What changed in this filing

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Item 1. Financial Statements

2023-08-14 compared with 2023-05-22 · 209 added, 99 removed, 361 unchanged (46% of the section changed)

1 unchanged sentence

consolidated financial statements included in this Form 10-Q are as follows:

Balance Sheets as of March 31, 2023 (unaudited) and December 31, 2022;

Statements of Operations for the three months ended March 31, 2023 and 2022 (unaudited);

Statement of Stockholders’ Equity (Deficit) for the three months ended March 31, 2023 (unaudited);

Statements of Cash Flows for the three months ended March 31, 2023 and 2022 (unaudited);

to Consolidated Financial Statements.

Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022;

Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (unaudited);

Consolidated Statement of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2023 and 2022 (unaudited);

Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited);

Notes to Consolidated Financial Statements.

consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States

2 unchanged sentences

necessary for a fair presentation have been included.

Operating results for the interim three months ended March 31, 2023 are not necessarily

indicative of the results that can be expected for the full year.

Operating results for the interim three and six months ended June 30, 2023 are

not necessarily indicative of the results that can be expected for the full year.

Balance Sheets

June 30, 2023

December 31, 2022

Current assets

Cash and cash

Cash and cash equivalents

Other receivable

Deposit on acquisition of Pegasus Specialty Vehicles LLC

Total current assets

2 unchanged sentences

Current liabilities

Accounts payable and accrued

Accounts payable and accrued liabilities

Due to related parties

Convertible notes payable

Senior promissory note

Derivative liability

Total current liabilities

Total liabilities

Stockholders’ Deficit

Series B - Preferred stock,

66,667 shares authorized, $ 0.0001 par value, 0 issued and outstanding

Series C - Preferred stock,

2,000,000 shares authorized, $ 0.0001 par value, 2,000,000 issued and outstanding

Series Preferred stock

40,000 shares authorized, $ 0.0001 par value 40,000 issued and outstanding

Series B - Preferred stock, 66,667 shares authorized, $ 0.0001 par value, 0 issued

and outstanding

Series C - Preferred stock, 2,000,000 shares authorized, $ 0.0001 par value, 2,000,000 issued and

Series D Preferred stock 40,000 shares authorized, $ 0.0001 par value 40,000 issued

and outstanding

Preferred stock value

Common stock;

$ 0.0001 par value;

200,000,000 shares authorized;

78,328,877 and

75,437,604 shares issued and outstanding

2 unchanged sentences

Additional paid-in capital

Accumulated deficit

( 26,103,686 )

( 25,320,424 )

Total stockholders’

Total stockholders’ deficit

( 2,099,146 )

( 1,146,730 )

TOTAL LIABILITIES AND

STOCKHOLDERS’ DEFICIT

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

accompanying notes are an integral part of these consolidated financial statements.

Statements of Operations

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

COST OF REVENUES

3 unchanged sentences

Officer compensation

cash management fees

Non cash management fees

Total operating expenses

2 unchanged sentences

Interest expense

Gain (loss) on change in

derivative liability

Amortization of issuance

on settlement of notes payable

Total operating income

Gain (loss) on change in derivative liability

Amortization of issuance costs

Gain on settlement of notes payable

Total operating income (expense)

NET INCOME (LOSS)

$ ( 402,310 )

INCOME (LOSS) PER SHARE-

basic and diluted

$ ( 783,262 )

INCOME (LOSS) PER SHARE- basic and diluted

INCOME (LOSS) PER SHARE- basic

WEIGHTED AVERAGE SHARES OUTSTANDING

6 unchanged sentences

$ ( 4,101,931 )

Issuance of common stock in

private placement

Issuance of common stock for

debt conversions

Issuance of common stock in private placement

Issuance of common stock for debt conversions

Stock issuance for services

3 unchanged sentences

$ ( 3,278,319 )

Stock issuance for services

Balance, June 30, 2022

$ ( 261,059 )

$ ( 25,272,281 )

$ ( 3,062,084 )

Balance, December 31, 2022

5 unchanged sentences

$ ( 1,146,730 )

Reclassification of convertible

Reclassification of convertible debt

Exercise of warrants

4 unchanged sentences

( 1,768,824 )

Exercise of warrants

Stock issuance for services

Issuance of common stock for commitment fees

Net Income (loss)

Balance, June 30, 2023

$ ( 261,059 )

$ ( 26,103,686 )

$ ( 2,099,146 )

$ ( 261,059 )

$ ( 26,103,686 )

$ ( 2,099,146 )

accompanying notes are an integral part of these consolidated financial statements.

Statements of Cash Flows

March 31, 2023

June 30, 2023

June 30, 2022

Six Months Ended

June 30, 2023

June 30, 2022

Cash Flows from Operating Activities

Net income (loss)

$ ( 783,262 )

Adjustments to reconcile

net income (loss) to net cash used in operations

Loss (gain) on derivative

Adjustments to reconcile net income (loss) to net cash used in operations

Gain on derivative liability

( 1,687,112 )

Non cash interest expense

Gain on settlement of notes

Share professional fees/

Gain on settlement of notes payable

Share professional fees/ compensation

Depreciation and amortization

Changes in operating assets

and liabilities

Stock subscription receivable

Changes in operating assets and liabilities

Advances to suppliers

Other receivables

Accounts payable and accrued

Net cash provided by (used

in) operating activities

Accounts payable and accrued expenses

Due to related party

Net cash provided by (used in) operating activities

( 1,009,564 )

Cash Flows from Investing Activities

Deposit on acquisition of Pegasus Specialty Vehicles LLC

Net cash provided by (used in) investing activities

Cash Flows from Financing Activities

Proceeds from issuance

of convertible notes

Proceeds from related party

Proceeds from issuance of convertible notes

Proceeds from subscription

Proceeds from warrant exercise

Repayment of related party

of convertible notes

Net cash provided by (used

in) financing activities

Repayment of related party advances

Repayment of convertible notes

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

2 unchanged sentences

Supplemental cash flow disclosures

paid for interest

paid for taxes

Cash paid for interest

Cash paid for taxes

Non-cash investing and financing activities

of debt for common stock

Conversion of debt for common stock

accompanying notes are an integral part of these consolidated financial statements.

TO THE CONSOLIDATED FINANCIAL STATEMENTS

THE THREE MONTHS ENDED MARCH 31, 2023

THE THREE AND SIX MONTHS ENDED JUNE 30, 2023

1 – ORGANIZATION AND BUSINESS OPERATIONS

80 unchanged sentences

new business focus.

On June 20, 2023, the Company entered into an Agreement and Plan of Merger

with Pegasus Specialty Vehicles, LLC, an Ohio limited liability company, and Pegasus Specialty Holdings LLC, an Ohio limited liability

company and wholly-owned subsidiary of the Company.

of Presentation

10 unchanged sentences

Reclassifications

reclassifications have been made to the March 31, 2022 classifications to make them comparable to March 31, 2023.

reclassifications have been made to the June 30, 2022 classifications to make them comparable to June 30, 2023.

consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going

concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

As of March 31, 2023, the Company has an accumulated deficit of $ 25,701,376 .

As of June 30, 2023, the Company has an accumulated deficit of $ 26,103,686 .

The company’s ability to continue as a going concern

25 unchanged sentences

collection information and existing economic conditions.

As of March 31, 2023 and December 31, 2022, there’s no allowance for doubtful

As of June 30, 2023 and December 31, 2022, there’s no allowance for doubtful

accounts and bad debts.

28 unchanged sentences

by little or no market activity).

assets and liabilities measured at fair value on a recurring basis are summarized below for the quarter ended March 31, 2023 and year

assets and liabilities measured at fair value on a recurring basis are summarized below for the quarter ended June 30, 2023 and year

ended December 31, 2022.

OF ASSETS AND LIABILITIES MEASURED AT VALUE ON RECURRING BASIS

As of March 31, 2023

As of June 30, 2023

Derivative Liabilities

As of December 31, 2022

6 unchanged sentences

upon forecasts for future demand and market conditions.

Generally, the Company only keeps inventory on hand for sales made and in which

a deposit has been received.

income (loss) per Common Share

35 unchanged sentences

has periodically advanced funds to the Company for operating expenses.

At March 31, 2023 and December 31, 2022, amounts due related parties

At June 30, 2023 and December 31, 2022, amounts due related parties

were $ 69,100 and $ 164,946 , respectively.

1 unchanged sentence

4 - CONVERTIBLE NOTE PAYABLE

notes payable consists of the following as of March 31, 2023 and December 31, 2022:

notes payable consists of the following as of June 30, 2023 and December 31, 2022:

OF CONVERTIBLE NOTES PAYABLE

June 30, 2023

December 31, 2022

Convertible notes face value

Debt issuance

Debt issuance cost

Net convertible notes

March 31, 2023 and December 31, 2022, $ 200,000 of the convertible notes were 8 % Unsecured Convertible Promissory Notes (“Notes”)

from an investor issued March 5, 2021.

The note has an automatic conversion into equity on the maturity date , which was July 3, 2022 ,

or if a Qualified Financing (QF) of $ 5,000,000 is achieved, whichever occurs first.

June 30, 2023 and December 31, 2022, $ 200,000 of the convertible notes was an 8 % Unsecured Convertible Promissory Note from an investor

issued March 5, 2021.

The note has an automatic conversion into equity on the maturity date, which was July 3, 2022 , or if a Qualified

Financing (QF) of $ 5,000,000 is achieved, whichever occurs first.

The maturity date pricing is $0.10.

A QF converts

into equity at the lesser of $1.00 or 75% of the average selling price of the aggregate offering.

The noteholder has expressed to the

Company not to convert his Note into shares in the near term.

Consequently, we have mutually agreed not to accrue interest on the this

Note going forward.

A QF converts into equity at the

lesser of $1.00 or 75% of the average selling price of the aggregate offering.

The noteholder has expressed to the Company not to convert

his Note into shares in the near term.

Consequently, we have mutually agreed not to accrue interest on the this Note going forward.

the year ended December 31, 2022, the Company entered into Securities Purchase Agreements with five accredited investors, pursuant to

16 unchanged sentences

We received $ 128,500 from the Note after applying the original issue discount to the Note.

the three months ended March 31, 2023, the Company repaid $ 118,800 of this note, leaving a balance of $ 20,000 at March 31, 2023.

note has a Variable Conversion Price of 73 % of market price, market price is average of 3 lowest prices over previous 10 days.

on September 8, 2022, we issued and sold a senior secured convertible promissory note to AJB Capital Investments LLC for a principal

amount of $ 600,000 , together with guaranteed interest of 12 % per year calendar from the date hereof.

All Principal and Interest owing

hereunder, along with any and all other amounts, shall be due and owing on the Maturity Date March 8, 2023 .

We received $ 540,000 from

the Note after applying the original issue discount to the Note.

The note is convertible at a Variable Conversion Price shall equal the

volume weighted average trading price (i) during the previous twenty (20) Trading Day period ending on the date of issuance of this Note,

or (ii) during the previous twenty (20) Trading Day period ending on the Conversion Date.

the six months ended June 30, 2023, the Company repaid the entire note.

September 8, 2022, we issued and sold a senior secured convertible promissory note to AJB Capital Investments LLC for a principal amount

of $ 600,000 , together with guaranteed interest of 12 % per year calendar from the date hereof.

All Principal and Interest owing hereunder,

along with any and all other amounts, shall be due and owing on the Maturity Date March 8, 2023 .

We received $ 540,000 from the Note after

applying the original issue discount to the Note.

The note is convertible at a Variable Conversion Price shall equal the volume weighted

average trading price (i) during the previous twenty (20) Trading Day period ending on the date of issuance of this Note, or (ii) during

the previous twenty (20) Trading Day period ending on the Conversion Date

Maturity Date may be extended at the sole discretion of the Borrower up to six (6) months following the date of the original Maturity

2 unchanged sentences

period following the original Maturity Date, payable monthly .

maturity date for repayment of the Notes is nine months from issuance and the Notes bear interest at 10 % per annum.

Securities Purchase Agreement contain a most favored nation provision that allows the Investor to claim any lower price from any future

2 unchanged sentences

shares collectively during the year ended December

of March 31, 2023 and December 31, 2022, accrued interest payable on notes payable was $ 153,344 and $ 265,480 respectively.

of June 30, 2023 and December 31, 2022, accrued interest payable on notes payable was $ 202,556 and $ 265,480 respectively.

Company accounts for the fair value of the conversion features of its convertible debt in accordance with ASC Topic No.

15 unchanged sentences

OF DERIVATIVE LIABILITIES

June 30, 2023

December 31, 2022

Exercise price

$ 0.024 - $ 0.031

Expected volatility

2 unchanged sentences

Expected dividend rate

6 – SENIOR PROMISSORY NOTE

June 20, 2023, the Company signed a Securities Purchase Agreement with an accredited investor, pursuant to which the Company issued and

sold to the accredited investor a 15 % original issue discount Senior Promissory Note (non-convertible), dated June 20, 2023, in the principal

amount of $ 575,000 .

The Senior Promissory Note is secured by all of the Company’s assets under a separate security agreement between

the accredited investor and the Company.

Company received $ 435,000 from the Senior Promissory Note after applying the original issue discount and commissions and fees.

were utilized as a deposit on the Company’s acquisition of Pegasus Specialty Vehicles, LLC

(See Note 7).

maturity date for repayment of the Senior Promissory Note is September 20, 2023 and bears interest at 15 % per annum starting 60 days

after issuance and interest payable in cash monthly thereafter.

The Company may prepay the Senior Promissory Note at any time, but is

required to pay a premium of 104 % of the principal amount if repaid after 60 days.

additional consideration, the Company issued 1,318,000 shares of its common stock as commitment shares.

The Company is required to issue

additional commitment shares in the event the Senior Promissory Note is not prepaid at 60 days.

Pursuant to a Registration Rights Agreement,

the Company has agreed to register the commitment shares with the SEC no later than 90 days from the issuance of the Senior Promissory

the agreements, the Company agreed to certain restrictive covenants, including a restriction on borrowing and a most favored nation clause

in favor of the accredited investor for any future offerings not specifically exempted.

On June 20, 2023, the Company and Pegasus

Specialty Vehicles, LLC entered into a Loan and Security Agreement whereby the Company lent to Pegasus the principal amount of $ 575,000 secured by all of the Pegasus’

assets, but subordinate to the security interest of accredited investor and another lender of Pegasus .

7 – AGREEMENT AND PLAN OF MERGER WITH PEGASUS SPECIALTY VEHICLES, LLC

June 20, 2023, the Company entered into an Agreement and Plan of Merger

with Pegasus Specialty Vehicles, LLC, an Ohio limited liability company (“Pegasus”), and Pegasus Specialty Holdings LLC, an

Ohio limited liability company and wholly-owned subsidiary of the Company (“Pegasus Sub”).

Merger Agreement provides that at the closing, subject to terms and conditions,

Pegasus Sub will merge with and into Pegasus , with Pegasus surviving as a wholly-owned subsidiary

of the Company.

At Closing of the Merger, the issued and outstanding common shares of Pegasus will automatically be converted into the

right to receive an aggregate of 623,500 shares of Series AA

Preferred Stock of the Company.

Company, Pegasus, and Pegasus Sub have each made various representations and warranties and agreed to certain covenants in the

Merger Agreement, including a covenant by the Company that it would raise $ 3,000,000

less costs in new financing at Closing, with $ 435,000

loaned pre-Closing to Pegasus under a secured promissory note with a face value of $ 575,000 .

Pegasus granted a security interest to

the Company in all of Pegasus’ assets on the $ 575,000

loan, subordinate to other security interests as to the same collateral.

The Company received $ 500,000 from the Note after applying

the Original Issue Discount (OID), $ 30,000 of which was used to pay commission to a broker as placement agent, $ 30,000 was paid to

the lender for its legal fees and $ 5,000 for a due diligence fee paid to the lender.

The balance was tendered to the Company to lend to Pegasus under a Loan and Security Agreement as

described below.

Consummation of the Merger is subject to the satisfaction or, if permitted

by applicable law, waiver, by the Company, Pegasus, or both of various conditions.

For Pegasus, these conditions include, without limitation,

(i) an agreeable plan to spin out the existing Company cannabis assets and operations, (ii) an agreeable plan to transfer the outstanding

shares of Series C Preferred Stock of the Company to Brian Barrington simultaneously to the date of the aforementioned spin-out;

an agreeable plan to retire the Series E Designation;

(iv) financing by the Company of $3,000,000 less costs;

(v) the filing of the Certificate

of Designation for the Series AA Preferred Stock with the Secretary of State of Nevada;

and (vi) certain other customary conditions.

the Company, these conditions include, without limitation, (i) a secured promissory note issued by Pegasus to the Company in the amount

of $500,000 with the collateral being a UCC lien subordinate to other lenders;

(ii) the payback by the Company of certain advances contributed

by corporate officers and others in the Company in an amount not to exceed $140,000;

(iii) resolutions of the equity holders of Pegasus

approving the Merger Agreement and the transactions contemplated;

and (iv) certain other customary conditions .

Merger Agreement contains certain termination rights including the right of the parties to mutually agree upon termination, and by each

of the Company and Pegasus unilaterally if the other party has committed a violation of the covenants, representations and warranties

in the Merger Agreement.

Merger Agreement, the Merger, and the transactions contemplated thereby were unanimously approved by the board of directors of Pegasus, and unanimously approved by the board of directors of the Company.

Closing of the Merger is expected to occur as soon as practicable after the satisfaction or waiver of all the conditions to Closing in

the Merger Agreement, which is currently expected to be in the 3rd quarter of calendar year 2023.

8 – COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

Rent expense was approximately $ 7,539

and $ 1,165 for the three months ended March 31, 2023 and 2022, respectively .

and $ 2,502 for the six months ended June 30, 2023 and 2022, respectively .

Employment Agreement

13 unchanged sentences

9 – STOCKHOLDERS’ EQUITY

the first quarter of 2023, the Company did not issue any shares of common or preferred stock.

The Company received proceeds of $ 6,000

from the exercise of 249,255 warrants.

The 249,255 shares of common stock have yet to be issued at March 31, 2023.

the first quarter of 2022 the Company issued a total of 904,666 shares of common stock to vendors for compensation and services rendered.

The fair market value of the shares issued accounted as expenses as follows:

OF COMPENSATION AND SERVICES RENDERED

Professional Fees

Convertible promissory

the six months ended June 30, 2023, the Company issued the following shares of common stock:

Company issued 1,273,273 shares of common stock for the exercise of a warrant for proceeds of $ 30,000 ;

Company issued 250,000 shares of common stock under a consulting agreement with a 1 year term.

The shares were valued at $ 14,250 ,

the fair value at the issuance date.

Of this amount, $ 2,303 was recognized during the six months ended June 30, 2023, with the remaining

$ 11,947 unrecognized.

Company issued a total of 1,368,000 shares of common stock as commitment fees under borrowing agreements.

The Company recognized

$ 45,685 in expenses, the fair value of the common stock on the issuance dates.

the six months ended June 30, 2022 the Company issued a total of 954,666 shares of common stock to vendors for compensation and services

rendered, valued at $ 200,014 .

10 – SUBSEQUENT EVENTS

April 7, 2023, the Company paid the remaining $ 20,000 balance due on the 1800 Diagonal Lending, LLC convertible note that was issued

on June 27, 2022 and retired the note.

The principal amount of the note prior to interest and fees was $ 138,800 .

On April 21, 2023, the Company signed a non-binding

Letter of Intent (“LOI”) to acquire Pegasus Specialty Vehicles, LLC (“Pegasus”).

Company had one remaining convertible noteholder from the March 12, 2021 Private Placement Memorandum (PPM) that was holding his note,

without accrued interest, since the note maturity date of January 3, 2022.

On July 10, 2023, the noteholder converted his entire outstanding

note into 3,282,219 shares of the Company’s common stock and the note is now fully retired.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements