Quarterly Report (10-q)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended February 28, 2023

 

☐	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 000-55875

 

 

 

Renewable Innovations, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada		82-3254264
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
588 West 400 South, Suite 110 Lindon, UT		84042
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code [phone]

 

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the previous 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 ☒ 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 and post such files). Yes ☒ No ☐

 

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

 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer (Do not check if a smaller reporting company)	☐	Smaller reporting company Emerging growth company	☒ ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period 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 ☒

 

As of June 7, 2023, there were 6,734,120 shares of common stock, $0.0001 par value, issued and outstanding.

 

 

 

 

RENEWABLE INNOVATIONS, INC.

 

TABLE OF CONTENTS

 

			Page
PART I – FINANCIAL INFORMATION			3
	Item 1. Financial Statements		F-1
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		4
	Item 3. Quantitative and Qualitative Disclosure About Market Risks		8
	Item 4. Controls and Procedures		8
PART II – OTHER INFORMATION			9
	Item 1. Legal Proceedings		9
	Item 1A. Risk Factors		9
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		9
	Item 3. Defaults Upon Senior Securities		9
	Item 4. Mine Safety Disclosures		9
	Item 5. Other Information		9
	Item 6. Exhibits		10
SIGNATURES			11

 

2

 

PART I – FINANCIAL INFORMATION

 

This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading: “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.

 

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

 

3

 

ITEM 1

Financial Statements

 

RENEWABLE INNNOVATIONS, INC.

CONSOLIDATED BALANCE SHEETS

 

		As of
		February 28, 2023				November 30, 2022
		(Unaudited)				(Restated)
ASSETS
Current assets
Cash		$	260,461			$	1,260,199
Accounts receivable, net of allowance of $7,500 and $7,500			30,878				74,167
Inventories			561,491				347,207
Prepaid expenses			782,278				584,132
Contract asset			584,018				43,528
Total current assets			2,219,126				2,309,233
Property and equipment, net			2,519,395				2,563,766
Deposits			35,000				35,000
Right of use asset			4,077,799				4,239,676
Total assets		$	8,851,320			$	9,147,675
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	933,082			$	627,976
Accrued payroll liabilities			61,832				70,973
Short-term note payable			300,000				-
Contract liabilities - customer deposits			2,415,172				2,842,356
Lease liability - current portion			551,483				475,195
Total current liabilities			4,261,569				4,016,500
Noncurrent liabilities
Lease liability, net of current portion			3,705,161				3,876,145
Total liabilities			7,966,730				7,892,645
Stockholders’ equity
Common stock, par value $.0001, 250,000,000 shares authorized; 6,165,580 shares and 6,090,580 issued and outstanding as of February 28, 2023, and November 30, 2022, respectively.			617				-
Preferred A stock, par value $.0001, 25,000,000 shares authorized; 2,155,684 shares issued and outstanding as of February 28, 2023, and November 30, 2022, liquidation preference of $21,557.			216				216
Additional paid-in capital			4,907,160				4,786,955
Treasury stock, at cost (640,000 shares)			(120,000	)			-
Accumulated deficit			(3,903,403	)			(3,532,141	)
Total stockholders’ equity			884,590				1,255,030
Total liabilities and stockholders’ equity		$	8,851,320			$	9,147,675

 

The accompanying unaudited notes should be read in conjunction with these unaudited condensed consolidated financial statements.

 

F-1

 

RENEWABLE INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

		For the three months
		ended February 28,
		2023				2022
Sales		$	1,098,598			$	1,333,245
Cost of sales			593,266				684,319
Gross profit			505,332				648,926
Operating expenses
Sales, general, and administrative			787,264				171,283
Depreciation			89,330				89,332
Total operating expenses			876,594				260,615
Income (loss) from operations			(371,262	)			388,311
Other income:
Rental income			-				84,900
Total other income			-				84,900
Net income (loss)		$	(371,262	)		$	473,211
Net income (loss) per share:
Basic		$	(0.06	)		$	-
Diluted		$	(0.06	)		$	0.002
Shares used in computing earnings per share:
Basic			6,135,302				-
Diluted			6,135,302				215,568,400

 

The accompanying unaudited notes should be read in conjunction with these unaudited condensed consolidated financial statements.

 

F-2

 

RENEWABLE INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

 

		Series A																Additional
		Preferred Stock								Common Stock								Paid-In				Treasury				Accumulated
		Shares				Amount				Shares				Amount				Capital				Stock				Deficit				Total
Balance at November 30, 2021			2,155,684			$	216				-			$	-			$	2,588,455			$	-			$	(1,179,028	)		$	1,409,643
Net gain			-				-				-				-				-				-				473,211				473,211
Balance at February 28, 2022			2,155,684			$	216				-			$	-			$	2,588,455			$	-			$	(705,817	)		$	1,822,854
Balance at November 30, 2022 (Restated)			2,155,684			$	216				-			$	-			$	4,786,955			$	-			$	(3,532,141	)		$	1,255,030
Recapitalization			-				-				6,090,580				609				10,463				(120,000	)			-				(108,928	)
Issuance of common stock for services			-				-				75,000				8				109,742				-				-				109,750
Net loss			-				-				-				-				-				-				(371,262	)			(371,262	)
Balance at February 28, 2023			2,155,684			$	216				6,165,580			$	617			$	4,907,160			$	(120,000	)		$	(3,903,403	)		$	884,590

 

The accompanying unaudited notes should be read in conjunction with these unaudited consolidated condensed consolidated financial statements.

 

F-3

 

RENEWABLE INNOVATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		For the three months
		ended February 28,
		2023				2022
Cash flows from operating activities
Net income (loss)		$	(371,262	)		$	473,211
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization			114,377				111,192
Lease amortization			161,876				116,930
Bad debt			-				7,500
Stock based settlement expense			109,750				-
Changes in operating assets and liabilities
Accounts receivable			43,289				6,833
Inventories			(214,284	)			218,078
Prepaid expenses and other current assets			(198,146	)			3,444
Contract asset			(540,490	)			-
Accounts payable			193,607				(299,093	)
Accrued payroll liabilities			(9,141	)			(30,207	)
Right of use asset and lease liability, net			(94,695	)			(111,442	)
Contract liabilities			(427,184	)			(624,173	)
Net cash used in operating activities			(1,232,303	)			(127,727	)
Cash flows from investing activities
Cash acquired in reverse merger			2,571				-
Purchase of property and equipment			(70,006	)			(20,597	)
Net cash used in investing activities			(67,435	)			(20,597	)
Cash flows from financing activities
Proceeds from issuance of short-term note payable			300,000				-
Proceeds from issuance of preferred stock			-				150,000
Net cash provided by financing activities			300,000				150,000
Net change in cash			(999,738	)			1,676
Cash at beginning of period			1,260,199				357,189
Cash at end of period		$	260,461			$	358,865
Non-cash activities:
Net liabilities acquired for stock		$	(111,499	)		$	-
Supplemental disclosure of cash flow information:
Cash paid for interest		$	-			$	-
Cash paid for income taxes			-				-

 

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

 

F-4

 

RENEWABLE INNOVATIONS, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation and Preparation

 

The condensed consolidated financial statements include the accounts of Renewable Innovations, Inc. (a Nevada Corporation) formerly named Nestbuilder.com Corp. and its wholly owned subsidiary, Renewable Innovations Corp. (a Delaware corporation) formerly known as Renewable Innovations Inc. The Consolidated entity is hereafter referred to as “we,” “us,” “Renewable Innovations,” or the “Company”. In the opinion of the Company’s management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. Amounts related to inventory, contract assets, contract liabilities, and expenses in the condensed consolidated financial statements and accompanying notes have been reclassified to conform to the current period’s presentation. These unaudited condensed consolidated financial statements and accompanying notes should be read in conjunction with the Renewable Innovations Inc. Delaware corporation annual financial statements and accompanying notes included in its Nestbuilder.com Corp second Amended Form 8-K/A file on June 9, 2023.

 

The unaudited condensed consolidated statement of operations for the period ended February 28, 2023 and the unaudited consolidated balance sheet as of February 28, 2023 include the operations, assets, and liabilities of Nestbuilder.com Corp. and NB Merger Corp. The effects of the merger with Nestbuilder.com are included herein. Any intercompany transactions have been eliminated in consolidation.

 

We describe our significant accounting policies in Note 2 of the notes to financial statements in our second Amended 8-K/A for the year ended November 30, 2022. During the three-month period ended February 28, 2023, there were no significant changes to those accounting policies.

 

On December 1, 2022, Renewable Innovations, Inc. (a Delaware corporation) was acquired by Nestbuilder.com Corp, in a transaction accounted for as a recapitalization of Renewable Innovations Inc. (a Delaware corporation). The effects of the recapitalization were retrospectively applied to all periods presented in the accompanying unaudited consolidated financial statements. We discuss the acquisition in further detail in Note 8.

 

Certain amounts presented on the comparative 2022 financial statements reflect restated numbers from the 10-K/A and 8-K/A filed on June 9, 2023.

 

On February 28, 2023 all operations of Nestbuilder.com Corp were discontinued. Management does not believe this will have a material impact on the financial operations of the Company moving forward.

 

Use of Estimates

 

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant accounting estimates reflected in the Company’s financial statements include allowance for doubtful accounts, revenue recognition, contract liabilities, useful lives of property, plant and equipment and fair value of lease liability and right of use assets, and inventory obsolescence. The Company utilizes fair value estimates for the calculation of stock-based compensation for applicable warrants and restricted stock awards. Actual results could differ from those estimates.

 

Recent Accounting Pronouncements

 

In August 2020, the Financial Statement Accounting Board (the “FASB”) issued ASU 2020-06 which simplifies the accounting for convertible instruments and its application of the derivatives scope exception for contracts in an entity’s own equity. For contracts in an entity’s own equity, the new guidance eliminates some of the current requirements for equity classification such as the requirement that settlement in unregistered shares is permitted. In addition, the new guidance reduces the number of accounting models that require separating embedded conversion features from convertible instruments, including eliminating the requirement to recognize a beneficial conversion feature if the conversion feature is in the money and does not require bifurcation as a derivative liability. As a result, only conversion features accounted for under the substantial premium model and those that require bifurcation will be accounted for separately. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation and requires enhanced disclosures about the terms of convertible instruments and contracts in an entity’s own equity. The Company adopted the new standards on December 1, 2022. The adoption of this standard may allow the Company, in the future and in certain circumstances, to avoid derivative treatment of warrants and avoid beneficial conversion treatment of certain convertible preferred shares. Adoption of this standard had no effect on the Company’s financial statements.

 

F-5

 

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the existing “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the CECL model. Under the CECL model, the Company is required to present certain financial assets carried at amortized cost, such as insurance premium finance loans held for investment, at the net amount expected to be collected. The measurement of expected credit losses is based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This ASU is effective December 1, 2023 for the Company. The Company is evaluating the impact on the adoption of this standard.

 

All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable.

 

Net Loss Per Common Share

 

Net loss per share is provided in accordance with FASB ASC 260-10, “Earnings per Share”. Basic net loss per common share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued, unless doing so is anti-dilutive. The weighted-average number of common shares outstanding for computing basic EPS for the three-months ended February 28, 2023 and 2022 were 6,135,302 and 0 respectively. For the quarter ended February 28, 2023, the diluted net loss per share of common stock is the same as basic net loss per share of common stock because the effects of potentially dilutive securities are antidilutive. The following table puts forth the potentially dilutive securities excluded from the computation of diluted net loss per share for the quarter ended February 28, 2023, because such securities have an anti-dilutive impact due to losses reported.

		February 28, 2023
Series A preferred stock			215,568,400
Warrants to purchase common stock			10,135,000
Total shares excluded from diluted net loss per share			225,703,400

 

The diluted earnings per share for the quarter ended February 28, 2022 included 2,155,684 shares of preferred stock that were convertible to 215,568,400 shares of common stock.

 

F-6

 

NOTE 2 – GOING CONCERN

 

The accompanying financial statements have been prepared assuming that we will continue as a going concern. As of February 28, 2023, the Company had an accumulated deficit of $3,903,403 and a net loss of $371,262 for the quarter then ended. These facts and others raise substantial doubt about the Company’s ability to continue as a going concern for a period of twelve months from the date of this filing. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Management’s plan of operations includes, but is not limited to, the following:

 

	●	The creation of additional sales and profits across its product lines;
	●	The continuation of improving cash flow by maintaining moderate cost reductions;
	●	Requiring 50% deposit on all purchase orders;
	●	Continuing positive cash flows from operating activities;
	●	Potential issuances of additional common stock to existing shareholders and through PIPE financing.

 

NOTE 3 – CONCENTRATIONS

 

For the three-months ended February 28, 2023 and 2022, two customers accounted for 97% and 100% respectively, of the Company’s revenues.

 

Accounts receivable at February 28, 2023 and November 30, 2022 are made up of trade receivables due from customers in the ordinary course of business. Three customers account for 98% of the accounts receivable balance at February 28, 2023 and two customers represented 100% of the balance of accounts receivable at November 30, 2022.

 

For the three months ended February 28, 2023 three vendors made up 80% of our purchases. For the three months ended February 28, 2022 one vendors made up 74% or our purchases.

 

NOTE 4 – ACCOUNTS RECEIVABLE

 

Accounts receivable consisted of the following:

		February 28, 2023				November 30, 2022
Trade Accounts Receivable		$	38,378			$	81,667
Less Allowance for doubtful accounts			(7,500	)			(7,500	)
Total Accounts Receivable (net)		$	30,878			$	74,167

 

The accounts receivable balance is made up of trade receivables due from customers in the ordinary course of business.

 

NOTE 5 – INVENTORY

 

As of February 28, 2023 and November 30, 2022 inventory consisted of $561,491, and $347,207, respectively in Raw Materials Inventory.

 

F-7

 

NOTE 6 – SHORT-TERM NOTE PAYABLE

 

During the quarter ended February 28, 2023 the Company engaged in negotiations with an outside investor to acquire debt. While the negotiations were taking place, before a contract was settled, the investor lent the Company $300,000 on February 13, 2023. There was no contract, no interest, and no payment schedule associated with this loan. This amount was included as part of the principal on the debt when the contract was finalized subsequent to the reporting period—see Note 9 for more details.

 

NOTE 7 – STOCKHOLDERS’ EQUITY

 

On December 1, 2022, the Company amended the Series A Preferred Stock to be designated “Series A Convertible Preferred Stock.” These Series A Convertible Preferred Stock shares have preferential dividend rights in noncumulative dividends in an amount equal to any dividends or other Distribution on the Common Stock. Holders of these Series A Preferred Stock are to be treated for this purpose as holding the number of shares of Common Stock to which the holders thereof would be entitled if they converted their shares of Series A Convertible Preferred Stock at the time of such dividend. Series A Convertible Preferred Stock shares are also amended to have liquidation rights where holders of each share shall be entitled to participate with the holders of shares of common stock then outstanding, pro rata according to the number and preferences of the shares of common stock and Series A Convertible Preferred Stock as converted to common stock shares. Series A Convertible Preferred Stock shares are also amended to have an optional right of conversion into one hundred shares of common stock, and automatic conversion rights. Automatic conversion rights shall be exercised into one hundred shares of common stock at the earliest of (i) a reorganization or any other consolidation or merger of the Company with or into any other person, (ii) any sale, conveyance, transfer or other disposition of all or substantially all of the property, assets or business of the Company (iii) the effectuation of a transaction or series of related transactions in which more than fifty percent of the voting power of the Company is disposed of, (iv) a Form S-1 registration statement filed by the Company with the U.S. Securities and Exchange Commission or other securities regulator for the contemplated sale of securities of the Company has been declared effected, or (v) the Company’s shares have been listed for trading on a Trading Market (other than the OTCQB Marketplace, the OTC Pink Marketplace or any other tier operated by OTC Markets Group Inc.). If the Company takes any action to increase or decrease the number of outstanding shares of common stock, then the number of shares of common stock issuable upon the conversion of the Series A Convertible Preferred Stock shall be proportionately increased or decreased as the case may be, so that, upon conversion into Common Stock, the percentage interest of any holder of shares of Series A Convertible Preferred Stock shall not be modified from what his, or her or its then current percentage interest in the Company would have been if the Series A Convertible Preferred Stock had been converted into Common Stock immediately prior to any such capital change, effective in either case at the close of business on the date that the capital change becomes effective. Series A Preferred Convertible Preferred Stock were also amended to have the number of votes to which the holders thereof would be entitled if they converted their shares of Series A Convertible Preferred Stock at the time of voting.

 

As part of the recapitalization, the Company is deemed to have issued 6,090,580 common shares to the original shareholders of Nestbuilder. See further details in Note 8.

 

During the quarter ended February 28, 2023, the Company issued 75,000 shares of common stock to a marketing firm in exchange for marketing services. This stock was issued in 25,000-share increments on three separate occasions. These shares were valued at $109,750, which was based on the market value of the common stock on the date of each transaction, multiplied by the number of shares issued.

 

NOTE 8 – REVERSE ACQUISITION

 

On December 1, 2022, pursuant to an Agreement and Plan of Merger, dated as of December 1, 2022, by and among Nestbuilder (“Parent”), NB Merger Corp. (the “Merger Sub”) a Delaware corporation and a direct, wholly owned subsidiary of Nestbuilder, Renewable Innovations, Inc. (the “Company”), a Delaware corporation, Lynn Barney, as the representative of the Company’s securityholders, and Alex Aliksanyan, as the Parent representative, the Parent acquired the Company through the merger of the merger sub with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and becoming a wholly owned subsidiary of the Parent.

 

In connection with the Merger, the Parent filed articles of merger with the Nevada Secretary of State to change its name to Renewable Innovations, Inc. pursuant to a parent/subsidiary merger between Parent and the Company as a wholly owned non-operating subsidiary, which was established for the purpose of giving effect to this name change.

 

Immediately prior to the Merger, there were 6,090,580 shares of Parent Common Stock issued and outstanding and warrants outstanding to acquire up to an aggregate of 10,135,000 shares of Parent Common Stock. As a result of the Merger, Parent issued to the shareholders of the Company an aggregate of 2,155,684 shares of Parent Series A Convertible Preferred Stock, par value $0.0001 per share, each share of which is convertible into 100 shares of Parent Common Stock and votes on an as converted basis, which represents a 97% voting interest immediately following the Merger. As a result of the foregoing transactions, Parent underwent a change of control on December 1, 2022, which will be accounted for as a reverse merger and recapitalization of the Company.

 

The unaudited condensed statements of operations for the three months ended February 28, 2022 do not include the revenue and earnings from Nestbuilder.com Corp. If it had, the revenue would have increased by $11,456 and the net loss would have increased by $162,928.

 

NOTE 9 – SUBSEQUENT EVENTS

 

On March 6, 2023, the Company issued a note payable to investors for cash, of which the principal amount totaled $630,000, which included the $300,000 discussed in note 7 above. Principal and accrued interest is due at the end of 12 months, and it carries an interest rate of ten percent (10%) per annum.

 

On April 30, 2023, we entered into a Line of Credit Promissory Note with Robert L. Mount, our Chief Executive Officer, President, and a member of our Board of Directors. Pursuant to the Note, upon mutual agreement between the parties, Mount may advance funds to us. The Note bears interest at the rate of ten percent (10%) per annum, and can be prepaid at any time by us. Any outstanding principal and interest must be repaid 24 months after the execution date.

 

Also subsequent to year end, 600,000 warrants were exercised in a cashless option. This resulted in the issuance of 568,540 shares of common stock, and no additional cash to the Company.

 

F-8

 

ITEM 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

 

Although the forward-looking statements in this Quarterly Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

 

The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, its unaudited financial statements and related notes elsewhere in this Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.

 

Summary Overview

 

We were incorporated on June 28, 2019 and commenced operations in 2021. We had sales of $370,341 in the year ended November 30, 2021, and $2,430,194 in the year ended November 30, 2022.

 

On December 1, 2022, pursuant to an Agreement and Plan of Merger, we were acquired by Nestbuilder.com Corp through the merger of NB Merger Corp. with and into Renewable Innovations, Inc., with Renewable Innovations, Inc. continuing as the surviving wholly owned subsidiary of Nestbuilder.com Corp. Renewable Innovations, Inc., a Delaware corporation (the wholly owned subsidiary), changed its name to Renewable Innovations Corp., and Nestbuilder.com Corp (the parent corporation) changed its name to Renewable Innovations, Inc.

 

Overview

 

We are focused on designing, optimizing, developing, and producing modular, scalable, zero-carbon green renewable solutions. Applications for scalable power vary from primary power to emergency power and mobile power.

 

Our initial focus is on mobile and stationary electric vehicle rapid charging.

 

4

 

Going Concern

 

From inception (June 28, 2019) through November 30, 2022, we have an accumulated deficit of $3,532,141 and for the year ended November 30, 2022, we had a net loss of $2,353,113. In order to continue as a going concern we must effectively balance many factors and generate more revenue so that we can fund our operations from our sales and revenues. If we are not able to do this we may not be able to continue as an operating company. At our current revenue and burn rate, we have an immediate cash need, and thus we must raise capital by issuing debt or through the sale of our stock. However, there is no assurance that our existing cash flow will be adequate to satisfy our existing operating expenses and capital requirements.

 

Results of Operations for the Three Months Ended February 28, 2023 and 2022

 

Introduction

 

We had sales of $1,098,598 for the three months ended February 28, 2023, compared to $1,333,245 for the three months ended February 28, 2022, a decrease of $234,647, or 18%. Our cost of sales was $593,266 for the three months ended February 28, 2023 (54% of sales), compared to $684,319 for the three months ended February 28, 2022 (51% of sales), a decrease of $91,053, or 13%.

 

Sales and Net Operating Loss

 

Our sales, operating expenses, and net operating loss for the three months ended February 28, 2023 and 2022 were as follows:

 

		Three Months Ended February 28, 2023				Three Months Ended February 28, 2022				Increase/ (Decrease)
Sales		$	1,098,598			$	1,333,245			$	(234,647	)
Cost of sales			593,266				684,319				(91,053	)
Operating expenses:
Sales, general and administrative			787,264				171,283				615,981
Depreciation			89,330				89,332				(2	)
Total operating expenses			876,594				260,615				615,979
Net operating income (loss)			(371,262	)			388,311				(759,573	)
Other income/(expense)			-				84,900				(84,900	)
Net gain/(loss)		$	(371,262	)		$	473,211			$	(844,473	)

 

Sales

 

We had sales of $1,098,598 for the three months ended February 28, 2023, compared to $1,333,245 for the three months ended February 28, 2022, a decrease of $234,647, or 18%. Of our sales for the three months ended February 28, 2023, $1,070,724, or 97% of sales, was from the sales of products, with the remainder from sales of services.

 

Two customers accounted for 97% of our sales for the three months ended February 28, 2023, compared to 100% for the three months ended February 28, 2022. These contracts were not completed during the applicable three month period, but partial payments were collected.

 

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Cost of Sales

 

Our cost of sales was $593,226 for the three months ended February 28, 2023 (54% of sales), compared to $684,319 for the three months ended February 28, 2022 (51% of sales), a decrease of $91,053, or 13%. Our costs of sales includes raw materials and in-house manufacturing costs for the products we manufacture.

 

Gross Margin

 

Our gross margin

 

Sales, general and Administrative

 

Sales, general and administrative expense was $787,264 for the three months ended February 28, 2023, compared to $171,283 for the three months ended February 28, 2022, an increase of $615,981, or 360%. In the three months ended February 28, 2023, our sales, general and administrative expense consisted primarily of contractor expense of $454,878, payroll of $104,142, and rent of $57,890. In the three months ended February 28, 2022, our sales, general and administrative expense consisted primarily of payroll of $55,849, rent of $29,761, and legal fees of $25,393.

 

Depreciation

 

Operating depreciation was $89,330 for the three months ended February 28, 2023, compared to $89,332 for the three months ended February 28, 2022, a decrease of $2, or 0%. Our operating depreciation expense remained constant because we did not purchase additional operating equipment.

 

Net Operating Gain/Loss

 

As a result of the items discuss above, our net operating loss was $371,262 for the three months ended February 28, 2023, compared to net operating income of $388,311 for the three months ended February 28, 2022, a decrease of $759,573, or 196%.

 

Other Income and Expense

 

Other income (expense) for the three months ended February 28, 2023 was $0, compared to $84,900 for the three months ended February 28, 2022, a decrease of $84,900. In the three months ended February 28, 2022, our other income (expense) consisted of rental income of $84,900.

 

Net Gain/Loss

 

Our net loss for the three months ended February 28, 2023, was $371,262, compared to a net gain of $473,211 for the three months ended February 28, 2022, a decrease of $844,473, or 178%.

 

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Liquidity and Capital Resources

 

Introduction

 

During the three months ended February 28, 2023 we had significant negative operating cash flows. We covered our cash flow deficit by using our existing cash and issuing promissory notes. Our need to purchase property and equipment in order to fulfill our sales orders will continue in the future, and thus we will continue to face short-term and long-term cash needs. We anticipate that these needs will be satisfied through the issuance of debt or the sale of our securities until such time as our cash flows from operations will satisfy our cash flow needs.

 

Our cash, current assets, total assets, current liabilities, and total liabilities as of February 28, 2023 and November 30, 2022, respectively, are as follows:

 

		February 28, 2023				November 30, 2022				Change
Cash		$	260,461			$	1,260,199			$	(999,738	)
Total Current Assets			2,219,126				2,309,233				(90,107	)
Total Assets			8,851,320				9,147,675				(296,355	)
Total Current Liabilities			4,261,569				4,016,500				245,069
Total Liabilities		$	7,966,730			$	7,892,645			$	74,085

 

Our cash decreased by $999,738 as of February 28, 2023 compared to November 30, 2022. Our total current assets also decreased by $90,107 during the same period, and our total assets decreased by $296,355 during the same period.

 

Our total current liabilities increased by $245,069 as of February 28, 2023 compared to November 30, 2022. Our total liabilities increased by $74,085 during the same period.

 

In order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources. There is no assurance, however, that we will be successful in these efforts.

 

Cash Requirements

 

Our total cash on hand as of February 28, 2023 was $260,461. Our net cash used in operating activities was $1,232,303 for the three months ended February 28, 2023. We incurred $70,006 in expenses related to the purchase of property and equipment, acquired $2,571 in the acquisition of Nestbuilder.com Corp, and raised $300,000 from the issuance of promissory notes, for net negative cash flow of $999,738 for the year. We anticipate that our expenses related to the purchase of property and equipment will continue to exceed our net cash provided by operating activities in the future. We anticipate that our short-term and medium-term cash flow needs will be satisfied through the issuance of debt or the sale of our securities until such time as our cash flows from operations will satisfy our cash flow needs.

 

Sources and Uses of Cash

 

Operations

 

Our net cash used in operating activities was $1,232,303 and $127,727 for the three months ended February 28, 2023 and 2022, respectively, an increase of $1,104,576. Our net cash used in operating activities for the three months ended February 28, 2023 consisted primarily of our net loss of $371,262, plus changes in contract asset of $540,490, contract liabilities of $427,184, inventories of $214,284, and prepaid expenses and other current assets of $198,146, offset by changes in accounts payable of $193,607, adjustments in lease amortization of $161,876, adjustments in depreciation and amortization of $114,377, and stock based settlement expense of $109,750. Our net used in operating activities for the three months ended February 28, 2022 consisted primarily of our net income of $473,211, plus changes in inventories of $218,078 and changes in lease amortization of $116,930, offset by changes in contract liabilities of $624,173, accounts payable of $299,093, and right of use asset and lease liability, net of $111,442.

 

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Investments

 

Our net cash provided by (used in) investing activities was ($67,435) and $(20,597) for the three months ended February 28, 2023 and 2022, respectively, a decrease of $46,838. Our net cash used in investing activities for the three months ended February 28, 2023 consisted of $2,571 cash acquired in reverse merger, offset by $70,006 for the purchase of property and equipment.

 

Financing

 

Our net cash provided by financing activities was $300,000 and $150,000 for the three months ended February 28, 2023 and 2022, respectively, an increase of $150,000. Our net cash provided by financing activities for the three months ended February 28, 2023 consisted entirely of proceeds from the issuance of a short-term note payable.

 

ITEM 3

Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 4

Controls and Procedures

 

(a)	Disclosure Controls and Procedures

 

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of February 28, 2023, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of February 28, 2023, our disclosure controls and procedures were not effective at the reasonable assurance level due to (i) the material weaknesses identified and described in our Annual Report on Internal Control Over Financial Reporting filed in our Annual Report on Form 10-K, and (ii) a restatement needed for our November 30, 2022 financial statements due to material journal entries that are not consistently located and an error related to inventory, contract assets, contract liabilities, and expenses, resulting in a reduction in net income by $1,408,175 and a reduction in earnings per share by $0.23 for the year ended November 30, 2022. The error also reduced the inventory and contract assets on the balance sheet as of November 30, 2022. We intend to remediate the material weakness in our journal entries and error correction by engaging a third-party firm to assist us once resources become available.

 

Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all errors and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

(b)	Changes in Internal Control over Financial Reporting

 

No change in our system of internal control over financial reporting occurred during the period covered by this report, the three-month period ended February 28, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

ITEM 1

Legal Proceedings

 

We are not a party to or otherwise involved in any legal proceedings.

 

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain, and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

 

ITEM 1A

Risk Factors

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 2

Unregistered Sales of Equity Securities and Use of Proceeds

 

On December 1, 2022, pursuant to an Agreement and Plan of Merger, we were acquired by Nestbuilder.com Corp through the merger of NB Merger Corp. with and into Renewable Innovations, Inc., with Renewable Innovations, Inc. continuing as the surviving wholly owned subsidiary of Nestbuilder.com Corp. Renewable Innovations, Inc., a Delaware corporation (the wholly owned subsidiary), changed its name to Renewable Innovations Corp., and Nestbuilder.com Corp (the parent corporation) changed its name to Renewable Innovations, Inc. In connection with the transactions described above, we issued to the shareholders of Renewable Innovations an aggregate of 2,155,684 shares of our Series A Convertible Preferred Stock, par value $0.0001 per share, each share of which is convertible into 100 shares of our Common Stock, which represents a 93% ownership interest based on our fully-diluted capitalization immediately following the Merger. As a result of the foregoing transactions, we underwent a change of control on December 1, 2022. The issuances were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933.

 

ITEM 3

Defaults Upon Senior Securities

 

There have been no events which are required to be reported under this Item.

 

ITEM 4

Mine Safety Disclosures

 

Not applicable.

 

ITEM 5

Other Information

 

None.

 

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ITEM 6

Exhibits

 

(a)

Exhibits

 

Exhibit No.		Name and/or Identification of Exhibit
2.1 (1)		Agreement and Plan of Merger among Nesetbuilder.com Corp, NB Merger Corp., and Renewable Innovations, Inc. dated December 1, 2022
2.2 (1)		Certificate of Merger of NB Merger Corp. with and into Renewable Innovations, Inc.
2.3 (1)		Agreement and Plan of Merger of Nestbuilder.com Corp and Renewable Innovations, Inc.
3.1 (2)		Articles of Incorporation of NestBuilder.com Corp.
3.2 (2)		Bylaws of Nestbuilder.com Corp.
3.3 (1)		Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1		Chief Executive Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Chief Financial Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
100.INS		Inline XBRL Instance Document
100.SCH		Inline XBRL Schema Document
100.CAL		Inline XBRL Calculation Linkbase Document
100.DEF		Inline XBRL Definition Linkbase Document
100.LAB		Inline XBRL Labels Linkbase Document
100.PRE		Inline XBRL Presentation Linkbase Document
104		Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit)

 

	(1)	Incorporated by reference from our Current Report on Form 8-K dated and filed with the Commission on December 1, 2022.
	(2)	Incorporated by reference from our Registration Statement on Form 10, filed with the Commission on December 22, 2017.

 

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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 thereunto duly authorized.

 

	Renewable Innovations, Inc.
Dated: June 13, 2023		/s/ Robert L. Mount
	By:	Robert L. Mount
	Its:	Chief Executive Officer

 

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