UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark one)
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended November 30, 2018

 

OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________to

 

Commission File Number: 000-55018

Infinity Distribution, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada		47-3900562
(State or Other Jurisdiction		(I.R.S. Employer
of Incorporation or Organization)		Identification No.)

 

3311 S. Rainbow Blvd., #135, Las Vegas, NV		89146
(Address of principal executive offices)		(Zip Code)

 

(702) 581-4063

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  þ  No  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or, an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company”, in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company þ
Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

 

There were 11,315,666 shares of Common Stock outstanding as of February 21, 2020.

 

 

Table of Contents

Infinity Distribution, Inc.

Index to Form 10-Q

For the Quarterly Period Ended November 30, 2018

 

PART I	Financial Information	3
ITEM 1.	Financial Statements	3
	Unaudited Condensed Balance Sheets as of November 30, 2018 and May 31, 2018	3
	Unaudited Condensed Statements of Operations for the three and six months ended November 30, 2018 and 2017	4
	Unaudited Condensed Statements of Stockholders’ Deficit for the six months ended November 30, 2018 and 2017	5
	Unaudited Statements of Cash Flows for the six months ended November 30, 2018 and 2017	7
	Notes to the Unaudited Interim Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	21
ITEM 4.	Controls and Procedures	21
PART II	Other Information	23
ITEM 1.	Legal Proceedings	23
ITEM 1A.	Risk Factors	23
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
ITEM 3.	Defaults Upon Senior Securities	23
ITEM 4.	Submission of Matters to a Vote of Security Holders	23
ITEM 5.	Other Information	23
ITEM 6.	Exhibits	24
	SIGNATURES	25

 

 
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

INFINITY DISTRIBUTION, INC.

BALANCE SHEETS

 

 

		November 30,				May 31,
		2018				2018
		(unaudited)
ASSETS
Current assets:
Cash		$	3,329			$	2,759
Inventory			-				6,052
Total current assets			3,329				8,811
Fixed assets, net			1,381				1,578
Total assets		$	4,710			$	10,389
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		$	8,096			$	7,138
Accounts payable - related party			3,024				2,724
Accrued executive compensation			690,955				552,955
Accrued interest payable - related party			16,457				14,163
Notes payable - related party			49,625				48,065
Convertible debt - related party			91,500				91,500
Total current liabilities			859,657				716,545
Commitments and Contingencies (Note 10)
Total liabilities			859,657				716,545
Stockholders' deficit:
Preferred stock, $0.001 par value, 3,900,000 shares
authorized, 0 and 0 shares issued and oustanding
as of November 30, 2018 and May 31, 2018, respectively			-				-
Preferred stock - Series A, $0.001 par value, 100,000 shares
authorized, 100,000 and 0 shares issued and oustanding
as of November 30, 2018 and May 31, 2018, respectively			100				-
Convertible Preferred stock - Series B, $0.001 par value, 1,000,000 shares
authorized, 1,000,000 and 0 shares issued and oustanding
as of November 30, 2018 and May 31, 2018, respectively			1,000				-
Common stock, $0.001 par value, 100,000,000 shares
authorized, 11,248,333 and 11,175,000 shares issued and
11,248,333 and 11,165,000 outstanding
as of November 30, 2018 and May 31, 2018, respectively			11,248				11,175
Additional paid in capital			2,277,819				143,775
Stock payable			4,500				-
Treasury stock			-				(1,000	)
Accumulated deficit			(3,149,614	)			(860,106	)
Total stockholders' deficit			(854,947	)			(706,156	)
Total liabilities and stockholders' deficit		$	4,710			$	10,389

 

See Accompanying Notes to Financial Statements.

 

 

INFINITY DISTRIBUTION, INC.

STATEMENT OF OPERATIONS

(unaudited)

 

 

		For the				For the				For the				For the
		three months				three months				six months				six months
		ended				ended				ended				ended
		November 30,				November 30,				November 30,				November 30,
		2018				2017				2018				2017
Revenue		$	-			$	-			$	-			$	-
Operating expenses:
Depreciation			98				98				197				197
Executive compensation			2,192,717				69,000				2,261,717				128,500
General and administrative			2,888				6,847				6,200				10,320
Professional fees			4,160				25,444				13,048				45,677
Inventory write-down			6,052				-				6,052				-
Total operating expenses			2,205,915				101,389				2,287,214				184,694
Other expense:
Interest expense - related party			(1,141	)			(1,141	)			(2,294	)			(2,294	)
Total other expense			(1,141	)			(1,141	)			(2,294	)			(2,294	)
Net loss		$	(2,207,056	)		$	(102,530	)		$	(2,289,508	)		$	(186,988	)
Weighted average number of common
shares outstanding - basic / dilutive			11,228,846				10,901,209				11,208,788				10,758,880
Net loss per share - basic / dilutive		$	(0.20	)		$	(0.01	)		$	(0.20	)		$	(0.02	)

 

See Accompanying Notes to Financial Statements.

 

 

INFINITY DISTRIBUTION, INC.

STATEMENT OF STOCKHOLDERS' DEFICIT

(unaudited)

 

 

																										Additional
		Preferred Shares								Preferred Shares																Paid																Total
		Series A								Series B								Common Shares								In				Stock				Treasury				Accumulated				Stockholders'
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Payable				Stock				Deficit				Deficit
Balance, June 1, 2018			-			$	-				-			$	-				11,175,000			$	11,175			$	143,775			$	-			$	(1,000	)		$	(860,106	)		$	(706,156	)
August 31, 2018
Issuance of preferred stock
for prepaid royalties			100,000				100				1,000,000				1,000				-				-				99,000				-				-				-				100,100
August 31, 2018
Issuance of common stock for cash			-				-				-				-				43,333				43				6,457				-				-				-				6,500
August 31, 2018
Cancel treasury stock			-				-				-				-				(10,000	)			(10	)			(990	)			-				1,000				-				-
August 31, 2018
Net loss for the quarter ended			-				-				-				-				-				-				-				-				-				(82,452	)			(82,452	)
Balance, August 31, 2018			100,000			$	100				1,000,000			$	1,000				11,208,333			$	11,208			$	248,242			$	-			$	-			$	(942,558	)		$	(682,008	)
November 30, 2018
Issuance of common stock for cash			-				-				-				-				40,000				40				5,960				4,500				-				-				10,500
Stock compensation to executives																											2,023,617																2,023,617
Net loss for the quarter ended			-				-				-				-				-				-				-				-				-				(2,207,056	)			(2,207,056	)
Balance, November 30, 2018			100,000			$	100				1,000,000			$	1,000	#			11,248,333			$	11,248			$	2,277,819			$	4,500			$	-			$	(3,149,614	)		$	(854,947	)

 

See Accompanying Notes to Financial Statements.

 

 

INFINITY DISTRIBUTION, INC.

STATEMENT OF STOCKHOLDERS' DEFICIT

(unaudited)

 

 

																		Additional
																		Paid												Total
		Preferred Shares								Common Shares								In				Treasury				Accumulated				Stockholders'
		Shares				Amount				Shares				Amount				Capital				Stock				Deficit				Deficit
Balance, June 1, 2017			-			$	-				10,540,000			$	10,540			$	80,910			$	(1,000	)		$	(486,699	)		$	(396,249	)
August 31, 2017
Issuance of common stock for cash			-				-				265,000				265				26,235				-				-				26,500
August 31, 2017
Net loss for the quarter ended			-				-				-				-				-				-				(84,458	)			(84,458	)
Balance, August 31, 2017			-			$	-				10,805,000			$	10,805			$	107,145			$	(1,000	)		$	(571,157	)		$	(454,207	)
November 30, 2017
Issuance of common stock for cash			-				-				165,000				165				16,335				-				-				16,500
November 30, 2017
Net loss for the quarter ended			-				-				-				-				-				-				(102,530	)			(102,530	)
Balance, November 30, 2017			-			$	-				10,970,000			$	10,970			$	123,480			$	(1,000	)		$	(673,687	)		$	(540,237	)

 

See Accompanying Notes to Financial Statements.

 

 

INFINITY DISTRIBUTION, INC.

STATEMENT OF CASH FLOWS

(unaudited)

 

		For the				For the
		six months				six months
		ended				ended
		November 30,				November 30,
		2018				2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(2,289,508	)		$	(186,988	)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation			197				197
Inventory write-down			6,052				-
Stock based executive compensation			2,123,717				-
Changes in operating assets and liabilities:
Decrease in prepaid expenses			-				20,000
Increase in accounts payable			958				4,623
Increase (decrease) in accounts payable - related party			300				(7,645	)
Increase in accrued executive compensation			138,000				125,500
Increase in accrued interest payable - related party			2,294				2,294
Net cash used in operating activities			(17,990	)			(42,019	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments for notes payable			-				(1,000	)
Proceeds from notes payable - related party			4,915				-
Repayments for notes payable - related party			(3,355	)			(1,650	)
Proceeds from the sale of common stock			17,000				43,000
Net cash provided by financing activities			18,560				40,350
NET CHANGE IN CASH			570				(1,669	)
CASH AT BEGINNING OF PERIOD			2,759				2,430
CASH AT END OF PERIOD		$	3,329			$	761
SUPPLEMENTAL INFORMATION:
Interest paid		$	-			$	-
Income taxes paid		$	-			$	-

 

See Accompanying Notes to Financial Statements.

 

INFINITY DISTRIBUTION, INC.

Notes to CONDENSED Financial Statements

(UNAUDITED)

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

 

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended May 31, 2018 and notes thereto included in the Company’s Form 10-K filed with the SEC on September 13, 2018. The Company follows the same accounting policies in the preparation of interim reports.

 

Results of operations for the interim period are not indicative of annual results. The condensed balance sheet at May 31, 2018 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete financial statements.

 

Organization

The Company was incorporated on May 8, 2015 (Date of Inception) under the laws of the State of Nevada, as Infinity Distribution, Inc.

 

Nature of operations

The Company is planning to import and export furniture and home goods.

 

Year end

The Company’s year end is May 31.

 

Cash and cash equivalents

For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.

 

Inventory

Inventories are stated at cost, not to exceed fair market value. The cost of the Company’s inventory of $0 and $6,052 at November 30, 2018 and May 31, 2018, respectively has been determined using the first-in first-out (FIFO) method. During the six months ended November 30, 2018, the Company recognized a write-down of the inventory in the amount of $6,052 due to slow movement.

 

Fixed assets

The Company records all property and equipment at cost less accumulated depreciation.  Improvements are capitalized while repairs and maintenance costs are expensed as incurred.  Depreciation is calculated using the straight-line method over the estimated useful life of the assets or the lease term, whichever is shorter.  Leasehold improvements include the cost of the Company’s internal development and construction department.  Depreciation periods are as follows:

 

Furniture and equipment

7 years

 

INFINITY DISTRIBUTION, INC.

Notes to CONDENSED Financial Statements

(UNAUDITED)

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Revenue recognition

The Company recognizes revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers, which requires five steps to evaluate revenue recognition: (i) identify the contract with the customer; (ii) identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price; and (v) recognize revenue when or as the entity satisfied a performance obligation.

 

Advertising costs

Advertising costs are anticipated to be expensed as incurred; however there were no advertising costs included in general and administrative expenses for the three and six months ended November 30, 2018 or November 30, 2017.

 

Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of November 30, 2018 and May 31, 2018. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

 

Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.

 

Level 2: Financial Accounting Standards Board (“FASB”) acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.

 

Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.

 

The Company did not have Level 1 – 3 estimates of fair value during the three and six months ended November 30, 2018.

 

Stock-based compensation

The Company records stock based compensation in accordance with the guidance in FASB Accounting Standards Codification (“ASC”) Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards.  This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award. 

 

INFINITY DISTRIBUTION, INC.

Notes to CONDENSED Financial Statements

(UNAUDITED)

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Stock-based compensation (continued)

 

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 718-10 and the conclusions reached by the ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by ASC 505-50.

 

Earnings per share

The Company follows ASC Topic 260 to account for the earnings per share. Basic earning per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earning per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

 

There are 13,598,560 and 3,446,060 additional shares issuable in connection with outstanding stock payable and convertible debts which would be considered dilutive as of November 30, 2018 and November 30 ,2017, respectively. Diluted earnings (loss) per share have not been presented for the three and six months ending November 30, 2018 and November 30, 2017, since the effect of the assumed issuances would have an anti-dilutive effect.

 

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 of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

 

Recent pronouncements

The Company has evaluated the recent accounting pronouncements through September 2019 and believes that none of them will have a material effect on the company’s financial statements except for the one below.

 

In February 2016, the FASB issued ASU 2016-02, “Leases” (“ASC 842”). The guidance requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Lessor accounting is similar to the current model, but updated to align with certain changes to the lessee model and the new revenue recognition standard. Existing sale-leaseback guidance, including guidance for real estate, is replaced with a new model applicable to both lessees and lessors. ASC 842 is effective for fiscal years beginning after December 15, 2018.

 

INFINITY DISTRIBUTION, INC.

Notes to CONDENSED Financial Statements

(UNAUDITED)

 

NOTE 2 – GOING CONCERN

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. The Company has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred net losses for the six months ended November 30, 2018 of $2,289,508 and has an accumulated deficit of $3,149,614. In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.

 

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. Management’s plans are to raise funds through the sale of equity or entering into debt transactions to finance the operating and capital requirements of the Company. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

NOTE 3 – Licensing Agreement – Related Party

 

On August 31, 2018, the Company issued 100,000 shares of Preferred Stock – Series A and 1,000,000 shares of Preferred Stock – Series B related to a license agreement with the Company’s CEO, Raul Mansueto. The license agreement was granted to the Company for the right to use the licensed vehicle windshield cover. The license agreement is effective from January 1, 2018 until December 21, 2020. The Company’s CEO, Raul Mansueto, owns the patent rights (no. US 9,688,129 B2) of intellectual property related to vehicle windshield cover and granted the Company an exclusive license to use the patent’s intellectual property to manufacture, sell, and market such products. A total of 10 million units of the patented product will be subjected to royalty fees at a $1.00 per unit. The fair value of the shares was $2,123,717 and was based on the value of the common stock into which it is convertible (Note 7). The Company evaluated the fair value of the royalties and the fair value of the securities and in accordance with non-cash transaction guidance, determined the fair value of the securities was the most readily determinable, and therefore recognized the fair value of the securities as executive compensation.

 

NOTE 4 – FIXED ASSETS

 

The following is a summary of fixed assets:

 

		November 30,
		2018
Furniture and equipment		$	2,761
Fixed assets, total			2,761
Less: accumulated depreciation			(1,380	)
Fixed assets, net		$	1,381

 

Depreciation expense for the six months ended November 30, 2018 and November 30, 2017 were $197 and $197, respectively.

 

NOTE 5 – NOTES PAYABLE – RELATED PARTY

 

As of November 30, 2018, the balance owed to an officer, director and shareholder of the Company was $44,995. The loan is due upon demand and bears 0% interest. During the six months ended November 30, 2018 the individual loaned additional amounts totaling $1,500 and received repayments totaling $1,455.

 

As of November 30, 2018, the balance owed to an officer, director and shareholder of the Company was $4,630. The loan is due upon demand and bears 0% interest. During the six months ended November 30, 2018 the individual loaned additional amounts totaling $3,415 and received repayments totaling $1,900.

 

INFINITY DISTRIBUTION, INC.

Notes to CONDENSED Financial Statements

(UNAUDITED)

 

NOTE 6 – CONVERTIBLE DEBT – RELATED PARTY

 

On April 24, 2015, the Company executed a convertible promissory note with an officer and director for $35,000. The unsecured note bears interest at 5% per annum with principal and interest due on the earlier of March 19, 2016 or the next equity financing. The debt is convertible at a discount of 30% of the price per share of the securities sold in the next equity financing. The debt discount was valued at $10,500 and was recorded to additional paid in capital and was amortized over the life of the loan. The debt discount was fully amortized as of November 30, 2018. As of November 30, 2018 and May 31, 2018, the loan is in default.

 

On May 8, 2015, the Company executed a convertible promissory note with an officer and director for $35,000. The unsecured note bears interest at 5% per annum with principal and interest due on the earlier of March 19, 2016 or the next equity financing. The debt is convertible at a discount of 30% of the price per share of the securities sold in the next equity financing. The debt discount was valued at $10,500 and was recorded to additional paid in capital and will be amortized over the life of the loan. The debt discount was fully amortized as of November 30, 2018. As of November 30, 2018 and May 31, 2018 , the loan is in default.

 

On May 11, 2015, the Company executed a convertible promissory note with an officer and director for $21,500. The unsecured note bears interest at 5% per annum with principal and interest due on the earlier of March 19, 2016 or the next equity financing. The debt is convertible at a discount of 30% of the price per share of the securities sold in the next equity financing. The debt discount was valued at $6,450 and was recorded to additional paid in capital and will be amortized over the life of the loan. The debt discount was fully amortized as of November 30, 2018. As of November 30, 2018 and May 31, 2018, the loan is in default.

 

Interest expense for the three and six months ended November 30, 2018 is $1,141 and $2,294. Interest expense for the three and six months ended November 30, 2017 is $1,141 and $2,294.

 

NOTE 7 – STOCKHOLDERS’ (DEFICIT)

 

The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock and 5,000,000 shares of its $0.001 par value preferred stock. On August 8, 2018, the Company designated 100,000 shares of preferred stock – Series A and 1,000,000 shares of preferred stock – Series B. The preferred stock - Series A has voting rights of 1,000 to 1. The preferred stock – Series A is not convertible into common stock and does not have redemption rights. The preferred stock – Series B is convertible into common stock at a conversion rate of 1 to 10. The Company shall have the right at any time prior to conversion to redeem any shares of preferred stock – Series B at a price per share equal to the face amount ($1.00).

 

Preferred Stock

 

During the three months ended August 31, 2018, the Company issued 100,000 shares of preferred stock – Series A and 1,000,000 shares of preferred stock – Series B in exchange for the prepaid royalties as part of the license agreement with Raul Mansueto (Note 3).

 

Common Stock

 

During the three months ended August 31, 2018, the Company sold 43,333 shares of common stock at $0.15 per share for a total of $6,500. The Company cancelled the 10,000 shares that were in treasury.

 

During the three months ended November 30, 2018, the Company sold 70,000 shares of common stock at $0.15 per share for a total of $10,500. As of November 30, 2018, the Company has not yet issued 30,000 shares of common stock sold for cash and recorded a stock payable of $4,500. The shares were issued on December 3, 2018.

 

INFINITY DISTRIBUTION, INC.

Notes to CONDENSED Financial Statements

(UNAUDITED)

 

NOTE 8 – WARRANTS AND OPTIONS

 

As of November 30, 2018, there were no warrants or options outstanding to acquire any additional shares of common stock.

 

NOTE 9 – RELATED PARTY TRANSACTIONS

 

As of November 30, 2018, the Company had loans totaling $4,630 and accounts payable of $3,024 due to an individual who is an officer, director and shareholder.

 

As of November 30, 2018, the Company had loans totaling $44,995, convertible debt of $91,500 and accrued interest totaling $16,457 due to an individual who is an officer, director and shareholder. As of November 30, 2018, the convertible debt is in default.

 

The Company had executive compensation for two officers of $2,192,717 for the three months ended November 30 ,2018, as compared with $69,000 for the same period ended 2017. The Company had executive compensation for two officers of $2,261,717 for the six months ended November 30, 2018, as compared with $128,500 for the same period ended 2017. As of November 30, 2018, the accrued executive compensation balance was $690,955.

 

NOTE 10 - COMMITMENTS AND CONTINGENCIES

 

As of November 30, 2018, we did not have any known commitments or contingencies other than our notes payable.

 

Legal matter contingencies

 

The Company believes, based on current knowledge and after consultation with counsel, that it is not currently party to any material pending proceedings, individually or in the aggregate, the resolution of which would have a material effect on the Company. Provisions for losses are established in accordance with ASC 450, “Contingencies” when warranted. Once established, such provisions are adjusted when there is more information available of when an event occurs requiring a change.

 

NOTE 11 – SUBSEQUENT EVENTS

 

Subsequent to November 30, 2018, the Company issued a total of 30,000 shares of common stock and reduced stock payable by $4,500. Additionally, the Company sold 44,000 shares of common stock for $6,600.

 

Subsequent to November 30, 2018, the Company received a total of $13,972 in loans from the officers and directors of the Company. The loans are due upon demand and bear 0% interest.

 

 

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Forward-Looking Information

 

This Quarterly Report on Form 10-Q contains forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words "anticipate," "believe," "estimate," "will," "plan," "seeks," "intend," and "expect" and similar expressions identify forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in any forward-looking statements are reasonable, these plans, intentions, or expectations may not be achieved. Our actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied, by the forward-looking statements contained in this Quarterly Report on Form 10-Q. Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this Quarterly Report on Form 10-Q All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth in this Quarterly Report on Form 10-Q. Except as required by federal securities laws, we are under no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise.

 

Critical Accounting Policies

 

There have been no material changes to our critical accounting policies and estimates from the information provided in, "Management's Discussion and Analysis and Results of Operations", included in our Annual Report on Form 10-K for the period ended May 31, 2018.

 

RESULTS OF OPERATIONS

 

OVERVIEW OF CURRENT OPERATIONS

 

Infinity Distribution, Inc. was incorporated in the State of Nevada on May 8, 2015, under the name Infinity Distribution, Inc. We consider ourselves to be an emerging growth company under applicable federal securities laws and will be subject to reduced public company reporting requirements. From our inception to date, we have generated no revenues, and our operations have been limited to organizational, start-up, and capital formation activities. Our plan of operation is to engage in the business of offering a variety of services designed to assist Philippine exporters, small or large, which have a competitive product or service in terms of price, quality, delivery and after-sales service, whatever the size of the transaction to find clients in the United States.

 

 

GENERAL

 

Our company Infinity Distribution was incorporated on May 8, 2015 in the State of Nevada United States of America, with an established end of fiscal year of May 31.  Director of our company Raul Mansueto and Josefa Gerona were born in the Philippines and for the last 25 years have been working in management positions. As of today, our company does not have any revenues, we possess minimal assets and have already incurred losses since incorporation.  We are a development-stage company created with the intent to offer a variety of services designed to assist Philippine exporters, small or large, which have a competitive product or service in terms of price, quality, delivery and after-sales service, whatever the size of the transaction to find clients in the United States. To the greatest extent possible, given its corporate purpose of providing and encouraging assistance in support of Philippine export trade.

 

We have developed 12 months business plan, to attract potential business partners. In the beginning we may not be able to provide enough revenue to cover expenses for company presentation during first 12 months.  We plan to be aggressive with our business plan from the first month depending on the level of funds we raise.  Our directors will provide for covering initial administrative expenses using their personal assets.

 

Total estimated amount of assets necessary for our business start-up is $82,500. We need assets to cover general running and administrative expenses,  for business  development and marketing, auxiliary   materials,   to  cover   expenses   connected  with  company  public presentation.

Depending on the amount of finance attracted, our company will consider possibility of expansion to major Philippine cities.

 

TARGET MARKET

 

Our services are unique enough to get any market segments interested.  We can determine two different directions our services can cover - corporate and private.

 

By corporate we mean large and small companies, which Infinity Distribution can assist them in the development of domestic and export trade in the United States and also assist in the Philippine capacity to engage in that trade and to respond to international business opportunities.

 

By private we mean any new private or small company with limited budget that cannot afford representation in the United States, Infinity Distribution can assist in exposing their products to a larger market they would never have the opportunity to achieve.

 

Infinity Distribution is able to offer any type of client the support to meet their very special requirements.

 

 

MARKETS

 

Essentially, consumer market of Infinity Distribution includes any person or any company willing to have their product identified to potential business partners, provide information on doing business in the United States, and launch their company into this market. Infinity Distribution would expose their branded products of grocery foods, dry goods such as toiletries, cosmetics and household cleaning products. Foodservice: we expose them to catering services of institutional distributors, airlines and airport, hospitals, hotels, ship chandler, and industrial catering of our dried fruits and nuts, coconut, pineapple, tuna, sauces, creamers, and beverages fit for the requirements of cooks and chefs. We intend to communicate the value of a product, service or brand to potential customers, for the purpose of promoting or selling that product, service, or brand. The main purpose is to increase sales of the product and profits of the company.

 

MARKETING

 

Our marketing campaign consists of several directions.

 

First of all we will start out with marketing techniques including choosing target markets through market analysis and market segmentation, as well as understanding our customer needs and advertising a product's value to the potential purchasing customer.

 

Launch of our e-commerce ready web-site, banners on popular websites and advertisements in social networks will be the second step of our campaign in the Philippines and the United States.

 

Besides aforesaid we will send our commercial quotations to events, PR and advertising agencies, which can raise customer awareness and attract new partners.

 

Upon raising 2/3 and more of intended amount we shall advertise our product in media, on radio, TV and on billboards in the Philippines and the United States.  Such marketing action will raise awareness among people and companies and increase customers trust in our company.

 

In the course of our campaign we shall contact PR departments of large and developing companies and offer our services.  We are ready to offer reasonable discounts at the beginning to get established. All discounts will be determined per deal.  As we are small and developing-stage company, we will be of high interest among such companies with our competitive price and high-quality services.

 

This marketing campaign is designed to attract many clients and develop a strong reputation of high-quality, diligent and inexpensive services.  Hopefully, our clients will readily recommend us to others.

 

 

LEASE AGREEMENT

 

Infinity Distribution has signed a lease agreement as of this filing, and rent amount is $583 per month. Our address is 3311 S. Rainbow Blvd Ste. 135, Las Vegas, Nevada 89146; our phone number is 1-702-581-4063.

 

COMPETITION

 

Competition at the chosen market of export service advising is relatively high. There exist many large companies offering various ranges of similar services in every geographic market we have picked for operation.  Such companies will make it difficult for us to develop easily, as they will be our direct competitors.  Many of such companies are large enough to provide clients with services at a lower price, besides they already have best practice in client attraction.  We may probably lose our business while competing with companies like that.

 

Infinity Distribution has not yet entered the market, but we have spoken to Philippine companies.  As soon as we start operations, we’ll become one of many participants of this business direction. Some of the competing companies have more finance, experience and management skills. Therefore, we appear in competitively unfavorable position as soon as we enter the market with our services, which makes it more complicated for us to achieve success in our market.  Due to that, Infinity Distribution may possibly not make its place at the market.

 

INSURANCE

 

We do not maintain any insurance and do not intend to maintain insurance in the future.  As we do not have insurance, and if we are made a party of products liability action, we may not have sufficient funds to defend the litigation.  In that case, judgment could be rendered against us, which could cause us to cease operations.

 

EMPLOYEES

 

We currently have no employees, other than our two Directors - Raul Mansueto, who will initially perform all work in the organization of our business and Josefa Gerona our Secretary who will assist him.

 

GOVERNMENT REGULATION

 

We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to our business in any jurisdiction which we would conduct activities.  We do not believe that regulation will have a material impact on the way we conduct our business.

 

 

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED NOVEMBER 30, 2018 AND 2017 

 

During the three month period ended November 30, 2018, the Company generated total revenues of $0. During the three month period ended November 30, 2017, the Company generated total revenues of $0. In addition, the Company does not expect to generate any profit for the next twelve months.

 

For the three months ended November 30, 2018, we experienced a net loss of $2,207,056, as compared to a net loss of $102,530 for the three months ending November 30, 2017. The net loss for the three months ending November 30, 2018 was attributed to $2,192,717 in executive compensation, $4,160 in professional fees, $2,888 in general & administrative expenses, and $98 in depreciation as compared to $69,000 in executive compensation, $25,444 in professional fees, $6,847 in general & administrative expenses, and $98 in depreciation for the three months ending November 30, 2017. The Company reduced its general and administrative expenses and professional fees during the three months ended November 30, 2018 versus the same period in 2017.

 

During the three months ended November 30, 2018, the Company recorded impairment of their inventory of $6,052. The inventory was impaired due to slow moving items.

 

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED NOVEMBER 30, 2018 AND 2017 

 

During the six month period ended November 30, 2018, the Company generated total revenues of $0. During the six month period ended November 30, 2017, the Company generated total revenues of $0. In addition, the Company does not expect to generate any profit for the next twelve months.

 

For the six months ended November 30, 2018, we experienced a net loss of $2,289,508, as compared to a net loss of $186,988 for the six months ending November 30, 2017. The net loss for the six months ending November 30, 2018 was attributed to $2,261,717 in executive compensation, $13,048 in professional fees, $6,200 in general & administrative expenses, and $197 in depreciation as compared to $128,500 in executive compensation, $45,677 in professional fees, $10,320 in general & administrative expenses, and $197 in depreciation for the six months ending November 30, 2017. The Company reduced its general and administrative expenses and professional fees during the six months ended November 30, 2018 versus the same period in 2017.

 

During the six months ended November 30, 2018, the Company recorded impairment of their inventory of $6,052. The inventory was impaired due to slow moving items.

 

Revenues

 

The Company has generated total revenues of $0 for the three months ended November 30, 2018. As of November 30, 2018, the Company had an accumulated deficit of $3,149,614. There can be no assurances that the Company can achieve or sustain profitability or that the Company's operating losses will not increase in the future.

 

 

Plan of Operation

 

The Company’s plan of operation is to assist Philippine exporters to find customers for their products in the United States. As of November 30, 2018, we had $3,329 cash on hand. Management believes, without any additional funding or revenues, the Company does not have sufficient cash to finance its operations, for a period of twelve months, which estimate includes the additional expenses the Company will incur as a reporting company. We will apply any proceeds from future revenues to help cover our expenditures. At this time, management anticipates it will be required to seek outside funding to keep its business operational for the next twelve months.

 

If we experience losses in our first year of business operations, we do not believe such losses would prevent us from continuing our operations for our first year, based on our current cash reserves. If and when the time comes that we seek funding, we plan to rely on equity sales of our common shares in order to continue to fund our business operations. And, we would have to issue equity or enter into a strategic arrangement with a third party. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any of additional sales of our equity securities or other financing to fund our business operations. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

 

Future funding could result in potentially dilutive issuances of equity securities, the incurrence of debt, contingent liabilities and/or amortization expenses related to goodwill and other intangible assets, which could materially adversely affect the Company's business, results of operations and financial condition. Any future acquisitions of other businesses, technologies, services or product(s) might require the Company to obtain additional equity or debt financing, which might not be available on terms favorable to the Company, or at all, and such financing, if available, might be dilutive.

 

Going Concern

 

Our independent auditors included an explanatory paragraph in their report on the May 31, 2018 audited financial statements regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors. Our ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and our ability to achieve and maintain profitable operations.

 

Therefore, management plans to raise equity capital to finance the operating and capital requirements of the Company. While the Company is devoting its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

 

Summary of any product research and development that we will perform for the term of our plan of operation.

 

We do not anticipate performing any product research and development under our current plan of operation.

 

 

Expected purchase or sale of plant and significant equipment.

 

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.

 

Significant changes in the number of employees.

 

As of November 30, 2018, we did not have any employees. We are dependent upon our two officers for our future business development. As our operations expand we anticipate the need to hire additional employees, consultants and professionals; however, the exact number is not quantifiable at this time.

 

Liquidity and Capital Resources

 

The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock and 5,000,000 shares of its $0.001 par value preferred stock. On August 8, 2018, the Company designated 100,000 shares of preferred stock – Series A and 1,000,000 shares of preferred stock – Series B. The preferred stock - Series A has voting of 1,000 to 1. The preferred stock – Series B converts into common stock at 1 to 10.

 

As of November 30, 2018, the Company has 11,248,333 shares of common stock issued and outstanding. As of November 30, 2018, the Company had current assets of $3,329 and current liabilities of $859,657.

 

The Company has limited financial resources available, which has had an adverse impact on the Company's liquidity, activities and operations. In order for the Company to remain a Going Concern it will need to find additional capital or generate revenues. Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders),or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained on terms favorable to the Company, or at all.

 

Management believes the Company has sufficient cash assets to fund its operations and keep the Company fully reporting for the next twelve (12) months, without seeking additional outside funding.

 

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

  

Critical Accounting Policies and Estimates

 

Revenue Recognition: We recognize revenue from product sales once all of the following criteria for revenue recognition have been met: pervasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not subject to refund or adjustment; and collection of the amount due is reasonable assured.

  

New Accounting Standards

 

The Company's management has evaluated all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that any of these pronouncements will have a material impact on the Company's financial position and results of operations.

  

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

Not applicable.

  

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Our disclosure controls and procedures, as defined in Rule 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

 

 

Management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, our disclosure controls and procedures were not effective. Our disclosure controls and procedures were not effective because of material weaknesses.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

This quarterly report does not include an attestation report of the Corporation's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Corporation's registered public accounting firm pursuant to temporary rules of the SEC that permit the Corporation to provide only the management's report in this quarterly report.

 

 

PART II. OTHER INFORMATION

 

ITEM 1 -- LEGAL PROCEEDINGS

 

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

We are not presently a party to any material litigation, nor to the knowledge of management is any litigation threatened against us, which may materially affect us.

 

ITEM 1A - RISK FACTORS

 

See Risk Factors set forth in the Company's Annual Report on Form 10-K for the fiscal year ended November 30, 2018 and the discussion in Item 1, above, under "Liquidity and Capital Resources."

 

ITEM 2 -- UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

None.

 

ITEM 5 -- OTHER INFORMATION

 

None.

 

 

ITEM 6 -- EXHIBITS

 

			Incorporated by reference
Exhibit	Exhibit Description	Filed herewith	Form	Period Ending	Exhibit	Filing Date
3.1	Articles of Incorporation, as currently in effect		S-1		3.1	08/20/2015
3.2	Bylaws, as currently in effect		S-1		3.2	08/20/2015
31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	X
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002.	X

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

	Infinity Distribution Registrant
Date: February 21, 2020	/s/ Raul Mansueto
	Name: Raul Mansueto
	Its: Principal Executive Officer Principal Financial Officer Principal Accounting Officer

 

 

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