U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
| Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 | |
| For the quarterly period ended | |
| Transition Report under Section 13 or 15(d) of the Exchange Act | |
| For the Transition Period from ________to __________ | |
Commission
File Number:
(Exact Name of Registrant as Specified in its Charter)
| (State of other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification Number) |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
Phone: (
Indicate
by check mark whether the issuer (1) filed all reports required to be filed by Section13 or 15(d) of the Exchange Act of 1934
during the past 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| 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 complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
The number of shares of Common Stock, $0.001 par value, outstanding on November 10, 2021 was shares.
ITEM 1. FINANCIAL STATEMENTS
TRIBUS ENTERPRISES, INC.
UNADUITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2021
TRIBUS ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2021 | March 31, 2021 | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts Receivable (Note 5) | $ | |||||||
| Inventory, net of inventory valuation of $ | ||||||||
| Prepaid expenses | ||||||||
| Deposits, current (Note 7) | - | |||||||
| Total current assets | ||||||||
| Deposits | ||||||||
| Right of use asset, operating leases | ||||||||
| Equipment and Intangibles, net of accumulated depreciation and amortization of $ | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Deferred revenue (Note 9) | ||||||||
| Operating lease liability, current (Note 10) | ||||||||
| Finance lease, current (Note 11) | ||||||||
| Loans payable, current (Note 12) | ||||||||
| Total current liabilities | ||||||||
| Operating lease liability, net of current portion (Note 10) | - | |||||||
| Finance lease, net of current portion (Note 11) | ||||||||
| Loans payable, net of current portion (Note 12) | ||||||||
| Other Long-Term Liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity | ||||||||
| Series A convertible preferred stock, $ par; authorized; issued and outstanding at September 30, 2021 and March 31, 2021 (Note 13) | ||||||||
| Series B convertible preferred stock, $ par; authorized; issued and outstanding at September 30, 2021 and March 31, 2021 (Note 13) | ||||||||
| Common stock, $ par value; authorized; and issued and outstanding at September 30, 2021 and March 31, 2021, respectively (Note 13) | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity | ||||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
1
TRIBUS ENTERPRISES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| Three months ended September 30, | Six months ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Gross margin | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating expenses | ||||||||||||||||
| Employee costs | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Facilities | ||||||||||||||||
| Research and development | ||||||||||||||||
| Depreciation expense | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Other income/(expense), net | ( | ) | ( | ) | ||||||||||||
| Gain/(loss) on sale of equipment | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense) | ( | ) | ( | ) | ||||||||||||
| Income tax | ||||||||||||||||
| Net and comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
2
TRIBUS ENTERPRISES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
| Series A Convertible Preferred Stock | Series B Preferred Stock | Common Stock | Additional | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Paid In Capital | Deficit | Total | ||||||||||||||||||||||||||||
| - | ||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Series B preferred stock issued for cash | ||||||||||||||||||||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||||||||||
| Direct Incremental Costs | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net loss, three months ended June 30, 2020 | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance, June 30, 2020 | ( | ) | ||||||||||||||||||||||||||||||||||
| Net loss, three months ended September 30, 2020 | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Balance, March 31, 2021 | $ | ( | ) | |||||||||||||||||||||||||||||||||
| Common stock issued for cash | - | - | - | |||||||||||||||||||||||||||||||||
| Direct Incremental Costs | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss, three months ended June 30, 2021 | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Common stock issued for cash | ||||||||||||||||||||||||||||||||||||
| Direct Incremental Costs | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Reclass of Prior Years' Incremental Costs | ( | ) | - | |||||||||||||||||||||||||||||||||
| Net loss, three months ended June 30, 2021 | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
TRIBUS ENTERPRISES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six months ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Change in Right of Use Assets | ||||||||
| Inventory Allowance | ||||||||
| (Gain)/loss on sale of equipment | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Prepaid expenses | ( | ) | ||||||
| Deposits, current | ||||||||
| Deposits | ( | ) | ||||||
| Inventory | ( | ) | ( | ) | ||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Interest payable | ( | ) | ||||||
| Deferred rent | ||||||||
| Estimated warranty liability | ||||||||
| Deferred revenue | ( | ) | ||||||
| Sub lease security deposit | ||||||||
| Payments of operating lease liability | ( | ) | ( | ) | ||||
| Forgiveness of CARES Act Loan | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of equipment | ( | ) | ( | ) | ||||
| Sale of equipment | ||||||||
| Net cash provided by (used in) investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Repayments of finance leases | ( | ) | ( | ) | ||||
| Repayments of loans payable | ( | ) | ( | ) | ||||
| Proceeds from Loan Payable | ||||||||
| Proceeds from CARES Act Loan | ||||||||
| Shareholder Contribution | ( | ) | ||||||
| Proceeds from sale of common stock | ||||||||
| Proceeds from the sale of series B preferred stock | ||||||||
| Payments of direct incremental costs associated with the sale of stock | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Cash, beginning of period | ||||||||
| Net change in cash | ||||||||
| Cash, end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
| Supplemental disclosure of non-cash financing activities | ||||||||
| Returned Equipment purchased through a finance lease | $ | ( | ) | $ | ||||
| Finance leases entered into for purchase of equipment | ||||||||
| Loan entered into for purchase of equipment | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
TRIBUS ENTERPRISES, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2021
NOTE 1 – NATURE OF OPERATIONS AND ORGANIZATION
The Company was incorporated in the State of Washington on March 29, 2017 for the purpose of developing, designing, manufacturing and distributing hand tools. Upon incorporation, the Company entered into a share exchange agreement with Tribus Innovations, LLC (“Tribus Innovations”) and acquired all of the outstanding ownership interests of Tribus Innovations. Tribus Innovations was formed on December 1, 2015. The transaction was accounted for as a reverse merger and these financial statements present the historical financial information of Tribus Innovations from its inception and include the financial information of the Company from the completion of the share exchange agreement on March 29, 2017.
Tribus Enterprises, Inc. was formed to develop, manufacture, and market a compelling product line of innovative ratcheting flare nut wrenches which have been issued a Patent Number 10,414,029. The Company’s ratcheting flare nut wrench product line, which includes line and O2/NOx sensor wrenches, are being sold in the hand tool industry. Historically there have been limited designs for the ratcheting flare nut wrench or the traditional non-ratcheting flare nut wrench. These designs do not allow for small incremental movement in confined spaces, whereas Tribus’ version of the ratcheting flare nut wrench breaks new ground in this market.
Due to the wide application of Tribus Tools, Tribus has extensive marketing opportunities. Currently, Tribus has been selling its tools through on-line sales that include Facebook and Google ads and tool trucks. In the latter part of our fiscal year, we started selling our O2/NOx Sensor wrench on Amazon. While these efforts generated modest sales to date, it has provided Tribus with the feedback and assurance that the tools are needed, wanted, and provide value to our customers.
During the quarter ended September 30, 2021, the Company continued to focus most of its’ efforts implementing new equipment to expand operations while fine-tuning engineering product designs and machine programming. As such, sales during the quarter were minimal as production was down for half of the quarter.
In addition to manufacturing tools, the Company has been working on a software (web-based application) marketed under Mobile Tool Network to allow Mobile Tool Trucks to not only purchase Tribus products but also products from other manufacturers. The development was done in two phases. The first phase which was completed in September 2021 allows for on-line purchases. The second phase which will be marketed to Mobile Tool Trucks for purchase will include features to interface with their own customers, as well as have inventory management and reporting capabilities.
NOTE 2 – UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated interim financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the periods ended September 30, 2021 and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s March 31, 2021 audited financial statements. The results of operations for the periods ended September 30, 2021 are not necessarily indicative of the operating results for the full year. These consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Tribus Innovations LLC. All intercompany balances and transactions are eliminated on consolidation.
The preparation of consolidated 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 at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reported period. 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) all valid transactions are recorded and (3) transactions are recorded in the 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.
NOTE 3 – GOING CONCERN
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs which raises substantial doubt regarding the Company’s ability to continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully execute its plans and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. The Company’s foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with operations. The Company may experience a cash shortfall and be required to raise additional capital. Historically, it has mostly relied upon internally generated funds and funds from the sale of shares of stock to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.
5
TRIBUS ENTERPRISES, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
September 30, 2021
NOTE 4 – REVENUE RECOGNITION
The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, for revenue recognition. Adoption of ASC 606 did not have a significant impact on the financial statements. Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration expected to be received in exchange for those products. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
The
Company offers a lifetime warranty for manufacturing defects on products sold. The Company has estimated future costs that will
be incurred under its lifetime warranty program based on its historical defect rate. The amount of estimated warranty liability
was $
The
Company recognized revenues of $
NOTE 5 - ACCOUNTS RECEIVABLE
Accounts
receivable represents money due to the Company for products sold and delivered but not yet paid. The accounts receivable balance
was $
NOTE 6 - INVENTORY
The Company recognizes the cost of inventory through cost of goods sold as product is shipped to customers on an average cost basis. The value of inventory is carried at the lower of cost or market of raw materials purchased to manufacture the finished goods, direct labor associated with manufacturing and certain overhead related to the manufacturing facility.
As
of September 30, 2021, the Company’s finished goods inventory balance was $
In
addition to the above, the Company had $
As
of March 31, 2021, the Company’s finished goods inventory balance was $
NOTE 7 - CURRENT DEPOSITS
During
the year ended March 31, 2021, the Company made a deposit of $
NOTE 8 – EQUIPMENT AND INTANGIBLES
Property
and equipment are stated at cost. Depreciation is computed using the average cost method over the estimated useful lives of the
assets, which range from
During
the period ended September 30, 2021, the Company capitalized costs related to internal use software following guidance in ASC
350-40, Internal-Use Software. This software was placed into service with amortization beginning in September 2021. In
addition, the Company is capitalizing costs associated with software to be marketed following guidance in ASC 985-20, Software
– Costs of Software to Be Sold, Leased or Marketed. Amortization will begin once the software is completed. Certain
costs totaling $
As of September 30, 2021, the Company’s equipment and intangibles net of accumulated depreciation and amortization was $ and $ as of March 31, 2021.
NOTE 9 - DEFERRED REVENUE
Deferred
revenue represents revenues collected but not earned as of September 30, 2021. This is primarily composed of rent or sales revenue
received in advance of goods or services being delivered. The balance of deferred revenue was $
6
TRIBUS ENTERPRISES, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
September 30, 2021
NOTE 10 – OPERATING LEASES
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes guidance in ASC 840, Leases, which the Company adopted for the year ended March 31, 2020 under the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application Results and disclosure requirements for reporting periods beginning after March 31, 2019 are presented under Topic 842 while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting under Topic 840.
On March 23, 2017, the Company entered into a lease agreement for the rent of warehouse space that terminates on April 30, 2022, which was amended on May 20, 2017. Additionally, on March 12, 2019, the Company entered into an additional lease for the rent of warehouse space that terminates on March 31, 2022.
On
April 1, 2019, the Company recorded a right of use asset and operating lease liability totaling $
On
July 27, 2021, the Company entered into a short-term lease for the rent of an additional warehouse that terminates on
The leases require future minimum payments as shown below:
| Year Ending March 31, | |||||
| 2022 | |||||
| 2023 | |||||
| Less imputed interest | ( | ) | |||
| Operating lease liability, total | $ | ||||
On
May 8, 2019, the Company entered into a sublease agreement whereby it will sublet a portion of its space for a period of twelve
months commencing on May 1, 2019. The sublease requires a prorated amount of rent of $
On
May 11, 2020, the Company entered into a separate sublease agreement whereby it will sublet a portion of its space for a period
of
The
Company records sublease payments received as other income in the statement of operations. Sublease income of $
The subleases provide future income as shown below:
| Year Ending March 31, | |||||
| 2022 | |||||
| 2023 | |||||
| Other income from subleases, total | $ | ||||
7
TRIBUS ENTERPRISES, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
September 30, 2021
NOTE 11 – FINANCING LEASES PAYABLE
In February 206, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes guidance in ASC 840, Leases, which the Company adopted for the year ended March 31, 2020 under the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application Results and disclosure requirements for reporting periods beginning after March 31, 2019 are presented under Topic 842 while prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting under Topic 840.
The
Company accounts for financing leases in accordance with ASC 842. As of September 30, 2021, the Company had two separate long-term
leases for equipment that grants the Company the option to purchase the underlying asset at lease termination that the Company
is reasonably certain to exercise. The Company determined these were financing leases based on the reasonable certainty the Company
will exercise its right to purchase the underlying assets and capitalized the net present value of the leases which totaled $
As
of September 30, 2021, there was a total of $
Future annual payments required under the financing leases through termination are as follows:
| Year Ending March 31, | Principal | Interest | Total | ||||||||||
| 2022 | |||||||||||||
| 2023 | |||||||||||||
| 2024 | |||||||||||||
| 2025 | |||||||||||||
| $ | $ | $ | |||||||||||
As
of March 31, 2021, there was a total of $
NOTE 12 – LOANS PAYABLE
As of September 30, 2021, the Company had outstanding three separate loan agreements and one loan that was forgiven.
| ● | June 1, 2019, the Company entered into a loan
to borrow $ |
| ● | On January 20, 2021,
the Company entered into a short-term loan with a related party in the amount of $ |
| ● | On February 18,
2021, the Company entered into a verbal loan for equipment valued at $ |
| ● | On May 1, 2020,
the Company received loan proceeds in the amount of $ |
Total
loans outstanding as of September 30, 2021, were $
Total
loans outstanding as of March 31, 2021, were $
8
TRIBUS ENTERPRISES, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
September 30, 2021
NOTE 13 – CAPITAL STOCK
Authorized
The Company is authorized to issue up to shares of $ par value Series A Preferred Stock, shares of $ par value Series B Preferred Stock and shares of $ par value Common Stock.
The holders of the Series A Preferred Stock are entitled to votes for each share held. Each share of Series A Preferred Stock is convertible into shares of Common Stock at the discretion of the Company’s directors. In the event that there is a change of control transaction, each share of Series A Preferred Stock is convertible into 10 shares of Common Stock at the option of the holder. The holders of the Series A Preferred Stock are entitled to participate in dividends. Dividends are non-cumulative and are at the discretion of the Company’s directors.
The holders of the Series B Preferred Stock are entitled to votes for each share held. Each share of Series B Preferred Stock is convertible into shares of Common Stock at the discretion of the stockholder. The holders of the Series B Preferred Stock are entitled to participate in dividends. Dividends are non-cumulative and are at the discretion of the Company’s directors.
Issued
During
the three months ended September 30, 2021, the Company accepted stock subscriptions to issue a total of shares of common
stock at $ per share resulting in total cash proceeds of $
During
the six months ended September 30, 2021, the Company accepted stock subscriptions to issue a total of 1,762,700 shares of common
stock at $1.00 per share resulting in total cash proceeds of $
During the three and six months ended September 30, 2021, the Company did not issue any preferred stock.
9
TRIBUS ENTERPRISES, INC.
Notes to Unaudited Consolidated Condensed Financial Statements
September 30, 2021
NOTE 13 – CAPITAL STOCK (CONTINUED)
There were ; and shares of Series A Convertible Preferred Stock, Series B Preferred Stock and Common Stock issued and outstanding as of September 30, 2021.
There were ; and shares of Series A Convertible Preferred Stock, Series B Preferred Stock and Common Stock issued and outstanding as of March 31, 2021.
During
the quarter ended September 30, 2021, $
Basic Net Loss Per Share
Basic net loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. The weighted average number of common shares during the three and six months ended September 30, 2021 were and , respectively. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are approximately of potentially issuable shares through the conversion of preferred stock. These shares are excluded from the calculation as the impact of those shares are anti-dilutive in the current period.
NOTE 14 – SUBSEQUENT EVENTS
Subsequent
to September 30, 2021, the Company issued an additional shares of common stock and paid $
10
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-Q which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); finding suitable merger or acquisition candidates; expansion and growth of the Company’s business and operations; and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether actual results or developments will conform with the Company’s expectations and predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by. the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.
These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as “believes,” “anticipates,” “expects,” “estimates,” “plans,” “may,” “will,” or similar terms. These statements appear in a number of places in this Filing and include statements regarding the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company’s financial condition or results of operations for its limited history; (ii) the Company’s business and growth strategies; and, (iii) the Company’s financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company’s limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change and competition.
Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.
General Business Development
Tribus Enterprises Inc. was formed on March 29, 2017 in the State of Washington. Throughout this report references to “we”, “our”, “us”, “the company”, “Tribus” and similar terms refer to Tribus Enterprises, Inc.
Upon incorporation, the Company entered into a share exchange agreement with Tribus Innovations, LLC and acquired all of the outstanding ownership interests of Tribus Innovations, LLC. Tribus Innovations, LLC was formed on December 1, 2015. The transaction was accounted for as a reverse merger and these financial statements present the historical financial information of Tribus Innovations, LLC from its inception and include the financial information of the Company from the completion of the share exchange agreement on March 29, 2017. The membership interests of Tribus Innovations, LLC were all held by the officers and directors of Tribus Enterprises, Inc. The Company acquired 100% of the membership interests of Tribus Innovations, LLC in exchange for 2,600,000 of our common shares and 19,999,998 of our shares of Class A preferred stock. Tribus Innovations, LLC is currently a 100% owned subsidiary of the Company.
Tribus was formed to develop, manufacture, and market a compelling product line of innovative ratcheting flare nut wrenches which have been issued a Patent under Patent Number 10,414,029. The initial product line uses traditional manufacturing methods of metal forging, subtractive manufacturing (CNC milling), additive manufacturing (3D printing), and plastic injection molding.
Products
Tribus’ ratcheting flare nut wrench addresses the market in a way that has never been done before; reducing the time it takes to turn inline fasteners.
● Ease of Use – There are no buttons or switches. In order to reverse the tightening direction, simply remove the tool and rotate it 180°.
● Learning Curve – This works the same as a standard open ended wrench but it has the ability to ratchet, saving valuable time. There will be a very short and slight learning curve as the users will simply need to remove the tool off the fastener and line up the open slots to remove the tool completely off the line.
● Heavy Torque Application – Due to the design of the pawls that engage into the ratchet, it has at least 4x more contact surfaces than standard ratcheting wrenches. This will translate to much more application of torque.
● Convenience in Tight Spaces – Pawls have been designed along with corresponding grooves in the ratchet so users can maximize ratchet pitch. It will only take 4° to get the ratchet to click. This is crucial in tight spaces where there is very little room to swing the ratchet.
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Tribus’ ratcheting flare nut wrench product line, which includes line and O2/NOx sensor wrenches, are being sold in the hand tool industry. Historically there have been limited designs for the ratcheting flare nut and the traditional non-ratcheting flare nut wrench. These designs do not allow for small incremental movement in confined spaces, whereas Tribus’ version of the ratcheting flare nut wrench breaks new ground in this market.
Business/Marketing Strategy
Due to the wide application of Tribus Tools, Tribus has extensive marketing opportunities. Currently, Tribus has been selling its tools through on-line sales that include Facebook and Google ads and tool trucks. We also started selling our O2/NOx Sensor wrench on Amazon at the end of last year. While these efforts generated modest sales to date, it has provided Tribus with the feedback and assurance that the tools are needed, wanted, and provide value to our customers.
Liquidity and Capital Resources
As of September 30, 2021, Tribus had $1,164,560 in total current assets and total current liabilities of $1,465,570. Current assets consisted mainly of $592,947 of cash and $560,894 of inventory. Current liabilities consisted mainly of $200,063 of accounts payable and accrued liabilities, finance lease liabilities of $138,601, operating lease liabilities of $50,219 and current loans payable of $1,073,302.
Net cash used in operating activities was $1,015,444 compared to $524,266 for the six months ended September 30, 2021 and 2020, respectively. The increase in net cash used in operating activities was the result of our net loss increasing. See results of operations for further information.
Net cash used in investing activities was $274,597 and $46,347 for the six months ended September 30, 2021 and 2020, respectively. The majority of the difference is related to the Company selling equipment in the six months ended September 30, 2020, which provided net cash in the amount of $370,000.
Net cash provided by financing activities was $1,492,791 and $1,006,808 for the six months ended September 30, 2021 and 2020, respectively. Compared to the six months ended September 30 more funds were raised from the sale of stock in 2021 than in 2020. In addition, repayments of finance leases was significantly lower in the six months ended September 30, 2021 than in 2020.
Going Concern
The future of Tribus is dependent upon its ability to obtain financing and upon future profitable operations. Management is currently seeking additional capital through a private placement offering. See Note 3 to the financial statements for additional information.
Results of Operations
Tribus generated revenues totaling $50,121 during the six months ended September 30, 2021 and $12,799 during the six months ended September 30, 2020. Total operating expenses were $759,453 and $412,806 during the six months ended September 30, 2021 and 2020, respectively. Net loss for the six months ended September 30, 2021 was $994,887 compared to $514,450 for the same period in 2020. Most of the increase in net loss was the result of increased employee costs of approximately $261,000, an increase in general and administrative costs of $105,000 and inventory of $212,000 being written off to scrap or loss on obsolete inventory.
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CRITICAL ACCOUNTING POLICIES
In Financial Reporting release No. 60, “CAUTIONARY ADVICE REGARDING DISCLOSURE ABOUT CRITICAL ACCOUNTING POLICIES” (“FRR 60”), the Securities and Exchange Commission suggested that companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our most critical accounting policies include: going concern, inventory, revenue recognition and finance leases payable. The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results we report in our financial statements. In addition, certain prior year amounts have been reclassified for comparative purposes to conform to the current-year financial statement presentation. These reclassifications had no effect on previously reported results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is not exposed to market risk related to interest rates or foreign currencies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”), as of March 31, 2021, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer), who concluded, that because of the material weakness in our internal control over financial reporting (“ICFR”) our disclosure controls and procedures were not effective as of March 31, 2021.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
While significant work is being done to improve the Company’s internal controls, there have been no significant changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the current quarter that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
There have been no material changes in the risk factors set forth in the Company’s Form 10K for the period ended March 31, 2021 filed July 12, 2021.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended September 30, 2021, the Company accepted stock subscriptions to issue a total of 632,000 shares of common stock at $1.00 per share resulting in total cash proceeds of $632,000. Of this amount, 432,000 shares of common stock were issued to related parties for total cash proceeds of $432,000.
During the six months ended September 30, 2021, the Company accepted stock subscriptions to issue a total of 1,762,700 shares of common stock at $1.00 per share resulting in total cash proceeds of $1,762,700. Of this amount, 1,034,500 shares of common stock were issued to related parties for total cash proceeds of $1,034,500.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 3A. OFF BALANCE SHEET ARRANGEMENTS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following documents are included or incorporated by reference as exhibits to this report:
(b) REPORTS ON FORM 8-K
None.
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SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 10, 2021.
| Tribus Enterprises, Inc. | ||
| Registrant | ||
| By: | /s/ Kendall Bertagnole | |
| Kendall Bertagnole | ||
| Chief Executive Officer | ||
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