UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
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:
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction | (I.R.S. Employer | |
| of Incorporation or Organization) | Identification No.) |
(Address Including Zip Code of Registrant’s Principal Executive Offices)
(Registrant’s Telephone Number, Including Area Code)
Securities registered under 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.
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).
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,” “non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| Large accelerated filer | ☐ | 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 ☐
As of February 15, 2024, there were shares of common stock, par value $0.01 per share, outstanding.
TABLE OF CONTENTS
| 2 |
PART I
Item 1. Financial Statements
Awaysis Capital, Inc.
Consolidated Balance Sheet
| December 31, | June 30, | |||||||
| 2023 | 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Inventory | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Fixed assets, net | ||||||||
| Security deposit | ||||||||
| Operating lease right-of-use | ||||||||
| Total non-current assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | ||||||||
| Current portion of lease Liability | ||||||||
| Accrued expenses | $ | $ | ||||||
| Due to related party | ||||||||
| Notes payable | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock - shares authorized $ par value issued and outstanding at December 31, 2023 and June 30, 2023, respectively | ||||||||
| Common stock – shares authorized $ par value issued and outstanding common shares at December 31, 2023 and June 30, 2023 were and , respectively | ||||||||
| Common stock subscribed – $ par value subscribed common shares at December 31, 2023 and June 30, 2023 were and , respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Subscription receivable | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total Liabilities and Stockholders Equity | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
Awaysis Capital, Inc.
Consolidated Statements of Operations
(Unaudited)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expense | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Total other expense | ||||||||||||||||
| Net loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income taxes | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted per common share amounts: | ||||||||||||||||
| Basic and diluted net loss | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| (basic and diluted) | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
Awaysis Capital, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
| Common Stock Shares | Common Stock Par Value | Common Stock Subscribed | Subscription Receivable | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||||||||||||
| Balance, June 30, 2023 | | $ | | $ | | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, Sept 30, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
| Shares issued at par $ | $ | $ | ||||||||||||||||||||||||||
| Shares issued for professional Services | $ | $ | $ | |||||||||||||||||||||||||
| Net loss | - | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
| Shares issued for professional Services | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Shares issued at $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Net Income (Loss) | - | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
| Shares issued for professional Services | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||
| Share subscribed adjustment for acquisition | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
| Net Income (Loss) | - | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
Awaysis Capital, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| For the Six Months Ended | ||||||||
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | $ | |||||||
| Stock based compensation | $ | |||||||
| Amortization of operating lease right-of-use | $ | |||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) in prepaid expenses | $ | ( | ) | ( | ) | |||
| (Increase) decrease in Inventory expenses | $ | ( | ) | |||||
| (Increase) in security deposit | $ | ( | ) | |||||
| Increase (decrease) in due to related party | $ | |||||||
| Increase in accounts payable | $ | |||||||
| (Decrease) increase in accrued expenses | $ | ( | ) | |||||
| (Decrease) in operating lease liabilities | $ | ( | ) | ( | ) | |||
| Net cash used in operating activities | $ | ( | ) | ( | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of fixed assets | $ | ( | ) | |||||
| Sale of fixed assets | $ | |||||||
| Net cash used in investing activities | $ | ( | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Increase in related party advances, net | $ | |||||||
| Payment of note payable | $ | ( | ) | |||||
| Net proceeds from sale of equity | $ | |||||||
| Net cash provided by financing activities | $ | ( | ) | |||||
| Net (decrease) in cash | $ | ( | ) | |||||
| Cash - beginning of year | $ | |||||||
| Cash - end of year | $ | |||||||
The accompanying notes are an integral part of these consolidated financial statements.
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Awaysis Capital, Inc.
Notes to the Consolidated Financial Statements
1. NATURE OF OPERATIONS
Nature of Business
Awaysis Capital, Inc., a Delaware corporation, (“Awaysis”, “the Company”, “we”, “us” or “our’) is a real estate management and hospitality company focused on acquisition, construction, selling and managing short term rentals of residential vacation home communities in desirable travel destinations. We seek to create value through the targeting and acquisition, development, and up-cycling, rebranding, and repositioning of currently undervalued operating and shovel ready residential/resort communities in global travel destinations, with the intention to relaunch these assets under the “Awaysis” brand. The goal is to create a network of residential and resort enclave communities that will optimize both sales and rental revenues, providing attractive returns to owners and exceptional vacation experiences to travelers. The company is licensed as a real estate corporation in Florida.
We were not directly impacted by the COVID-19 outbreak. However, management believes the effect of the pandemic outbreak on the global economy has driven demand for vacation home ownership and remote work at home while travelling. The Company believes that this will enhance its ability to raise funding for working capital and other needs and to attract an experienced management team to take advantage of the opportunities for growth.
Company History
The Company was formed in Delaware on September 29, 2008 under the name ASPI, Inc.
On May 18, 2022, the Company changed its name from JV Group, Inc. to Awaysis Capital, Inc. In connection with this name change, we changed our ticker symbol from “ASZP” to “AWCA” and effective May 25, 2022, we began trading on the OTC Market under our new symbol.
In December 2021, we formed a wholly owned subsidiary, Awaysis Capital, LLC, a Florida single member limited liability corporation to hold the office lease and to become the master payroll company for Awaysis Capital, Inc.
We also formed a wholly owned subsidiary, Awaysis Casamora Limited, a Belize single member limited liability corporation to hold the title to the acquisition of the Casamora assets.
From October 2015 to February 2022, we were a publicly quoted shell company seeking to merge with an entity with experienced management and opportunities for growth in return for shares of our common stock to create values for our shareholders. In February 2022, the Board of Directors of the Company determined to pursue a business strategy of acquiring, developing and managing residential vacation home communities in desirable travel destinations.
The Company’s principal executive office is located at 3400 Lakeside Drive, Suite 100, Miramar, FL 33027 and its main number is 855-795-3377. The Company’s website address is www.awaysisgroup.com. The information in its website is not a part of this Form 10-Q.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The summary of significant accounting policies is presented to assist in the understanding of the financial statements. These policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and have been consistently applied. The Company has selected June 30 as its financial year end.
Principles of Consolidation
The consolidated financial statements include accounts of the Company’s wholly-owned subsidiaries Awaysis Capital, LLC, Awaysis Casamora Limited, Awaysis Chial Limited and Awaysis Cove Limited. All significant intercompany balances and transactions have been eliminated in consolidation.
Interim Financial Statements
The accompanying unaudited interim condensed financial statements have been prepared in accordance with GAAP for interim financial information in accordance with Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. While we believe that the disclosures presented herein are adequate and not misleading, these interim condensed financial statements should be read in conjunction with the audited financial statements and the footnotes thereto for the fiscal year ended June 30, 2023 included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 and filed on October 17, 2023. Operating results for the interim period presented are not necessarily indicative of the results for the full year.
| 7 |
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 of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
We
maintain cash balances in a non-interest-bearing account and unrestricted cash in escrow that currently does not exceed federally insured
limits. For the purposes of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered
to be cash equivalents. As of December 31, 2023, our cash balance was $
Cash and cash equivalents are stated at amortized cost which approximates fair value.
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:
Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.
Level 2 – Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.
Level 3 – Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value of financial transmission rights.
Our financial instruments consist of cash and cash equivalents accounts payable, accounts payable - related party and note payable – related party. The carrying amount of our cash and cash equivalents, accounts payable, accounts payable - related party and note payable – related party approximate their fair values because of the short-term maturities of these instruments.
Related Party Transactions
A related party is generally defined as (i) any person that holds 10% or more of our membership interests including such person’s immediate families, (ii) our management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with us, or (iv) anyone who can significantly influence our financial and operating decisions. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. See Note 6 below for details of related party transactions in the period presented.
Fixed Assets
Fixed assets are carried at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives. The fixed assets include property, equipment and software which ownership is maintained by the Company.
| 8 |
Leases
The Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842), and all related amendments on January 1, 2022, on a modified retrospective basis. Under Topic 842, the Company determines if an arrangement is or contains a lease at inception. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease term includes options to extend the lease when it is reasonably certain that the Company will exercise that option and when doing so is at the Company’s sole discretion. The Company has elected the short-term lease exception for all classes of assets, and therefore has not applied the recognition requirements of Topic 842 to leases of 12 months or less. The Company has also elected the practical expedient to not separate lease and non-lease components for all classes of assets. The Company’s classes of assets that are leased include real estate leases and equipment leases. Real estate leases typically pertain to the Company’s corporate office locations, field operation locations, or vacation properties whereby the Company takes control of a third party’s property during the lease period for the purpose of renting the property on a short-term basis.
The Company recognizes lease expense on a straight-line basis over the lease term. The Company’s lease agreements may contain variable costs such as common area maintenance, operating expenses or other costs. Variable lease costs are expensed as incurred on the consolidated statements of operations.
We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) as assets, operating lease non-current liabilities, and operating lease current liabilities in our balance sheet. Finance leases are property and equipment, other current liabilities, and other non-current liabilities in the balance sheet.
ROU assets represent the right to use an asset for the lease term and lease liability represent the obligation to make lease payment arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over lease term. As most of the leases don’t provide an implicit rate, we generally use the incremental borrowing rate on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payment is recognized on a straight-line basis over lease term.
We were party to an operating lease agreement during the six months ended December 31, 2023.
Income Taxes
The Company accounts for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.
The
Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25
addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial
statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely
than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has
a greater than fifty percent (
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Revenue Recognition
Revenue Recognition Standard, ASC 606 is used by the Company to recognize revenue. ASC 606 standards were jointly issued by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
Step 1: Identify the contract(s) with customers
| 9 |
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to performance obligations
Step 5: Recognize revenue when the entity satisfies a performance obligation
The Company is a development stage corporation.
The Company currently derives its revenue primarily from the short-term unit rentals of sold and unsold inventory at the resort we own and manage.
Revenue from rentals is recognized over the period in which a guest completes a stay.
Revenue
recognized from rentals was $
Other services consist of revenue derived from our real estate brokerage and other related services.
Revenue
recognized from other services was $
Other Services
In addition to providing vacation rental platform services, the Company provides or intends to provide other services including real estate brokerage and management services to the home owners associations. The purpose of these services is to attract and retain homeowners as customers of the Company’s vacation rental platform. As such, the Company enters into or would enter into an exclusive rental management contract with each home owners associations it controls. Under the real estate brokerage services, the Company assists or would assist home buyers and sellers in listing, marketing, selling and finding homes. Real estate commissions earned by the Company’s real estate brokerage business are or would be recorded as revenue at a point in time which is upon the closing of a real estate transaction (i.e., purchase or sale of a home). The commissions the Company pays to real estate agents are recognized concurrently with associated revenues and presented as cost of revenue in the consolidated statements of operations. Under the home owners association management services, the Company provides or would provide common area property management, community governance, and association accounting services to community and homeowner associations in exchange for a management fee and other incrementally billed services. The services represent an individual performance obligation in which the Company has determined it is primarily responsible. Revenue is recognized over time as services are rendered for the management fee and incrementally billed services are recognized at a point in time.
Inventory
New real estate inventory is carried at the lower of cost or net realizable value. The cost of finished inventories determined on the specific identification method is removed from inventories and recorded as a component of cost of sales at the time revenue is recognized. In addition, an allocation of depreciation and amortization is included in cost of goods sold. Under the specific identification method, if finished real estate inventory can be sold for a profit there is no basis to write down the inventory below the lower of cost or net realizable value.
Inventory,
consisting of real estate under construction, was $
Financial Instruments
Fair Value of Financial Instruments - From inception, the Company adopted ASC 820, Fair Value Measurements and Disclosures, which provides a framework for measuring fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard also expands disclosures about instruments measured at fair value and establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
| ● | Level 1: Quoted prices for identical assets and liabilities in active markets. |
| ● | Level 2: Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and |
| ● | Level 3: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
The carrying amounts of financial instruments including cash, accounts payable, warrant liability and notes payable approximated fair value as of December 31, 2023 due to the relatively short maturity of the respective instruments.
Advertising and Marketing Costs
We
expense advertising costs when advertisements occur. Advertising for the Company consists primarily of the creation and marketing of
the Awaysis brand guideline, logo, wordmark, tagline, and website. Advertising expenses amounted to approximately $
| 10 |
The cost of equity instruments issued to employees and non-employees in return for goods and services is measured by the grant date fair value of the equity instruments issued in accordance with ASC 718, Compensation – Stock Compensation. The related expense is recognized as services are rendered or vesting periods elapse.
Stock-based compensation of $ and $ was issued for services during the three and six months ended December 31, 2023, respectively, and is included in the General and Administrative expenses in the Consolidated Statements of Operations.
Basic earnings (loss) per common share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average shares outstanding, assuming all dilutive potential common shares were issued. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
potentially dilutive debt or equity instruments were issued or outstanding during the six months ended December 31, 2023.
Recently Issued Accounting Pronouncements
As of December 31, 2023, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.
3. GOING CONCERN
The
Company adopted Accounting Standards Update No. 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40):
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). The Company’s
financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations,
realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the financial statements, the
Company had an accumulated deficit at December 31, 2023 and 2022, a net loss and net cash used in operating activities for the reporting
periods then ended. As of December 31, 2023, we had cash in the amount of $
The Company is commencing operations and seeking to generate sufficient revenue and have received sufficient subscriptions that if and when funded would support its current basic operations for at least the next 12 months; however, the subscriptions have not been paid as of the date of this filing and the Company’s cash position may not be sufficient to support the Company’s long-term strategy. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue to further develop its first properties through presales, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate sufficient revenue through presales or otherwise, and its ability to raise additional funds. These conditions, in the aggregate, raise substantial doubt as to the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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4. FIXED ASSETS
The carrying basis and accumulated depreciation of fixed assets at December 31, 2023 and 2022 is as follows:
| December 31, | December 31, | |||||||||
| Useful Lives | 2023 | 2022 | ||||||||
| Furniture and fixtures | $ | $ | ||||||||
| Computer and equipment | ||||||||||
| Software | ||||||||||
| Less depreciation and amortization | ( | ) | ( | ) | ||||||
| Total fixed assets, net | $ | |||||||||
The
Company recorded depreciation expense of $
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
As
of December 31, 2023 and 2022, the balance of accounts payable was $
As
of December 31, 2023 and 2022, the balance of accrued expenses was $
6. DUE TO RELATED PARTY
As
of December 31, 2023 and 2022, the balance due to related party was $
7. NOTES PAYABLE
On
June 30, 2022, the Company purchased from a non-related party, real estate asset appraised at $
The
Company has notes payable as of December 31, 2023 and 2022 in the amount of approximately $
8. OPERATING LEASES - LESSEE
The
Company has an operating lease for office space, with a term of
The maturity schedule of future minimum lease payments under operating leases and the reconciliation to the operating lease liabilities reported on the Consolidated Balance Sheets was as follows:
| December 31, | ||||
| 2023 | ||||
| Remaining six months ending June 30, 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| Total operating lease payments | ||||
| Present value adjustment | ( | ) | ||
| Total operating lease liabilities | $ | |||
| 12 |
The
total operating lease liability amount consists of current and long-term portion of operating lease liabilities of $
Operating
lease costs were $
The following table summarizes the weighted-average remaining lease term and weighted-average discount rate related to the Company’s operating leases as of December 31, 2023:
| December 31, | ||||
| 2023 | ||||
| Weighted-average remaining lease term, years | ||||
| Weighted-average discount rate, % | % | |||
9. COMMITMENTS & CONTINGENCIES
Legal Proceedings
We
were not subject to any legal proceedings during the six months ended December 31, 2023, and, to the best of our knowledge,
Purchase Commitments
We were not party to any purchase commitments during the six months ended December 31, 2023.
10. STOCKHOLDERS’ EQUITY
Preferred Stock
As of December 31, 2023, we were authorized to issue shares of preferred stock with a par value of $.
No shares of preferred stock were issued and outstanding during the six months ended December 31, 2023.
Common Stock
As of December 31, 2023, we were authorized to issue shares of common stock with a par value per share of $, of which shares of common stock were issued and outstanding and shares of common stock were subscribed, contractually obligated and committed to be issued but not yet issued pending payment therefor.
In
June 2022, prior to the commencement of the Company’s fiscal year ending June 30, 2023, the Company was contractually obligated
and committed to issue an aggregate of shares of its common stock as partial consideration for the purchase of real estate
inventory in the amount of $
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During the three and six months ended December 31, 2023, the Company provided stock based compensation of $ and $, respectively for services rendered and payroll. The Company sold commons shares of at market rates at an averaging price per share of $ and shares were provided as payroll to a director at $ per share.
As
of December 31, 2023, the Company has committed subscription agreements from investors, entered into during a private offering, for
shares, at a price per share of $ for aggregate proceeds of $
The Company has not declared or paid any dividends or returned any capital to common stock shareholders as of December 31, 2023, and 2022.
Warrants
warrants were issued or outstanding during the three and six months ended December 31, 2023, or 2022.
Restricted Stock Awards
On
February 13, 2023, the Company awarded restricted shares of Company common stocks to certain of its executive officers, equal in an aggregate
value to $
As of December 31, 2023, there were shares of restricted stock outstanding.
Stock Options
The Company adopted the 2022 Omnibus Performance Award Plan in February 2022. The Plan authorizes the granting of of the Company’s Common Stock.
On February 13, 2023, the Company awarded to certain of its executive officers, options to purchase an aggregate of shares of the Company’s stock at an exercise price per share equal to the fair market value of the Company’s common stock on the date of the grant, $ per share; all of which are currently exercisable and outstanding as of December 31, 2023.
stock options were issued during the three and six months ended December 31, 2023, or 2022.
11. SUBSEQUENT EVENTS
The Company evaluated subsequent events after December 31, 2023, in accordance with FASB ASC 855 Subsequent Events, through the date of the issuance of these financial statements and has determined that no disclosure is necessary.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
The following discussion should be read in conjunction with our unaudited financial statements and related notes included in Item 1, “Financial Statements,” of this Quarterly Report on Form 10-Q. Certain information contained in this MD&A includes “forward-looking statements.” Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition and results of operations, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our existing and proposed business, including many assumptions regarding future events. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors, including those risks described in detail in the section entitled “Risk Factors” on our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, filed with the Securities and Exchange Commission on October 17, 2023.
Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “will,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology.
In light of these risks and uncertainties, and especially given the nature of our existing and proposed business, there can be no assurance that the forward-looking statements contained in this section and elsewhere in this Quarterly Report on Form 10-Q will in fact occur. Potential investors should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, there is no undertaking to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
Overview
We are a real estate management and hospitality company focused on acquisition, construction, selling and managing short-term rentals of residential vacation home communities in desirable travel destinations. We seek to create value through the targeting and acquisition, development, and up-cycling, rebranding, and repositioning of currently undervalued operating and shovel ready residential/resort communities in global travel destinations, with the intention to relaunch these assets under the “Awaysis” brand. The goal is to create a network of residential and resort enclave communities that will optimize both sales and rental revenues, providing attractive returns to owners and exceptional vacation experiences to travelers. At least initially, our target acquisitions are resorts that have not been completed nor have a prior operational history. As such we intend to purchase the real estate and finish the development, then we would sell the finished units and put them in a rental pool.
The Company seeks to own and grow a stable, cash generating, diversified portfolio of single-family and luxury resort/residence properties in the Caribbean, Europe, South America, and the United States.
Our business strategy entails targeting and identifying undervalued assets in emerging markets located in proximity to high demand travel destinations. The Company intends to focus these efforts on shovel-ready properties and/or other assets that we believe can be used to optimize sales and rental revenues. We have currently identified five properties in the country of Belize, all of which are expected to constitute our initial real estate portfolio. To that effect, on June 30, 2022, we closed on the acquisition of certain real estate assets in San Pedro, Belize (the “Casamora Awaysis Assets”), pursuant to our previously announced series of Agreements of Purchase and Sale, all dated April 15, 2022. The total consideration paid by us for the properties subject to the agreements was at the appraisal value of $11.1 million (excluding transaction costs and fees) and was settled in a combination of a Purchase Money Mortgage of $2.6 million at 0% interest rate, payable on demand, a Purchase Money Mortgage of $280,000 at 0% interest rate that was paid on August 8, 2022 and 51.6 million shares of the Company’s common stock based on a per share price equal to the market price on the date of appraisal of $0.160. As the first acquisition by the Company in Belize and an important milestone, the Company expects to rebrand the Casamora Awaysis Asset, so it is easily identifiable as an Awaysis Property and fit perfectly with its strategy of creating a countrywide network of Awaysis residential enclave communities in the country for owners and guests to travel, work and play.
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Our Planned Business
Our planned business is expected to include real estate development and sales, hospitality rentals, resort operations and club management. Revenues are expected to come from:
| ● | selling our own developed resort inventory that includes Condominiums, Single Family Homes, and Villas. |
| ● | providing management services to our branded resorts under HOA management agreements; and |
| ● | manage short-term unit rentals of sold and unsold inventory at the resorts we own or manage. |
The Casamora Awaysis development, our first property, has started its hospitality operations and has commenced sales operations on or about June 1, 2023.
As development progresses, and more units are expected to become rentable, increased hospitality operations are expected over the coming months.
Results of Operations
We commenced activities and started to incur material costs in the second half of the fiscal year ended June 30, 2022, as a result of our change in control transaction in November 2021 and commencement in February 2022 of our business strategy of acquiring, developing, and managing residential vacation home communities in desirable travel destinations. Our business strategy continued throughout the fiscal year ended June 30, 2023, showing substantial growth in operating expenses in preparation for expected future growth in revenue.
During the six month period ended December 31, 2023, our operations and activities increased significantly.
We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
We will require additional capital to meet our long-term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities. We recently commenced rentals of a few “rental ready” units and expect increasing sales to also generate cash flow for working capital.
Three Months Ended December 31, 2023, as Compared to December 31, 2022
Revenues
We recognized revenue of $27,100 and $43,760 during the three months ended December 31, 2023 and 2022, respectively. As development progresses at our Casamora Awaysis development, a few units were placed into the rental pool allowing for rental revenue operations to commence.
Sales and Marketing Expenses
During the three months ended December 31, 2023 and 2022, we incurred sales and marketing expenses of $25,015 and $26,783, respectively, consisting of marketing and support of our products and services, promotional and public relations expenses, fundraising costs, investor relations, and administration expenses in support of sales and marketing.
Our planned marketing and sales activities are expected to be based on targeted direct marketing and a highly personalized sales approach. We intend to use targeted direct marketing to reach potential purchasers of units or sell through a licensed distribution network of both in-market and off-site sales centers. Our products are expected to be marketed for sale or rent globally.
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General and Administrative Expenses
During the three months ended December 31, 2023 and 2022, we incurred general and administrative expenses of $630,365 and $1,887,067, respectively, consisting of audit and accounting fees, travel and entertainment, payroll and employee benefits, legal fees, filing fees and transfer agent fees, all relating to both sustaining the corporate existence of the Company and public company-related expenses. The decrease is primarily due to a decrease in salaries and professional fees, while focusing on raising funds and transitioning from being a shell company to an operating company under its current management.
Operating Loss and Net Loss
During the three months ended December 31, 2023 and 2022, we recognized net losses and operating losses of $(628,280) and $(1,870,090), respectively. These losses were primarily attributable to the Company transitioning from being a shell company to an operating company under its current management and brand along with the deployment of its sales, marketing, and acquisition initiatives.
Six Months Ended December 31, 2023, as Compared to December 31, 2022
Revenues
We recognized revenue of $33,900 and $43,760 during the six months ended December 31, 2023, and 2022, respectively. As development progresses at our Casamora Awaysis development, a few units have been placed into the rental pool allowing for rental revenue operations to commence and real estate commissions income have increased.
Sales and Marketing Expenses
During the six months ended December 31, 2023, and 2022, we incurred sales and marketing expenses of $28,036 and $94,295, respectively, consisting of marketing and support of our products and services, promotional and public relations expenses, fundraising costs, investor relations, and administration expenses in support of sales and marketing. The decrease is primarily due to in prior period there was a great focus on marketing and advertising as the company is transitioning from being a shell company to an operating company under its current management.
Our planned marketing and sales activities are expected to be based on targeted direct marketing and a highly personalized sales approach. We intend to use targeted direct marketing to reach potential purchasers of units or sell through a licensed distribution network of both in-market and off-site sales centers. Our products are expected to be marketed for sale or rent globally.
General and Administrative Expenses
During the six months ended December 31, 2023, and 2022, we incurred general and administrative expenses of $4,165,972 and $2,218,211, respectively, consisting of audit and accounting fees, travel and entertainment, payroll and employee benefits, legal fees, filing fees and transfer agent fees, all relating to both sustaining the corporate existence of the Company and public company-related expenses. The increase is primarily due to transitioning from being a shell company to an operating company under its current management, salary bonus of $2 million was also accounted for in 2023 vs 2022.
Operating Loss
During the six months ended December 31, 2023, and 2022, we recognized operating losses of $(4,160,108) and $(2,268,746), respectively. These losses were primarily attributable to the Company transitioning from being a shell company to an operating company under its current management and brand along with the deployment of its sales, marketing, and acquisition initiatives.
Liquidity and Capital Resources
As of December 31, 2023, we had cash of $12,173 and had a positive working capital of $2,089,958, which was mainly from the issuance of shares for real estate inventory and the sale of shares from our private placement of common stock. We do not have sufficient cash or commitments for funding to satisfy our basic operations for at least 12 months, and expect the anticipated cost of development of our first properties to come from pre-sales, investors subscriptions, advances from our principal shareholders and not cash-on-hand. We will need to raise additional cash to satisfy both our short and long-term requirements.
Historically, our principal shareholder has advanced funds on our behalf as we have required for the Company to become, and remain, a fully reporting public company while seeking to create value for shareholders by pursuing our business plan to reinvent the Company as a real estate management and hospitality company. The shareholder has indicated its intention to continue to do so; provided, however, that such intentions do not represent a binding commitment by the principal shareholder and there is no guarantee that our principal shareholder will be able to provide the funding necessary to achieve this objective. To date, our principal shareholder has advanced an aggregate of approximately $668,000 on behalf of the Company to cover certain of the Company’s expenses. Neither the shareholder nor the Company have entered into any agreement with respect to the terms and conditions of such advances, including any repayment terms, although we expect to do so.
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If we are unable to obtain the necessary funding from our principal shareholder, we anticipate facing major challenges in raising the necessary funding to affect our business plan. Raising debt or equity funding for small publicly quoted, penny stock companies is extremely challenging. We can provide no assurance that financing will be available in the amounts it needs or on terms acceptable to it, if at all. If we are not able to secure adequate additional working capital when it becomes needed, we may be required to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible and/or suspend or curtail planned acquisitions and developments. Any of these actions could materially harm our planned business.
Our plan for satisfying our cash requirements and to remain operational beyond the next 12 months or to further expand our asset base is through the sale of shares of our capital stock to third parties. While we intend in the short term to seek to raise up to $25 million through the private sale of our common stock, we cannot assure you we will be successful in raising any or all of such capital and in meeting our working capital needs. Through December 31, 2023, we have raised an aggregate of $1,918,000 in such private placement and can give no assurance that we will be successful in raising the remaining funds being sought. The capital raises from issuances of equity securities could result in additional dilution to our shareholders. In addition, to the extent we determine to incur indebtedness, our incurrence of debt could result in debt service obligations and operating and financing covenants that would restrict our operations.
The following table provides a summary of the net cash flow activity for each of the periods set forth below:
| Six months ended | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash used in operating activities | $ | (494,283 | ) | $ | (388,792 | ) | ||
| Cash provided by investing activities | 1,849 | (23,388 | ) | |||||
| Cash provided by financing activities | 504,528 | (69,785 | ) | |||||
| Change in cash | $ | 12,173 | $ | (481,965 | ) | |||
Cash Flows from Operating Activities
Net cash flows used in operating activities were $(494,283) and $(388,792) for the six months ended December 31, 2023 and 2022, respectively. The net cash used in operations primarily consisted of the selling, marketing, and general expenses that resulted from the company recently going operational.
Cash Flows from Investing Activities
During the six months ended December 31, 2023 and 2022, net cash flow used for investing activities was $1,849 and $(23,388) respectively. This primarily consisted of the purchase of machinery and equipment related to the development of our properties in the prior period. We have had no such purchases during the six months ending December 31, 2023.
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Cash Flows from Financing Activities
For the six months ended December 31, 2023 and 2022, net cash from financing activities was $504,528 and $(69,785), respectively, which primarily consisted of payroll for its officers, advances, payment towards a note payable, and issuance of stock for services provided.
We are dependent upon the receipt of capital investment or other financing to fund our ongoing operations and to execute our business plan to become a real estate and hospitality company. In addition, we are dependent upon our controlling shareholder to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement our plan of operations.
Critical Accounting Policies
The Company applies judgment and estimates that may have material effect in the eventual outcome of assets, liabilities, revenues and expenses, accounts receivable, inventory and goodwill. The following explains the basis and the procedure where judgment and estimates are applied.
Inventories
New real estate inventory is carried at the lower of cost or net realizable value. The cost of finished inventories determined on the specific identification method is removed from inventories and recorded as a component of cost of sales at the time revenue is recognized. In addition, an allocation of depreciation and amortization is included in cost of goods sold. Under the specific identification method, if finished real estate inventory can be sold for a profit there is no basis to write down the inventory below the lower of cost or net realizable value.
Going Concern
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As reflected in the financial statements, the Company had an accumulated deficit at December 31, 2023 and 2022, a net loss and net cash used in operating activities for the reporting periods then ended. As of December 31, 2023, we had cash in the amount of $12,173 and has a subscription pending funding in the amount of $943,000 which has not yet been collected. During the six months ended December 31, 2023, the Company had collected $0 from executed subscriptions and $0 from its principal shareholder.
The Company is commencing operations and seeking to generate sufficient revenue and have received sufficient subscriptions that if and when funded would support its current basic operations for at least the next 12 months; however, the subscriptions have not been paid as of the date of this filing and the Company’s cash position may not be sufficient to support the Company’s long-term strategy. While the Company believes in the viability of its strategy to commence operations and generate sufficient revenue to further develop its first properties through presales, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan, generate sufficient revenue through presales or otherwise, and its ability to raise additional funds. These conditions, in the aggregate, raise substantial doubt as to the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
The Company needs to implement disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports are recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure.
As of December 31, 2023, the Chief Executive Officer and Chief Financial Officer carried out an assessment, of the effectiveness of the design and operation of our then existing disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(b) and 15d-15(b). As of the date of this assessment, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as of December 31, 2023 to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures, primarily as a result of the Company’s recent transitions with respect to its auditor and its CFO. The Company’s management is seeking to remedy this deficiency. Additionally, we have implemented a quarterly newsletter to communicate to our Board and investor community.
This Form 10-Q does not include an attestation report from our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Form 10-Q.
Changes in Internal Control Over Financial Reporting.
There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during our last fiscal quarter 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.
None.
Item 1A. Risk Factors.
Not required for a smaller reporting company.
Item 2. Unregistered Sale of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
| (1) | Filed herewith. |
| (2) | Incorporated by reference from the exhibit included in the Company’s Current Report on Form 8-K filed with the SEC on May 23, 2022. |
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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.
| AWAYSIS CAPITAL, INC. | |
| Date: February 22, 2024 | /s/ Michael Singh |
| Michael Singh | |
| Chief Executive Officer | |
| (Principal Executive Officer) | |
| Date: February 22, 2024 | /s/ Andrew Trumbach |
| Andrew Trumbach | |
| President and Chief Financial Officer | |
| (Principal Financial and Accounting Officer) |
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