Item 1. Financial Statements
Index to Financial Statements
OUTDOOR SPECIALTY PRODUCTS, INC.
Balance Sheets
(Unaudited)
| Assets: | |
December 31,
2022 | | |
September 30,
2022 | |
| Current Assets: | |
| | |
| |
| Cash | |
$ | 1,228 | | |
$ | 1,241 | |
| Accounts receivable | |
| 13 | | |
| - | |
| Prepaid expense | |
| 4,584 | | |
| 458 | |
| Inventory | |
| 4,625 | | |
| 4,638 | |
| Total current assets | |
| 10,450 | | |
| 6,337 | |
| | |
| | | |
| | |
| Other Assets: | |
| | | |
| | |
| Patents, net | |
| 4,489 | | |
| 4,591 | |
| | |
| | | |
| | |
| Total Assets | |
$ | 14,939 | | |
$ | 10,928 | |
| | |
| | | |
| | |
| Liabilities and Stockholders’ Deficit: | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | |
| Accrued interest | |
$ | 2,703 | | |
$ | 2,088 | |
| Line of credit – related party | |
| 74,715 | | |
| 60,769 | |
| | |
| | | |
| | |
| Total Liabilities | |
| 77,418 | | |
| 62,857 | |
| | |
| | | |
| | |
| Stockholders’ Deficit: | |
| | | |
| | |
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and
outstanding | |
| - | | |
| - | |
Common stock, $0.001 par value, 190,000,000 shares authorized, 5,284,318 shares issued and
outstanding | |
| 5,285 | | |
| 5,285 | |
| Additional paid-in capital | |
| 99,232 | | |
| 99,232 | |
| Accumulated deficit | |
| (166,996 | ) | |
| (156,446 | ) |
| Total Stockholders’ Deficit | |
| (62,479 | ) | |
| (51,929 | ) |
| | |
| | | |
| | |
| Total Liabilities and Stockholders’ Deficit | |
$ | 14,939 | | |
$ | 10,928 | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
OUTDOOR SPECIALTY PRODUCTS, INC.
Statements of Operations
(Unaudited)
| | |
For the Three Months Ended
December 31, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Revenue | |
$ | 130 | | |
$ | 121 | |
| Cost of Sales | |
| (13 | ) | |
| (13 | ) |
| Gross Profit | |
| 117 | | |
| 108 | |
| | |
| | | |
| | |
| Operating Expenses: | |
| | | |
| | |
| General and administrative | |
| 10,052 | | |
| 8,695 | |
| Total Operating Expenses | |
| 10,052 | | |
| 8,695 | |
| Loss from Operations | |
| (9,935 | ) | |
| (8,587 | ) |
| Other Expense: | |
| | | |
| | |
| Interest expense | |
| 615 | | |
| 317 | |
| Total other expense | |
| 615 | | |
| 317 | |
| Net Loss | |
$ | (10,550 | ) | |
$ | (8,904 | ) |
Net loss per share of common Stock – basic and diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
Weighted average number of common shares outstanding – basic and diluted | |
| 5,284,318 | | |
| 5,284,318 | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
OUTDOOR SPECIALTY PRODUCTS, INC.
Statements of Changes in Stockholders’ Deficit
For the three months ended December 31, 2022, and
2021
(Unaudited)
| | |
Common Stock | | |
Additional
Paid-in | | |
Accumulated | | |
Total
Stock-holders’ | |
| | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Deficit | |
| Balance, September 30, 2021 | |
| 5,284,318 | | |
$ | 5,285 | | |
$ | 99,232 | | |
$ | (119,280 | ) | |
$ | (14,763 | ) |
| Net loss for the three months ended December 31, 2021 | |
| - | | |
| - | | |
| - | | |
| (8,904 | ) | |
| (8,904 | ) |
| Balance, December 31, 2021 | |
| 5,284,318 | | |
$ | 5,285 | | |
$ | 92,232 | | |
$ | (128,184 | ) | |
$ | (23,667 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, September 30, 2022 | |
| 5,284,318 | | |
$ | 5,285 | | |
$ | 99,232 | | |
$ | (156,446 | ) | |
$ | (51,929 | ) |
| Net loss for the three months ended December 31, 2022 | |
| - | | |
| - | | |
| - | | |
| (10,550 | ) | |
| (10,550 | ) |
| Balance, December 31, 2022 | |
| 5,284,318 | | |
$ | 5,285 | | |
$ | 92,232 | | |
$ | (166,996 | ) | |
$ | (62,479 | ) |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
OUTDOOR
SPECIALTY PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
| | |
For the Three Months Ended
December 31, | |
| | |
2022 | | |
2021 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |
| | |
| |
| Net Loss | |
$ | (10,550 | ) | |
$ | (8,904 | ) |
| Adjustments to Reconcile Net Loss | |
| | | |
| | |
| To Net Cash Used by Operating Activities | |
| | | |
| | |
| Depreciation and Amortization | |
| 102 | | |
| 103 | |
| Changes in Operating Assets and Liabilities: | |
| | | |
| | |
| Increase in prepaid expense | |
| (4,126 | ) | |
| (4,584 | ) |
| Increase in accounts receivable | |
| (13 | ) | |
| - | |
| Decrease in inventory | |
| 13 | | |
| 14 | |
| Increase in accounts payable | |
| - | | |
| 2,665 | |
| Increase in accrued interest | |
| 615 | | |
| 317 | |
| Net Cash Used by Operating Activities | |
| (13,959 | ) | |
| (10,389 | ) |
| | |
| | | |
| | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
| Net Cash Used by Investing Activities | |
| - | | |
| - | |
| | |
| | | |
| | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
| Proceeds from line of credit - related party | |
| 13,946 | | |
| 11,294 | |
| Net Cash Provided by Financing Activities | |
| 13,946 | | |
| 11,294 | |
| | |
| | | |
| | |
| Net Increase (Decrease) in Cash | |
| (13 | ) | |
| 905 | |
| Cash at Beginning of Period | |
| 1,241 | | |
| 6,168 | |
| Cash at End of Period | |
$ | 1,228 | | |
$ | 7,073 | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURES: | |
| | | |
| | |
| Cash Paid During the Period For: | |
| | | |
| | |
| Interest | |
$ | - | | |
$ | - | |
| Income taxes | |
$ | - | | |
$ | - | |
The accompanying notes are an integral part of
these unaudited condensed financial statements.
OUTDOOR SPECIALTY PRODUCTS, INC.
Notes to the Unaudited Condensed Financial Statements
Three Months Ended December 31, 2022
NOTE 1: Condensed Financial Statements
The accompanying unaudited financial statements
of Outdoor Specialty Products, Inc. (the “Company”) were prepared pursuant to the rules and regulations of the United States
Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such
rules and regulations. Management of the Company (“Management”) believes that the following disclosures are adequate to make
the information presented not misleading. These financial statements should be read in conjunction with the audited financial statements
and the notes thereto for the year ended September 30, 2022.
These unaudited financial statements reflect all
adjustments, consisting only of normal recurring adjustments that, in the opinion of Management, are necessary to present fairly the financial
position and results of operations of the Company for the periods presented. Operating results for the three months ended December 31,
2022, are not necessarily indicative of the results that may be expected for the year ending September 30, 2023.
NOTE 2 – Going Concern
The accompanying financial statements have been
prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course
of business. As shown in the accompanying financial statements, the Company did not generate sufficient revenue to generate
net income, has a negative working capital, and has a limited operating history. These factors, among others, may indicate that there
is substantial doubt that the Company will be able to continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments
relating to the recoverability and classification of assets and liabilities that might be necessary should the Company be unable to continue
as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate sufficient
cash flow to meet its obligations on a timely basis and ultimately to attain profitability. The Company intends to seek additional
funding through debt or equity offerings and additional stockholder loans to fund its business plan. There is no assurance
that the Company will be successful in raising additional funds.
OUTDOOR SPECIALTY PRODUCTS, INC.
Notes to the Unaudited Condensed Financial Statements
Three Months Ended December 31, 2022
NOTE 3 – LINE OF CREDIT – RELATED
PARTY
During the three months ending December 31, 2022,
the Company amended the revolving promissory note agreement with its related party to extend the maturity date to December 31, 2023 and
increased the maximum principal amount to $75,000. The revolving promissory note bears interest at the rate of 3.5%. The Company received
proceeds under the line of credit of $13,946 during the three months ended December 31, 2022, resulting in balances of $65,989 and $52,043,
with accrued interest of $2,448 and $1,909, at December 31, 2022 and September 30, 2022, respectively.
Also, during the three months ended December 31,
2022, the Company amended the revolving promissory note agreement with another principal stockholder increasing the maximum principal
indebtedness to $9,750 and extending the maturity date to December 31, 2023. The note bears interest at the rate of 3.5% per annum. The
balance on this line of credit was $8,726 and $8,726 on December 31, 2022, and September 30, 2022, respectively, with accrued interest
of $255 and $179.
NOTE 4 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet
date through the date of the financial statements were issued and determined that there are no events requiring disclosure.
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
You should read the following discussion in conjunction with our
financial statements, which are included elsewhere in this report.
Overview
We are and have since our inception in 2014 been engaged in the business
of developing, selling, and marketing products in niche markets within the specialty outdoor products marketplace. We introduced our proprietary
“Reel Guard” product in 2014 and continue to offer it for sale. We have postponed the production of our SLINKOR product pending
completion of a design change in the composition of the weighting component from lead to another material and the use of molded product
components.
The COVID-19
pandemic has had, and continues to have, a significant impact around the world. The COVID-19 pandemic has resulted in restrictions
on travel and business operations, temporary closures of businesses, quarantine and shelter-in-place orders, and greater uncertainty in
global financial markets. As a result of COVID-19 mobility restrictions globally,
there have been changes in consumer behavior. The extent to which the COVID-19 pandemic will impact our business and financial condition
in the future will depend on a number of evolving factors that we cannot predict, including the duration and scope of the pandemic; any
resurgence of the pandemic; the availability and distribution of effective treatments and vaccines; governmental, business and individual
actions that may be taken in response to the pandemic; the impact of the pandemic on national and global economic activity and financial
markets, including the possibility of a national or global recession; and the ability of consumers to pay for products. We expect these
changes in behavior to continue to evolve as the pandemic ebbs and flows. The full impact of the COVID-19 pandemic on the Company remains
inherently uncertain at the time of this report.
Our financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We did not
generate sufficient revenue to generate net income, we have negative working capital, and we have a limited operating history. These factors,
among others, may indicate that there is substantial doubt that we will be able to continue as a going concern for a reasonable period
of time. Our financial statements do not include any adjustments relating to the recoverability and classification of assets and liabilities
that might be necessary should we be unable to continue as a going concern. Our continuation as a going concern is dependent
upon our ability to generate sufficient cash flow to meet our obligations on a timely basis and ultimately to attain profitability. We
intend to seek additional funding through debt or equity offerings and additional stockholder loans. We also intend to increase
our sales through the addition of our SLINKOR product upon the completion of its redesign. There is no assurance that we will be successful
in raising additional funds or that the SLINKOR product will result in an increase in sales.
Results of Operations for the Three Months Ended December 31, 2022
and 2021
Revenue
From our inception in 2014 through the present, our revenue has resulted
solely from sales of our proprietary Reel Guard product and our cost of sales also relate solely to that product. Our Reel Guard product
is offered for sale on our website and on eBay and sales vary from quarter to quarter based on the number of customers that become aware
of the product and decide to make a purchase. Total revenue for the three months ended December 31, 2022, was $130, compared to $121 for
the three months ended December 31, 2021, an increase of $9, or approximately 7%.
Cost of Sales
Cost of sales for the three months ended December 31, 2022 and December
31, 2021 was $13. Cost of sales as a percentage of revenue for the three months ended December 31, 2022 was approximately 10% compared
to approximately 11% for the three months ended December 31, 2021. Our cost of sales as a percentage of revenue did not differ significantly
from 2021 to 2022 since we offered only one product for sale and there have been no material change in the sales price or manufacturing
cost of our product.
General and Administrative Expenses
General and administrative expenses were $10,053 for the three months
ended December 31, 2022, compared to $8,695 for the three months ended December 31, 2021, an increase of $1,358 or approximately 16%.
General and administrative expenses consist primarily of legal, accounting, and Edgar filing expenses.
Depreciation and Amortization Expense
Depreciation and amortization expenses currently are not material to
our business. Depreciation and amortization expense was $102 for the three months ended December 31, 2022 as compared to $103 for the
three months ended December 31, 2021.
Research and Development Expenses
Research and development expenses are not currently material to our
business. We did not incur research and development expenses in the three months ended December 31, 2022 or 2021.
Liquidity and Capital Resources
As of December 31, 2022, we had total current assets of $10,450, including
cash of $1,228, and current liabilities of $77,418, resulting in a working capital deficit of $66,968. Our current liabilities include
an outstanding principal balance of $74,715, and $2,703 in accrued interest, under the short-term revolving loan agreements with our president
and another principal stockholder for which the due dates have been extended to December 31, 2023. As of December 31, 2022, we had an
accumulated deficit of $166,996 and a total stockholders’ deficit of $62,479. We have financed our operations to date from sales
of our Reel Guard product, proceeds from our 2014 private placement, and proceeds from the short-term revolving loan agreements.
For the three months ended December 31, 2022, net cash used by operating
activities was $13,959, as a result of a net loss of $10,550, which was (i) reduced by depreciation and amortization of $102, a decrease
in inventory of $13, and an increase in accrued interest of $615, and (ii) increased by an increase in prepaid expense of $4,126 and an
increase in accounts receivable of $13. By comparison, for the three months ended December 31, 2021, net cash used by operating activities
was $10,389, as a result of a net loss of $8,904, which was (i) reduced by depreciation and amortization of $103, a decrease in inventory
of $14, an increase in accounts payable of $2,665, and an increase in accrued interest of $317, and (ii) increased by an increase in prepaid
expense of $4,584.
For the three months ended December 31, 2022 and 2021, we had no cash
flows used in or provided by investing activities.
For the three months ended December 31, 2022, we had net cash provided
by financing activities of $13,946 consisting of proceeds from the revolving loan agreements. For the three months ended December 31,
2021, we had net cash provided by financing activities of $11,294, also consisting of proceeds from the revolving loan agreements.
Following our incorporation in 2014, we completed the private placement
of 285,714 shares of our common stock to accredited investors in a private placement at a price of $0.35 per share for total proceeds
of $100,011. The proceeds from the private placement together with our limited product sales were sufficient to fund our operations through
our fiscal year ended September 30, 2020. On January 4, 2021, we entered into a revolving promissory note agreement with our president
and principal stockholder that provided for total loans of up to $40,000 at an interest rate 3.5% per annum, which was repayable on or
before December 31, 2021. During December 2021, we amended the revolving promissory note agreement to extend the maturity date to June
30, 2022, and during June 2022, we further amended the agreement to increase the maximum principal indebtedness to $55,200 and extend
the maturity date to December 31, 2022. During November 2022, we further amended the agreement to increase the maximum principal indebtedness
to $75,000 and extend the maturity date to December 31, 2023. During December 2021, we entered into a revolving promissory note agreement
with another principal stockholder which provided for loans of up to $7,000 at an interest rate of 3.5% per annum, which was repayable
on or before June 30, 2022. During June 2022, we amended the agreement to increase the maximum principal indebtedness to $9,750 and extend
the maturity date to December 31, 2022. During November 2022, we further amended the agreement to increase the maximum principal indebtedness
to $13,240 and extend the maturity date to December 31, 2023. We received proceeds under the revolving loan agreements of $13,946 during
the three months ended December 31, 2022, resulting in a principal balance of $74,715, with accrued interest of $2,703 at December 31,
2022.
We believe we will have adequate funds to meet our obligations for
the next twelve months from our current cash, the revolving note agreements, and cash flows from operations. Cash flow from operations
has not historically been sufficient to sustain our operations without the additional sources of capital described above. Our future working
capital requirements will depend on many factors, including the extension of the revolving loan agreements, the expansion of our product
line to include the new SLINKOR product, and the costs of redesigning the SLINKOR product. To the extent our cash, cash equivalents, and
cash flows from operating activities and the revolving note agreements are insufficient to fund our future activities, we may need to
raise additional funds through private equity or debt financing or additional stockholder loans. We also may need to raise additional
funds in the event we determine in the future to effect one or more acquisitions of businesses, technologies, or products. If additional
funding is required, we may not be able to effect an equity or debt financing on terms acceptable to us or at all.
In addition, COVID-19 and related measures to contain its impact have
caused material disruptions in both national and global financial markets and economies. The future impact of COVID-19, these containment
measures, and recent increases in the rate of inflation cannot be predicted with certainty and may increase our borrowing costs and other
costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity, and no assurance
can be given that we will have access to external financing at times and on terms we consider acceptable, or at all, or that we will not
experience other liquidity issues going forward.
Cash Requirements
As of December 31, 2022 and September 30, 2022, we did not have any
lease obligations or requirements or other agreements requiring a significant commitment of cash.
Off-Balance Sheet Arrangements
As of December 31, 2022 and September 30, 2022, we did not have any
off-balance sheet financing arrangements.
Significant Accounting Policies
There have been no material changes to our critical accounting policies
and estimates as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022.