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Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Going Concern
Critical Audit Matter Description
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Management’s plans for addressing going concern matter are described in Note 3.
Critical Audit Matter Determination
As discussed in Note 3 to the financial statements, the Company suffered a net loss from operations, a working capital deficit and has an accumulated deficit of approximately $10.7 million which raises substantial doubt about its ability to continue as a going concern.
How We Addressed the Matter in Our Audit
Our audit procedures included:
| - | Identifying the conditions and events noted above that, when considered in the aggregate, indicate there is substantial doubt about the Company’s ability to continue as a going concern |
| - | Evaluating management’s plans in connection with their intent to raise additional debt financing |
| - | The potential business development to overcome the presumption of a going concern |
Reviewing and evaluating the financial statement presentation and disclosure regarding the substantial doubt about the ability of the Company to continue as a going concern.
Embedded Conversion Feature
Critical Audit Matter Description
The Company has numerous notes payable from prior years with conversions rates that are determined by the closing bid price based on averages over a given number of trading days based on the volume weighted average trading price preceding the conversion date. This and other factors require the embedded conversion feature to be bifurcated and the fair value of the feature to be remeasured at each reporting period. Calculations and accounting for the notes payable and embedded conversion features require management’s judgments related to initial and subsequent recognition of the debt and related conversions features, use of a valuation model, and determination of the appropriate inputs used in the selected valuation model.
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Critical Audit Matter Determination
The embedded conversion features and resulting derivative liability is a highly complex area of accounting with significant impact on the liabilities, additional paid in capital and statement of operations of the Company. It takes a high degree of training to understand and recognize the accounting implications of the conversion features and to understand the assumptions and impact of the specific assumptions on the valuation model used in the calculation of the derivative liability.
Critical Audit Matter Audit Procedures
Our audit procedures related to evaluating the Company’s accounting for the convertible note payables with embedded conversion feature, were as follows:
| - | We read the various instruments, identified the embedded conversion feature, confirmed the amount of the outstanding debt, and recalculated the accrued interest. | |
| - | We reviewed the assumptions used to calculate the derivative liabilities at the balance sheet date and the related accounting entries. | |
| - | We performed independent calculations on a test basis of specific derivatives to evaluate the model used in calculating the derivatives at various measurement dates. |
Critical Audit Matter Relevant Financial Statement Disclosures
| - | We read the Company’s disclosures related to the derivative liabilities and changes during the year as a result of mark to market to ensure the changes were properly accounted for and fully disclosed in the financial statements. |
/s/
August 12, 2022
We have served as the Company’s auditor since 2022
PCAOB
ID:
| 21 |
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Bioquest Corp.
Balance Sheets
| April 30, 2022 | April 30, 2021 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid Expenses | ||||||||
| Total Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable and Accrued Liabilities | $ | $ | ||||||
| Accrued Compensation | ||||||||
| Due to Officers Shareholders | ||||||||
| Accrued Interest | ||||||||
| Convertible
Notes Payable Net of Discount of $- | ||||||||
| Derivative Liability | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Deficit | ||||||||
| Common Stock, $ Par Value Authorized; and Issued and Outstanding at April 30, 2022 and 2021 respectively | ||||||||
| Stock Payable | ||||||||
| Additional-Paid-in-Capital | ||||||||
| Accumulated Deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
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Bioquest Corp.
Statement of Operations
| For the Year Ended | For the Year Ended | |||||||
| April 30, 2022 | April 30, 2021 | |||||||
| Revenues | $ | $ | ||||||
| Operating Expenses | ||||||||
| Compensation | ||||||||
| Stock Compensation Expense | ||||||||
| Professional Fees | ||||||||
| General and Administrative Expenses | ||||||||
| Total Operating Expenses | ||||||||
| Operating Loss | ( | ) | ( | ) | ||||
| Derivative Gain (Expense) | ( | ) | ||||||
| Interest Expense | ( | ) | ( | ) | ||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Basic and Fully Dilutive Loss per Share | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Common Shares - Basic and Fully Diluted | ||||||||
The accompanying notes are an integral part of these financial statements.
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Bioquest Corp.
Statement of Changes in Stockholders’ Deficit
For the Years Ended April 30, 2021 and 2022
| Common Shares | Par Value $.001 | Stock Payable | Additional Paid-In Capital | Accumulated Deficit | Stockholders’ Deficit | |||||||||||||||||||
| Balance April 30, 2020 | ( | ) | ( | ) | ||||||||||||||||||||
| Stock Issued For Cash | ||||||||||||||||||||||||
| Shares Issued for Stock Payable | ( | ) | ||||||||||||||||||||||
| Shares Issued for Employment and Consulting Services | ||||||||||||||||||||||||
| Shares Issued for Prepaid Marketing Services | ||||||||||||||||||||||||
| Net Loss for the Year Ended April 30, 2021 | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance April 30, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Shares Issued for Cash | ||||||||||||||||||||||||
| Shares Issued for Settlement of Accrued Compensation | ||||||||||||||||||||||||
| Stock Payable | - | |||||||||||||||||||||||
| Net Loss for the Year Ended April 30, 2022 | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance April 30, 2022 | | $ | | $ | | $ | | $ | ( | ) | $ | ( | ) | |||||||||||
The accompanying notes are an integral part of these financial statements.
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Bioquest Corp.
Statements of Cash Flows
| For The Year Ended | For The Year Ended | |||||||
| April 30, 2022 | April 30, 2021 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities. | ||||||||
| Stock Based Compensation | ||||||||
| Amortization of Debt Discount | ||||||||
| Changes in Operating Assets and Liabilities | ||||||||
| Increase (Decrease) in Accounts Payable and Accrued Liabilities | ||||||||
| Increase in Accrued Compensation | ||||||||
| Increase Due to Officers Shareholders for Expenses Paid | ||||||||
| Increase in Accrued Interest | ||||||||
| Decrease in Prepaid Expenses | ||||||||
| Derivative (Gain) Expense | ( | ) | ||||||
| Net Cash Used From Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Cash from Financing Activities | ||||||||
| Sale of Common Stock for Cash | ||||||||
| Stock Subscriptions Payable for Cash | ||||||||
| Issuance of Notes Payable | ||||||||
| Net Cash Provided in Financing Activities | ||||||||
| Net Increase in Cash | ||||||||
| Beginning Cash | ||||||||
| Ending Cash | $ | $ | ||||||
| Supplemental Information | ||||||||
| Cash Paid for Interest | $ | $ | ||||||
| Cash Paid for Income Taxes | ||||||||
| Non-Cash Items: | ||||||||
| Non-Cash Interest | $ | $ | ||||||
| Shares issued for Extinguishment of Accrued Compensation and Accrued Liabilities | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| 26 |
BIOQUEST CORP.
NOTES TO THE FINANCIAL STATEMENTS
For the Years Ended April 30,2022 and 2021
NOTE 1 - ORGANIZATION AND OPERATIONS
Bioquest
Corp.(the “Company”) was originally incorporated in the State of Nevada on May 17, 2011, as Renaissance Films Inc. On September
26, 2011, the Company changed its name to Sedition Films Inc. and on May 1, 2014, the Company changed its name to Select-TV Solutions,
Inc. The Company was organized for the purpose of producing documentary films.
The Company had previously intended to market, package, and distribute, Hemp-CBD based products. Our mission was to Create High End, Unique Content and aggregate all relevant CBD content in the Nutraceutical and Pharmaceutical markets. In 2022, after the effects of Covid, the Company decided to change direction and acquire companies in the green energy sector. The Company has executed a letter of intent on June 23,2022 to acquire its first energy company. (See Subsequent Events Note 8).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and Estimates
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 of the financial statements and the reported amounts of revenues and expenses during the reporting period. Those estimates include the fair value of our common shares. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing, and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
Income Taxes
The Company follows FASB ASC Subtopic 740, Income Taxes, for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.
Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
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The Company follows FASB ASC Subtopic 718, Stock Compensation, for accounting for stock-based compensation. The guidance requires that new, modified, and unvested share-based payment transactions with employees, such as grants of stock options and restricted stock, be recognized in the consolidated financial statements based on their fair value at the grant date and recognized as compensation expense over their vesting periods.
FASB ASC Subtopic 260, Earnings Per Share, provides for the calculation of “Basic” and “Diluted” earnings per share. Basic earnings per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. All potentially dilutive securities including stock options and stock payable have been excluded from the computations since they would be antidilutive. However, these dilutive securities could potentially dilute earnings per share in the future. As of April 30,2022, and 2021 the Company had and shares of common stock issuable upon the conversion of convertible shares not included in earnings per share as they would be antidilutive.
Cash and Cash Equivalents
Cash
equivalents consist of highly liquid investments with maturities of three months or less when purchased. Cash and cash equivalents are
on deposit with financial institutions without any restrictions. At April 30, 2022, and 2021, cash equivalents amounted to $
Revenue Recognition
Fair Value of Financial Instruments
Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) a reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
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Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 - Inputs that are both significant to the fair value measurement and unobservable. Our company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts our company could realize in a current market exchange. As of April 30, 2022, and 2021, the carrying value of accounts payable and loans that are required to be measured at fair value, approximated fair value due to the short-term nature and maturity of these instruments.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As
reflected in the accompanying financial statements, the Company had a Stockholders’ Deficit at April 30, 2022, of $
The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 4 – RELATED PARTY TRANSACTIONS
As of April 30, 2021, there were $ in accrued compensations due to officers and shareholders and $ due to officers and shareholders for expense reimbursements.
The
Company settled on September 30, 2021, all amounts of $
The
Company does not current lease any space. The Company has agreed to reimburse certain officers for office and warehouse space leased
by them to their party landlords to be used in the business. In the year ended April 30, 2022, the Company reimbursed certain officers
a total of $
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NOTE 5 – CONVERTIBLE NOTES PAYABLE
The
Company issued multiple convertible notes payable in January and February 2020 in the amount of $
These notes contain contingent conversion features. The first feature triggers in the event that the Company has a qualified equity offering, as defined, in agreement. If triggered, this allows the holder to convert the principal and any unpaid and accrued interest at a price per share equal to the Discount Rate (as defined in the note agreement) multiplied by the price per share paid by the investors in the qualified financing. The second feature triggers in the event that the Company has an equity financing that does not qualify as a qualified financing. If triggered, this allows the holder to convert the principal and any unpaid and accrued interest into the equity financing security at a rate at the lower of the Discount Rate (as defined in the note agreement) multiplied by the price per share paid by the investors in the equity financing. The third feature triggers in the event that a Sale Event (as defined in the note agreements) occurs. If triggered, this allows the note holders to covert their outstanding principal and any unpaid and accrued interest into common stock of the Company at the Discount Rate (as defined in the note agreement) multiplied by proceeds per share payable in the Sales Event.
Upon maturity, the holders of the notes may elect to convert their unpaid principal and accrued interest into that number of common shares determined by multiplying the Discount Rate (as defined in the note agreement) by the 5-trading day average closing price of the Company’s common stock.
The
Company issued a convertible note payable in September 2020 due in
| 30 |
In
the year ended April 30, 2022, the Company recorded a penalty payable at non-payment upon maturity for the two notes above totaling $
In
March 2022, the Company received gross proceeds of $
In
March 2022, the Company received gross proceeds of $
For the April 30, 2021 convertible notes, the Company has determined that the conversion features require bifurcation as derivatives. The Company has calculated the value of the derivative, a level 3 liability as follows:
the
expected volatility rate was estimated based on comparison to the volatility of a peer group of companies in similar industries. The
term for the conversion of the notes is based upon the remaining term of the notes. The risk-free interest rate for periods within the
contractual life is based on the yield derived from auctions of comparable periods of constant maturity U.S. Treasury securities. Circumstances
may change, and additional data may become available over time, which could result in changes to these assumptions and methodologies,
and thereby materially impact our fair value determination. In the year ended April 30, 2022, the Company amortized the remaining debt
discount from its
The following table for the derivative liability summarizes the inputs used for the Black-Scholes pricing model on the nine months ended April 30, 2022.
| Note 1 | Note 2 | |||||||
| Exercise price | $
| $ | ||||||
| Risk free interest rate | % | % | ||||||
| Volatility | % | % | ||||||
| Expected term years | ||||||||
| Dividend yield | ||||||||
NOTE 6 – STOCKHOLDERS’ DEFICIT
Capital Stock Issued
During
the year ended April 30,2021 the Company issued shares for $
During
the year ended April 30, 2022, the Company issued shares of common stock for $
Authorized Capital Stock Common Stock
The Company is authorized to issue shares of common stock with a par value of $ per share. As of April 30, 2022, and April 30, 2021, there were and and shares issued and outstanding.
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NOTE 7-INCOME TAXES
The components of the provision for income taxes are as follows:
The benefit of income taxes for the years ended April 30, 2022 and 2021 are as follows:
For
the Years Ended | ||||||||
| 2022 | 2021 | |||||||
| U.S. Federal | ||||||||
| Current | $ | $ | ||||||
| Deferred | ||||||||
| State and local | ||||||||
| Current | ||||||||
| Deferred | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Income tax benefit | $ | $ | ||||||
A reconciliation of the statutory federal rate to the Company’s effective tax rate is as follows:
| April 30, | ||||||||
| 2022 | 2021 | |||||||
| Federal rate | ||||||||
| State income taxes, net of federal benefit | ||||||||
| Common stock issued and issuable for services | ( | ) | ( | ) | ||||
| Change in fair value of derivative | ( | ) | ||||||
| Amortization of debt discount | ( | ) | ( | ) | ||||
| Change in valuation allowance | ( | ) | ( | ) | ||||
| Other | ||||||||
| Income tax benefit | ||||||||
| 32 |
The components of our deferred tax assets are as follows:
| April 30, | ||||||||
| 2022 | 2021 | |||||||
| Deferred tax assets: | ||||||||
| Net operating losses | $ | $ | ||||||
| Other | ||||||||
| Total deferred tax assets | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
| Total deferred tax liabilities | $ | $ | ||||||
| Net deferred tax liabilities | $ | $ | ||||||
The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all the deferred tax assets will not be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, loss carryback and tax-planning strategies. Generally, more weight is given to objectively verifiable evidence, such as the cumulative loss in recent years, as a significant piece of negative evidence to overcome. At April 30, 2022 and 2021, the Company continued to maintain that the realization of its deferred tax assets has not achieved a more likely than not threshold therefore, net deferred tax assets have been offset by a valuation allowance.
As
of April 30, 2022, the Company had NOL carryforwards for federal and state purposes of approximately $
NOTE 8– SUBSEQUENT EVENTS
The
Company issued common shares of S-8 Registered Stock on July 14, 2022, in satisfaction of part of the Stock Payable earned in
the year ended April 30,2022. The Company also issued on July 14, 2022, shares of its unregistered common shares to extend $
On June 23, 2022, the Company executed a non-binding Letter of Intent with the shareholders of Progressus Clean Technologies, Inc. (“Progressus”), whereby the Company shall acquire all of the issued and outstanding shares of Progressus, a private company incorporated in Delaware in exchange for the Company issuing shares of its common stock to the shareholders of Progressus. Should the acquisition become effective, the shareholders of Progressus will control the Company.
Progressus is a venture stage green technology company focused on the development of novel hydrogen generation and separation technologies. Progressus owns the exclusive rights and intellectual property pertaining to the Advanced Electrolyzer System for the production of hydrogen from dilute syngas.
| 33 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by the Company’s management, who also serves as the Chief Executive Officer/Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of April 30, 2021. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on the evaluation, our Chief Executive Officer/Chief Financial Officer concluded disclosure controls and procedures were not effective as of April 30, 2021.
Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and Rule 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:
| ● | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; | |
| ● | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and | |
| ● | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2021. In making this assessment, it used the criteria set forth in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its assessment, management concluded that, as of April 30, 2021, the Company’s internal control over financial reporting is not effective based on those criteria due to the material weaknesses as described below.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were inadequate segregation of duties consistent with control objectives, and lack of an audit committee and limited expertise with complex debt and equity transactions These material weaknesses were identified by our Chief Financial Officer in connection with the above annual evaluation.
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.
Management believes that the appointment of more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.
We will work as quickly as possible to implement these initiatives; however, the lack of adequate working capital and positive cash flow from operations will likely slow this implementation.
Changes in Internal Control
As of the end of the period covered by this report, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the year ended April 30, 2022, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
Item 9B. Other Information
None.
| 34 |
Part III
Item 10. Director and Executive
Directors and Executive Officers
The following table sets forth information regarding our executive officers, directors, and significant employees. On September 30, 2021, all office directors and employees entered into settlement agreements for all amounts owing as of that date for all accrued compensation, benefits and other amounts owing totaling $1,885,873. The Company issued 1,257,251 common shares of S-8 registered shares and 1,267,246 unregistered to the all the individuals for forgiveness of all amounts owed. All contracts were placed on an “hold status” until all individuals and the Board of Directors reactivate the contracts. No amounts for compensation or benefits will accrue this period.
As of April 30, 2022, BioQuest Corp. had seven-full-time employees, and no part-time employees. The directors and executive officers of the Company as of April 30, 2022, are as follows:
| Name | Position | Age | Date of Appointment | Approx. Hours Per Week | ||||
| Thomas Hemingway | CEO and Director | 65 | October 10, 2019 | |||||
| Michael Krall | President, COO and Director | 70 | October 10, 2019 | 40 | ||||
| Robert Orbach | Director | 67 | October 10, 2019 | 10 | ||||
| David Noyes | CFO | 79 | October 10, 2019 | 40 | ||||
| Jeffery Donnell | EVP Operations EVP Operations and Director | 70 | October 10, 2019 | 40 | ||||
| Pam A. Daily | Marketing Officer | 71 | June 1, 2020 | 40 |
Thomas Hemingway, Age 65: Chairman and CEO, Currently, Chairman and President of Redwood Investment Group (1996 to current), and Pillar Marketing Group, Inc. (April 2011 to current). Previously, the Founder, Chief Executive Officer and Chairman of Oxford Media (2004 to 2006) and Chief Executive Officer and Chairman MetroConnect (2007 to 2009). Mr. Hemingway has also served as CEO and Chairman of Esynch Corporation and Chairman and CEO of Intermark Corporation, a software developer and publisher in the entertainment markets. Prior, Mr. Hemingway was President and CEO of Omni Advanced Technologies and Intellinet Information Systems. In addition, Mr. Hemingway has been a consultant and or board member to several NASDAQ and privately held companies. Bachelor of Sciences, Political Science, SUNY Albany.
Michael Krall, Age 70: President, COO and Board Member of BioQuest Corporation since October 2019 to current. Mr. Krall was the founder of PURE Bioscience, Inc. where he held the positions of President, CEO and Chairman of the Board from 1998 to 2014. From 2015 to present, Mr. Krall has advised companies on biotech products and processes. Additionally, he is an inventor and co-inventor of dozens of domestic and international patented biotech products. Mr. Krall brings a wealth of knowledge of the biotech, manufacturing, and securities industries, including his leadership ability, dedication and commitment to excellence make him well suited to this highly regulated industry.
Jeffery Donnell, Age 70: CBDO (Chief Business Development Officer, Board Member) since October 2019 Mr. Donnell has served in senior level positions for private and public companies over the past 40 years including COO of Enviroguard Sciences, LLC, (2003 to 2007) a distribution company for bio-chemical products throughout the United States. Executive Vice President of Business Development for Pure Bioscience, (2007 to 2013) a public company responsible for the production and distribution of biochemical products nationally and internationally. From 2015 to current Mr. Donnell has been providing advisory services to companies on a part-time basis. He has established and expanded business relations with Fortune 500 companies including Cardinal Health, CareFusion and Brenntag.
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David Noyes, Age 79: CFO - recently, Fort Worth based EnviroSolar Power, a green energy solutions provider to the home energy marketplace since March 2014. Previously, he was CFO for KOR Company, Inc. a commercial fire and security company from November 2012 until March 2014. He is Managing Director of Monarch Capital Resources, Inc., a business-consulting firm. He is co-founder and EVP for Tech Energy Services, Inc. a green energy technology firm. He has been CFO of five publicly traded companies, most recently NextPhase Wireless, Inc. from February 2007 through March 2008; Oxford Media, Inc. from August 2004 through February 2007; Local.com from January 2001 through January 2003 and Mergence Corporation from September 1999 through November 2000. He was Chief Executive Officer and Chief Financial Officer and Director of Ortho Mattress from 1996 through 1997; President, Chief Financial Officer and Director of California Software Products, Inc. in 1996 and Director and Chief Financial Officer of Griswold Industries in 1994 and 1995. Previously he was President, Director and Chief Executive Officer of Structural Coatings, Inc. and Executive Vice President, Chief Executive Officer, Chief Operating Officer and Chief Financial Officer of General Power Systems, Power Paragon and Scientific Drilling International. He was a senior Manager with Ernst and Young, is a Certified Public Accountant and has an MBA from the Anderson School of Management at UCLA. He has served on several Boards of Directors and has extensive SEC experience and has raised in excess of $500 million.
Pamela A Daily, Age 70: Chief Marketing Officer Pam is one of the founders of the infomercial direct marketing industry. She has been instrumental in the rapid financial and physical growth of multiple Fortune 500 companies. Over the past thirty years, Pamela has held Executive positions with companies such as Media Arts International, National Media Corporation, Reliant Interactive, Achievement Dynamics (Verbal Advantage), Vision Direct Marketing, Aftermarket Company, Global Efficient Energy, Majic Beauty Inc., and many others. In all of these entities, Pam’s executive duties resulted in record increases in revenues. Previous to Daily’s Executive Management and Marketing career, she held Sales and Marketing positions in the field of corporate advertising with AT&T, Gannett Corporation and NBC.
Robert Orbach, Age 67: Director, BioQuest Corporation, since October 2019, is a seasoned, accomplished entrepreneur with talent for recognizing emerging trends since 1992 and a proven track record for building strategic partnerships. Mr. Orbach has been providing advisory services on a part time basis to companies from 2015 to present. Bobby has over 30 years’ experience in retail, finance, IP and building emerging technology companies. Mr. Orbach was one of the founders of 47th Street Computers and electronics, a large retailer in the late 80’s and 90’s. He advised countless technology companies and managed successful business deals. Bobby has served as a director and board member of many public and private sector companies. Bobby has been a broker and advisor in the IP monetization business and has successfully sold and brokered over 60 technology patent portfolios. He was awarded Excellence and Quality service award from Intellectual Ventures in 2012. Throughout his career, Bobby has aligned his business interests with his personal values - nurturing human potential and promoting people relations as well as supporting philanthropic causes. Mr. Orbach is an advisor and on the board of several charities and non-profit community organizations.
Term of Office
Directors are appointed to hold office until the next annual meeting of our stockholders or until a successor is elected and qualified, or until they resign or are removed in accordance with the provisions of the Nevada Revised Statutes. Officers are appointed by our Board of Directors and hold office until removed by the Board. The Board of Directors has no nominating, auditing, or compensation committees.
Identification of Significant Employees
Thomas Hemingway, David Noyes, and Michael Krall are officers and directors of the Company who serve on a full-time basis. Robert Orbach, Jeffery Donnell are Directors of the Company. Other than our officers and directors, we currently have two (2) employees. None of the employees are represented by a labor union for purposes of collective bargaining. The Company considers its relations with the employees to be good.
Family Relationship
We currently do not have any officers or directors of our Company who are related to each other.
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Involvement in Certain Legal Proceedings
During the past ten years no director, executive officer, promoter, or control person of the Company has been involved in the following:
| (1) | A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; | |
| (2) | Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
| (3) | Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: |
| i. | Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; | |
| ii. | Engaging in any type of business practice; or | |
| iii. | Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; |
| (4) | Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity; | |
| (5) | Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; | |
| (6) | Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; | |
| (7) | Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended, or vacated, relating to an alleged violation of: |
| i. | Any Federal or State securities or commodities law or regulation; or | |
| ii. | Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or | |
| iii. | Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| (8) | Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
| 37 |
Audit Committee and Audit Committee Financial Expert
The Company does not have an audit committee or an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on its Board of Directors. The current member of the Board of Directors lacks sufficient financial expertise for overseeing financial reporting responsibilities. The Company has not yet employed an audit committee financial expert on its Board due to the inability to attract such a person.
The Company intends to establish an audit committee of the Board of Directors, which will consist of independent directors. The audit committee’s duties will be to recommend to the Company’s Board of Directors the engagement of an independent registered public accounting firm to audit the Company’s financial statements and to review the Company’s accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in the opinion of the Company’s Board of Directors, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.
Code of Ethics
Our board of directors has not adopted a code of ethics due to the fact that we presently only have four directors, and we are in the development stage of our operations. We anticipate that we will adopt a code of ethics when we increase either the number of our directors and officers or the number of our employees.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership. These reporting persons are required by SEC regulations to furnish us with copies of all such reports they file. To our knowledge, based solely on our review of the copies of such reports furnished to us and written representations from certain insiders that no other reports were required, we believe there were no applicable reporting persons based on all applicable Section 16(a) filing requirements with respect to transactions during the fiscal years ended April 30, 2022 and 2021.
Item 11. Executive Compensation
The following summary compensation table sets forth all compensation awarded to, earned by, or paid to our named executive Officer paid by us during the years ended April 30, 2022, and 2021, in all capacities for the accounts of our executives, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO):
Name and Principal Position | Year | Salary $ | Bonus $ | Stock Awards Shares | Stock Awards | Options Awards $ | Non-Equity Incentive Plan Compensation $ | Non- Qualified Deferred Compensation Earnings $ | Settlement Shares | Total $ | Accrued Compensation $ | |||||||||||||||||||||||||||||||
| Tom Hemingway | 2022 | - | - | - | - | - | - | - | 654,981 | - | - | |||||||||||||||||||||||||||||||
| CEO, Director | 2021 | 36,000 | 36,000 | 308,500 | ||||||||||||||||||||||||||||||||||||||
| Michael Krall | 2022 | - | - | - | - | - | - | - | 681,867 | - | - | |||||||||||||||||||||||||||||||
| President ,COO,Director | 2021 | 32,500 | - | - | - | - | - | - | - | 32,500 | 317,500 | |||||||||||||||||||||||||||||||
| Robert Orbach | 2022 | - | - | - | - | - | - | - | 39,960 | - | - | |||||||||||||||||||||||||||||||
| Director | 2021 | - | - | - | - | - | - | - | - | - | 55,000 | |||||||||||||||||||||||||||||||
| David Noyes | 2022 | - | - | - | - | - | - | - | 451,223 | - | - | |||||||||||||||||||||||||||||||
| CFO | 2021 | 12,000 | 12,000 | 228,000 | ||||||||||||||||||||||||||||||||||||||
| Jeffrey Donald | 2022 | - | - | - | - | - | - | - | 351,333 | - | - | |||||||||||||||||||||||||||||||
| EVP Operations | 2021 | - | - | - | - | - | - | - | - | - | 175,000 | |||||||||||||||||||||||||||||||
| Pam A. Daily | 2022 | - | - | - | - | - | - | - | 220,000 | - | - | |||||||||||||||||||||||||||||||
| 2021 | 10,000 | 200,000 | 200,000 | 210,000 | 145,000 | |||||||||||||||||||||||||||||||||||||
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Narrative Disclosure to Summary Compensation Table
There are no employment contracts, compensatory plans or arrangements, including payments to be received from the Company with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.
Outstanding Equity Awards at Fiscal Year-End: Include the following language and chart:
The table below summarizes the outstanding equity awards to our executive officers as of April 30, 2021.
| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END | ||||||||||||||||||||||||||||||||||
| OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||||||||||||
| Name | Number
of Securities Underlying Unexercised Options (#) Exercisable | Number
of Securities Underlying Unexercised Options (#) Unexercisable | Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option
Expiration Date | Number
of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) | |||||||||||||||||||||||||
| - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||
Long-Term Incentive Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.
Compensation Committee
We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.
| 39 |
Compensation of Directors
Our directors receive no extra compensation for their service on our Board of Directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of April 30, 2022, of: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) our director, and or (iii) our officer. Unless otherwise indicated, the stockholder listed possesses sole voting and investment power with respect to the shares shown.
We have determined beneficial ownership in accordance with Rule 13d-3 under the Exchange Act. Beneficial ownership generally means having sole or shared voting or investment power with respect to securities. Unless otherwise indicated in the footnotes to the table, each shareholder named in the table has sole voting and investment power with respect to the shares of common stock set forth opposite the shareholder’s name. We have based our calculation of the percentage of beneficial ownership on 11,310,230 shares of the Company’s common stock outstanding on April 30, 2022
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percentage of Beneficial Ownership(2) | ||||||
| Directors and Officers: | ||||||||
| Tom Hemingway, CEO & Director | 3,639,981 | 32.2 | % | |||||
| David Noyes, CFO | 1,201,233 | 10.6 | % | |||||
| Michael Krall, President, & Director | 3,231,867 | 28.6 | % | |||||
| Jeffery Donnell, Vice President, Director | 1,151,333 | 10.2 | % | |||||
| Robert Orbach, Director | 539,960 | 4.8 | % | |||||
| Pam Daily, Chief Marketing Officer | 420,000 | 3.7 | % | |||||
| All executive officers and directors as a group | 10,184,374 | 90.0 | % | |||||
Total Outstanding | 11,310,320 | 100 | % | |||||
| 1) | The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table | |
| 2) | Based on 11,310,230 issued and outstanding shares of common stock as of April 30, 2022. |
Changes in Control
There are no present arrangements or pledges of the Company’s securities, which may result in a change in control of the Company.
| 40 |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Director Independence
The Board of Directors is currently composed of four members. Thomas Hemingway, and Michael Krall do not qualify as independent Directors in accordance with the published listing requirements of the NASDAQ Global Market. Robert Orbach qualifies as Independent Director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the Director is not, and has not been for at least three years, one of the Company’s employees and that neither the Director, nor any of his family members has engaged in various types of business dealings with us. In addition, the Board of Directors has not made a subjective determination as to each Director that no relationships exist which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a Director, though such subjective determination is required by the NASDAQ rules. Had the Board of Directors made these determinations, the Board of Directors would have reviewed and discussed information provided by the Directors and the Company with regard to each Director’s business and personal activities and relationships as they may relate to the Company and its management.
Related Party Transactions
As of April 30, 2021, there were $1,258,250 in accrued compensations due to officers and shareholders and $21,235 due to officers and shareholders for expense reimbursements.
The Company settled on September 30, 2021, all amounts of $1,885,873 due to executive officers and consultants from employment and consulting contracts and other accounts payables in exchange for 2,514,497 common stock of the Company. Of these shares 1,257,251 were issued under the Company’s S-8 Registration Statement and 1,257,246 were issued as restricted shares under Rule 144. The Company owed $23,100 to Officers Shareholders as of April 30,2022,
Other than the foregoing, neither the director nor executive officer of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.
With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manor:
| ● | Disclosing such transactions in reports where required; | |
| ● | Disclosing in any and all filings with the SEC, where required; | |
| ● | Obtaining disinterested directors consent; and | |
| ● | Obtaining shareholder consent where required. |
Review, Approval or Ratification of Transactions with Related Persons
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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Item 14. Principal Accounting Fees and Services
On May 16, 2022, our Board of Directors voted to change our independent auditors, Haynie and Company, CPA. (“HC”), effective May 17, 2022.
HC audited the financial statements of the Company for the two years ended April 30 ,2021and 2020 respectively, and reviewed the two subsequent quarters July 30, 2021, and October 31, 2021. The report of HC on such financial statements, dated August 13, 2021. did contain a modification raising substantial doubt about the Registrant’s ability to continue as a going concern. HC’s reports did not contain any other adverse or disclaimer of opinion and were not otherwise qualified or modified as to uncertainty, audit scope or accounting principles.
For the past two fiscal years and subsequent interim periods though the date of termination, there have been no disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of Haynie and Company, CPA., would have caused them to make reference thereto in their report on the financial statements.
During the two most recent fiscal years and the interim period to the date of their resignation, there have been no reportable events, as that term is defined in Item 304(a)(1)(v) of Regulation S-B.
On May 18th, 2022, L J Soldinger Associates, LLC (“LJS”), Certified Public Accountants of Deer Park, Illinois, were appointed by the Company to audit our financial statements for the year ended April 30, 2022. During our two most recent fiscal years and the subsequent interim periods preceding their appointment as independent accountants, neither the Company nor anyone on its behalf consulted LJS regarding either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered of the Company’s consolidated financial statements, nor has LJS provided to the Company a written report or oral advice regarding such principles or audit opinion.
All Other Fees
| Fees | 2022 | 2021 | ||||||
| Audit Fees | $ | 32,500 | $ | 54,117 | ||||
| Audit-Related Fees | — | — | ||||||
| Tax Fees | — | — | ||||||
| Other Fees | — | — | ||||||
| Total Fees | $ | 32,500 | $ | 54,117 | ||||
The aggregate fees billed during the fiscal years ended April 30, 2021, and 2020 for products and services provided by our principal independent accountants (other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A was $0 and $0, respectively.
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Part IV
Item 15. Exhibits
(a) Exhibits
| Exhibit Number | Exhibit Description | |
| 31.1 | Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14 or 15d-14 of the Exchange Act pursuant to Section 302 of the Sarbanes- Oxley Act of 2002 | |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| EX-101.INS | Inline XBRL Instance Document | |
| EX-101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| EX-101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| EX-101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| EX-101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document | |
| EX-101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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Signatures
Pursuant to the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BIOQUEST CORP, INC.
| BioQuest Corp. | ||
| /s/ Thomas Hemingway | August 12, 2022 | |
| Thomas Hemingway, CEO, Principal Executive Officer, Director | ||
| /s/ Michael Krall | August 12, 2022 | |
| Michael Krall, President, Director | Date | |
| /s/ David Noyes | August 12, 2022 | |
| David Noyes, CFO, Principal Accounting Officer | Date | |
| /s/ Jeffery Donnell | August 12, 2022 | |
| Jeffery Donnell, Director | Date | |
| /s/ Robert Orbach | August 12, 2022 | |
| Robert Orbach, Director | Date |
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