UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FORM 10-K
(Mark One)
For
the fiscal year ended
or
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Explanatory
Note:
DOCUMENTS INCORPORATED BY REFERENCE
| i |
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act” or “Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), including statements that contain the words “believes,” “anticipates,” “expects,” “plans,” “intends” and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected in any forward-looking statement. In addition to the factors specifically noted in the forward-looking statements, other important factors, risks and uncertainties that could result in those differences include, but are not limited to, those discussed under Item 1A to Part I “Risk Factors” in this Annual Report. The forward-looking statements are made as of the date of this Annual Report, and we assume no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investors should consult all of the information set forth in this report and the other information set forth from time to time in our reports filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934, including our reports on Forms 10-Q and 8-K.
Factors, among others, that could cause actual results and events to differ materially from those expressed or implied in any forward-looking statement include:
| ● | the ability to raise additional capital and continue as a going concern; |
| ● | the ability to proceed with our IPO for the raise gross proceeds of up to $20,000,000 under our registered IPO registration statement declared effective on December 1, 2023, which will require a post-effective amendment; |
| ● | the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
| ● | the scope of protection we are able to establish and maintain for our intellectual property rights covering our services and technology; |
| ● | the ability to compete in our industry, including against competitors that have significantly greater financial, technical and marketing resources than we do; |
| ● | the ability to obtain and maintain government or regulatory certification in the countries and regions where we will sell products or offer services; |
| ● | the ability to maintain key relationships; |
| ● | the impact of global economic and political developments on our business, including rising inflation and interest rates, capital market disruptions, bank failures, government shutdowns, economic sanctions and economic slowdowns or recessions that may result from such developments which could harm our development efforts as well as the value of our common stock and our ability to access capital markets; |
| ● | the implementation of our business model and strategic plans for our business, products, and technology; |
| ● | the impact of numerous laws and regulations that apply to us and compliance with these laws and regulations, as they currently exist or as modified in the future; |
| ● | the ability to retain the continued service of our key personnel and to identify, hire and retain additional qualified professionals. |
Additional factors that might cause actual results and our current expectations and projections to differ materially include, among other things, those discussed under the section titled “Risk Factors,” as well as those discussed elsewhere in the Annual Report and the other risks detailed from time-to-time in our reports and registration statements filed with the Securities and Exchange Commission, or SEC. We intend that such forward-looking statements be subject to the safe harbors for such statements. These forward-looking statements are based on the current beliefs and expectations of our management and speak only as of the date of this Annual Report or, in the case of documents referred to or incorporated by reference, the date of those documents. You should not place undue reliance on these forward-looking statements, which are subject to significant known and unknown risks, uncertainties and other factors, which are in some cases, beyond our control and which could materially affect results. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections.
Except as required by law, we do not undertake any obligation to revise or update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
As used in this Annual Report, unless the context otherwise requires, the terms the “Company,” “we,” “us,” and “our” refer to Blue Chip Capital Group, Inc., a Nevada corporation, and its subsidiaries, collectively. Each reference to a fiscal year in this Annual Report refers to the fiscal year ending in the calendar year indicated (for example, fiscal 2025 refers to the fiscal year ended May 31, 2025).
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PART I
Item 1. Business.
Blue Chip Capital Group, Inc., (the “Company”), a development stage company, was incorporated in the State of Delaware on November 27, 2019, under the name of Blue Chip Financial Group Corp.. The Company was subsequently redomiciled to the State of Nevada on December 17, 2020, with a name change to Blue Chip Capital Group, Inc.
The Company has developed Crowdfunding platforms to provide individual or entity investors with access to a wide array of private market investment opportunities, identifying and evaluating potential investment opportunities in startups and private businesses, among others. The Company is not limited to any specific business, industry, or geographical location and may elect to participate in business ventures of any kind or nature provided that its management believes the investments will be in the best interest of the Company and its shareholders.
On June 15, 2020, the Company formed Raisewise USA, Inc. as a wholly owned subsidiary under the laws of the State of New York. To date, Raisewise USA no assets or liabilities recorded on its balance sheet, nor has the Raisewise USA subsidiary had any transactions since inception other than the Platform License and Management and Maintenance Services Agreements with the Company. The Raisewise USA subsidiary’s purpose is to commercially exploit the Crowdfunding platform to provide individual and entity investors with access to investment opportunities. The Company owns 100% of this subsidiary.
On March 31, 2021, the Company organized another wholly owned subsidiary, Raisewise Morocco L.L.C. No assets or liabilities have been recorded on its balance sheet, nor has the subsidiary had any transactions since inception other than the Platform License and Management and Maintenance Services Agreements with the Company. The Raisewise Morocco subsidiary’s purpose is to commercially exploit the Crowdfunding platform to provide individual and entity investors with access to investment opportunities. The Company owns 100% of the subsidiary.
On May 21, 2021, the Company organized an additional subsidiary, Raisewise Sweden AB and subsequent to its organization, 20% ownership of this subsidiary was sold to Medcap LTD for $50,000. No assets or liabilities have been recorded on its balance sheet, nor has the subsidiary had any transactions since inception other than the Platform License and Management and Maintenance Services Agreements with the Company. The Raisewise Morocco subsidiary’s purpose is to commercially exploit the Crowdfunding platform to provide individual and entity investors with access to investment opportunities. The Company owns 80% of this subsidiary.
On May 29, 2023, the Company organized another majority owned subsidiary, Raisewise Brasil LTDA. No assets or liabilities have been recorded on its balance sheet, nor has the subsidiary had any transactions since inception. The subsidiary’s purpose is to create a Crowdfunding platform that provides individual investors with access to investment opportunities. The Company owns 95% of this subsidiary and the remaining 5% is owned by an unaffiliated Brazilian entity, MJA Consultoria e Participacoes LTDA, administered by Jore Aragao, a Brazilian attorney. To date, the Company has not finalized into a License Agreement or a Platform Management and Maintenance Services Agreement with Raisewise Brazil.
The Raisewise Crowdfunding platforms operate as a traditional crowdfunding platform with debt, equity, rewards and donations. The ceiling on money raises via crowdfunding platform in the U.S. was formerly USD $1,070,000, until the upper limit was raised in October 2020 to USD$5,000,000 over a 12-month period. Each investor can find projects that fit their particular business and investor needs, from USD$1,000 projects up to USD$5,000,000 and from simple personal loans to real estate equity investments, among other investment opportunities.
| 1 |
The Company’s Raisewise platforms will be operated through the Company’s wholly or majority owned subsidiaries in various U.S. and international jurisdictions. The Company’s Raisewise subsidiaries intend to compete with established crowdfunding companies, including, among others:
| ● | Crowdlustro.com |
| ● | Fundopolis |
| ● | Crowdfunz |
| ● | Republic.co |
| ● | Fundable |
These other crowdfunding platforms with which we will compete are all well established with longer operating histories and significant resources. These advantages may adversely affect our ability to compete.
The Company’s Raisewise Business Plan
The Company’s business plan is to monetize the Raisewise Crowdfunding platforms by funding projects for individual and entity investors thereby generating revenues and profits worldwide. As a new start-up, there can be no assurance of market acceptance, ability to successfully compete with established companies with far greater resources and established operating histories and generate significant revenues or profits, if ever.
The Company is seeking to raise gross proceeds of up to $20,000,000 from the sale of the Units pursuant to our registered IPO under a registration statement on Form S-1 that was declared effective by the SEC on December 1, 2023, not including an additional $25,000,000 if all of the Warrants were exercised at the warrant exercise price of $2.50, of which there was no assurance (the “Registration Statement” or IPO”). In order to raise these proceeds under the Registration Statement, we will have to file a post-effective amendment to include, among other disclosure, updated audited financial statement through the Company’s fiscal year ended May 31, 2025 (included in this Annual Report on Form 10-K). This post-effective amendment is subject to review by and must be declared effective by the SEC, prior to any capital raise. Our net proceeds from the IPO offering, if successful, will be used principally to: (i) expand our crowdfunding operations, including opening in new markets, in addition to the United States, Sweden, Morocco and recently in Brazil (pending Brazil’s license application/approval process) and elsewhere; (ii) fund the acquisition of US Petrochemical pursuant to a letter of intent dated August 24, 2024, as reported in the Company’s Form 8-K/A filed with the SEC on September 11, 2024, subject to the mutual agreement between the Company and US Petrochemical to waive the January 31, 2025 termination date, of which there can be no assurance; (iii) fund growth initiatives, including other potential future acquisitions; and (iv) for working capital and general corporate purposes.
To date, the Company has established Raisewise Crowdfunding subsidiaries, either wholly or majority owned, in the United States, Sweden, Morocco and Brazil to operate in the Crowdfunding industry. Each of these subsidiaries has its own platform, duly licensed by the Company, except for the Brazil subsidiary, which license is pending final approval. The first one established was Raisewise USA, which was incorporated in the State of New York and is in the process of being registered and authorized as a Crowdfunding entity by the SEC and FINRA and plans to resubmit its application to FINRA in or around December 2025.
The Company’s plan is to launch additional platforms in the major countries worldwide, dependent upon: (i) the success of capital raise under our IPO; and (ii) our ability to obtain authorizations from each local international financial market for authority to operate Crowdfunding platforms using the “Raisewise” name; among other factors. In additional to Raisewise Crowdfunding entities in Sweden, Morocco and Brazil, among other priority targeted areas, as a second stage, we plan to devote efforts to open Crowdfunding entities in the UK, France and Germany, with additional countries to be targeted thereafter. These efforts are, of course, subject to and dependent upon the success of our capital raise under our IPO, of which there can be no assurance.
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The Company has devoted time and resources toward the development of its own proprietary source code, designed to its needs with the capacity of modifying, adapting, transforming and improving its Crowdfunding platforms and ability to adapt each platform to specific countries and markets.
To that end, the Company has also engaged and will continued to identify a team of professionals, including consultants and service providers, to work with our management team. The Company is intent on developing an international web marketing agency to globalize our Crowdfunding network, subject to the success of its capital raising efforts.
Raisewise Subsidiaries and Material Terms of Contracts
Raisewise USA Inc. - Raisewise USA Crowdfunding License Agreement (“USA License Agreement”): Pursuant to the USA License Agreement dated April 1, 2022 (attached as Exhibit 10.2 to the Company’s Form S-1/A filed with the Commission on August 7, 2023), Raisewise USA was granted the rights to the Company’s Crowdfunding Platform for a term of 3 years. The USA License Agreement requires Raisewise USA to pay to the Company the sum of $50,000.00 US (subject to collection upon commencement of operations) as well as royalties of 2.5% of the gross revenue derived from Raisewise USA’s operation of the Crowdfunding Platform. Raisewise USA is a 100% owned subsidiary of the Company.
Raisewise USA Inc. - Crowdfunding Platform Management Services Agreement (“USA Platform Management Agreement”): Pursuant to the USA Platform Management Agreement dated April 1, 2022 (attached as Exhibit 10.3 to the Company’s Form S-1/A filed with the Commission on August 7, 2023), the Company was engaged to render certain defined management services to Raisewise USA for a term of 3 years. The USA Platform Management Agreement requires Raisewise USA to compensate the Company for management fees (3% of gross revenue), maintenance fees ($240,000.00 US/year) and set-up fees (5% of the gross revenue during the second year of operations).
Raisewise Sweden AB - Crowdfunding Platform License Agreement (“Sweden Platform License Agreement”): Pursuant to the Sweden Platform License Agreement dated April 1, 2022 (attached as Exhibit 10.4 to the Company’s Form S-1/A filed with the Commission on August 7, 2023), Raisewise Sweden was granted the rights to the Company’s Crowdfunding Platform for a term of 3 years. The Sweden Platform License Agreement requires Raisewise Sweden to pay to the Company the sum of $30,000.00 US (subject to collection upon commencement of operations) as well as royalties of 2.5% of the gross revenue derived from Raisewise Sweden’s operation of the Crowdfunding Platform. Raisewise Sweden is a 80% owned subsidiary of the Company with the remaining 20% owned by an unaffiliated United States corporation., MedCap International Inc.
Raisewise Sweden AB - Crowdfunding Platform Management Services Agreement (“Sweden Management Services Agreement”): Pursuant to the Sweden Management. Services Agreement dated April 1, 2022 (attached as Exhibit 10.5 to the Company’s Form S-1/A filed with the Commission on August 7, 2023), the Company was engaged to render certain defined management services to Raisewise USA for a term of 3 years. The Agreement requires Raisewise Sweden to compensate the Company for management fees (3% of gross revenue), maintenance fees ($85,000.00 US/year) and set-up fees (5% of the gross revenue during the second year of operations).
Raisewise Morocco SARL - Crowdfunding Platform License Agreement (“Morocco Platform License Agreement”): Pursuant to the Morocco Platform License Agreement dated April 1, 2022 (attached as Exhibit 10.6 to the Company’s Form S-1/A filed with the Commission on August 7, 2023), Raisewise Morocco was granted the rights to the Company’s Crowdfunding Platform for a term of 3 years. The Agreement requires Raisewise Morocco to pay to the Company the sum of $30,000.00 US (subject to collection upon commencement of operations) as well as royalties of 2.5% of the gross revenue derived from Raisewise Morocco’s operation of the Crowdfunding Platform. Raisewise Morocco is a 100% owned subsidiary of the Company.
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Raisewise Morocco SARL - Crowdfunding Platform Management and Maintenance Services Agreement (“Morocco Management Services Agreement”): Pursuant to the Morocco Management Services Agreement dated April 1, 2022 (attached as Exhibit 10.7 to the Company’s Form S-1/A filed with the Commission on August 7, 2023) the Commission on August 7, 2023), the Company was engaged to render certain defined management services to Raisewise Morocco for a term of 3 years. The Morocco Management Services Agreement requires Raisewise Morocco to compensate the Company for management fees (3% of gross revenue), maintenance fees ($120,000.00 US/year) and set-up fees (5% of the gross revenue during the second year of operations).
Raisewise Brasil LTDA - Raisewise Brasil LTDA was organized under the laws of Brazil on May 24, 2023 and is in the process of applying with the Brazil securities authorities to operate as a crowdfunding entity in Brazil. To date, the Company has not yet finalized the License Agreement or a Platform Management and Maintenance Services Agreement with the Raisewise Brazil subsidiary.
Raisewise USA is in the process of finalizing its application to be a FINRA regulated Regulation CF crowdfunding platform and has contracted with North Capital, a registered broker dealer. Regulation Crowdfunding (Reg CF) requires crowdfunding offerings to be conducted through an intermediary, which can be either a registered broker-dealer or a registered funding portal, both of which must be registered with the SEC and FINRA.
Raisewise Sweden has the FI authorization to operate debt and donations and is in the process of finalizing the plug-in for its payment system The Raisewise Morocco Crowdfunding Platform is in place pending operational approval under Moroccan law. The Moroccan crowdfunding law (Law number: 15.18; Decret number Dahir: 1.21.24) is pending finalization and publication. While the Company reasonably expects this crowdfunding law to be enacted, there can be no assurance as to when or if it will be adopted. Accordingly, Raisewise Morocco is preparing its filing with the Moroccan financial authority, which, if approved, should establish the Company as a pioneer in the Moroccan crowdfunding space. As noted about, Raisewise Brazil is preparing to file its application with the Brazilian regulatory authorities. The timing for the filings and approvals, if any when they occur, cannot be determined with any certainty at this time.
Government Regulation
The regulation of crowdfunding in the United States is multifaceted. Donation-based and reward-based crowdfunding are essentially unregulated, subject only to the prohibitions on fraud and false advertising that apply to all commercial transactions. But crowd investing and most forms of crowdlending must comply with the registration and prospectus requirements of the Securities Act, unless an exemption is available.
Four different exemptions are available. Two of these, Rules 506(b) and 506(c), allow sales to wealthy or sophisticated investors with relatively minimal additional regulation. Section 4(a)(6) of the Securities Act and its implementing regulation, Regulation Crowdfunding, allow sales to the general public, but at a high regulatory cost. Section 4(a)(6) and Regulation Crowdfunding heavily regulate all three participants in the crowdfunding process—issuers, intermediaries, and investors—and impose significant limits on the structure of offerings. Finally, many US states have adopted state crowdfunding exemptions that are coordinated with the federal intrastate offering exemption. These state exemptions are of limited usefulness because the issuer and all investors must be located in a single state.
Regulation Crowdfunding enables eligible companies to offer and sell securities through crowdfunding. The rules:
| ● | require all transactions under Regulation Crowdfunding to take place online through an SEC-registered intermediary, either a broker-dealer or a funding portal; | |
| ● | permit a company to raise a maximum aggregate amount of $5 million through crowdfunding offerings in a 12-month period; | |
| ● | limit the amount individual non-accredited investors can invest across all crowdfunding offerings in a 12-month period; and | |
| ● | require disclosure of information in filings with the Commission and to investors and the intermediary facilitating the offering. |
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Securities purchased in a crowdfunding transaction generally cannot be resold for one year. Rule 503 of Regulation Crowdfunding includes “bad actor” disqualification provisions that disqualify offerings if the issuer or other “covered persons” have experienced a disqualifying event, such as being convicted of, or subject to court or administrative sanctions for, securities fraud or other violations of specified laws.
Having platforms that host Regulation A, Regulation Crowdfunding and Regulation D offerings, we are required to comply with a variety of state and federal securities laws as well as the requirements of FINRA, a national securities association of which our funding portal subsidiary is a member.
Regulation Crowdfunding (Reg CF) and SEC Requirements: In order to act as an intermediary under Regulation Crowdfunding, our Raisewise USA subsidiary will be registered as a funding portal with the SEC and apply to become a member of FINRA. In the future, we may be subject to additional rules issued by other regulators, such as the money-laundering rules proposed by FinCEN.
As a funding portal, our Raisewise USA subsidiary is prohibited from engaging in certain activities in order not to be regulated as a full-service broker-dealer. These activities are set out in Section 4(a)(6) under the Securities Act and in Regulation Crowdfunding. Raisewise USA has established internal processes to ensure that Raisewise USA and its agents and affiliates do not engage in activities that it/they are not permitted to undertake, including:
| ● | Providing investment advice or recommendations to investors for securities displayed on our platform; |
| ● | Soliciting purchases, sales or offers to buy securities displayed on our platform; |
| ● | Compensating employees, agents or other persons for solicitation or for the sale of securities displayed or listed on our platform; or |
| ● | Holding, managing, processing or otherwise handling investors’ funds or securities. |
In addition, our funding portal has certain affirmative requirements that it is required to comply with to maintain its status. These affirmative obligations include:
| ● | Providing a communications channel to allow issuers to communicate with investors; |
| ● | Having due diligence and compliance protocols and requirements in place so that it has a “reasonable basis” to believe that |
| ● | its issuers are in compliance with securities laws, have established means to keep accurate records of the securities offered and sold, and that none of their covered persons (e.g., officers, directors and certain beneficial owners) are “bad actors” and therefore disqualified from participating in the offering; |
| ● | its issuers and offerings do not present the potential for fraud or otherwise raise concerns about investor protection; and |
| ● | its investors do not invest more than they are allowed to invest under the limitations set out in Regulation Crowdfunding; and |
| ● | Creating procedures for its investors to notify them of risks regarding investing in securities hosted on its platform and providing them with required investor education and disclosure materials. |
We are also required to set up protocols regarding payment procedures and recordkeeping.
FINRA Rules: As a planned member of FINRA, our funding portal will be subject to their supervisory authority and will be required to comply with FINRA’s crowdfunding portal requirements. These requirements include rules regarding conduct, compliance and codes of procedure. For instance, FINRA’s compliance rules require timely reporting of specified events such as complaints and certain litigation against the portal or its associated persons as well as the provision of the portal’s annual financials prepared on a U.S. GAAP basis. In addition, under the conduct rules, the portal is required to conduct its business with high standards of commercial honor and just and equitable principles of trade, is limited to certain types of communications with investors and issuers, and is prohibited from using manipulative, deceptive and other fraudulent devices.
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Liability
Under Section 11 of the Securities Act, an issuer, including its officers and directors, may be liable to the purchaser of its securities in a transaction made under Section 4(a)(6) of the Securities Act if the issuer makes an untrue statement of a material fact or omits to state a material fact required to be stated or necessary in order to make the statements, in light of the circumstances under which there were made, not misleading; provided, however, that the purchaser does not know of the untruth or omission, and the issuer is unable to prove that it did not know, and in the exercise of reasonable care could not have known, of the untruth or omission.
Though not explicitly stated in the statute, Section 11 may extend liability to funding portals, and the SEC has stated that, depending on the facts and circumstances, portals may be liable for misleading statements made by issuers. However, funding portals would likely have a “reasonable care” due diligence defense. “Reasonable care” would include establishing policies and procedures that are reasonably designed to achieve compliance with the requirements of Regulation Crowdfunding, including conducting a review of the issuer’s offering documents before posting them to the platform to evaluate whether they contain materially false or misleading information. We have designed our internal processes and procedures with a view to establishing this defense, should the need arise.
Further, we may also face liability from existing anti-fraud rules and statutes under the securities laws. For instance, under Section 9(a)(4) of the Exchange Act anyone who “willfully participates” in an offering could be liable for false or misleading statements made to induce a securities transaction.
In addition, FINRA imposes liability for certain conduct including violations of commercial honor and just and equitable principles of trade and acts using manipulative, deceptive and other fraudulent devices.
Regulation A and Regulation D; Broker-Dealer Registration Requirements
With respect to sales under Regulation A and Regulation D, promulgated by the SEC under the Securities Act, we provide the technology for issuers to identify and interact with potential investors, and do not structure transactions. We are not registered as a broker-dealer and do not engage in certain activities that would constitute “engaging in the business” of being a broker-dealer, including:
| ● | Actively soliciting investors and negotiating the terms of an arrangement between companies and investors; |
| ● | Accepting compensation related to the success and size of the transaction or deal; |
| ● | Effecting transactions, including handling of the securities and funds relating a transaction; and |
| ● | Extending credit to investors; and creating the market and help negotiate the price between buyers and sellers. |
There has been little regulatory guidance as to the circumstances in which state or federal broker-dealer registration requirements apply to online investment platforms, and such guidance as it exists generally predates the technological developments of the last couple of decades. Despite a long-standing request from organizations such as the American Bar Association to clarify the circumstances in which “finders,” who also connect buyers and sellers of securities, are permitted to perform that function without registering as broker-dealers, the SEC has not provided any guidance. It is possible that any clarification of the matter will result in our having to change our business model or even register as a broker-dealer. See “Risk Factors.”
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Competition and Barriers to Entry
The Company’s Raisewise USA platform, operating through several wholly or majority owned subsidiaries in various U.S. and international jurisdictions can compete in the market with companies such as:
| ● | Crowdlustro.com |
| ● | Fundopolis |
| ● | Crowdfunz |
| ● | Republic.co |
| ● | Fundable |
With respect to offerings made under Regulation Crowdfunding, we expect to compete with other intermediaries, including brokers and funding portals such as WeFunder, Next Seed, SeedInvest, Republic and MicroVentures.
With respect to offerings under Regulation A, we expect compete with other platforms, hosting services and broker-dealers. Some of our competitors include: SeedInvest, Hambrecht, CrowdEngine and Wefunder.
With respect to offerings under Rule 506(c), or online offerings made under Regulation D (which includes non-solicited offerings), we expect to compete with platforms such as Crowdfunder, AngelList, EquityNet, SeedInvest, FundersClub and Fundable. (See also “Competition and Barriers to Entry” disclosure below.)
Proposed New Business Venture
On May 23, 2024, the Board of Directors of the Company approved the execution of a Letter of Intent with US Petrochemical Industries, Inc. (“US Petrochemical”), a privately owned company based in Houston, TX, a copy of which letter of intent was attached as Exhibit 99.1 to the Company’s Form 8-K filed with the SEC on May 29, 2024. This letter of intent provided for the proposed acquisition, via a share exchange, with Laique Rehman, President and sole stockholder of US Petrochemical, contemplating that the Company will enter into a share exchange agreement with Mr. Rehman in consideration for which the Company will acquire 100% of Mr. Rehman’s capital stock in US Petrochemical in exchange for a number of shares of the Company’s securities in an amount to be determined based upon a mutually agreed valuation.
On August 28, 2024, the Company and US Petrochemical entered into a binding letter of intent, a copy of which was attached as Exhibit 99.2 to the Form 8-K/A filed on September 11, 2024, that provided for the execution of a definitive agreement for acquisition by the Company of US Petrochemical for cash consideration of $7,000,000 and further provided that Mr. Rehman will render continued services to the Company and US Petrochemical for a period of at least one (1) year following execution of a definitive agreement at terms to be negotiated. The binding letter of intent contained a termination date of January 31, 2025, at which date the binding letter of intent would be deemed null and void unless extended by mutual agreement between the Company and Mr. Rehman. While no extension has been agreed upon to date, the Company believes, based upon recent discussions with representatives of Mr. Rehman, that a final definitive may still be reached. However, the terms of a definitive agreement, if any, and indeed the likelihood of any such agreement cannot be assured at this time.
Reference is made to the Company’s above-referenced Forms 8-K and 8-K/A filed with the Commission on May 29, 2024 and September 11, 2024, respectively, which are incorporated herein by reference.
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Employees
We currently have no full-time employees and our Chief Executive Officer, who also serves as our Chief Financial Officer, as well as our Chief Operating Officer, who primarily works remotely, may be considered to be part-time. Our CEO, CFO and COO devote such time as they deem reasonably necessary based upon the present level of operations. We also work with a number of contractors for user-experience design, security controls and testing.
Property
Our principal executive offices are located at 269 South Beverly Drive – Suite 373, Beverly Hills 90212, and are leased from an unaffiliated third party for nominal rent on a month to month basis. If and when our operations increase and assuming we complete the acquisition of US Petrochemical, of which there can be no assurance, we expect that we will required additional facilities as well as assuming the leases utilized by US Petrochemical in Houston, TX. Our telephone number is: (402) 960-6110.
Item 1A. Risk Factors
Investing in our securities involves a high degree of risk. You should carefully consider and evaluate all of the information contained in this Form 10-K and the disclosures contained in our registration statement on Form S-1 that was declared effective by the SEC on December 1, 2023 (the “Registration Statement”), before you decide to purchase the Units offered pursuant to the Registration Statement. The risks and uncertainties described herein are not the only ones we may face. Additional risks and uncertainties that we do not presently know about or that we currently believe are not material may also adversely affect our business, business prospects, results of operations or financial condition. Any of the risks and uncertainties set forth herein, could materially and adversely affect our business, results of operations and financial condition.
Risks Related to our Financial Condition
The Company’s IPO Offering this is a “best effort offering,” investors who invest initially will be subject to more risk than later investors.
Pursuant to our Registration Statement declared effective by the SEC on December 1, 2023, and subject to a required post-effective amendment that must be filed with and be declared effective by the SEC containing the audited financial statements of the Company for its fiscal year-ended May 31, 2025, and any applicable interim financial statements, we are seeking to raise gross proceeds of up to $20,000,000 from the sale of 10,000,000 Units, each consisting of one share of common stock and one common stock purchase warrant the “Offering”), at an Offering price of $2.00 per Unit (not including an additional $25,000,000 if all of the Warrants are exercised at the Warrant Exercise Price of $2.50, of which there can be no assurance). This does not include any commissions payable to placement agents, if any, which amount cannot be determined at present but which will not exceed 9% of the gross proceeds of the Units sold as a direct result of the efforts of the placement agents. Our net proceeds from the Offering will be used principally: (i) to expand our crowdfunding operations, including opening in new markets, in addition to the United States, Sweden, Morocco and Brazil (pending Brazil’s license application/approval process) and elsewhere principally in Europe; (ii) to fund the acquisition of US Petrochemical, subject to the agreement with US Petrochemical to waive the January 31, 2025 termination date, of which there can be no assurance; (iii) to pay the expenses of the Unit Offering including any placement agent fees; (iv) for working capital and general corporate purposes; and (v) to fund growth initiatives, including other potential future acquisitions, if any. See “Description of Securities – Unit Offering.” Because this is a best effort Offering, the earlier investors invest in this Offering, the greater degree of risk they will incur. For example, if the Company raises an immaterial amount, investors will be subject to greater risk than if all or substantially all of the Units are sold and gross proceeds of at least $5,000,000 or up to $20,000,000 is raised. If we do not raise a substantial amount of proceeds from the Offering, we may not have sufficient working capital to be able to carry out our business plan including any possible acquisition of US Petrochemical. In that event, we will be required to seek other financing, either debt or equity or a combination thereof, which, if available, of which there can be no assurance, may be very dilutive and expensive or be at terms and conditions not acceptable to the Company. There can be no assurance that we will be successful in selling Units or that our Units, Common Stock and Warrants may become subject to quotation of the OTCQB or that we will become eligible for listing on any NASDAQ or NYSE Exchanges.
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Our Independent Registered Public Accounting Firm has expressed substantial doubt as to our ability to continue as a going concern.
The audited financial statements have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result if we cease to continue as a going concern. We believe that to continue as a going concern we will need approximately $250,000 to $400,000 per year simply to cover the administrative, legal and accounting fees, assuming the completion of the US Petrochemical, of which there can be no assurance whatsoever, notwithstanding any positive cash frow from operations that US Petrochemical may generate. We plan to fund these expenses primarily through cash flow from operations, if and when we generate positive cash flow, of which there can be no assurance, the sale of restricted shares of our Common Stock, and the issuance of convertible notes, as well as funds raised from our Offering, if successful, of which there can be no assurance, which Offering will not commence until the Company’s planned post-effective amendment to its Registration Statement is filed with and declared effective by the SEC.
Based on our audited financial statements for the fiscal years ended May 31, 2025 and 2024, our independent registered public accounting firms have expressed substantial doubt as to our ability to continue as a going concern. To date we have not generated any revenue from operations and have had to rely on the infusion of capital from our founders and private investors, from time to time. There can be no assurance that we will, in fact, generate revenues from operations in the near term, if ever, notwithstanding our expectations.
We may need to raise additional capital to fund continuing operations and an inability to raise the necessary capital or to do so on acceptable terms could threaten the success of our business.
To date, our operations have been funded entirely from the proceeds from the private sale of equity and the issuance of notes, including convertible notes, to private accredited investors, as well as loans from our management and founders. We currently anticipate that our available capital resources will be insufficient to meet our expected working capital and capital expenditure requirements for the near future. We anticipate that we will require an additional $2,000,000 during the next twelve months to fulfil our business plan plus an additional $7,000,000 or such other agreed amount to fund the potential acquisition of US Petrochemical, of which there can be no assurance. However, such resources may not be sufficient to fund the long-term growth of our business. If we determine that it is necessary to raise additional funds, we may choose to do so through strategic collaborations, licensing arrangements through our “White Labeling” (defined herein as our source code and intellectual property) strategy, public or private equity or debt financing, a bank line of credit, or other arrangements.
The Company is a holding company that owns intellectual property developed by Raisewise USA and held nominally by its wholly owned and majority owned subsidiaries, Raisewise Sweden, Raisewise Morocco and Raisewise Brazil. This intellectual property consists primarily of source code, maintenance contracts, the Raisewise brand and trademark and associated technologies. Blue Chip will monetize its intellectual property through Franchise contracts, as further described herein. By owning the source code, the Company will be able to develop new platforms and opportunities, including White Labeling opportunities, around the globe to franchise to new clients to further monetize the Company’s assets.
We have a limited operating history; it is difficult to evaluate our business and future prospects and increases the risks associated with investment in our securities.
We only have a limited history and only limited business operations to date, principally related to start-up and formation of our Raisewise USA subsidiary as well as our subsidiaries in Sweden, Morocco and Brazil. We plan to resubmit a crowdfunding application with FINRA through its Funding Portal Gateway for our Raisewise USA crowdfunding subsidiary, which application will follow registering with the SEC as a funding portal. Because of our limited operating history, investors may not have adequate information on which they can base an evaluation of our business and prospects. Investors should be aware of the difficulties, delays, and expenses normally encountered by an enterprise in its early stage, many of which are beyond our control, including unanticipated research and development expenses, employment costs, and administrative expenses. We cannot assure our investors that our proposed business plans as described herein will materialize or prove successful, or that we will be able to finalize development of our products or operate profitably. We may not be successful in addressing these and other challenges we may face in the future, and our business and future prospects may be materially and adversely affected if we do not manage these and other risks successfully. Given our limited operating history, we may be unable to effectively implement our business plan which could materially harm our business or cause us to scale down or cease our operations.
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Risks Related to our Business
You should carefully consider the following risk factors that affect our business. Such risk factors could cause our actual results to differ materially from those that are expressed or implied by forward-looking statements contained herein. Some of the risks described relate principally to our business and the industry in which we operate. Others relate principally to the securities market and ownership of our capital stock. The risks and uncertainties described below are not the only ones we face. Additional risks are described elsewhere in this report under the Item 1 – Business, Item 3 – Legal Proceedings, and Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operation sections, among others. Other risks and uncertainties that we are unaware of, or that we currently deem immaterial, also may become important factors that affect us. Our business, financial condition or results of operations could be materially and adversely affected by any of these risks. The discussion of our risk factors should be read in conjunction with the financial statements and notes thereto included herein.
Based on our recurring losses incurred during our startup and early development stage, and limited operating history, we may not be able to successfully implement our business plan; our auditors have included an explanatory paragraph in their opinion as to the substantial doubt about our ability to continue as a going concern.
We are a development stage company and since inception, have suffered losses from development stage activities to date, are dependent upon the success of our capital raise from our IPO may need of additional capital. We have experienced net losses in each fiscal quarter since our inception and as of the fiscal year ended May 31, 2025, have an accumulated deficit of $8,256,213. As a result of these factors, our independent auditors have included an explanatory paragraph in their opinion for the year ended May 31, 2025, and 2024 as to the substantial doubt about our ability to continue as a going concern. Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States, which contemplate that we will continue to operate as a going concern. Our financial statements do not contain any adjustments that might result if we are unable to continue as a going concern.
We may not be able to manage our growth, if any, effectively, which could slow or prevent our ability to achieve profitability.
The ability to manage and operate our business as we execute our development and growth strategy will require effective planning. Any significant growth, which may be unlikely to occur, could strain our internal resources and delay or prevent our efforts to achieve profitability. We expect that our efforts to grow will place a significant strain on our personnel, management systems, infrastructure, and other resources. Our ability to manage future growth effectively will also require us to successfully attract, train, motivate, retain, and manage new employees and continue to update and improve our operational, financial, and management controls and procedures. If we do not manage our growth effectively, slower growth is likely to occur, thereby slowing or negating our ability to achieve and sustain profitability.
We will operate in a regulatory environment that is evolving and uncertain.
The regulatory framework for online capital formation or crowdfunding is relatively new. The regulations that govern our operations have been in existence for a very few years. Further, there are constant discussions among legislators and regulators with respect to changing the regulatory environment. New laws and regulations could be adopted in the United States and abroad. Further, existing laws and regulations may be interpreted in ways that would impact our operations, including how we communicate and work with investors and the companies that use our platforms’ services. For instance, over the past year, there have been several attempts to modify the current regulatory regime. Some of those suggested reforms could make it easier for anyone to sell securities (without using our services), or could increase our regulatory burden, including requiring us to register as a broker-dealer. Any such changes would have a negative impact on our business.
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Risks related to the petrochemical industry.
Until we receive the full due diligence disclosure from and assuming we are able to complete the acquisition of US Petrochemical, of which there can be no assurance because the binding letter of intent had an expiration date of January 31, 2025, we cannot at this time adequately disclose the “risk factors” applicable to the business and operations of US Petrochemical and the petrochemical industry generally. If and when we complete the US Petrochemical acquisition, we will be required to make full disclosure of the material facts related to any such acquisition, including the financial statements of US Petrochemical and the risk factors related to its business and operations, among other disclosure.
We operate in a highly regulated industry.
We are subject to extensive regulation and failure to comply with such regulation could have an adverse effect on our business. Further our subsidiary, Raisewise USA will be registered as a funding portal and regulated entities such as us are often subject to FINRA fines. In addition, some of the restriction and rules on our subsidiary could adversely affect and limit some of our business plans.
In the event we are required to register as a broker-dealer, our business model could be harmed.
Under our current structure, we believe we are not required to register as a broker-dealer under federal and state laws. Further, none of our officers or our chairman has previous experience in securities markets or regulations or has passed any related examinations or holds any accreditations. We comply with the rules surrounding funding portals and restrict our activities and services so as to not be deemed a broker-dealer under state and federal regulations, see “Business – Government Regulations.” However, if we were deemed by a relevant authority to be acting as a broker-dealer, we could be subject to a variety of penalties, including fines and rescission offers. Further, we may be required to register as a broker-dealer, which would increase our costs, especially our compliance costs. If in those circumstances we decided not to register as a broker-dealer or act in association with a broker-dealer in our transactions, we may not be able to continue to operate under our current business model.
We may be liable for misstatements made by issuers on our funding portal.
Under the Securities Act and the Exchange Act, issuers making offerings through our funding portal may be liable for including untrue statements of material facts or for omitting information that could make the statements made misleading. This liability may also extend in Regulation Crowdfunding offerings to funding portals, such as our subsidiary. There may also be circumstances in which we are held liable for making misleading statements in connection with Regulation A and Regulation D offerings. See “Regulation – Regulation Crowdfunding – Liability” and “Regulation – Regulation A and Regulation D – Liability.” Even though due diligence defenses may be available, there can be no assurance that if we were sued, we would prevail. Further, even if we do succeed, lawsuits are time consuming and expensive, and being a party to such actions may cause us reputational harm that would negatively impact our business.
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Our compliance is focused on U.S. laws and we have not analyzed foreign laws regarding the participation of non-U.S. residents.
Some of the investment opportunities posted on our platform are open to non-U.S. residents. We have not researched all the applicable foreign laws and regulations, and therefore we have not set up our structure to be compliant with all those laws. It is possible that we may be deemed in violation of those laws, which could result in fines or penalties as well as reputational harm. This may limit our ability in the future to assist companies in accessing money from those investors, and compliance with those laws and regulation may limit our business operations and plans for future expansion.
Raisewise’s Crowdfunding products and services are relatively new in an industry that is still quickly evolving.
The principal securities regulations under Regulation A and Regulation Crowdfunding that our United States Crowdfunding operations through our Raisewise USA subsidiary will be subject to have only been in effect in their current form since 2015 and 2016, respectively. Raisewise USA’s ability to operate in the market remains uncertain as potential issuer companies may choose to use different platforms or providers (including, in the case of Regulation A, using their own online platform), or determine alternative methods of financing. Investors may decide to invest their money elsewhere. Further, our potential market may not be as large, or our industry may not grow as rapidly, as anticipated. With a smaller market than expected, we may have fewer customers. Success will likely be a factor of investing in the development and implementation of marketing campaigns, subsequent adoption by issuer companies as well as investors, and favorable changes in the regulatory environment.
We are reliant on one main type of service.
All of current services are variants on one type of service, providing a platform for online capital formation. Our revenues are therefore wholly dependent upon the market for online capital formation and our ability to comply with the regulatory requirements in each such market.
Raisewise and its providers are vulnerable to hackers and cyber-attacks.
As an internet-based business, we may be vulnerable to hackers who may access the data of our investors and the issuer companies that utilize our platform. Further, any significant disruption in service on the StartEngine platform or in its computer systems could reduce the attractiveness of the StartEngine platform and result in a loss of investors and companies interested in using our platform. Further, we rely on a third-party technology provider to provide some of our back-up technology as well as act as our escrow agent. Any disruptions of services or cyber-attacks either on our technology provider or on StartEngine could harm our reputation and materially negatively impact our financial condition and business.
Our business could be negatively affected by any adverse economic developments in the securities markets or the economy in general.
We depend on the interest of individuals in obtaining financial information and securities trading strategies to assist them in making their own investment decisions. Significant downturns in the securities markets or in general economic and political conditions may cause individuals to be reluctant to make their own investment decisions and, thus, decrease the demand for our products. Significant upturns in the securities markets or in general economic and political conditions may cause individuals to be less proactive in seeking ways to improve the returns on their trading or investment decisions and, thus, decrease the demand for our products.
We will need to introduce new products and services and enhance existing products and services to remain competitive.
Our future success depends in part on our ability to develop and enhance our products and services. In addition, the adoption of new Internet, networking, or telecommunications technologies or other technological changes could require us to incur substantial expenditures to enhance or adapt our services or infrastructure. There are significant technical and financial costs and risks in the development of new or enhanced products and services, including the risk that we might be unable to effectively use new technologies, adapt our services to emerging industry standards, or develop, introduce, and market enhanced or new products and services. An inability to develop new products and services, or enhance existing offerings, could have a material adverse effect on our profitability.
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We may rely on external service providers to perform certain key functions.
We may rely on a number of external service providers for certain key technology, processing, service, and support functions. External content providers provide us with financial information, market news, charts, option and stock quotes, research reports, and other fundamental data that we offer to clients. These service providers face technological and operational risks of their own. Any significant failures by them, including improper use or disclosure of our confidential client, employee, or company information, could cause us to incur losses and could harm our reputation.
We cannot assure that any external service providers will be able to continue to provide these services in an efficient, cost-effective manner or that they will be able to adequately expand their services to meet our needs. An interruption in or the cessation of service by any external service provider as a result of systems failures, capacity constraints, financial constraints or problems, unanticipated trading market closures, or for any other reason, and our inability to make alternative arrangements in a smooth and timely manner, if at all, could have a material adverse effect on our business, results of operations, and financial condition.
Our business could be negatively affected if we are required to defend allegations that our direct selling activities are fraudulent or deceptive schemes, are against public interest, or are the sale of unregistered securities.
Direct selling activities are regulated by the FTC, as well as various federal, state, and local governmental agencies in the United States and foreign countries. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, often referred to as “pyramid” schemes, which compensate participants primarily for recruiting additional participants without significant emphasis on product sales. Regulators may take the position that some or all of our products are deemed to be securities, the sale of which has not been registered. The laws and regulations governing direct selling are modified from time to time, and like other direct selling companies, we may be subject from time to time to government investigations related to our direct selling activities. This may require us to make changes to our business model and our compensation plan.
Any independent distributors and subsidiaries could fail to comply with applicable legal requirements or our policies and procedures, which could result in claims against us that could harm our business.
Any independent distributors that we may utilize will be independent contractors and our subsidiaries outside the United States (Raisewise Sweden, Raisewise Morocco and Raisewise Brazil) will rely on local management and controls and, accordingly, we are not in a position to directly provide the same oversight, direction, and motivation as we could if they were our employees. As a result, we cannot assure that our independent distributors and/or our wholly and majority owned foreign subsidiaries in Sweden, Morocco and Brazil will comply with applicable laws or regulations or our distributor policies and procedures.
Extensive federal, state, local, and international laws and authorities regulate our business, products, and direct selling activities. Because we are expanding into foreign countries, our policies and procedures for these foreign operations differ slightly or perhaps significantly in some countries due to the different legal requirements of each country in which we do business.
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Our future success is largely dependent on our current management.
Our business was built by the vision, dedication, and expertise of our executive officers and board of directors (collectively, our “Management”), who are responsible for our day-to-day operations and creative development. Our success is dependent upon the continued efforts of these people. If it became necessary to replace them, it is unlikely new management could be found that would have the same level of knowledge and dedication to our success. The loss of the services of these professionals, especially in the development of future proprietary software, patents, or applications, would adversely affect our business.
We are a controlled company.
A “controlled company” refers to a company controlled by another entity or another person by owning more than 50% of the total voting shares. As such, that entity or person has the decisive voice for managing the affairs of the Company. Since the majority of the holding is with a person or group, there is a risk for the interest of minority shareholders of the Company. There is the risk that minority holders might not receive the proportionate shares, and there could be a transfer of the resources of the Company by controlling shareholders for private purposes. The majority of the votes in the Company belongs to the controller in practice. Hence, the decision made by them is the decisions of their own, which might not be good for the Company as a whole. For example, in case the controller decides by giving priority to their motive; then it may prove riskier for the Company, which is being controlled by others. Reference is made to the disclosure under “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” below.
Risks Related to the Company’s Offering and Ownership of the Units, Common Stock and the Warrants
There is no established market for the Units, Common Stock or the Warrants and an active trading market may not develop nor be sustained.
There is no established trading market for the Units, the underlying Common Stock or the Warrants and we do not know if a market will develop on the OTCQB, any other OTC Markets or on NASDAQ or the NYSE (if we become eligible for listing, of which there can be no assurance, based upon our present Offering Price of $2.00 per Unit, among other factors) or, if it does, how active it will be or whether it will be sustained. We cannot assure you that we will meet the quantitative listing requirements for any other market or exchange or that any application will be approved. The liquidity of the market for our Units, Common Stock and the Warrants depends on a number of factors, including prevailing interest rates, our financial condition and operating results, the number of holders of these securities, our compliance with the timely reporting requirements of the Exchange Act, the market for similar securities and the interest of broker dealers in making a market in these securities. The market for the Warrants will be linked to the price and the liquidity of our Common Stock. We cannot predict with certainty the extent of investor interest in the Units, the shares of Common Stock and the Warrants, or how liquid that market will be. Without an active trading market, the liquidity of these securities will be limited.
A market maker, a FINRA registered broker-dealer, must make a Form 211 application to FINRA in order to obtain trading symbols for the Company’s Units, Shares and Warrants.
In order for the Company to obtain ticker symbols for its Units, Common Stock and Warrants, a market maker must submit a Form 211 on behalf of the Company to FINRA. A market maker is a FINRA registered broker-dealer firm that accepts the risks associated holding any number of shares or participating in the offering of shares of any company in an initial public offering or IPO (such as the Company) in the “going public process.” Obtaining ticker symbols for the securities being offered by the Company in its Registration Statement is the last step in the process and only a market maker, not an issuer, may make application to FINRA for ticker symbols. The Company through a market maker has a pending application with FINRA for a trading symbol for its Common Stock. The timing for FINRA approval of a trading symbol cannot be assured.
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Our COO will be a “Control Person” and the Company will be a “Controlled Company.”
The Company is a “controlled company,” which is defined to be a company of which more than 50% of the voting power is held by an individual, group or another company. A “Control Person” means any Person or Persons (as defined under Section 2(a)2 of the Act) that possesses directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or contract or otherwise. Joseph Richard Moran, our COO and founder, is the control person of NM & RM Corp. and Titan Ventures, Inc. which respectively own 28,125,000 shares and 25,000,000 shares (or a combined total of 53,125,000 shares) of the Company’s 93,919,400 outstanding shares of Common Stock, representing approximately 56.5% of the presently outstanding Common Stock. In addition, RN & NM Corp. and Titan Ventures, Inc. each own 333,333 shares of Series A Voting Preferred Stock, representing 66.67% of the 999,999 outstanding shares of Series A Voting Preferred Stock. The remaining 333,333 shares of Series A Voting Preferred Stock are owned by Ocean Prospect Limited. The holders of the shares of Series A Voting Preferred Stock are entitled to sixty-eight (68%) percent of the total votes on all such matters subject to stockholder vote, regardless of the actual number of shares of Common Stock then outstanding, from time to time. In addition, Mr. Moran, by virtue of his control of 666,666 shares of Series A Voting Preferred Stock through NM & RM Corp. and Titan Ventures, Inc., representing 66.67% of the 999,999 outstanding shares of Series A Voting Preferred Stock, will have voting rights to an additional 63,865,192 votes, representing a total of 116,990,192 votes of the total voting rights of 157,984,592 shares of voting capital stock, which includes the voting rights of the remaining 333,333 shares of Series A Voting Preferred Stock, resulting in Mr. Moran’s control of approximately 74.1%% of the total voting capital stock of the Company.
As a result of Mr. Moran’s ownership, through NM & RM Corp. and Titan Ventures Inc. of 53,125,000 shares of Common Stock and 666,666 shares of Series A Voting Preferred Stock, Mr. Moran may be deemed to be a “Control Person” of the Company, which means any Person or Persons (as defined under Section 2(a)2 of the Act) that possesses directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or contract or otherwise. Mr. Moran is deemed to be a “Control Person” of the Company, as defined under Section 2(a)2 of the Act.
Risks Relating to Our Common Stock
We have only a very limited operating history and may expect to report future losses that may cause our stock price to decline.
Since our inception, we have had only limited operating history, principally related to that of any start-up business including the filing with the SEC of our Registration Statement under the Securities Act and our reports under the Exchange Act as well as the organization and planned registration of our Raisewise USA with FINRA. We cannot be certain whether we will begin to generate revenues from operations or ever be profitable, or that any profitability will be sustained. Also, any general economic weakness either in the U.S. or globally may limit our ability to successfully pursue and implement our business plan. Any of these factors could cause our stock price to decline and result in our stockholders losing a portion or all of their investments.
Applicable SEC Rules governing the trading of “penny stocks” limits the trading and liquidity of our Common Stock which may affect the trading price of our Common Stock.
The Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
| ● | That a broker or dealer approve a person’s account for transactions in penny stocks; and |
| ● | The broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. |
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In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
| ● | Obtain financial information and investment experience objectives of the person; and |
| ● | Make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. |
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:
| ● | Sets forth the basis on which the broker or dealer made the suitability determination; and |
| ● | That the broker or dealer received a signed, written agreement from the investor prior to the transaction. |
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our Common stock and cause a decline in the market value of our stock.
Nevertheless, if our Common Stock qualifies for listing on the NASDAQ or NYSE, which may occur if we successfully complete the acquisition of US Petrochemical, it is our understanding that our Common Stock may not be deemed to be a “penny stock.”
We may need to raise additional capital. If we are unable to raise additional capital, our business may fail.
Because we have no to date, no any assurance when or if we will have revenues from operations, we need to secure ongoing funding to cover expenses. If we are unable to obtain adequate additional financing, we may not be able to successfully market and sell our products, our business operations will most likely be discontinued, and we will cease to be a going concern. To secure additional financing, we may need to borrow money or sell more securities. Under these circumstances, we may be unable to secure additional financing on favorable terms or at all. Selling additional stock or other securities, either privately or publicly, would dilute the equity interests of our stockholders. If we borrow money, we will have to pay interest and may also have to agree to restrictions that limit our operating flexibility. If we are unable to obtain adequate financing, we may have to curtail business operations, which would have a material negative effect on operating results and most likely result in a lower stock price.
The market price of our securities may fluctuate and be extremely volatile.
To date, there has been no trading in any of our securities, including our Units, Common Stock or Warrants. We believe this potential volatility, if and when a trading market develops, of which there can be no assurance, may be caused, in part, by variations in our quarterly operating results, delays in development of our markets for crowdfunding, changes in market valuations of similar companies, and the volume of our stock in the market.
Additionally, in recent years the stock market in general, and the OTC Markets and financial stocks in particular, have experienced extreme price and volume fluctuations. In some cases, these fluctuations are unrelated or disproportionate to the operating performance of the underlying company. These market and industry factors may materially and adversely affect our stock price regardless of our operating performance. The historical trading of other companies involved directly or indirectly in crowdfunding is not necessarily an indicator of how our securities will trade in the future and our trading price will not necessarily an indicator of what the trading price of our Common Stock might be in the future.
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In the past, class action litigation has often been brought against companies following periods of volatility in the market price of those companies’ common stock. If we become involved in this type of litigation in the future it could result in substantial costs and diversion of management attention and resources, which could have a further negative effect on our stock price.
Because we have no plans to pay dividends on our Common Stock, stockholders must look solely to appreciation of our Common Stock to realize a gain on their investments.
We do not anticipate paying any dividends on our Common Stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the expansion of our business. Our future dividend policy is within the discretion of our board of directors and will depend upon various factors, including our business, financial condition, results of operations, capital requirements, and investment opportunities. Accordingly, stockholders must look solely to appreciation of our Common Stock to realize a gain on their investment. This appreciation may not occur.
Certain provisions of Nevada law and of our corporate charter may inhibit a potential acquisition of our Company, and this could depress our stock price.
Nevada corporate law includes provisions that could delay, defer, or prevent a change in control of our company or our management. These provisions could discourage information contests and make it more difficult for our stockholders to elect directors and take other corporate actions. As a result, these provisions could limit the price that investors are willing to pay in the future for shares of our Common Stock. For example:
| (i) | without prior stockholder approval, our board of directors has the authority to issue one or more classes of preferred stock with rights senior to those of our Common Stock and to determine the rights, privileges, and inference of that preferred stock; |
| (ii) | there is no cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates; and |
| (iii) | stockholders cannot call a special meeting of stockholders. |
Our indemnification of our directors and officers may limit the rights of our stockholders.
While our board of directors and officers are generally accountable to our stockholders and us, the liability of our directors and officers to all parties is limited in certain respects under applicable Nevada state law and our articles of incorporation and bylaws, as in effect. Further, we have agreed or may agree to indemnify our directors and officers against liabilities not attributable to certain limited circumstances. This limitation of liability and indemnity may limit rights that our stockholders would otherwise have to seek redress against our directors and officers.
Additional issuances of convertible notes and warrants will cause additional substantial dilution to our stockholders.
Given our limited cash, liquidity, and revenues, it is likely that in the future, as in the past, we will issue additional equity or debt (including convertible debt) to finance our future business operations as well as potential acquisitions and strategic relationships. The issuance of additional shares of Common Stock, the exercise of warrants, and the conversion of any existing or future convertible debt to shares of our Common Stock could cause additional dilution to our stockholders and could have further adverse effects on the market price for our securities or on our ability to obtain future financing.
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The number of authorized shares of Common Stock may result in management implementing anti-takeover procedures by issuing new securities.
The proportion of 306,080,600 unissued but authorized shares of Common Stock compared to the 93,919,400 presently issued shares of Common Stock (prior to the any shares of common stock issued pursuant to out IPO Offering, shares underlying the warrants issued as part of the Units in the IPO Offering and shares underlying the warrants already outstanding that were issued to private investors) could, under certain circumstances, have an anti-takeover effect, for example, by permitting issuances of Common Stock that would dilute the stock ownership of a person seeking to effect a change in the composition of our board of directors or contemplating a tender offer or other transaction for the combination of our company with another entity. Although, we have no current plans to issue additional stock for this purpose, management could use the additional shares that are now available or that may be available after a possible further recapitalization to resist or frustrate a third-party transaction. Generally, no stockholder approval would be necessary for the issuance of all or any portion of the additional shares of Common Stock unless required by law or any rules or regulations to which we are subject.
Depending upon the consideration per share for any subsequent issuance of Common Stock, such issuance could have a dilutive effect on those stockholders who paid a higher consideration per share for their stock. Also, future issuances of Common Stock will increase the number of outstanding shares, thereby decreasing the percentage ownership—for voting, distributions, and all other purposes—represented by existing shares of Common Stock. The availability for issuance of the additional shares of Common Stock may be viewed as having the effect of discouraging an unsolicited attempt by another person or entity to acquire control of us. Although our board has no present intention of doing so, our authorized but unissued Common Stock could be issued in one or more transactions that would make a takeover of us more difficult or costly and, therefore, less likely. Holders of our Common Stock do not have any pre-emptive rights to acquire any additional securities issued by us.
Our stockholders may not recoup all or any portion of their investment in the event of our dissolution.
In the event of a liquidation, dissolution, or winding-up of our Company, whether voluntary or involuntary, our net remaining proceeds and/or assets, after paying all of our debts and liabilities, will be distributed to the holders of Common Stock on a pro-rata basis. We cannot assure that we will have available assets to pay to the holders of Common Stock any amounts upon such a liquidation, dissolution, or winding-up of our company. In this event, our stockholders could lose some or all of their investment.
Financial Industry Regulatory Authority, Inc. (“FINRA”) sales practice requirements may limit a stockholder’s ability to buy and sell our Common Stock.
In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our Common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
Shares eligible for future sale may adversely affect the market.
From time to time, certain of our stockholders who have invested privately in our Common Stock or other securities may become eligible to sell all or some of their shares of Common Stock or other securities by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated by the SEC under the Securities Act, subject to certain limitations. In general, pursuant to amended Rule 144, non-affiliate stockholders may sell freely after six months subject only to the current public information requirement under the Exchange Act. Affiliates may sell after six months subject to the Rule 144 volume, manner of sale (for equity securities), current public information and notice requirements. Any substantial sales of our Common Stock pursuant to Rule 144 may have a material adverse effect on the market price of our Common Stock.
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If we fail to maintain effective internal controls over financial reporting, the price of our securities may be adversely affected.
Our internal control over financial reporting may have weaknesses and conditions that could require correction or remediation, the disclosure of which may have an adverse impact on the price of our securities. We are required to establish and maintain appropriate internal controls over financial reporting. Failure to establish those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business, prospects, financial condition or results of operations. In addition, management’s assessment of internal controls over financial reporting may identify weaknesses and conditions that need to be addressed in our internal controls over financial reporting or other matters that may raise concerns for investors. Any actual or perceived weaknesses and conditions that need to be addressed in our internal control over financial reporting or disclosure of management’s assessment of our internal controls over financial reporting may have an adverse impact on the price of our Common Stock.
The availability of a large number of authorized but unissued shares of Common Stock may, upon their issuance, lead to dilution of existing stockholders.
We are authorized to issue 400,000,000 shares of Common Stock, of which 71,875,000 shares of Common Stock are presently owned by to our founders and a total of 93,919,400 shares are outstanding as of November 3, 2025, including our founders’ shares. In addition, as of May 31 and August 31, 2025, a total of 1,320,220 and 1,700,000 warrants, respectively, were outstanding. The Company has issued and sold shares of Common Stock and issued convertible notes that included warrants in private transactions to non-affiliate “accredited investors” in reliance upon the exemptions under Regulation D and Regulation S promulgated by the SEC under the Securities Act and Section 4(2) of the Securities Act. Additional shares may be issued by the Company upon the conversion of convertible notes and/or exercise of any outstanding warrants issued to these accredited investors or to be issued by the Company in the future, or otherwise authorized for issuance by our board of directors, from time-to-time, without further stockholder approval. The issuance of large numbers of shares of Common Stock, possibly at below market prices, or warrants having exercise prices below market prices, is likely to result in dilution to the interests of other stockholders, which may be substantial. In addition, issuances of large numbers of shares may adversely affect the market price of our Common stock.
Our Articles of Incorporation authorize 10,000,000 shares of preferred stock and our Board of Directors is authorized to provide for the issuance of unissued shares of preferred stock in one or more series, and to fix the number of shares and to determine the rights, preferences and privileges thereof. As of May 31, 2025, 1,000,000 shares of Series A Voting Preferred Stock are authorized, of which our founders own 999,999 shares of such Series (that have “super voting rights as described more fully in “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” below.
Accordingly, the board of directors may issue preferred stock which may convert into large numbers of shares of Common Stock and consequently lead to further dilution of other shareholders.
The Nevada Revised Statute contains provisions that could discourage, delay or prevent a change in control of our company, prevent attempts to replace or remove current management and reduce the market price of our stock.
Provisions in our articles of incorporation and bylaws may discourage, delay or prevent a merger or acquisition that our stockholders may consider favorable. For example, our certificate of incorporation authorizes our board of directors to issue up to ten million shares of “blank check” preferred stock. As a result, without further stockholder approval, the board of directors has the authority to attach special rights, including voting and dividend rights, to this preferred stock. With these rights, preferred stockholders could make it more difficult for a third party to acquire us.
We are also subject to the anti-takeover provisions of the NRS. Depending on the number of residents in the state of Nevada who own our shares, we could be subject to the provisions of Sections 78.378 et seq. of the Nevada Revised Statutes which, unless otherwise provided in the Company’s articles of incorporation or by-laws, restricts the ability of an acquiring person to obtain a controlling interest of 20% or more of our voting shares. Our articles of incorporation and by-laws do not contain any provision which would currently keep the change of control restrictions of Section 78.378 from applying to us.
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We are subject to the provisions of Sections 78.411 et seq. of the Nevada Revised Statutes. In general, this statute prohibits a publicly held Nevada corporation from engaging in a “combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the combination or the transaction by which the person became an interested stockholder is approved by the corporation’s board of directors before the person becomes an interested stockholder. After the expiration of the three-year period, the corporation may engage in a combination with an interested stockholder under certain circumstances, including if the combination is approved by the board of directors and/or stockholders in a prescribed manner, or if specified requirements are met regarding consideration. The term “combination” includes mergers, asset sales and other transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with affiliates and associates, owns, or within three years did own, 10% or more of the corporation’s voting stock. A Nevada corporation may “opt out” from the application of Section 78.411 et seq. through a provision in its articles of incorporation or by-laws. We have not “opted out” from the application of this section.
Our publicly filed Exchange Act Reports are and will be subject to review by the SEC, and any significant changes or amendments required as a result of any such review may result in material liability to us and may have a material adverse impact on the trading price of the Company’s Common Stock and other securities.
The reports of publicly traded companies are subject to review by the SEC from time to time for the purpose of assisting companies in complying with applicable disclosure requirements, and the SEC is required to undertake a comprehensive review of a company’s reports at least once every three years under the Sarbanes-Oxley Act of 2002. SEC reviews may be initiated at any time. We could be required to modify, amend or reformulate information contained in prior filings as a result of an SEC review. Any modification, amendment or reformulation of information contained in such reports could be significant and result in material liability to us and have a material adverse impact on the trading price of the Company’s Common Stock and other securities.
We are not subject to certain of the corporate governance provisions of the Sarbanes-Oxley Act of 2002.
Since our Common Stock is not presently listed for trading and may never be listed on a national securities exchange, we are not subject to certain of the corporate governance requirements established by the national securities exchanges pursuant to the Sarbanes-Oxley Act of 2002. These include rules relating to independent directors, director nomination, audit and compensation committees, retention of audit committee financial expert and the adoption of a code of ethics. Unless we voluntarily elect to fully comply with those obligations, which we have not to date, the protections that these corporate governance provisions were enacted to provide will not exist with respect to us. While we may make an application to have our securities listed for trading on a national securities exchange, which would require us to fully comply with those obligations, we cannot assure you that we will make such application, that we would be able to satisfy applicable listing standards, or if we did satisfy such standards, that we would be successful in such application.
We are required to comply with Section 404a of the Sarbanes-Oxley Act of 2002 and if we fail to comply in a timely manner, our business could be harmed and our stock price could decline.
Rules adopted by the SEC pursuant to Section 404a of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal controls over financial reporting, Any failure to maintain adequate controls could result in delays or inaccuracies in reporting financial information or non-compliance with SEC reporting and other regulatory requirements, any of which could adversely affect our business and stock price.
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Set forth, under the caption “Risk Factors,” where appropriate, the risk factors described in Item 105 of Regulation S-K (§ 229.105 of this chapter) applicable to the registrant. Provide any discussion of risk factors in plain English in accordance with Rule 421(d) of the Securities Act of 1933 (§ 230.421(d) of this chapter). Smaller reporting companies are not required to provide the information required by this item.
Item 1B. Unresolved Staff Comments.
None.
Item
1C.
The SEC mandates through Item 106 of Regulation S-K that public companies, such as Blue Chip Capital Group, Inc. must acknowledge the financial implications of cybersecurity risks in their disclosures. This requirement stems from the understanding that cyber incidents can lead to significant material costs, affecting a company’s financial condition and, consequently, its investors. The Company believes that at this stage of its development, with no active operations being conducted other than start-up activities principally related to the Raisewise subsidiaries’ initial compliance with registration and regulatory protocols, it is not exposed to cybersecurity risks. If and when it completes its acquisition of U.S. Petrochemical Industries, Inc., a supplier of raw materials to the Petrochemical industry globally in over 30 countries and has several international offices, the Company intends to engage professional cybersecurity professionals to assess the related risks and make full regulatory mandated disclosure in its SEC filings under the Exchange Act.
Item 2. Properties.
Our principal executive offices are located at 269 South Beverly Drive – Suite 373, Beverly Hills 90212, and are leased from unaffiliated third parties for nominal rent on a month to month basis. If an when our operations increase and assuming we complete the acquisition of US Petrochemical, of which there can be no assurance, we expect that we will required additional facilities as well as assuming the leases utilized by US Petrochemical in Houston, TX.
Item 3. Legal Proceedings.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
At present, there is no established public trading market for a class of common equity of the Company nor has the Company been assigned a trading symbol for its Common Stock by FINRA. The form 211 filing is a prerequisite for FINRA to issue a trading symbol for the Common Stock of the Company. The application for a trading symbol, by the filing by a market maker of the Form 211 with FINRA is pending and the Company reasonably expects that it should receive a trading symbol for its shares of Common Stock in or before December 2025.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with our consolidated financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. When the words “believe,” “expect,” “plan,” “project,” “estimate,” and similar expressions are used, they identify forward-looking statements. These forward-looking statements are based on management’s current beliefs and assumptions and information currently available to management, and involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission (“SEC”). The forward-looking statements included in this report are made only as of the date of this report. We disclaim any obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise.
Blue Chip Capital Group, Inc., a Nevada corporation (the “Company”) owns subsidiaries that operate independently but are accretive to one another under the name Raisewise USA, Inc., a New York corporation. We are establishing a portfolio of wholly and majority owned subsidiaries delivering what we believe will be leading-edge crowdfunding services in the market. Raisewise USA is a Regulation C crowdfunding platform, which is quite different than other crowdfunding platforms such as: (i) Lending Club, which began as a crowdfunding operation but transitioned to became a peer-to-peer lending company and financial institution that raises money through banks; (ii) Funding Circle Holdings PLC, a public company in the United Kingdom; and (iii) Seed Invest, which is a platform that raises money for equity up to US$75 million and operates like mini IPO for projects holders. Our Raisewise platform operates as a traditional crowdfunding platform with debt, equity, rewards and donations. The ceiling on money raises via crowdfunding platform in the U.S. was formerly USD $1,070,000, until the upper limit was raised in October 2020 to USD $5,000,000. Each investor can find projects that fit their particular business and investor needs from USD $1,000 projects up to USD $5,000,000 and from simple personal loans to real estate equity investments, for example.
The Company has yet to generate revenue from its operations during the fiscal year ended May 31, 2025, nor through the three-month period ended August 31, 2025, and it has not had any revenue since inception November 27, 2019. In order for the Company to maintain and expand its operations through the next 12 months, it may be required to: (1) successfully raise capital from its pending Registration Statement, if and when it is declared effective by the SEC; and/or (2) continue to raise through capital infusions through the issuance of other equity or debt securities, of a minimum of $1 million and up to $5 million.
The Company incurred net losses for the years ended May 31, 2025, and 2024 of ($5,693,136) and ($1,256,667) respectively. Cumulative losses since inception through May 31, 2025 are $(8,256,213). The Company has net negative working capital at its fiscal year ended May 31, 2025 of ($609,363.
During the year ended May 31, 2025, the Company raised $651,0000 from private securities offerings, principally involving the issuance of convertible notes, to third-party “accredited investors,” as that term is defined under Rule 501 of Regulation D promulgated by the Commission under the Act, as compared to $264,825 during the same period of the prior year, which sales were made in reliance upon Regulation S promulgated by the Commission under the Act. The Company reasonably believes that it will be able to continue to raise capital from sales of restricted securities to third-party investors and from advances from related parties. However, the Company has no current arrangements or commitments from third-party investors or related parties nor can there be any assurance that the Company will be able to continue to support its operations through private offerings of its securities or advances from related parties on a long term basis. The Company will be dependent upon the raise of equity capital from the public Offering under it effective Registration Statement, provided that it files and has declared effective by the SEC a post-effective amendment to the Registration Statement. There can be no assurance that the Company will be successful in raising sufficient proceeds from this Offering or the amount of proceeds that are actually raised under the Registration Statement, assuming that the post-effective amendment is filed with and declared effective by the SEC.
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This raises doubt about the Company’s ability to continue as a going concern. If additional funds cannot be raised or otherwise generated, the Company may be forced to reduce staff, minimize its research and development activities, or in a worst-case scenario, shut-down operations. However, management is cautiously optimistic that they can continue to improve operations and raise the appropriate funds both privately and publicly, of which there can be no assurance, in order to develop and grow the Company’s underlying business operations. As explained above, the Company has been raising capital to fund its operations by private placements to accredited investors of its securities involving the sale of restricted common stock and convertible notes, certain sales of which have also included warrants. These sales of restricted securities have been made in reliance upon the exemption under Reg D, rule 506(b) promulgated by the Commission under the Act.
Reference is made to the disclosure under “BUSINESS-The Company’s Raisewise Business Plan” above. Despite its limited cash resources, the Company has been able to retain engineering, consulting, legal and accounting personnel partially through the raising of interim working capital from related party advances and private sales of securities to accredited investors, notwithstanding the fact that the Company has substantial Commitments for Capital Expenditures.
The Company believes that it possesses the ability to meet requirements in the short-term (the next 12 months from the most recent fiscal period ended May 31, 2025) as well as in the long-term (beyond the next 12 months).
Results of Operations for the Year Ended May 31, 2025 compared to the Year Ended May 31, 2024
Operating Expenses
Operating expenses incurred for the year ended May 31, 2025, were $5,693,136 compared to operating expenses of $1,256,667 for the year ended May 31, 2024, an increase of $4,436,469, which is principally due the increased legal and accounting fees related to the fees related to the Company’s reporting obligations with the SEC under the Exchange Act, Raisewise USA and its non-U.S. regulatory application processes with their respective jurisdictions and the general and administrative expenses associated with being a small public company.
Liquidity and Capital Resources
At May 31, 2025, the Company had a working capital deficit of $609,363 compared to a working capital deficit of $166,522 at May 31, 2024. The increase in the working capital deficit is due to a increase in payables due to related parties, offset by an increase in accounts payable.
The Company used $653,350 in operating activities for the fiscal year ended May 31, 2025, compared to $263,840 during the same period of the prior fiscal year. The increase is due to general and administrative expenses related to legal and accounting fees during the fiscal year ended May 31, 2025, as discussed under Operating Expenses above.
The Company received $651,000 provided by financing activities during the fiscal year ended May 31, 2025, compared to $264,825 provided by financing activities during the fiscal year ended May 31, 2024. The increase is due to the sale of restricted securities, principally related to the issuance and sale of convertible notes to accredited investors in reliance on Reg D, Rule 506(b) during the year ended May 31, 2025.
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Off-Balance Sheet Arrangements.
The Company does not have any off-balance sheet arrangements at this time.
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, contingent assets and liabilities, each as of the date of the financial statements, and revenues and expenses during the periods presented. On an ongoing basis, management evaluates their estimates and assumptions, and the effects of any such revisions are reflected in the financial statements in the period in which they are determined to be necessary. Management bases their estimates on historical experience and on various other factors that they believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual outcomes could differ materially from those estimates in a manner that could have a material effect on our consolidated financial statements.
While our significant accounting policies are more fully described in Note 3 – Summary of Significant Accounting Policies to our consolidated financial statements, we believe that certain of these policies and estimates are deemed critical, as they require management’s highest degree of judgment, estimates and assumptions. We have discussed these accounting policies and estimates with the Audit Committee of our Board of Directors. We believe our most critical accounting policies and estimates are as follows:
Financial Instruments
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) an 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.
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.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of May 31, 2025. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
The Company does not have any assets or liabilities measured at fair value on a recurring basis.
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Convertible Notes
The Company evaluated the convertible note under ASC 470-20, Debt with Conversion and Other Options, and ASC 815, Derivatives and Hedging. The conversion feature does not meet the criteria for bifurcation as a derivative due to the illiquid nature of the underlying equity and the absence of a net settlement feature.
Accordingly, the entire instrument is accounted for as a liability at amortized cost. The Company uses the effective interest method to amortize the discount over the term of the note.
The Company accounts for debt instruments issued at a discount in accordance with ASC 835-30, Interest – Imputation of Interest, and ASC 470, Debt. The debt discount is amortized over the term of the debt using the effective interest method, which results in a non-linear recognition of interest expense over time. The amortization of the discount is recorded as interest expense in the consolidated statements of operations.
Stock-Based Compensation
ASC 718 Compensation – Stock Compensation (“ASC 718”) prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights may be classified as either equity or liabilities. The Company determines if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity’s past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability, otherwise, the transaction should be recognized as equity.
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 Equity – Based Payments to Non-Employees (“ASC 505-50”). Measurement of share-based payment transactions with non-employees are based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier performance commitment date or performance completion date. For stock-based transactions, May 31, 2025, the Company issued shares for services at an established market price of $2,00 discounted.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
None.
Item 8. Financial Statements and Supplementary Data.
The Consolidated Financial Statements of the Company and the report of the independent registered public accounting firm thereon starting on page F-1 are included herein.
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
On July 10, 2025, the Company’s Board of Directors approved the engagement of Grassi & Co., CPAs, P.C. (“Grassi & Co.”) as the Company’s independent registered public accounting firm for the fiscal years ended May 31, 2025 and May 31, 2026, including the review of interim quarterly financial statements for the periods ending August 31, 2025 through February 28, 2026. In connection with this engagement, the Company accepted the resignation of Hudgens CPA PLLC (“Hudgens”) as its independent registered public accounting firm.
As previously reported in the Company’s Form 8-K filed on January 30, 2025, the Board had approved the re-engagement of Hudgens as the Company’s independent registered public accounting firm on January 16, 2025, for the fiscal year ending May 31, 2025, following the resignation of Dan Barton, CPA on December 29, 2024. During the interim periods ended August 31, 2024, November 30, 2024, and February 28, 2025, and through July 10, 2025, there were no disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K) with Hudgens on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, and no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K). The Company has provided Hudgens with a copy of this disclosure and requested that it furnish a letter to the Securities and Exchange Commission (“SEC”) stating whether it agrees with the statements herein; such letter is filed as Exhibit 16.1 to this Form 10-K. The Company also previously reported in its January 30, 2025 Form 8-K that there were no disagreements or reportable events with Barton CPA, PLLC (“Barton”) and that his audit report on the Company’s consolidated financial statements for the year ended May 31, 2024, did not contain any adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles.
On April 5, 2024, the Company filed a Form 8-K with the Commission reporting that on March 31, 2024, the Board of Directors of Blue Chip Capital Group, Inc. (the “Company”) approved the engagement of Barton CPA, Cypress, TX (“Barton”) as the Company’s new independent registered public accounting firm for the Company’s fiscal year ending May 31, 2024, including review the Company’s interim quarterly financial statements for the period ended February 29, 2024. In connection with the selection of Barton, the Company agreed not to reengage Hudgens CPA PLLC (“Hudgens”) as the Company’s independent registered public accounting firm.
The refenced Form 8-K further reported that during the years ended May 31, 2023, 2022, 2021 and 2020, and the subsequent interim period through November 30, 2023, there were no (1) disagreements (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) with Hudgens on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Hudgens, would have caused Hudgens to make reference to the subject matter of the disagreement in their reports, or (2) reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K). The audit reports of Hudgens on the Company’s consolidated financial statements as of and for the years ended May 31, 2023, 2022, 2021 and 2020, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company’s two most recent fiscal years-ended May 31, 2023 and 2022, and the subsequent interim period through November 30, 2023, neither the Company nor anyone on its behalf has consulted Barton with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements or the effectiveness of internal control over financial reporting, where either a written report or oral advice was provided to the Company that Barton concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).
The Company delivered a copy of this Form 8-K containing disclosure under Item 4.02 to Hudgens CPA, PLLC and requested that it furnish to the Commission its letter regarding the disclosure Item 4.02 with respect to its firm. A copy of such letter was attached as Exhibit 16.1.
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On October 15, 2024, the Company filed a Form 8-K with the Commission with disclosure under Item 4.02(a) , Non-Reliance on Previously Issued Financial Statements or a Related Audit Report. The October 15, 2024 Form 8-K reported that during the preparation of this Form 10-K for the year ended May 31, 2024, management of the Company identified misstatements with respect to recognition of legal expenses during the year ended May 31, 2023. Management identified certain legal expenses in the approximate amount of $30,000, that should have been accrued in the year ended May 31, 2023. This resulted in an understatement in the reported amounts of general and administrative expense and understatement in the reported amounts of net loss by such amount, for the period ended May 31, 2023. Correspondingly, accounts payable for the year ended May 31, 2023, were understated and have been restated.
On October 10, 2024, the Company’s management and the Board of Directors decided it was necessary to amend its Form 10-K for the year ended May 31, 2023, to correct the audited consolidated financial statements for the misstatements identified above. Accordingly, investors should no longer rely on the Company’s previously released audited consolidated financial statements for the year ended May 31, 2023. The restated financial statements to be included in the amended Form 10-K should be relied on in lieu of the previous audited consolidated financial statements included in the Company’s original Form 10-K for the year ended May 31, 2023. The Company is diligently pursuing completion of the restatements and intends to file the amended Annual Report for the year ended May 31, 2023, as soon as reasonably practicable.
Dan Barton, CPA, the Company’s independent registered public accounting firm, concurred with the Company’s decision to amend the Form 10-K for the year ended May 31, 2023. The Company’s management and its Board discussed with Dan Barton, CPA, the matters described in the October 15, 2024 Form 8-K.
Item 9A. Controls and Procedures.
Rules adopted by the SEC pursuant to Section 404a of the Sarbanes-Oxley Act of 2002 require annual assessment of our internal controls over financial reporting and an annual management report on the effectiveness of controls over financial reporting.
When evaluating our internal control over financial reporting, we may identify material weaknesses and significant deficiencies. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
As of May 31, 2025, our management concluded that our controls and procedures over financial reporting and disclosures were not effective, due to material weaknesses in our internal control over financial reporting The identified material weaknesses relate to a lack of financial reporting close controls in place to ensure that all material transactions and developments impacting the financial statements are appropriately reflected in accordance with U.S. GAAP, including non-routine and complex accounting issues; a lack of segregation of duties in the financial reporting process; and insufficient personnel with the required skill and experience to complete the financial reporting close process. Our management and board of directors are reviewing the material weaknesses described above and developing a plan to remediate and enhance our overall control environment. In order to maintain and improve the effectiveness of its internal control over financial reporting, our efforts to remediate our material weaknesses will include:
● hiring additional accounting personnel, including those with public company experience;
● providing additional training for our personnel on internal controls over financial reporting;
● implementing additional controls and processes, including those that operate at a sufficient level of precision or that evidence performance;
● adopting processes and controls to better identify and manage segregation of duties; and
| 27 |
● potentially engaging an external advisor to assist with evaluating and documenting the design and operating effectiveness of internal controls and assisting with the remediation of deficiencies, as necessary.
Designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we intend to take may not fully address the material weaknesses that we have identified, and we may identify other material weaknesses in our internal control over financial reporting in the future.
Item 9B. Other Information.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Our directors were elected to serve until the next annual meeting of shareholders and until his respective successors will have been elected and will have qualified. The following table sets forth the name, age and position held with respect to our present executive officers and directors:
| Name and Address | Age | Title | ||
James C. DiPrima 269 South Beverly Drive, Suite 373 |
76 | Director, Interim Chief Executive Officer and Interim Chief Financial Officer | ||
| Beverly Hills, CA 90212 | ||||
Joseph Richard Moran 269 South Beverly Drive, Suite 373 |
67 | Chief Operating Officer | ||
| Beverly Hills 90212 | ||||
| Shani Moran | 47 | Director | ||
| 9790 Wendover Drive | ||||
| Beverly Hills, CA 90210 | ||||
| Frederic Ohana | 55 | Director | ||
| 14 Marina Views | ||||
| Gibraltar UK GX11188 |
| 28 |
James. C. DiPrima, Age 76, Director, Chief Executive Officer and Chief Financial Officer: On March 29, 2024, the Company’s Board of Directors approved the appointment of Mr. DiPrima as Interim Chief Executive Officer and Interim Chief Financial Officer. Mr. DiPrima has a Bachelor of Science in Business Administration from Creighton University, Omaha, Nebraska. His career includes 40 years of finance and accounting in both the public and private sectors beginning his career at Deloitte Haskins & Sells in the audit division, the predecessor company to Deloitte & Touche. He has held various positions with start-up companies, as a comptroller of a manufacturing company, founded and operated an accounting and tax consulting firm focused on medical practice management and tax planning. He has acted as a contract Chief Financial Officer for multiple traded companies and has been working in various positions with public traded companies since 1995 as well as providing consulting services for several other public companies in the areas of accounting, tax planning and financial reporting.
At present. Mr. DiPrima serves as CEO of PAO Group, Inc. (OTC: PAOG) a publicly traded holding company dedicated to operating businesses providing legal referrals. He currently is CEO of Green Stream Holding, Inc. (OTC: GSFI) a company providing solutions in the alternative energy sector. He is also serving as: CFO for Starstream Entertainment, Inc. (OTC: SSET), a company providing event staffing; acting CFO for GBX International (OTC GBXI), a holding company with patents in various medical products; and acting CFO of Pacific Software, Inc. (OTC PFSF), a company focused on the development of skin care products.
Joseph R. Moran, age 65, Chief Operating Officer. On March 29, 2024, the Board of Directors, in connection with the appointment of Mr. DiPrima as Interim CEO and CFO, appointed Mr. Moran as Chief Operating Officer. Mr. Moran served as the Company’s CEO and CFO from its founding as a Nevada corporation in December 2020 until March 29, 2024. Mr. Moran, an international entrepreneur with business activities in the United States and Western Europe, has been a leading distributor in the upholstery textile industry over the last three decades and was recognized as a major trimming supplier in the U.S. with warehouses across America and distribution in Central and South America, Middle East and Europe. Mr. Moran was founder and CEO of three private companies servicing different industries including commodities and high end fashion, active in both business and financial matters. Mr. Moran is also the founder and CEO of several private real estate companies in construction and development based in Bavaria, Germany. We believe that Mr. Moran’s established relationships with businesses and leaders in the U.S. and Europe should assist the Company to capitalize on the crowdfunding market’s arising opportunities.
Shani Moran, age 47 Director: Shani Moran is the wife of Joseph Richard Moran, the Company’s Chief Operating Officer and a founder. Ms. Moran, a recognized celebrity home consultant, is the founder and chief executive officer of Pillow Pops USA, a home decor company operates through its website, https://pillowpops.com. Launched in 2019, Pillow Pops was created to empower people from all walks of life to transform their homes with confidence and ease by creating a unique concept using ecologically friendly textiles and is committed to fighting child labor and human exploitation practices by adhering to stringent manufacturing guidelines.
Ms. Moran has extensive experience in textile design, having worked across all the spheres of the industry as one of the leading wholesalers in both the European and US market, from selling mass-produced commodities to furniture manufacturers at different department stores, as well as designing and producing upholstery textiles for leading fashion houses. In addition, Moran has been heavily involved in the Diamond Industry as an operations consultant, part of the Weltsman Group, a family Diamond Business with activities across the world and specifically in Israel, Belgium, Dubai and Africa. The Weltsman Group specializes in mining activities with contracts tied to US corporations as well as European trade companies.
Frederic Ohana, age 55, Director: Mr. Ohana was appointed as a member of the Company’s Board of Directors on October 21, 2024. Mr. Ohana has worked more than 20 years in Private Banking and Wealth Management for major institutions in France and Gibraltar, including Groupama Banque and Credit Suisse. He holds Masters in Mathematics and Finance from Paris University, France. In addition, Mr. Ohana is fluent in French, Arabic, Spanish and English and networks in Morocco, France, Spain and UK, principally engaged in international finance and business. Mr. Ohana currently serves as CFO of Hyperion Solution Partners, part of the Hyperion Group of Companies founded in 2012 and based in Gibraltar. The Hyperion Group provides a wide range of financial and related services including diverse and in-depth experience, beyond classic solutions, on behalf of high net-worth clients, often utilizing non-traditional asset classes including real estate, private equity, art and precious stones.
| 29 |
Corporate Governance
We have included as exhibits to this Annual Report on Form 10-K certificates of our Chief Executive Officer and Chief Financial Officer certifying the quality of our public disclosure.
We make available free of charge our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports, and all beneficial ownership reports on Forms 3, 4 and 5 filed by directors, officers and beneficial owners of more than 10% of our equity, as soon as reasonably practicable after such reports are electronically filed with the Securities and Exchange Commission. We have adopted a Code of Ethics for all of our employees, including our principal executive officer, principal financial officer and principal accounting officer and directors. Copies of the Code of Ethics is attached as Exhibit 14 to this Form 10-K.
Item 11. Executive Compensation.
For the fiscal years ended May 31, 2025, and May 31, 2024, the Company did not pay any compensation to our executive officers, nor did any other person receive a total annual salary and bonus exceeding $100,000.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table lists the number of shares of Common Stock and shares of Series A Voting Preferred Stock of our Company as of November 3, 2025, that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding Common Stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. The table also includes Information relating to beneficial ownership of Common Stock by our principal stockholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within sixty (60) days. Under the rules of the SEC, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he/she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The business address of each record and beneficial owner listed is in care of the Company at 269 South Beverly Drive, Suite 373, Beverly Hills CA 90212 unless otherwise noted.
Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our Common Stock owned by them, except to the extent that power may be shared with a spouse.
| 30 |
As of November 3, 2025, we had 93,919,400 shares of Common Stock and 999,999 shares of Series A Voting Preferred Stock issued and outstanding.
| Name of Beneficial Owner(1) | Common Stock Beneficially Owned (1) | Percentage
of Common Stock Owned (1) | ||||
| Joseph Richard Moran (2) | 53,125,000 shares | 56.5 | % | |||
| Ocean Prospect Limited (3) | 18,750,000 shares | 19.9 | % | |||
| James C. DiPrima, Director, CEO and CFO | 2,675,000 shares | * | % | |||
| Shani Moran, Director (4) | -0- shares | 0 | % | |||
| Frederic Ohana, Director | -0- shares | 0 | % | |||
| All Named Executive Officers and Directors as a group (4 persons) | 74,550,000 shares | 79.4 | % | |||
* Less than 1%
(1) Applicable percentage ownership is based on 93,919,400 shares of Common Stock outstanding as of November 4, 2025, and 71,875,000 shares of Common Stock owned by the above founders. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of Common Stock that are currently exercisable or exercisable within 60 days of August 31, 2025, are deemed to be beneficially owned by the person holding such securities for the purpose of computing ownership of such person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
(2) Joseph Richard Moran, our COO and founder, is the control person of NM & RM Corp. and Titan Ventures, Inc., which respectively own 28,125,000 shares and 25,000,000 shares (or a combined total of 53,125,000 shares) of the Company’s 93,919,400 outstanding shares of Common Stock, representing approximately 56.5% of the presently outstanding Common Stock. In addition, RN & NM Corp. and Titan Ventures, Inc. each own 333,333 shares of Series A Voting Preferred Stock, representing 66.67% of the 999,999 outstanding shares of Series A Voting Preferred Stock. The remaining 333,333 shares of Series A Voting Preferred Stock are owned by Ocean Prospect Limited. The holders of the shares of Series A Voting Preferred Stock are entitled to sixty-eight (68%) percent of the total votes on all such matters subject to stockholder vote, regardless of the actual number of shares of Common Stock then outstanding, from time to time. In addition, Mr. Moran, by virtue of his control of 666,666 shares of Series A Voting Preferred Stock through NM & RM Corp. and Titan Ventures, Inc., representing 66.67% of the 999,999 outstanding shares of Series A Voting Preferred Stock, will have voting rights to an additional 63,865,192 votes, representing a total of 116,990,192 votes of the total voting rights of 157,984,592 shares of voting capital stock, which includes the voting rights of the remaining 333,333 shares of Series A Voting Preferred Stock, resulting in Mr. Moran’s control of approximately 74.1%% of the total voting capital stock of the Company.
As a result of Mr. Moran’s ownership, through NM & RM Corp. and Titan Ventures Inc. of 53,125,000 shares of Common Stock and 666,666 shares of Series A Voting Preferred Stock, Mr. Moran may be deemed to be a “Control Person” of the Company, which means any Person or Persons (as defined under Section 2(a)2 of the Act) that possesses directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or contract or otherwise. Mr. Moran is deemed to be a “Control Person” of the Company, as defined under Section 2(a)2 of the Act.
(3) Ocean Prospect Limited, an entity located in Queensway, Gibraltar, is a trust organized under the laws of Gibraltar, owns 18,750,000 shares of Common Stock and 333,333 shares of Series A Voting Preferred Stock. The trustees of Ocean Prospect Limited include Frederic Ohana, a director of the Company.
(4) Shani Moran, a director, is the spouse of Joseph Richard Moran. Ms. Moran disclaims beneficial ownership of 53,125,000 shares of Common Stock beneficially owned by Mr. Moran.
| 31 |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The Company follows ASC 850, Related Party Disclosures (ASC:850”) for the identification of related parties and disclosure of related party transactions. At May 31, 2025 and May 31, 2024, the amounts due for related party transactions were $240 and $72,265, respectively. The single related party, Joseph Richard Moran, is a “control shareholder,” Chief Operating Officer and a founder of the Company and made various advances to cover operating expenses from time to time. During the fiscal years ended May 31, 2025 and 2024, Mr. Moran, a principal of NM & RM Corp. and Titan, both principal shareholders of the Company, was paid fees for services of $69,500 and $85,000, respectively.
Item 14. Principal Accountant Fees and Services.
| (1) | Audit Fees. Audit fees for the May 31, 2025 audit are $35,000. There were $27,000 in fees billed and paid in the aggregate for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements and review of financial statements included in the registrant’s Form 10-Q (17 CFR 249.308a) or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. | |
| (2) | Audit-Related Fees. The Company paid $50,000 in fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the registrant’s financial statements and are not reported under The fees were related to the production of accounting schedules utilized by the principal accounts in the performance of the audits.
| |
| (3) | Tax Fees. There were no tax fees billed by the principal accountant for tax compliance, tax advice, and tax planning. | |
| (4) | All Other Fees. There were no other aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in Items 9(e)(1) through 9(e)(3) | |
| (5) | (i) Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X. The audit committee reviewed previous filings of the auditor by other companies and reviewed the PCAOB database> | |
| (ii) Disclose the percentage of services described in each of Items 9(e)(2) through 9(e)(4) of Schedule 14A that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. | ||
| (6) | If greater than 50 percent, disclose the percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees. The Company CFO provided all accounting functions required to complete the necessary documentation required by the principal accountants in order to render their opinion. |
| 32 |
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) The following documents filed as a part of the report:
(b) Code of Ethics, filed as Exhibit 14 hereto.
Index of Exhibits
* Filed with the SEC as part of the Company’s Registration Statement on August 7, 2023, which are incorporated herein.
**Filed herewith.
*** Filed with the SEC as Exhibit 99.2 to the Company’s Form 8-K on September 11, 2024.
| 33 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Blue Chip Capital Group, Inc. | ||
| /s/: James C. DiPrima | ||
| Name: | James C. DiPrima | |
| Title: | Interim Chief Executive Officer | |
| Date: | November 10, 2025 | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name/Signature | Titles | Date | ||
| /s/: James C. DiPrima | Chief Executive Officer | November 10, 2025 | ||
| James C DiPrima | (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) and Director | |||
| /s/: Joseph R. Moran | ||||
| Joseph R. Moran | Chief Operating Officer | November 10, 2025 | ||
| /s/: Shani Moran | ||||
| Shani Moran | Director | November 10, 2025 | ||
| /s/: Frederic Ohana | ||||
| Frederic Ohana | Director | November 10, 2025 |
| 34 |
BLUE CHIP CAPITAL GROUP, INC.
CONSOLIDATED FINANCIAL STATEMENTS
May 31, 2025
| 35 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Blue Chip Capital Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Blue Chip Capital Group, Inc. (the “Company”) as of May 31, 2024 and 2023, and the related consolidated statements of operations, shareholders’ equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Blue Chip Capital Group, Inc. as of May 31, 2024 and 2023, and the results of its operations and its cash flows for the year ended May 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America.
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 audits 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.
Restatement of Previously Issued Financial Statements
As discussed in Note 4 to the consolidated financial statements, the accompanying financial statements as of and for the year ended May 31, 2024 have been restated to correct an error in the accounting for share-based compensation related to the issuance of fully vested common stock to a former executive officer. Our opinion is not modified with respect to this matter.
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
Description of the Matter
As described in Note 2 to the financial statements, The Company has generated no revenues for the year ended May 31, 2024. The Company has recurring net losses and is in a negative working capital position. If the Company is unable to raise sufficient funding, it may struggle to reach its future obligations. Accordingly, the Company has determined that these factors raise substantial doubt as to the Company’s ability to continue as a going concern for a period of one year from the date these financial statements are issued. Management plans to identify adequate sources of funding to provide operating capital for continued growth.
Auditing the Company’s assessment and related disclosures regarding its ability to continue as a going concern required significant auditor judgment. This is due to the high level of uncertainty surrounding the projections and assumptions related to the timing and likelihood of future cash flows, including external funding. Assessing whether the Company’s disclosures adequately reflect the uncertainty and risks associated with its going concern status also demanded considerable auditor judgment and effort.
How We Addressed the Matter in Our Audit
To assess the Company’s evaluation and related disclosures regarding its ability to continue as a going concern, we conducted audit procedures that included reviewing cash accounts subsequent to year-end up to the reporting date, assessing the aging of accounts and notes payable balances as of year-end, and reviewing significant events subsequent to year-end.
|
|
| We have served as the Company’s auditor since 2024. | |
| Cypress, Texas | |
| November 8, 2024 except for Note 4, as to which the date is November 7, 2025. |
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Blue Chip Capital Group, Inc.
Opinion on the Financial Statements
Substantial Doubt About the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred losses from inception, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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 audit. 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 audit, 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 audit 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 audit 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 audit provides a reasonable basis for our opinion.
/s/
PCAOB
ID #
We have served as the Company’s auditors since 2025.
November 10, 2025
| F-2 |
BLUE CHIP CAPITAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
May 31, 2025 | May 31, 2024 RESTATED | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Total Current Assets | ||||||||
| Other Assets | ||||||||
| Software application | ||||||||
| Total Other Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable-related party | ||||||||
| Accrued interest payable | ||||||||
| Due to related parties | ||||||||
| Note Payable | ||||||||
| Convertible
notes payable, net of discount of | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred A Stock, $ par value; shares authorized, issued and outstanding on May 31, 2025, and on May 31, 2024, respectively | ||||||||
| Common stock, $ par value; shares authorized issued and outstanding, on May 31, 2025, and on May 31, 2024. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
See accompanying notes to the consolidated financial statements.
| F-3 |
BLUE CHIP CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year Ended | ||||||||
| May 31, | May 31, | |||||||
| 2025 | 2024 RESTATED | |||||||
| Revenues: | $ | $ | ||||||
| Operating Expenses: | ||||||||
| Stock-based compensation | ||||||||
| Inducement expense | ||||||||
| General & Administrative expenses | ||||||||
| Total Operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income/(expenses): | ||||||||
| Interest expense | ( | ) | ||||||
| Total Other income/(expenses) | ( | ) | ||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| Net Loss Share Basic and Diluted | $ | ) | $ | ) | ||||
| Weighted Average Number of Common Shares Outstanding during the year Basic and Diluted | ||||||||
See accompanying notes to consolidated financial statements.
| F-4 |
BLUE CHIP CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT
| Shares | Amounts | Shares | Amount ($) | Additional Paid-In Capital ($) | Accumulated Deficit ($) | Stockholders’ Deficit ($) | ||||||||||||||||||||||
| Balance May 31, 2023 | ( | ) | ||||||||||||||||||||||||||
| Issuance of Common Shares for cash | ||||||||||||||||||||||||||||
| Issuance of commons Shares for services | ||||||||||||||||||||||||||||
| Cancel Founders shares | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance May 31, 2024 RESTATED | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of Common Shares for cash | ||||||||||||||||||||||||||||
| Issuance of Common Shares for Convertible Notes | ||||||||||||||||||||||||||||
| Issuance of Common Shares for services | ||||||||||||||||||||||||||||
| Warrants granted | ||||||||||||||||||||||||||||
| Net Loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance May 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||
See accompanying notes to the consolidated financial statements.
| F-5 |
BLUE CHIP CAPITAL GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended | Year Ended | |||||||
| May 31, 2025 | May 31, 2024 RESTATED | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operations | ||||||||
| Shares in lieu of compensation | ||||||||
| Shared issued for inducement | ||||||||
| Founders’ shares cancelled | ( | ) | ||||||
| Discount amortization | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable | ||||||||
| Accrued Interest payable | ||||||||
| Due to related parties | ( | ) | ||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Financing Activities: | ||||||||
| Proceeds from sale of common stock | ||||||||
| Note Payable borrowings | ||||||||
| Net Cash Provided by Financing Activities | ||||||||
| Net Increase (Decrease) in Cash | ( | ) | ||||||
| Cash at Beginning of Period | ||||||||
| Cash at End of Period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Founders’ shares cancelled | $ | $ | ||||||
| Shares issued for services | $ | $ | ||||||
| Shares issued with convertible notes | $ | $ | ||||||
| Warrants issued with convertible notes | $ | |||||||
The accompanying notes to the consolidated financial statements.
| F-6 |
BLUE CHIP CAPITAL GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND BUSINESS
Blue
Chip Capital Group, Inc., (the “Company”) was incorporated in the State of Delaware on November 27, 2019, under the name
of Blue-Chip Financial Group Corp. It was subsequently incorporated in the State of Nevada on December 17, 2020, with a name change to
Blue Chip Capital Group, Inc. Blue Chip Capital Group, Inc (the “Company”) owns
The
Company’s Raisewise USA platform will be operating through several wholly or majority owned subsidiaries in Morocco, Sweden and
Brazil which will conduct business, when and if operational, in various U.S. and international jurisdictions, as follows: Raisewise USA,
Inc., a New York corporation (
The first established, Raisewise USA, has been registered and authorized as a Crowdfunding entity by the United States Securities and Exchange Commission (“SEC”). Raisewise Sweden and Raisewise Morocco have received requisite licenses from the respective securities/regulatory authorities in Sweden and Morocco, respectively, and Raisewise Brazil was recently organized and is in the process for applying for licenses in Brazil, the timing of which cannot be determined at present. Raisewise Brazil will own its own platform and have license and management agreements.
On
January 8, 2021, the Company created Raisewise Morocco L.L.C under the laws of Morocco. No assets or liabilities have been recorded on
its balance sheet, nor has the subsidiary had any transactions since inception. This subsidiary’s purpose is to create a Crowdfunding
platform in Morocco that provides individual investors with access to investment opportunities. The Company owns
On
May 21, 2020, the Company established Raisewise Sweden AB, a Swedish limited liability company, having a Crowdfunding platform. Raisewise
Sweden AB was initially formed as a
NOTE 2 – GOING CONCERN
The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company generated
revenue for the twelve months ended May 31, 2025. The Company had a net loss of $
| F-7 |
Management plans to identify adequate sources of funding to provide operating capital for continued growth.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Principals of Consolidation
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP), and the rules and regulations of the Securities and Exchange Commission (SEC). The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated.
Cash and Cash Equivalents
The Company accounts for cash and cash equivalents under Accounting Standards Codification (“ASC”) 305, Cash and Cash Equivalents (“ASC 305”) and considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Software Application
Software consists of an internally developed information system for use by the Company to allow individuals to invest in various opportunities as well as present individuals to provide opportunities for potential Investors and accounted for in accordance with ASC 350-40, Intangibles – Goodwill and Other – Internal-Use Software (“ASC 350-40”). Costs incurred up to and including the feasibility stage of development as well as maintenance costs are expensed as incurred. As of May 31, 2025, the software is within the application development phase and all costs are currently capitalized.
Revenue Recognition
The Company recognizes revenue pursuant to Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. This new revenue recognition standard (new guidance) has a five-step process: a) Determine whether a contract exists; b) Identify the performance obligations; c) Determine the transaction price; d) Allocate the transaction price; and e) Recognize revenue when (or as) performance obligations are satisfied. The impact of the Company’s initial application of ASC 606 did not have a material impact on its financial statements and disclosures and there was no cumulative effect of the adoption of ASC 606.
| F-8 |
The Raisewise platform operates as a traditional crowdfunding platform with debt, equity, rewards and donations. Revenues from operations are recognized when payment is tendered. Amounts paid with a credit card are recorded in accounts and other receivables until payment is collected from the credit card processor. There has been no revenue recorded as of May 31, 2025 and May 31, 2024.
Deferred Income Taxes and Valuation Allowance
The
Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”). Under the asset and liability method of ASC
740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is
more likely than not that the Company will not realize tax assets through future operations. No deferred tax assets or liabilities
were recognized at, 2021. Based on its evaluation, the Company has concluded that there are no significant uncertain tax positions
requiring recognition in its financial statements. The Company’s evaluation was performed for twelve months ended May 31, 2025
and the tax years ended May 31, 2024, 2023, 2022 2021 and 2020 for U.S. Federal Income Tax and for the State of Nevada. The Company
has net operating loss carry forwards in the amount of approximately $
Financial Instruments
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) an 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.
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.
| F-9 |
Level 3 - Inputs that are both significant to the fair value measurement and unobservable.
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of May 31, 2025. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.
The Company does not have any assets or liabilities measured at fair value on a recurring basis.
Convertible Notes
The Company evaluated the convertible note under ASC 470-20, Debt with Conversion and Other Options, and ASC 815, Derivatives and Hedging. The conversion feature does not meet the criteria for bifurcation as a derivative due to the illiquid nature of the underlying equity and the absence of a net settlement feature.
Accordingly, the entire instrument is accounted for as a liability at amortized cost. The Company uses the effective interest method to amortize the discount over the term of the note.
The Company accounts for debt instruments issued at a discount in accordance with ASC 835-30, Interest – Imputation of Interest, and ASC 470, Debt. The debt discount is amortized over the term of the debt using the effective interest method, which results in a non-linear recognition of interest expense over time. The amortization of the discount is recorded as interest expense in the consolidated statements of operations.
Long-lived Assets
Long-lived
assets such as property, equipment and intellectual property are reviewed for impairment whenever facts and circumstances indicate that
the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the
fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available,
or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash
flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values
are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk
associated with the recovery of the assets. The Company’s internally developed intellectual property totalling $
Property and Equipment
The
Company follows ASC 360, Property, Plant, and Equipment, for its fixed assets. Equipment is stated at cost less accumulated depreciation.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets (
| F-10 |
Related Parties
The
Company follows ASC 850, Related Party Disclosures (ASC 850”) for the identification of related parties and disclosure of related
party transactions. On May 31, 2025, and May 31, 2024, the amounts due for related party transactions were $
ASC 718 Compensation – Stock Compensation (“ASC 718”) prescribes accounting and reporting standards for all stock-based payments award to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights may be classified as either equity or liabilities. The Company determines if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity’s past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability, otherwise, the transaction should be recognized as equity.
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 Equity – Based Payments to Non-Employees (“ASC 505-50”). Measurement of share-based payment transactions with non-employees are based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier performance commitment date or performance completion date. For stock-based transactions, May 31, 2025, the Company issued shares for services at an established market price of $ discounted. The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 Equity – Based Payments to Non-Employees (“ASC 505-50”). Measurement of share-based payment transactions with non-employees are based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. On May 31, 2025 the Company issued Common restricted shares in connection with services provided under an executive agreement with John Driscoll. Based on the terms of the warrants, including fixed exercise price and settlement in a fixed number of shares, the shares were classified as equity instruments.
Recently Issued Accounting Pronouncements
November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): “Improvements to Reportable Segment Disclosures” (“ASU 2023-07”) to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This update is effective beginning with the Company’s 2025 fiscal year annual reporting period, with early adoption permitted. The adoption of ASU 2023-07 did not have a significant impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”) to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid. This ASU applies to all entities subject to income taxes. This ASU will be effective for public companies for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of the new standard on the Company’s consolidated financial statements and related disclosures and does not believe it will have a material impact on its consolidated financial statements or its disclosures.
| F-11 |
In November 2024, the FASB issued ASU 2024-03, “Income Statement: Reporting Comprehensive Income— Expense Disaggregation Disclosures,” which requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement, as well as disclosures about selling expenses. This ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements disclosures.
We have reviewed the issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term.
The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.
NOTE 4-RESTATEMENT
During the preparation of its Form 10-K for the year ended May 31, 2025, management of the Company identified misstatements with respect to recognition of Stock in lieu Compensation expenses during the year ended May 31, 2024. Management identified Stock in lieu Compensation expenses and should have been included in that quarter and in the year end.
The Company has restated its Consolidated Balance Sheet as of May 31, 2024, and the related Consolidated Statement of Operations, Consolidated Statement of Stockholders’ Equity and Consolidated Statement of Cash Flows for the year ended May 31, 2024, to correct the misstatements described above.
The following table summarizes the effects of the restatement as of May 31, 2024, and for the year ended May 31, 2024. Corresponding changes were made in the Consolidated Statement of Stockholders’ Deficit, Consolidated Statement of Operations and Consolidated Statement of Cash Flows.
| At May 31, 2024, | ||||||||
As Previously Reported | As Restated | |||||||
| Stockholders’ Deficit | ||||||||
| Preferred Stock | ||||||||
| Common Stock | ||||||||
| Paid in Capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | ||||||||
| F-12 |
| Year Ended May 31, 2024 | ||||||||
As Previously Reported | As Restated | |||||||
| Consolidated Statement of Operations Information: | ||||||||
| Stock in Lieu of Compensation | ||||||||
| General and Administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| NET LOSS | ( | ) | ( | ) | ||||
| Net loss per share – basic and diluted | $ | ) | $ | ) | ||||
Weight Average Number of Common Shares Outstanding during the year Basic and Diluted | ||||||||
| Year Ended May 31, 2024 | ||||||||
As Previously Reported | As Restated | |||||||
| Consolidated Statement of Cash Flows | ||||||||
| Net Loss | ( | ) | ( | ) | ||||
| Shares in Lieu of compensation | ||||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
NOTE 5 – STOCKHOLDERS’ EQUITY
Series A Preferred Stock
Based upon Board resolutions at the time the Company was re-domiciled in Nevada, the Company is authorized to issue shares of Preferred Stock, at a par value of $ of which shares of common stock were issued to our founders. Our Board has the authority, without further action by the stockholders, to issue up to shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by our Board. As of May 31, 2025, there are shares of Series A Preferred Stock authorized, of which shares are outstanding.
| F-13 |
The Company applies the guidance in ASC 480 – Distinguishing Liabilities from Equity, ASC 470 – Debt, and ASC 815 – Derivatives and Hedging to determine whether financial instruments should be classified as liabilities, equity, or temporary equity. preferred stock without redemption features, that meet the criteria for equity classification under ASC 815-40 are classified as equity. The Company determined the criteria for equity classification for the Series A preferred stock was met.
Unless otherwise declared from time to time by the Board of Directors, out of funds legally available thereof, the holders of shares of the outstanding shares of Series A Preferred Stock shall not be entitled to receive dividends. Holders of Series A Preferred Stock shall not be entitled, as a matter of right, to subscribe for, purchase or receive any part of any stock of the Corporation of any class whatsoever, or of securities convertible into or exchangeable for any stock of any class whatsoever, whether now or hereafter authorized and whether issued for cash or other consideration or by way of dividend by virtue of the Series A Preferred Stock nor shall the shares of Series A Preferred Stock be convertible into shares of the Corporation’s common stock. The shares of Series A Voting Preferred Stock being issued to the Holders are not transferable.
Common Stock
The Company is authorized to issue shares of common stock, par value of $, of which shares of common stock were initially issued to our founders. On July17, 2023 the Board of Directors approved a resolution to cancel shares of common stock that had originally been issued to the founders.
During
the twelve months ended May 31, 2024, the Company issued shares of common stock for services and sold shares of common
stock for $
During
the twelve months ended May 31, 2025, the Company sold shares of common stock for a total of $
During
the twelve months ended May 31, 2025, the Company issued shares
of common stock as an inducement to investors of convertible notes. The fair value of the for restricted shares at issuance was
$
| ● | Stock price at issuance: $ | |
| ● | Exercise Price: $ | |
| ● | Expected term: years | |
| ● | Volatility: | |
| ● | Risk-free interest rate: |
During
the twelve months ended May 31, 2025, the Company issued shares of common stock for services rendered. The fair value of the
for restricted shares at issuance was $
| ● | Stock price at issuance: $ | |
| ● | Expected Terms: - years | |
| ● | Exercise price: $ | |
| ● | Volatility: % | |
| ● | Risk-free interest rate: -% | |
| ● | Dividend yield: |
Warrants
For accounting purposes, the Company accounts for the Private Placement Warrants (i) in accordance with the guidance contained in ASC 815-40 and (ii) classified as an equity instrument. The fair values of the Private Placement Warrants were accounted for as stock purchases. Since the entries recognize the fair value of the Private Placement Warrants offset within additional paid-in capital,
During
the year ended May 31, 2024, the Company entered into several subscription agreements with third parties who agreed to purchase a total
of shares of common stock for $
In
consideration for an investor who had purchased on February 7, 2025 a $
| F-14 |
On
April 19,2025 the Company issued
The fair value of the warrants at issuance was determined using the Black-Scholes option pricing model, which is considered an appropriate valuation technique under ASC 820, Fair Value Measurement. The following assumptions were used in the model:
| ● | Stock price at issuance: $ | |
| ● | Exercise
price: $ | |
| ● | Volatility:
| |
| ● | Risk-free
interest rate: | |
| ● | Dividend
yield: |
Based
on these inputs, the fair value of the warrants was estimated to be $ per warrant, resulting in a total fair value of $
On
March 27, 2025 the Company issued
The warrants were evaluated under ASC 470-20, Debt with Conversion and Other Options, and ASC 815, Derivatives and Hedging, to determine appropriate classification. Based on the terms of the warrants, including fixed exercise price and settlement in a fixed number of shares, the warrants were classified as equity instruments.
The fair value of the warrants at issuance was determined using the Black-Scholes option pricing model, which is considered an appropriate valuation technique under ASC 820, Fair Value Measurement. The following assumptions were used in the model:
| ● | Stock price at issuance: $ | |
| ● | Exercise price: $ | |
| ● | Volatility: | |
| ● | Risk-free interest rate: | |
| ● | Dividend yield: |
Based
on these inputs, the fair value of the warrants was estimated to be $ per warrant, resulting in a total fair value of $
On
April 28, 2025 the Company issued
The warrants were evaluated under ASC 470-20, Debt with Conversion and Other Options, and ASC 815, Derivatives and Hedging, to determine appropriate classification. Based on the terms of the warrants, including fixed exercise price and settlement in a fixed number of shares, the warrants were classified as equity instruments.
The fair value of the warrants at issuance was determined using the Black-Scholes option pricing model, which is considered an appropriate valuation technique under ASC 820, Fair Value Measurement. The following assumptions were used in the model:
| ● | Stock price at issuance: $ | |
| ● | Exercise
price: $ | |
| ● | Volatility:
| |
| ● | Risk-free
interest rate: | |
| ● | Dividend
yield: |
| F-15 |
Based
on these inputs, the fair value of the warrants was estimated to be $ per warrant, resulting in a total fair value of $
| Warrant Shares Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | ||||||||||
| Outstanding at May 31, 2024 | $ | |||||||||||
| Warrants granted | $ | |||||||||||
| Warrants exercised | - | |||||||||||
| Warrants canceled | - | |||||||||||
| Outstanding at May 31, 2025 | ||||||||||||
| Exercisable at May 31, 2025 | ||||||||||||
As
of May 31, 2025, there were
NOTE 6– CONVERTIBLE NOTES PAYABLE
During
the period from November 19, 2024 through May 31, 2025, the Company issued and sold to 6 investors convertible notes bearing interest
at
1:
11/19/2024 in the principal amount of $
2.
11/27/2024 in the principal amount of $
3:
12/12/2024 in the principal amount of $
4:
12/12/2024 in the principal amount $
5:
12/30/2024 in the principal amount of $
6:
4/16/2025 in the principal amount of $
| F-16 |
In addition, the Company issued and sold to a single investor convertible notes as follows:
1:
12/18/2024 in the principal amount of $
2:
1/6/2025 in the principal amount of $
3:
2/7/2025 in the principal amount of $
On
March 26, 2025, in consideration for this investor agreeing to authorize the release to the Company of the second tranche of $
The
Total of Convertible Notes was $
The
Convertible Notes are convertible into shares of the Issuer’s Common Stock from and after a date nine (9) months from the Issue
Date, at a conversion price of $
The
total discount recorded for these warrants granted related to these notes was $
The
Company recorded interest expense of $
The
Company recognized amortization of debt discounts in interest expense totalling $
NOTE 7 NOTES PAYABLE
On
May 19, 2025 the Company arranged for a non-convertible unsecured note in the amount of $
NOTE 8– SUBSEQUENT EVENTS
Subsequent events were evaluated through November 1, 2025, which is the date the financial statements were available to be issued.
During
the period from May 31, 2025 through November 1, 2025, the Company issued and sold to 8 investors convertible notes bearing interest
at
1:
7/9/2025 in the principal amount of $
2.
7/22/2025 in the principal amount of $
3:
7/28/2025 in the principal amount of $
4:
8/7/2025 in the principal amount $
5:
9/4/2025 in the principal amount of $
6:
9/12/2025 in the principal amount of $
7:9/25/2025
in the principal amount of $
8:10/05/2025
in the principal amount of $
The
Company arranged for a non-convertible unsecured note in the amount of $
In the first quarter of fiscal year 2026, the Company issued an aggregate of restricted common shares to certain key executives pursuant to their respective compensation agreements executed in August 2025. These awards were granted as part of the Company’s long-term incentive and retention program designed to align management’s interests with those of shareholders. The restricted common shares are subject to customary vesting conditions and other terms as set forth in the individual agreements. The fair value of these awards will be recognized as stock-based compensation expense over the applicable vesting periods in accordance with ASC Topic 718, Compensation—Stock Compensation.
| F-17 |