UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 333-208978
TrueNorth Quantum, Inc.
(Exact name of registrant issuer as specified in its charter)
| Nevada | 98-1253258 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
5428 South Regal Street #30954, Spokane, WA 99223
(Address of principal executive offices, including zip code)
Registrant’s phone number, including area code (647) 400-6927
(Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☐ 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 (section 232.405 of this chapter) during the preceding twelve months (or 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, 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 ☒ | 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 ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at November 12, 2021 | |
| Common Stock, $0.0001 par value | 151,043,725 |
TABLE OF CONTENTS
| Page | ||
| PART I | FINANCIAL INFORMATION | |
| ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: | 3 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 13 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 16 |
| ITEM 4. | CONTROLS AND PROCEDURES | 16 |
| PART II | OTHER INFORMATION | |
| ITEM 1 | LEGAL PROCEEDINGS | 17 |
| ITEM 2 | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 17 |
| ITEM 3 | DEFAULTS UPON SENIOR SECURITIES | 17 |
| ITEM 4 | MINE SAFETY DISCLOSURES | 17 |
| ITEM 5 | OTHER INFORMATION | 17 |
| ITEM 6 | EXHIBITS | 17 |
| SIGNATURES | 18 | |
| 2 |
PART I — FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TrueNorth Quantum, Inc.
(fka United Royale Holdings Corp.)
Interim Financial Statements
(Unaudited)
Table of Contents
| 3 |
TrueNorth Quantum Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | – | $ | 6,731 | ||||
| Prepaid expenses and other receivables | 3,500 | 21,756 | ||||||
| Total Current Assets | 3,500 | 28,487 | ||||||
| Non-current assets from discontinued operation | – | 41,691 | ||||||
| TOTAL ASSETS | $ | 3,500 | $ | 70,178 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | 834 | 31,533 | ||||||
| Due to related party | 43,295 | 49,744 | ||||||
| Current liabilities from discontinued operation | – | 23,128 | ||||||
| Total Current Liabilities | 44,129 | 104,405 | ||||||
| Total Liabilities | 44,129 | 104,405 | ||||||
| Stockholders' Equity (Deficit): | ||||||||
| Preferred stock, $0.0001 par value, 200,000,000 shares authorized, none issued and outstanding | – | – | ||||||
| Common stock, $0.0001 par value, 600,000,000 shares authorized, 141,990,387 shares issued and outstanding | 14,199 | 14,199 | ||||||
| Additional paid-in capital | 873,597 | 789,468 | ||||||
| Accumulated other comprehensive income | – | 1,477 | ||||||
| Accumulated deficit | (928,425 | ) | (839,371 | ) | ||||
| Total Stockholders' Equity (Deficit) | (40,629 | ) | (34,227 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 3,500 | $ | 70,178 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
TrueNorth Quantum Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
| Three Months Ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues | $ | – | $ | – | $ | – | $ | – | ||||||||
| Operating Expenses | ||||||||||||||||
| General and administrative | 47,395 | 17,044 | 72,631 | 86,880 | ||||||||||||
| Total Operating Expenses | 47,395 | 17,044 | 72,631 | 86,880 | ||||||||||||
| Loss from operations | (47,395 | ) | (17,044 | ) | (72,631 | ) | (86,880 | ) | ||||||||
| Loss from continuing operation | (47,395 | ) | (17,044 | ) | (72,631 | ) | (86,880 | ) | ||||||||
| Loss from discontinued operations | ||||||||||||||||
| Loss from discontinued operations | – | (1,061 | ) | (8,062 | ) | (3,437 | ) | |||||||||
| Loss from disposal of subsidiaries | – | – | (8,361 | ) | – | |||||||||||
| Loss from discontinued operations | – | (1,061 | ) | (16,423 | ) | (3,437 | ) | |||||||||
| Net Loss | $ | (47,395 | ) | $ | (18,105 | ) | $ | (89,054 | ) | $ | (90,317 | ) | ||||
| Other Comprehensive Income (loss) | ||||||||||||||||
| Realized foreign currency translation due to disposal of subsidiaries | – | – | (482 | ) | – | |||||||||||
| Foreign currency translation loss | – | 1,810 | (995 | ) | (1,046 | ) | ||||||||||
| Comprehensive loss | $ | (47,395 | ) | $ | (16,295 | ) | $ | (90,531 | ) | $ | (91,363 | ) | ||||
| Net Loss Per Common Share: Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
| Weighted Average Number of Common Shares Outstanding: Basic and Diluted | 141,990,387 | 464,667,527 | 141,990,387 | 664,499,399 | ||||||||||||
See accompanying notes to the unaudited consolidated financial statements.
| 5 |
TrueNorth Quantum Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(Unaudited)
Nine months ended September 30, 2021
| Accumulated | ||||||||||||||||||||||||
| Additional | other | |||||||||||||||||||||||
| Common stock | paid-in | comprehensive | Accumulated | |||||||||||||||||||||
| Shares | Amount | capital | Income (loss) | Deficit | Total | |||||||||||||||||||
| Balance, December 31, 2020 | 141,990,387 | $ | 14,199 | $ | 789,468 | $ | 1,477 | $ | (839,371 | ) | $ | (34,227 | ) | |||||||||||
| Disposal of subsidiaries | – | – | – | (482 | ) | – | (482 | ) | ||||||||||||||||
| Foreign currency translation | – | – | – | (995 | ) | – | (995 | ) | ||||||||||||||||
| Net loss for the period | – | – | – | – | (35,444 | ) | (35,444 | ) | ||||||||||||||||
| Balance, March 31, 2021 | 141,990,387 | $ | 14,199 | $ | 789,468 | $ | – | $ | (874,815 | ) | $ | (71,148 | ) | |||||||||||
| Debt forgiveness | – | – | 84,129 | – | – | 84,129 | ||||||||||||||||||
| Net loss for the period | – | – | – | – | (6,215 | ) | (6,215 | ) | ||||||||||||||||
| Balance, June 30, 2021 | 141,990,387 | $ | 14,199 | $ | 873,597 | $ | – | $ | (881,030 | ) | $ | 6,766 | ||||||||||||
| Net loss for the period | – | – | – | – | (47,395 | ) | (47,395 | ) | ||||||||||||||||
| Balance, September 30, 2021 | 141,990,387 | $ | 14,199 | $ | 873,597 | $ | – | $ | (928,425 | ) | $ | (40,629 | ) | |||||||||||
Nine months ended September 30, 2020
| Common Stock | Additional |
Accumulated
other |
Total | |||||||||||||||||||||
|
Number of
Shares |
Amount |
paid-in
capital |
comprehensive
loss |
Accumulated
Deficit |
Stockholders’
Equity |
|||||||||||||||||||
| Balance as of December 31, 2019 | 141,990,387 | $ | 14,199 | $ | 789,468 | $ | 953 | $ | (712,303 | ) | $ | 92,317 | ||||||||||||
| Net loss | – | – | – | – | (48,357 | ) | (48,357 | ) | ||||||||||||||||
| Foreign currency translation | – | – | – | (3,254 | ) | – | (3,254 | ) | ||||||||||||||||
| Balance as of March 31, 2020 | 141,990,387 | $ | 14,199 | $ | 789,468 | $ | (2,301 | ) | $ | (760,660 | ) | 40,706 | ||||||||||||
| Net loss | – | – | – | – | (23,855 | ) | (23,855 | ) | ||||||||||||||||
| Foreign currency translation | – | – | – | 398 | – | 398 | ||||||||||||||||||
| Balance as of June 30, 2020 | 141,990,387 | $ | 14,199 | $ | 789,468 | $ | (1,903 | ) | $ | (784,515 | ) | $ | 17,249 | |||||||||||
| Net loss | – | – | – | – | (18,105 | ) | (18,105 | ) | ||||||||||||||||
| Foreign currency translation | – | – | – | 1,809 | – | 1,809 | ||||||||||||||||||
| Balance as of September 30, 2020 | 141,990,387 | $ | 14,199 | $ | 789,468 | $ | (94 | ) | $ | (802,620 | ) | $ | 953 | |||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
TrueNorth Quantum Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Nine months ended | ||||||||
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (89,054 | ) | $ | (90,317 | ) | ||
| Accounts receivable - related party | ||||||||
| Depreciation expense | – | 2,569 | ||||||
| Loss on disposal of subsidiaries | 8,361 | – | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | 18,256 | 10,947 | ||||||
| Accounts payable and accrued liabilities | (30,699 | ) | (7,365 | ) | ||||
| Lease liabilities | – | (1,790 | ) | |||||
| Discontinued assets and liabilities | 8,725 | – | ||||||
| Net Cash Used in Operating Activities | (84,411 | ) | (85,956 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchase of biological assets | – | (4,548 | ) | |||||
| Net cash used in Investing Activities | – | (4,548 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Advance from related party | 77,680 | 34,557 | ||||||
| Net cash provided by Financing Activities | 77,680 | 34,557 | ||||||
| Effect of exchange rate changes in cash and cash equivalents | – | (186 | ) | |||||
| Net cash decrease for period | (6,731 | ) | (56,133 | ) | ||||
| Cash at beginning of period | 6,731 | 63,839 | ||||||
| Cash at end of period | $ | – | $ | 7,706 | ||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for income taxes | $ | – | $ | – | ||||
| Cash paid for interest | $ | – | $ | – | ||||
| NON CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Initial recognition of operating lease right-of-use assets and operating lease obligations | $ | – | $ | 21,330 | ||||
| Reversal Adjustment for operating lease right-of-use and operating lease obligation | $ | – | $ | 17,105 | ||||
| Debt forgiveness | $ | 84,129 | $ | – | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 7 |
TrueNorth Quantum Inc.
Notes to the Condensed Consolidated Financial Statements
September 30, 2021
(Unaudited)
| 1. | DESCRIPTION OF BUSINESS |
Organization
TrueNorth Quantum, Inc., formerly United Royale Holdings Corp., (“the Company”, “TNQ”, “we”, “us” or “our”) was incorporated under the laws of the State of Nevada on June 23, 2015 to offer planting and cultivation services to land owners in regards to the planting and cultivation of Aquilaria Subintegra & Aquilaria Sinensis trees. On February 15, 2017, we changed our name from Bosy Holdings Corp. to United Royale Holdings Corp. to facilitate our re-branding efforts and develop and enhance our business.
On September 30, 2018, the Company and Mr. CHEN Zheru, representing the sole shareholder of IV Enterprises Development Limited, a Seychelles corporation (“IVED”), entered into a Sale and Purchase Agreement, pursuant to which the Company acquired 100% (one hundred percent) of the shareholding of IVED. IVED provides tree nurseries, including planting, cultivation and inoculation services through its wholly-owned subsidiary, Oudh Tech Sdn Bhd, in Malaysia. The acquisition is completed on September 30, 2018.
On March 30, 2021, the Company and Mr. Li Gongming (“Mr. Li”), the director of the Company, signed an instrument of transfer, pursuant to which Mr. Li acquired 100% (one hundred percent) of the shareholding of IVED. The consideration was set at $1, same as the consideration that the Company acquired IVED in 2018.
Our Board of Directors, Li Gongming, Teoh Kooi Sooi and Soh Khay Wee resigned from the board of directors on April 7, 2021. On the same day, Teoh Kooi Sooi resigned from the roles of Chief Executive Officer, Chief Financial Officer and Treasurer of the Company, David Edwin Evans resigned from the role of Chief Operation Officer of the Company, Liao Lin resigned from the role of Chief Sales Officer of the Company, Jaya C Rajamanickam resigned from the role of President of the Company while Feliana Binti Johny resigned from the role of Secretary of the Company.
On April 7, 2021, Mr. Gary Bartholomew was appointed as the Director, Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer of the Company.
On April 22, 2021, CyberNorth Ventures Inc. acquired an aggregate of 109,423,767 shares of Common Stock of the Company, representing approximately 77.6% of the issued and outstanding shares of Common Stock of the Company as of such date, from the previous majority shareholders of the Company. As a result of such acquisition CyberNorth Ventures Inc. is able to unilaterally control the election of our board of directors, all matters upon which shareholder approval is required and, ultimately, the direction of our Company. CyberNorth Ventures Inc. is wholly owned by our director, Gary Bartholomew.
On October 4, 2021, the Company amended its Articles of Incorporation to (i) change its name to TrueNorth Quantum Inc. and (ii) designate its Series A Preferred Stock.
On October 20, 2021, the board of directors of the Company appointed Witold (Wit) Ostrenko as a director of the Company, and appointed Brad Herr as the Company’s Chief Financial Officer.
On October 29, 2021, the Company closed its acquisition of TrueNorth Quantum Inc. (“TNQ”), a corporation existing under the laws of the Province of Alberta, Canada pursuant to the Exchange Agreement, Support Agreement and Trust Agreement disclosed in the Company’s Current Report filed October 13, 2021.
| 8 |
On November 8, 2021, the board of directors of the Company appointed William Douglas (Doug) Beynon and David Mironov as directors of the Company.
Description of Business
TNQ is a technology company that has developed an enterprise platform providing security, connectivity and systems compatibility for existing financial institution’s back and front office. This includes integration into major Banks systems from compliance to customer information, including their trading platforms. The TNQ technology (“Northern Shield”) utilizes quantum cryptography (or Quantum key distribution) to secure the clients private key to their crypto assets and this key is held within the trusted Bank environment with the potential to be insured against cyberattack and theft.
Northern Shield enables banks to “institutionalize” crypto currencies the blockchain market. Crypto currencies such as Bitcoin were originally designed to “decentralize” currency. However, the Northern Shield will provide the vehicle for integration to applications and utility for digital wallets inbound and outbound. Northern Shield is a custody solution with insurance. Currently, crypto holders have an account at the crypto-exchange where they invested in that crypto currency. Our solution enables major banks to possess custody on behalf of their clients providing flexibility to trade on multiple exchanges with access to financial and payment networks in a secure and insured account.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of presentation
The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 8 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
In the opinion of management, the balance sheet as of September 30, 2021 which has been derived from unaudited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended September 30, 2021 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2021 or for any future period.
These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Form 10-K for the year ended December 31, 2020.
The accompanying financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany transactions and balances were eliminated in consolidation. As of September 30, 2021, there was no subsidiary held by the Company (see Note 7).
Use of estimates
Management uses estimates and assumptions in preparing these financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheet, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.
| 9 |
Going Concern
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. During the nine months ended September 30, 2021, the Company incurred a net loss of $89,054 and used cash in operations of $84,411. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2020 financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial support from its shareholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due. Despite the amount of funds that we have raised, no assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing.
Cash and cash equivalents
Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Fair value of financial instruments
The carrying value of the Company’s financial instruments: cash and cash equivalents, prepayments, amount due to a director and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.
The Company follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
| · | Level 1 : Observable inputs such as quoted prices in active markets; |
| · | Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and |
| · | Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions information regarding the impact of the adoption of ASC 842 on the Company’s financial statements. |
Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
| 3. | PREPAID EXPENSES AND OTHER RECEIVABLES |
The prepaid expenses as of September 30, 2021 included OTCQB annual fee of $3,500, while the prepaid expenses as of December 31, 2020 included OTCQB annual fee of $14,000, deposit of $600 and $6,410 in transfer agent and our consultancy firm.
| 10 |
| 4. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
The accounts payable and accrued liabilities as of September 30, 2021 included legal and transfer agent fee of $834, while the accrued liabilities as of December 31, 2020 included the auditor’s fee of $4,750, predecessor auditor consent fee of $5,000 and professional fee to our consulting service provider of $19,231.
| 5. | AMOUNT DUE TO RELATED PARTY |
As of September 30, 2021, and December 31, 2020, our directors and major shareholder has loaned to the Company $43,295 and $49,744 as working capital, respectively. This loan is unsecured, non-interest bearing and due on demand. During the nine months ended September 30, 2021, directors advanced $77,680 to the Company and due to director of $84,129 was forgiven.
| 6. | STOCKHOLDERS’ EQUITY |
As of September 30, 2021, and December 31, 2020, there were 141,990,387 shares of common stock issued and outstanding.
There were no stock options, warrants or other potentially dilutive securities outstanding as of September 30, 2021.
| 7. | DISCONTINUED OPERATIONS |
On March 30, 2021, the Company has signed an instrument of transfer with our director, Mr. Li Gongming. Beginning on January 1, 2020, the Company historical financial results for periods prior to the above transaction have been reflected in our statement of income, retrospectively, as discontinued operations. Additionally, the related assets and liabilities associated with the discontinued operations in the prior year balance sheet are classified as discontinued operations. As such, as of September 30, 2021, the Company accounted for all of its assets, liabilities and results of operations up to March 30, 2021 as discontinued operations.
The following table shows the results of operations of the Company for three and nine months ended September 30, 2021 and 2020 which are included in the loss from discontinued operations:
| Schedule of discontinued operations | ||||||||||||||||
| Three Months Ended | Nine months ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | $ | – | $ | – | $ | – | $ | – | ||||||||
| General and administrative | – | 1,061 | 8,062 | 3,437 | ||||||||||||
| Loss from operations | – | (1,061 | ) | (8,062 | ) | (3,437 | ) | |||||||||
| Other income (expense) | – | – | – | – | ||||||||||||
| Loss before income tax | – | (1,061 | ) | (8,062 | ) | (3,437 | ) | |||||||||
| Income tax expense (refund) | – | – | – | – | ||||||||||||
| Net loss from discontinued operations | $ | – | $ | (1,061 | ) | $ | (8,062 | ) | $ | (3,437 | ) | |||||
| 11 |
The following table shows the loss from disposal of subsidiaries from carrying amounts of the major classes of assets and liabilities as of March 30, 2021:
| Schedule of discontinued operations balance sheet | March 30, | |||
| 2021 | ||||
| Current Assets | ||||
| Cash and cash equivalents | $ | 1,692 | ||
| Prepaid expenses | 724 | |||
| Plant and equipment, net | 1,116 | |||
| Biological Assets | 38,651 | |||
| Amount due to director | (19,800 | ) | ||
| Accounts payable and accrued expenses | (14,504 | ) | ||
| Realized foreign currency translation due to disposal of subsidiaries | 482 | |||
| Loss from disposal of subsidiaries | $ | 8,361 | ||
| 8. | SUBSEQUENT EVENTS |
On September 3, 2021, the Company’s sole director and shareholder holding a majority of the Company’s voting stock approved the following actions by written consent: change of the Company’s name to TrueNorth Quantum, Inc., designation of one share of Series A Preferred Stock with special voting rights, and approval of a stock incentive plan and deferred stock unit plan.
On October 4, 2021, the Company amended its Articles of Incorporation to (i) change its name to TrueNorth Quantum Inc. and (ii) designate its Series A Preferred Stock.
On October 20, 2021, the board of directors of the Company appointed Witold (Wit) Ostrenko as a director of the Company, and appointed Brad Herr as the Company’s Chief Financial Officer.
On October 29, 2021, the Company closed its acquisition of TrueNorth Quantum Inc. (“TNQ”), a corporation existing under the laws of the Province of Alberta, Canada pursuant to the Exchange Agreement, Support Agreement and Trust Agreement disclosed in the Company’s Current Report filed October 13, 2021.
On November 5, 2021, TrueNorth Quantum, Inc., a Nevada corporation formerly known as United Royale Holdings Corp. (the “Company”) dismissed Zia Masood Kiani & Co. (“ZMKC”) as the Company’s independent registered public accounting firm. Following a careful deliberation, on November 5, 2021, the Company engaged BF Borger CPA PC (“BFB”) as the Company’s independent registered public accounting firm.
On November 8, 2021, the board of directors of the Company appointed William Douglas (Doug) Beynon and David Mironov as directors of the Company.
| 12 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Form 10-K dated March 29, 2021, for the year ended December 31, 2020 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.
The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Form 10-K dated March 29, 2021, in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this transition report on Form 10-Q. The following should also be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto that appear elsewhere in this report.
Company Overview
TrueNorth Quantum Inc. (formerly United Royale Holdings Corp.) (the “Company”, “TrueNorth”) was incorporated under the laws of the State of Nevada on June 23, 2015 to offer planting and cultivation services to land owners in regards to the planting and cultivation of Aquilaria Subintegra & Aquilaria Sinensis trees. On February 15, 2017, we changed our name from Bosy Holdings Corp. to United Royale Holdings Corp. to facilitate our re-branding efforts and develop and enhance our business.
The Company’s products include a highly scalable, institutional-grade cloud platform called the Northern Shield that enables the rapid build and scale of decentralized applications across many industries. The Northern Shield is the convergence of Security, Blockchain, AI, and Big Data into a single platform we call Web 3.0. The Company has started to work with application development companies to adapt or build their application using the Northern Shield. The Northern Shield is offered as a Platform as a Service (PaaS) offering a complex and highly secured and managed system reducing the cost of industry scale application development for disruption in Healthcare, Fintech, AgTech, and Wellness. These industries are transforming to a decentralized architecture enabling the Northern Shield to disrupt the way business is done today. The Company has numerous engagements to build applications using the Northern Shield, allowing for highly secured and insured capability with a global scale running on the blockchain. In addition to offering the Northern Shield as a PaaS, we offer full application development to the business that has the disruptive idea but needs a strong technical partner to implement their decentralized vision. This contract software development service is offered on a fixed price basis based on the Statement of Work mutually agreed to in a services contract.
On September 30, 2018, the Company and Mr. CHEN Zheru, representing the sole shareholder of IV Enterprises Development Limited, a Seychelles corporation (“IVED”), entered into a Sale and Purchase Agreement, pursuant to which the Company acquired 100% (one hundred percent) of the shareholding of IVED. IVED provides tree nurseries, including planting, cultivation and inoculation services through its wholly-owned subsidiary, Oudh Tech Sdn Bhd, in Malaysia. The acquisition is completed on September 30, 2018.
On March 30, 2021, the Company and Mr. Li Gongming (“Mr. Li”), the director of the Company, signed an instrument of transfer, pursuant to which Mr. Li acquired 100% (one hundred percent) of the shareholding of IVED. The consideration was set at $1, same as the consideration that the Company acquired IVED in 2018.
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Our Board of Directors, Li Gongming, Teoh Kooi Sooi and Soh Khay Wee resigned from the board of directors on April 7, 2021. On the same day, Teoh Kooi Sooi resigned from the roles of Chief Executive Officer, Chief Financial Officer and Treasurer of the Company, David Edwin Evans resigned from the role of Chief Operation Officer of the Company, Liao Lin resigned from the role of Chief Sales Officer of the Company, Jaya C Rajamanickam resigned from the role of President of the Company while Feliana Binti Johny resigned from the role of Secretary of the Company.
On April 7, 2021, Mr. Gary Bartholomew was appointed as the Director, Chief Executive Officer, Chief Financial Officer, President, Secretary, Treasurer of the Company.
On April 22, 2021, CyberNorth Ventures Inc. acquired an aggregate of 109,423,767 shares of Common Stock of the Company, representing approximately 77.6% of the issued and outstanding shares of Common Stock of the Company as of such date, from the previous majority shareholders of the Company. As a result of such acquisition CyberNorth Ventures Inc. is able to unilaterally control the election of our board of directors, all matters upon which shareholder approval is required and, ultimately, the direction of our Company. CyberNorth Ventures Inc. is wholly owned by our director, Gary Bartholomew.
On October 4, 2021, the Company amended its Articles of Incorporation to (i) change its name to TrueNorth Quantum Inc. and (ii) designate its Series A Preferred Stock.
On October 20, 2021, the board of directors of the Company appointed Witold (Wit) Ostrenko as a director of the Company, and appointed Brad Herr as the Company’s Chief Financial Officer.
On October 29, 2021, the Company closed its acquisition of TrueNorth Quantum Inc. (“TNQ”), a corporation existing under the laws of the Province of Alberta, Canada pursuant to the Exchange Agreement, Support Agreement and Trust Agreement disclosed in the Company’s Current Report filed October 13, 2021.
On November 8, 2021, the board of directors of the Company appointed William Douglas (Doug) Beynon and David Mironov as directors of the Company.
Results of Operation
For the three months ended September 30, 2021 and 2020
Revenues
We have not generated any revenue for the three months ended September 30, 2021 and 2020.
General and administrative expenses
We incurred a total of $47,395 and $17,044 general and administrative expenses during the three months ended September 30, 2021 and 2020 respectively. The general and administrative expenses are mainly comprised of Form 10-Q review fee, consulting fee, legal fee, transfer agent fee and Edgar filing fee. The increase of general and administrative expenses is due to an increase in professional fee.
Loss from discontinued operations
For the three months ended September 30, 2021 and 2020, loss from discontinued operations of $0 and $1,061 consisted of the results of operations of the disposed subsidiaries.
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Net loss
For three months ended September 30, 2021 and 2020, we had generated no revenues. We incurred a total net loss of $47,395 and $18,105 for the three months ended September 30, 2021 and 2020, respectively.
For the nine months ended September 30, 2021 and 2020
Revenues
We have not generated any revenue for the nine months ended September 30, 2021 and 2020.
General and administrative expenses
We incurred a total of $72,631 and $86,880 general and administrative expenses during the nine months ended September 30, 2021 and 2020 respectively. The general and administrative expenses are mainly comprised of Form 10-Q review fee, consulting fee, legal fee, transfer agent fee and Edgar filing fee. The decrease of general and administrative expenses is due to a decrease in salary payout offset by an increase in professional fees.
Loss from discontinued operations
For the nine months ended September 30, 2021 and 2020, loss from discontinued operations of $8,062 and $3,437 consisted of the results of operations of the disposed subsidiaries and loss form disposal of subsidiaries of $8,361 and $0, respectively.
Net loss
For nine months ended September 30, 2021 and 2020, we had generated no revenues. We incurred a total net loss of $41,659 and net loss of $72,211 for the nine months ended September 30, 2021 and 2020 respectively.
Liquidity and Capital Resources
Cash Used in Operating Activities
For the nine months ended September 30, 2021 and 2020, the cash flows used in operating activities was $84,411 and $85,956 respectively. The cash used from operating activities for the nine months ended September 30, 2021 and 2020, was primarily attributed to net loss of $89,054 and $90,317, respectively.
Cash Used in Investing Activities
For the nine months ended September 30, 2021 and 2020, the Company used $0 and $4,548 for purchase of biological assets, respectively.
Cash Provided by Financing Activities
For the nine months ended September 30, 2021 and 2020, the cash flows provided by financial activities was $77,680 and $34,557 respectively, consists of advances from directors.
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Off-balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of September 30, 2021.
Contractual Obligations
None.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.
Use of Estimates
The preparation of 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 disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
Item 3 Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4 Controls and Procedures.
Evaluation of Disclosure Controls and Procedures:
We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2021. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2021, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of September 30, 2021 our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
Changes in Internal Control over Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ending September 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
We know of no materials, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest adverse to us.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
ITEM 6. Exhibits
| 2.1 | TrueNorth Canadian Exchange Agreement (2) | |
| 2.2 | TrueNorth Non-Canadian Exchange Agreement (2) | |
| 3(i).1 | Articles of Incorporation, as amended (1) | |
| 3(i).2 | Certificate of Amendment (2) | |
| 3(ii).1 | Bylaws, as amended (1) | |
| 10.1 | TrueNorth Trust Agreement (2) | |
| 10.2 | TrueNorth Support Agreement (2) | |
| 10.3 | Incentive Stock Option Plan (2) | |
| 10.4 | Deferred Stock Unit Plan (2) | |
| 31.1* | Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer. | |
| 31.2* | Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer. | |
| 32.1** | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer. | |
| 101.INS* | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Inline XBRL for the cover page of this Quarterly Report on Form 10-Q, included in the Exhibit 101 Inline XBRL Document Set. | |
* Filed herewith
** Furnished herewith
(1) Previously filed as an exhibit to the Company’s Form 8-K filed with SEC on February 15, 2018 and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company’s Form 8-K filed with SEC on October 13, 2021 and incorporated herein by reference.
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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.
| TrueNorth Quantum Inc. | ||
| Date: November 24, 2021 | ||
| By: | /s/ Gary Bartholomew | |
| Title: |
Chief Executive Officer, (Principal Executive Officer) |
|
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EXHIBIT 31.1
CERTIFICATION
I, Gary Bartholomew, certify that:
1. I have reviewed this quarterly report on Form 10-Q of TrueNorth Quantum Inc. (the “Company”) for the quarter ended September 30, 2021;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 24, 2021 | By: | /s/ Gary Bartholomew |
| Gary Bartholomew | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION
I, Brad Herr, certify that:
1. I have reviewed this quarterly report on Form 10-Q of TrueNorth Quantum Inc. (the “Company”) for the quarter ended September 30, 2021;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 24, 2021 | By: | /s/ Brad Herr |
| Brad Herr | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) |
EXHIBIT 32.1
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of TrueNorth Quantum Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: November 24, 2021 | By: | /s/ Gary Bartholomew |
| Gary Bartholomew | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) |
In connection with the Quarterly Report of TrueNorth Quantum Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), The undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: November 24, 2021 | By: | /s/ Brad Herr |
| Brad Herr | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) |