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Form 10-Q Crucial Innovations, For: Mar 31

July 1, 2022 12:32 PM EDT

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U.S. 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 March 31, 2022

 

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

 

For the transition period from ______ to _______

 

Commission File No. 333-229638

 

CRUCIAL INNOVATIONS CORP.

(Exact name of registrant as specified in its charter)

 

Nevada

 

EIN 98-1446012

(State or Other Jurisdiction of

Incorporation or Organization)

 

(IRS Employer

Identification Number)

 

120 Moorgate

London EC2M 6UR

United Kingdom

+44 77 4212 5992

 (Address and telephone number of principal executive offices)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbols

 

Name of each exchange on which registered

N/A

 

 N/A

 

N/A

 

Indicate by checkmark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 such files). Yes ☒ No ☐

 

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. (Check one)

 

Large accelerated filer

Smaller reporting company

Accelerated filer

Emerging Growth Company

Non-accelerated Filer

 

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 7(a)(2)(B) of the exchange act.  

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

There were 32,417,002 shares of the registrant’s common stock, $0.001 par value per share, outstanding on June 27, 2022.

 

 

 

TABLE OF CONTENTS

 

PART I

ITEM 1

Financial Statements

3

ITEM 2

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

11

ITEM 3

Quantitative and Qualitative Disclosures about Market Risk

13

ITEM 4

Controls and Procedures

13

PART II

ITEM 1

Legal Proceedings

15

ITEM 1A

Risk Factors

15

ITEM 2

Unregistered Sales of Equity Securities and Use of Proceeds

15

ITEM 3

Defaults Upon Senior Securities

15

ITEM 4

Mining Safety Disclosures

15

ITEM 5

Other Information

15

ITEM 6

Exhibits

16

 

 
2

Table of Contents

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

CRUCIAL INNOVATIONS CORP.

CONDENSED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

March 31,

2022

(Unaudited)

 

 

December 31,

2021

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash

 

$-

 

 

$-

 

Prepaid expenses

 

 

10,750

 

 

 

10,750

 

Total current assets

 

 

10,750

 

 

 

10,750

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$10,750

 

 

$10,750

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Deficiency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$9,470

 

 

$6,245

 

Convertible note and accrued interest

 

 

10,000

 

 

 

10,000

 

Due to related party

 

 

17,500

 

 

 

17,500

 

Total current liabilities

 

 

36,970

 

 

 

33,745

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Stockholders' deficiency:

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value, 75,000,000 shares authorized 32,417,002 issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

3,241

 

 

 

3,241

 

Additional paid-in capital

 

 

87,910

 

 

 

87,910

 

Accumulated deficit

 

 

(117,371)

 

 

(114,146)

Total stockholders' deficiency

 

 

(26,220)

 

 

(22,995)

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Deficiency

 

$10,750

 

 

$10,750

 

 

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

 

 
3

Table of Contents

 

CRUCIAL INNOVATIONS CORP.

CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31, 2022

 

 

March 31, 2021

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Professional fees

 

$2,400

 

 

$-

 

General and administrative expenses

 

 

825

 

 

 

-

 

Total operating expenses

 

 

3,225

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net operating income (loss)

 

 

(3,225)

 

 

-

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$(3,225)

 

$-

 

 

 

 

 

 

 

 

 

 

Basic and diluted income (loss) per share

 

$(0.00)

 

$-

 

 

 

 

 

 

 

 

 

 

Weighted average number of common

 

 

 

 

 

 

 

 

shares outstanding - basic and diluted

 

 

32,417,002

 

 

 

32,417,002

 

          

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

 

 
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Table of Contents

 

CRUCIAL INNOVATIONS CORP.

CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficiency

 

For the Three Months Ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 12/31/2020

 

 

32,417,002

 

 

$3,241

 

 

$87,910

 

 

$(91,580)

 

$(429)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 3/31/2021

 

 

32,417,002

 

 

$3,241

 

 

$87,910

 

 

$(91,580)

 

$(429)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 12/31/2021

 

 

32,417,002

 

 

$3,241

 

 

$87,910

 

 

$(114,146)

 

$(22,995)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,225)

 

 

(3,225)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 03/31/2022

 

 

32,417,002

 

 

$3,241

 

 

$87,910

 

 

$(117,371)

 

$(26,220)

 

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

 

 
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Table of Contents

 

CRUCIAL INNOVATIONS CORP.

 CONDENSED STATEMENTS OF CASH FLOW (Unaudited)

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31,

2022

 

 

March 31,

 2021

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income (loss)

 

$(3,225)

 

$-

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

 

3,225

 

 

 

-

 

Net cash used in operating activities

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

-

 

 

 

-

 

Cash - beginning of the year

 

 

-

 

 

 

-

 

Cash - end of the year

 

$-

 

 

$-

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

Interest paid

 

$-

 

 

$-

 

Income taxes

 

$-

 

 

$-

 

 

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

 

 
6

Table of Contents

 

CRUCIAL INNOVATIONS CORP.

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

March 31, 2022

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Crucial Innovations Corp. (referred as the “Company”, “we”, “our”) was incorporated in the State of Nevada and established on February 28, 2018.   We were initially engaged in the business of English language tutoring over the Internet. However, were not able to execute our original business plan, develop significant operations or achieve commercial sales. We currently are pursuing the completion of an acquisition which will create a viable business model and value for our stockholders.

 

On October 17, 2021, the Board of Directors of the Company which, at that time, consisted solely of Laura De Leon Castro, elected two new additional directors, Timothy Ambrose and Jon-Paul Doran. On October 18, 2021, Laura De Leon Castro resigned as President, Chief Executive Officer, Secretary, Treasurer, and a Director and Chairman of the Board of Directors of the Company. Ms. De Leon Castro’s resignation was not the result of any disagreements with the Company regarding our operations, policies, practices or otherwise. Concurrently, Timothy Ambrose was elected as Chairman of the Board of Directors and Jon-Paul Doran was elected as President, Chief Executive Officer, and Secretary of the Company. The appointment of Mr. Ambrose and Mr. Doran was considered a change in control of the Company.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles of the United States (“GAAP”). The Company’s year-end is December 31.

 

In the opinion of management, all adjustments consisting of normal recurring entries necessary for a fair statement of the periods presented for: (a) the financial position; (b) the result of operations; and (c) cash flows, have been made in order to make the unaudited interim financial statements presented not misleading. The results of operations for such interim periods are not necessarily indicative of operations for a full year. The accompanying unaudited interim financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2021, as filed with the SEC on July 1, 2022.

 

Reclassifications

 

Certain prior period amounts have been reclassified to conform to current period presentation. There was no impact on the statements of operations.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. There were no cash or cash equivalents as of March 31, 2022 and December 31, 2021.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Basic and Diluted Net Loss Per Common Share

 

The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock.

 

Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued.

 

 
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As of March 31, 2022, and 2021, there were approximately 3,300 and -0- common stock equivalents outstanding, respectively, that were not included in the calculation of dilutive earnings per share as their effect would be anti-dilutive.

 

Stock-Based Compensation

 

The Company accounts for share-based compensation in accordance with the fair value recognition provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 718 and No. 505. The Company issues restricted stock to employees and consultants for their services. Cost for these transactions are measured at the fair value of the equity instruments issued at the date of grant. These shares are considered fully vested and the fair market value is recognized as expense in the period granted. The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services. For agreements requiring future services, the consulting expense is to be recognized ratably over the requisite service period. Stock based compensation amounted to $-0- for the three months ended March 31, 2022 and 2021.

 

Fair Value Measurements

 

In September 2006, the FASB issued ASC 820 which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of ASC 820 were effective January 1, 2008.

 

As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observations of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

 

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

 

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

 

Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

 

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

The Company did not identify any assets or liabilities that are required to be presented on the balance sheet at fair value in accordance with ASC 825-10 as of March 31, 2022 and December 31, 2021.

 

Revenue Recognition

 

Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

 

 
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The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods and service transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery.  For the three months ended March 31, 2022 and 2021, the Company reported $-0- revenues.

 

Income Taxes

 

The Company’s policy is to provide for deferred income taxes based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates that will be in effect when the differences are expected to reverse. The U.S. Tax Cuts and Jobs Act (TCJA) legislation reduces the U.S. federal corporate income tax rate from 35.0% to 21.0% and is effective June 22, 2018 for the Company. We did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because we have experienced operating losses since inception. When it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carryforwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carryforward period.

 

The Company’s policy is to provide for deferred income taxes based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates that will be in effect when the differences are expected to reverse. The U.S. Tax Cuts and Jobs Act (TCJA) legislation reduces the U.S. federal corporate income tax rate from 35.0% to 21.0% and is effective June 22, 2018 for the Company. We did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because we have experienced operating losses since inception. When it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carryforwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carryforward period.

 

The Company intends to file income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The tax years for 2010 to 2021 remain open for examination by federal and/or state tax jurisdictions. The Company is currently not under examination by any other tax jurisdictions for any tax year.

 

Recent Accounting Pronouncements

 

In August 2020, the FASB issued ASU 2020-06, ASC Subtopic 470-20 “Debt—Debt with “Conversion and Other Options” and ASC subtopic 815-40 “Hedging—Contracts in Entity’s Own Equity”. The standard reduced the number of accounting models for convertible debt instruments and convertible preferred stock. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting; and, (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company has adopted this standard on January 1, 2021.

 

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.

 

NOTE 3 – GOING CONCERN

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As of March 31, 2022, the Company had an accumulated deficit of $117,371, a net loss of $3,225 for the three months ended March 31, 2022 and has not earned any revenues since inception. The Company intends to fund operations through equity financing arrangements and related party advances, which may be insufficient to fund its capital expenditures, working capital and other cash requirements.

 

The ability of the Company to emerge from an early stage is dependent upon, among other things, obtaining additional financing to continue operations, and development of its business plan. In response to these problems, management intends to raise additional funds through public or private placement offerings.

 

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 
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NOTE 4 – PREPAID EXPENSES

 

As of March 31, 2022 and December 31, 2021, prepaid expenses consist of advances made on professional fees. As of March 31, 2022 and December 31, 2021, prepaid expenses were $10,750.

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders or directors. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances were considered temporary in nature and were not formalized by a promissory note.

 

On September 24, 2021, a company controlled by the Company’s CEO advanced operating expenses of $17,500.  As of March 31, 2022, the $17,500 advance is reported as due to related party in the accompanying balance sheet.

 

NOTE 6 – CONVERTIBLE NOTE

 

On April 14, 2021, the Company issued a convertible note with a conversion price of 60% discount on the market price to pay operating expenses of $6,480. On June 30, 2021, conversion price of this note was amended to a fixed conversion price of $3.00 per share of common stock. As result, under ASU 2020-06, the Company will no longer incur non-cash interest expense related to the accretion of the debt discount associated with the embedded conversion option. The Company shall repay the amount of $10,000 within 90 days. As of March 31, 2022 and December 31, 2021, the Company had a convertible note of $6,480 and accrued interest of $3,520 for and aggregate of $10,000 and is currently in default.

 

NOTE 7 – STOCKHOLDER’ EQUITY

 

The Company has 75,000,000, $0.0001 par value shares of common stock authorized.

 

There were 32,417,002 shares of common stock issued and outstanding as of March 31, 2022 and December 31, 2021.

 

NOTE 8 – SUBSEQUENT EVENTS

 

On April 13, 2022, the Company entered into a definitive Share Exchange Agreement (the “Exchange Agreement”) with the stockholders of Eco Equity Limited, a company organized under the laws of England and Wales (“EE UK”). Pursuant to the terms of the Exchange Agreement, the Company will acquire 100% of the issued and outstanding shares of capital stock of EE UK, in exchange for the issuance of 42,000,000 restricted newly issued, fully paid and non-assessable shares of common stock of the Company (the “Exchange Shares”) at a ratio of 0.0763 Exchange Share for each of the surrendered shares transferred by the EE UK stockholders, which will represent fifty-six percent (56%) of all issued and outstanding shares of Company common stock at the time of the closing of the transaction. The Exchange Shares were valued at $71,404 or $0.0017 per share. As the Company’s stock is thinly traded, the value assigned to the Exchange Shares to be issued under the Exchange Agreement was the last sale of Company’s common stock during October 2020 for $0.0017 per share. In addition, we will assume all assets and liabilities of EE UK, which includes EE UK’s wholly owned subsidiary, Eco-Equity Zimbabwe (Private) Limited, a Zimbabwe-registered company (“EE Zim”). As of June 27, 2022, the transactions contemplated by the Exchange Agreement, including the issuance of the 42,000,000 Exchange Shares, has not been consummated. The Company intends to pursue the sale of cannabis-related products from EE Zim.

 

The Company evaluated all events or transactions that occurred after March 31, 2022 up through June 27, 2022. During this period, the Company did not have any other material recognizable subsequent events. 

 

 
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FORWARD-LOOKING STATEMENTS

 

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events. 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

OVERVIEW

 

We are a development stage corporation with limited operations and no revenues from our business operations. We do not anticipate that we will generate significant revenues until we have raised significant funds. There is no assurance we will ever generate revenue even if we raised all necessary funds.

 

GOING CONCERN

 

Our financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We are in start-up stage operations and have not generated any revenues. Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months.

 

We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

 

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

 

COVID-19

 

In December 2019, a novel strain of COVID-19 was reported in China. Since then, the COVID-19 has spread globally including across North America and the United States. The spread of COVID-19 from China to other countries has resulted in the World Health Organization (WHO) declaring the outbreak of COVID-19 as a “pandemic,” or a worldwide spread of a new disease, on March 11, 2020.

 

Specifically, we caution that our business could be materially and adversely affected by the risks, or the public perception of the risks, related to the outbreak of COVID-19. To date, COVID has directly impacted the ability we have to participate in trade show events and other in-person marketing. Although retailers which may carry our products may be considered essential businesses and therefore be allowed to remain operational, they may experience significantly reduced demand. The risk of a pandemic, or public perception of the risk, could cause customers to avoid public places, including retail properties, and could cause temporary or long-term disruptions in our supply chains and/or delays in the delivery of our inventory to our customers. Further, such risks could also adversely affect retail customers’ financial condition, resulting in reduced spending on our products, which are marketed as premium products. “Shelter-in-place” or other such orders by governmental entities could also disrupt our operations, if our employees or the employees of our sourcing partners who cannot perform their responsibilities from home, are not able to report to work. Risks related to an epidemic, pandemic, or other health crisis, such as COVID-19, could also lead to the complete or partial closure of one or more of our co-packing facilities or operations of our sourcing partners.

 

 
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CRITICAL ACCOUTNING POLICIES

 

Please refer to Note 2 - Summary of Significant Accounting Policies in the accompanying Notes to the Consolidated Financial Statements.

 

RESULTS OF OPERATIONS

 

Overview. We had no revenues for the three months ended March 31, 2022 and 2021, respectively. We reported net losses of $3,225 and $-0- for the three months ended March 31, 2022 and 2021, respectively. The $3,225 increase in net loss is attributable to the factors discussed below.

 

Revenues. We generated no revenues for the three months ended March 31, 2022 and 2021.

 

Expenses. For the three months ended March 31, 2022 and 2021, we incurred total operating expenses of $3,225 and $-0-. The $3,225 increase was attributable for an approximate $2,000 increase in professional fees and an approximate increase in other general and administrative expenses.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As of March 31, 2022, our total assets were $10,750 for prepaid accounting fees. As of March 31, 2022, our total liabilities were $36,970 consisting of accounts payable for $9,470, convertible note and accrued interest for $10,000 and due to related party for $17,500.

 

Cash Flows from Operating Activities

 

We have not generated positive cash flows from operating activities for the three months ended March 31, 2022, net cash flows used in operating activities was $-0-.

 

PLAN OF OPERATION

 

Our plan of operation for the following twelve months is to transform the Company with the following:

 

On April 13, 2022, the Company entered into a definitive Share Exchange Agreement (the “Exchange Agreement”) with the stockholders of Eco Equity Limited, a company organized under the laws of England and Wales (“EE UK”). Pursuant to the terms of the Exchange Agreement, the Company will acquire 100% of the issued and outstanding shares of capital stock of EE UK, in exchange for the issuance of 42,000,000 restricted newly issued, fully paid and non-assessable shares of common stock of the Company (the “Exchange Shares”) at a ratio of 0.0763 Exchange Share for each of the surrendered shares transferred by the EE UK stockholders, which will represent fifty-six percent (56%) of all issued and outstanding shares of Company common stock at the time of the closing of the transaction. The Exchange Shares were valued at $71,404 or $.0017 per share. As the Company’s stock is thinly traded, the value assigned to the Exchange Shares to be issued under the Exchange Agreement was the last sale of Company’s common stock during October 2020 for $.0017 per share. In addition, we will assume all assets and liabilities of EE UK, which includes EE UK’s wholly owned subsidiary, Eco-Equity Zimbabwe (Private) Limited, a Zimbabwe-registered company (“EE Zim”). As of June 27, 2022, the transactions contemplated by the Exchange Agreement, including the issuance of the 42,000,000 Exchange Shares, has not been consummated. The Company intends to pursue the sale of cannabis-related products from EE Zim.

 

 
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On October 17, 2021, the Board of Directors of the Company which, at that time, consisted solely of Laura De Leon Castro, elected two new additional directors, Timothy Ambrose and Jon-Paul Doran. On October 18, 2021, Laura De Leon Castro resigned as President, Chief Executive Officer, Secretary, Treasurer, and a Director and Chairman of the Board of Directors of the Company. Ms. De Leon Castro’s resignation was not the result of any disagreements with the Company regarding our operations, policies, practices or otherwise. Concurrently, Timothy Ambrose was elected as Chairman of the Board of Directors and Jon-Paul Doran was elected as President, Chief Executive Officer, and Secretary of the Company. The appointment of Mr. Ambrose and Mr. Doran was considered a change in control of the Company.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We have no 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 of operations, liquidity, capital expenditures or capital resources.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

 

Not required for smaller reporting companies.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported, within the time period specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosures. Our management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives.

 

Our management, with the participation of our CEO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report. Based upon this evaluation, our CEO concluded that our disclosure controls and procedures were not effective because of the identification of a material weakness in our internal control over financial reporting which is described below.

 

Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with U.S. GAAP.

 

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our consolidated financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

 
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Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2022. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). Based on this evaluation, management concluded that that our internal control over financial reporting was not effective as of March 31, 2022. Our CEO concluded we have a material weakness due to lack of segregation of duties, a limited corporate governance structure, and a lack of a formal management review process over preparation of financial information. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

Our size has prevented us from being able to employ sufficient resources to enable us to have an adequate level of supervision and segregation of duties within our system of internal control. Therefore, while there are some compensating controls in place, it is difficult to ensure effective segregation of accounting and financial reporting duties. Management reported the following material weaknesses:

 

 

Lack of segregation of duties in certain accounting and financial reporting processes including the initiation, processing, recording and approval of disbursements;

 

 

Our corporate governance responsibilities are performed by the Board of Directors, none of whom are independent under applicable standards; we do not have an audit committee or compensation committee. Our Board of Directors acts primarily by written consent without meetings which results in several of our corporate governance functions not being performed concurrent (or timely) with the underlying transactions, including evaluation of the application of accounting principles and disclosures relating to those transactions; and

 

 

Certain reports that we prepare, and accounting and reporting conclusions reached in connection with the financial statement preparation process are not subjected to a formal review process that includes multiple levels of review and are not submitted timely to the Board of Directors for review or approval.

 

While we strive to segregate duties as much as practicable, there is an insufficient volume of transactions at this point in time to justify additional full-time staff. We believe that this is typical in many development stage companies. We may not be able to fully remediate the material weakness until we commence mining operations at which time, we would expect to hire more staff. We will continue to monitor and assess the costs and benefits of additional staffing.

 

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

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2022, 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 currently a party to any legal proceedings, and we are not aware of any pending or potential legal actions.

 

Item 1A. Risk Factors.

 

Not required for smaller reporting companies.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the three months ended March 31, 2022, we had no sales of unregistered equity securities.

 

Item 3. Defaults Upon Senior Securities.

 

During the three months ended March 31, 2022, we had no senior securities issued and outstanding.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

 

 
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Item 6. Exhibits.

 

EXHIBIT SCHEDULE

 

Exhibit

Number

 

Document Description

(1)

3 (i)

 

Articles of Incorporation filed with the Nevada Secretary of State of February 28, 2018.

(1)

3 (ii)

 

Bylaws.

(2)

10.1

 

Form of Share Exchange Agreement dated April 13, 2022, by and between Crucial Innovations Corp. and the Stockholders of Eco Equity Limited.

(2)

10.2

 

Registry of Shares of Eco-Equity Zimbabwe (Private) Limited

#

31.1

 

Certification of the Chief Executive Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

#

31.2

 

Certification of the Chief Financial Officer pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

##

32.1

 

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

#

101

 

The following financial information from the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Balance Sheets; (ii) the Condensed Statements of Operations; (iii) the Condensed Statements of Stockholders’ Deficit; (iv) the Condensed Statements of Cash Flows; and (v) the Notes to the Financial Statements.

 

(1) Incorporated by reference from the Company’s Registration Statement on Form S-1, SEC File No. 333-229638 as declared effective by the Commission on April 9, 2019.

(2) Incorporated by reference from the Company’s Annual Report on Form 10-K, filed with the SEC on July 1, 2022.

# Filed herewith.

## Furnished, not filed.

 

 
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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on July 1, 2022.

 

CRUCIAL INNOVATIONS CORP.

 

 

 

By

/s/ Jon-Paul Doran

 

Jon-Paul Doran

 

President and Chief Executive Officer

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on July 1, 2022.

 

Signature

 

Title

 

 

/s/ Jon-Paul Doran

 

 

 

Jon-Paul Doran

 

President, Chief Executive Officer, Treasurer, Secretary, and Director

(Principal Executive Officer and Principal Accounting Officer)

 

 

/s/ Timothy Ambrose

 

Timothy Ambrose

 

Chairman of the Board of Directors

 

 
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