Item 7. Management’s Discussion and Analysis
Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
Management’s Discussion and Analysis of Financial
Condition and Results of Operations is designed to provide a reader of the financial statements with a narrative report on our financial
condition, results of operations, and liquidity. This discussion and analysis should be read in conjunction with the audited Financial
Statements and notes thereto for the year ended June 30, 2023 and 2022, included under Item 8 “Financial Statements and Supplementary
Data” in this Report. The following discussion contains forwa rd-looking
statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Our actual
results could differ materially from those discussed in the forward-looking statements. Please also see the cautionary language at the
beginning of this Report regarding forward-looking statements.
Status
of Operations
On August 29, 2022, we entered into and consummated a Patent License
Agreement (“Agreement”) with Sparx Technologies, LLC, a limited liability company (“Licensor”). Licensor is
solely owned and controlled by Ms. Cassandra DeNunzio, our CEO and director. Ms. DeNunzio is the sole and first named inventor under
a provisional patent application with a Serial No. 63/304,302 filed with the United States Patent Office (“USPTO”) on
January 28, 2022, relating to the fire protection industry and particularly a commercially available battery-operated wireless
electronic fire sprinkler network. The Patent License Agreement, referenced herein, is attached as EX-10.1 to the Form 8-K filed
with the Securities and Exchange Commission on August 29, 2022. As a result of the Agreement, we adopted the existing operations and
business plan of Sparx Technologies, LLC pursuant to the terms and conditions of the patent licensing agreement and ceased to be a
shell company.
In partial consideration for the exclusive license granted by Licensor
to the Company, the Company paid Sparx Holdings, LLC, a limited liability company, controlled and solely owned by Ms. DeNunzio, a non-refundable
license fee upon execution of the Agreement in the amount of One Hundred Million shares (100,000,000) of the Company’s common stock
(the “Initial License Fee”). The Initial License Fee is consideration for the grant and continuation of the license pursuant
to a five-year term. Licensor shall have no obligation or liability to return any portion of the Initial License Fee. The Company shall
pay Licensor a royalty of fifty percent (50%) of Licensee’s Net Sales of all Licensed Products developed and sold by the Company.
Ownership of the licensed technology prior to, during the course or as a result of the Agreement, will be the sole and exclusive property
of Licensor.
Our Chief Executive Officer and Director, Casandra DeNunzio has agreed
to lend us equipment at no cost resulting in us having in-house capabilities to design and build innovative electronic fire
protection products and solutions. Ms. DeNunzio has extensive industry knowledge, familiarity with local specifications and regulations,
fire codes and expertise in the design and test engineering of fire detection, suppression, and extinguishment technology and their components
and systems. We have available to us, the equipment, capabilities, and expertise to create prototype electronic circuits, assemble and
reflow printed circuit boards, benchtop test electrical assemblies with DC and AC power supplies, troubleshoot designs with multimeters,
and create wiring harnesses.
The Company has now begun to finalize the prototype Sparx™
Smart Sprinkler System and has started working towards the design and development for the remaining system components to complete
the Sparx™ Smart Sprinkler System. The remaining components needed for the system prototype include a base station that
the wireless battery-powered Sparx™ Smart Sprinkler Systems communicate with and an installation and commissioning tool. As
mentioned elsewhere in this Annual Report, a utility patent has been filed with the USPTO that covers the technology. The Company
plans to commercialize Licensor’s wireless fire suppression technology into a fire protection/fire safety product line and
seek listing or approval from third-party testing bodies. Our plan is to provide superior protection against highly challenging
fires for a range of premises, including commercial buildings and industrial sites, through the application of our advanced
proprietary wireless mesh network fire suppression system technology. We plan to design, develop, integrate, install, test,
manufacture, produce, and market our wireless mesh network fire suppression system in an effort to commercialize our products.
Various photographs of our physical development prototype can be found
herein on page 12.
To effectively market our products, third-party testing is necessary. UL and FM are two of the most common third-party entities in the
United States that provide listing, approval, or certification services. UL is a reputable testing institute that is one of the largest
public safety testing labs in the world, while FM also has an international reputation for testing and is well-regarded in the industry.
In contrast to UL, FM is an insurance company that provides insurance coverage to customers that use products that they have approved
or certified to their own testing standards.
We cannot yet estimate with any level of specificity exactly when our
Sparx™ Smart Sprinkler System will be ready to bring to market or when we will be ready to commence efforts for UL and or FM testing.
When we have a clear indication of a timeline for such endeavors it is our intent to inform investors.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
As
of June 30, 2023, and 2022, we had cash and cash equivalents in the amount of $100,219 and $0 respectively. The variance in the balance
of our cash and cash equivalents from June 30, 2023 to June 30, 2022 is primarily from the sale of common stock pursuant to our Tier
2 Regulation A Offering.
On
March 31, 2023, we filed a Form 1-A Offering Statement that was subsequently qualified by the SEC on April 11, 2023. As of June 30 ,
2023 we had sold 5,000,000 shares of our common stock pursuant to this offering.
Assets
As
of June 30, 2023, and 2022, our total assets were $100,219 and $0 respectively. Our total assets as of June 30, 2023 were comprised
solely of cash and cash equivalents. Our physical development prototype is not booked as an
asset on the balance sheet.
Revenues
We have not generated any revenue to date.
Net Loss
For the year ended June 30, 2023 and June 30, 2022,
our net loss was $47,685 and $5,743 respectively. For both periods, our net loss was primarily attributable to general and administrative
expenses. For the year ended June 30, 2023 our research and development costs were $843 and our general and administrative expenses were
$46,685.
The variance in our net loss and the greater expenses
incurred for the year ended June 30, 2023 are both attributable to an increase in activity, as we have commenced operations relating
to the research/ development of our Sparx™ Smart Sprinkler System.
Additional
Paid-In Capital
The Company’s CEO, Cassandra DeNunzio, contributed cash totaling
$4,001 to the Company during the period ended June 30, 2023. These contributions were made with no expectation of repayment and are posted
as additional paid-in capital.
The Company’s director, Jeffrey DeNunzio, paid expenses on behalf
of the company totaling $27,303 during the period ended June 30, 2023.
The Company’s director, Jeffrey
DeNunzio, paid expenses on behalf of the company totaling $9,453 during the period ended June 30, 2022.
The Company’s director, Jeffrey
DeNunzio, paid expenses on behalf of the company totaling $960 during the period ended June 30, 2021.
The $37,716 in total payments
are considered contributions to the company with no expectation of repayment and are posted as additional paid-in capital.
Item
7A. Quantitative and Qualitative Disclosures about Market Risk.
We
qualify as a smaller reporting company, as defined by Item 10 of Regulation S-K and, thus, are not required to provide the information
required by this Item.
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Table of Contents
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