UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(MARK ONE)

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

 

For the quarterly period ended June 30, 2022

 

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 No. 000-56212

 

EVIL EMPIRE DESIGNS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

45-5530035

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

441 Eastgate Rd.

Henderson, Nevada 89011

(Address of principal executive offices, zip code)

 

(725) 666-3700

(Registrant’s telephone number, including area code)

 

___________________________________________________________

(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

 

 

 

 

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒     No ☐

 

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

 

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

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 Exchange Act Rule 12b-2 of the Exchange Act): Yes ☐     No ☒

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

As of August 9, 2022 there were 8,057,750 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 

EVIL EMPIRE DESIGNS, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED JUNE 30, 2022

 

INDEX

 

Index

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements.

4

Condensed Balance Sheets as of June 30, 2022 (unaudited) and December 31, 2021.

4

Condensed Statements of Operations for the Three and Six Months ended June 30, 2022 and 2021 (unaudited)

5

 

 

 

 

 

Condensed Statements of Stockholders’ Deficit for Three and Six Months ended June 30, 2022 and 2021 (unaudited).

7

 

 

 

 

 

 

Condensed Statements of Cash Flows for the Six Months ended June 30, 2022 and 2021 (unaudited).

 

8

 

Notes to Condensed Financial Statements (unaudited).

9

Item 2.

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

12

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

14

Item 4.

Controls and Procedures.

14

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings.

15

Item 1A.

Risk Factors.

15

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

15

Item 3.

Defaults Upon Senior Securities.

15

Item 4.

Mine Safety Disclosures.

15

Item 5.

Other Information.

15

Item 6.

Exhibits.

16

Signatures

17

 

 
2

Table of Contents

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q of Evil Empire Designs, Inc., a Nevada corporation (the “Company”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: (i) the development and protection of our brands and other intellectual property, (ii) the need to raise capital to meet business requirements, (iii) significant fluctuations in marketing expenses, (iv) the ability to achieve and expand significant levels of revenues, or recognize net income, from the sale of our products, (v) the Company’s ability to conduct the business if there are changes in laws, regulations, or government policies related to the motorcycle or motorcycle parts industry, (vi) management’s ability to attract and maintain qualified personnel necessary for the development and commercialization of its planned products, (vii) the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers, and employees or the overall economy, and (viii) other information that may be detailed from time to time in the Company’s filings with the United States Securities and Exchange Commission (“SEC”).

 

Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

 

 
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PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS.

 

EVIL EMPIRE DESIGNS, INC 

CONDENSED BALANCE SHEETS

(Unaudited)

 

 

 

June 30,

2022

 

 

December 31,

2021

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$164

 

 

$-

 

Accounts receivable

 

 

6,365

 

 

 

6,365

 

Interest receivable

 

 

8,268

 

 

 

2,268

 

Inventory

 

 

1,736

 

 

 

1,736

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

16,533

 

 

 

10,369

 

 

 

 

 

 

 

 

 

 

Fixed assets

 

 

 

 

 

 

 

 

Fixed assets, net of depreciation of $37,286 and $35,246

 

 

10,927

 

 

 

12,967

 

Other assets- Investment

 

 

182,500

 

 

 

182,500

 

Note receivable-TOL

 

 

100,000

 

 

 

100,000

 

 

 

 

 

 

 

 

 

 

Total assets

 

$309,960

 

 

$305,836

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Bank overdraft

 

 

-

 

 

 

18

 

Accounts payable and accrued expenses

 

 

158,764

 

 

 

142,546

 

Convertible notes payable

 

 

379,125

 

 

 

337,125

 

Notes payable

 

 

158,958

 

 

 

145,030

 

Total current liabilities

 

 

696,847

 

 

 

664,719

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value 25,000,000 authorized none are issued or outstanding

 

 

 -

 

 

 

 -

 

Common stock, $0.001 par value 100,000,000 authorized, 8,057,750, and 8,057,750 issued and outstanding, respectively:

 

 

8,058

 

 

 

8,058

 

Additional paid-in capital

 

 

222,757

 

 

 

222,757

 

Accumulated deficit

 

 

(617,702)

 

 

(589,698)

Total stockholders’ deficit

 

 

(386,887)

 

 

(358,883)

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

 

$309,960

 

 

$305,836

 

 

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

 

 
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Table of Contents

 

EVIL EMPIRE DESIGNS, INC.

STATEMENTS OF OPERATIONS 

As of June 30,

(Unaudited)

 

 

 

Three Months

 

 

Six Months

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$10,171

 

 

$5,277

 

 

$20,645

 

 

$10,334

 

Cost of goods

 

 

4,075

 

 

 

2,968

 

 

 

18,055

 

 

 

3,285

 

Gross Margin

 

 

6,096

 

 

 

2,309

 

 

 

2,590

 

 

 

7,049

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expense

 

 

5,448

 

 

 

(8,372)

 

 

10,031

 

 

 

17,174

 

Depreciation and amortization

 

 

143

 

 

 

1,897

 

 

 

2,040

 

 

 

3,794

 

Total operating expenses

 

 

5,591

 

 

 

(6,475)

 

 

12,071

 

 

 

20,968

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

505

 

 

 

8,784

 

 

 

(9,481)

 

 

 

(13,919)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

3,085

 

 

 

700

 

 

 

6,085

 

 

 

700

 

Loss on asset

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

Interest expense

 

 

(12,304)

 

 

(10,314)

 

 

(24,608)

 

 

(20,338)

Total other income (expense)

 

 

(9,219)

 

 

(9,614)

 

 

(18,523)

 

 

(19,688)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$(8,714)

 

 

$(830)

 

$(28,004)

 

$(33,607)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share, basic and diluted

 

$(0.00)

 

$(0.00)

 

$(0.00)

 

$(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding, basic and diluted

 

 

8,057,750

 

 

 

8,057,750

 

 

 

8,057,750

 

 

 

8,057,750

 

 

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

 

 
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Table of Contents

 

EVIL EMPIRE DESIGNS, INC

CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

 

 

 

 

 

Additional

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Deficit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

8,057,500

 

 

 

8,058

 

 

 

222,757

 

 

 

(522,755)

 

 

(291,940)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

--

 

 

 

-

 

 

 

-

 

 

 

(32,777)

 

 

(32,777)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2021

 

 

8,057,500

 

 

 

8,058

 

 

 

222,757

 

 

 

(555,532)

 

 

(324,717)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

--

 

 

 

-

 

 

 

-

 

 

 

(830)

 

 

(830)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2021

 

 

8,057,500

 

 

$8,058

 

 

$222,775

 

 

$(556,362)

 

$325,547)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

8,057,500

 

 

 

8,058

 

 

 

222,757

 

 

 

(589,698)

 

 

(358,883)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

--

 

 

 

-

 

 

 

-

 

 

 

(19,290)

 

 

(19,290)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2022

 

 

8,057,500

 

 

 

8,058

 

 

 

227,757

 

 

 

(608,988)

 

 

(378,173)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

--

 

 

 

-

 

 

 

-

 

 

 

(8,714)

 

 

 

(8,714)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2022

 

 

8,057,500

 

 

$8,058

 

 

$227,757

 

 

$(617,702)

 

$(386,887)

 

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

 

 
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EVIL EMPIRE DESIGNS, INC

CONDENSED STATEMENTS OF CASH FLOWS

FOR SIX MONTHS ENDED JUNE 30

(Unaudited)

 

 

 

Six Months

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

 

Net (loss)

 

$(28,004)

 

$(33,607)

Adjustments to reconcile net loss to net cash

 

 

 

 

 

 

 

 

used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

2,040

 

 

 

3,794

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(6,000)

 

 

(4,956)

Inventory

 

 

 

 

 

 

(47)

 

Accounts payable and accrued expenses

 

 

16,217

 

 

 

10,088

 

Net cash used in operating activities

 

 

(15,747)

 

 

(23,728)

 

 

 

 

 

 

 

 

 

Cash Flows from in investing activity

 

 

 

 

 

 

 

 

Investment

 

 

-

 

 

 

(27,500)

Net cash used in investing activities

 

 

-

 

 

 

(27,500)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Bank overdraft

 

 

(18)

 

 

-

 

Proceeds from convertible notes

 

 

15,929

 

 

 

53,836

 

Net cash provided by financing activities

 

 

15,911

 

 

 

53,836

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

164

 

 

 

2,608

 

Cash and cash equivalents – beginning of year

 

 

-

 

 

 

5,265

 

Cash and cash equivalents – end of period

 

$164

 

 

$7,873

 

 

 

 

 

 

 

 

 

 

SUPPLEMENT DISCLOSURES:

 

 

 

 

 

 

 

 

Interest paid

 

 

-

 

 

 

-

 

Income taxes paid

 

 

 -

 

 

 

 -

 

 

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

 

 
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EVIL EMPIRE DESIGNS, INC

NOTES TO CONDENSED FINANCIAL STATEMENTS

 (Unaudited)

 

NOTE 1 - NATURE OF BUSINESS

 

Evil Empire Designs, Inc., (formerly Jaycor Resources Inc.) (Jaycor) was organized on December 23, 2009 under the name US Terra Energy Corp in the State of Nevada. The Company was organized to explore investment opportunities in the energy business. In June 2016, the Company changed its business model to making and selling accessories to the motorcycle market.

 

The Company authorized 125,000,000 shares consisting of 100,000,000 of common stock with a par value of $0.001 per share and 25,000,000 shares of preferred stock with a par value of $0.001 per share.

 

On April 24, 2012, the Company filed a Certificate of Amendment amending the Articles of Incorporation changing the name of the Corporation to Jaycor Resources, Inc.

 

On September 12, 2016, the Company filed a Certificate of Amendment amending the Articles of Incorporation changing the name of the Corporation to Evil Empire Designs, Inc.

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for financial information and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation.

 

The unaudited interim financial statements of the Company for the three and six months ended June 30, 2022 and 2021 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position and the results of operations for the interim periods presented herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for any subsequent quarters or for an entire year.

 

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 at the date of the balance sheet. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments purchased with an original maturity of six months or less to be cash equivalents. As of June 30, 2022 the Company did not have any cash equivalents.

 

Accounts receivable

 

Accounts receivable are carried at face value less any provisions for uncollectible accounts considered necessary. Accounts receivable include receivables from customers that have received their product order. Bad debt expense is a recognition of uncollectable receivables based on past years’ experience and management’s estimate of likely losses for the year. No allowance for bad debt was considered necessary as of June 30, 2022 and 2021, respectively.

 

 
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Inventory

 

Inventories are stated at the lower or cost of market using the first-in; first-out (FIFO) cost method of accounting. The inventory consists of raw materials used to make various products for sale.

  

Revenue recognition

 

Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

 

Property and Equipment

 

Property and equipment is recorded at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the expected useful life of the asset (3 to 5 years), beginning when the asset is available and ready for use. Expenditures associated with upgrades and enhancements that improve, add functionality, or otherwise extend the life of property and equipment are capitalized, while expenditures that do not, such as repairs and maintenance, are expensed as incurred. For the three and six  months ended June 30, 2022 and depreciation and amortization expense totaled $143 and $2,040.

 

Impairment of long-lived assets

 

The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical-cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Fair value is estimated based upon either discounted cash flow analysis or estimated salvage value. As of June 30, 2021 no impairment losses have been recognized.

 

Income Taxes

 

Deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized.

 

The Company accounts for income taxes under the provisions of Financial Accounting Standards Board) Accounting Standards Codification 740, Accounting for Income Taxes. It prescribes a recognition threshold and measurement attributes for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result, the Company has applied a more-likely-than-not recognition threshold for all tax uncertainties. The guidance only allows the recognition of those tax benefits that have a greater than 50% likelihood of being sustained upon examination by the various taxing authorities.

 

The Company classifies penalties and interest related to unrecognized tax benefits as income tax expense in the Statements of Operations.

 

Basic and diluted net loss per share

 

Basic and diluted net loss per share calculations are calculated on the basis of the weighted average number of common shares outstanding during the year. Diluted loss per share calculations includes the dilutive effect of common stock. Basic and diluted net loss per share is the same due to the absence of common stock equivalents.

 

Fair Value of Financial Instruments

 

The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses and shareholder loans. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

 

 
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Financial assets and liabilities recorded at fair value in our condensed consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:

 

Level 1 — Quoted market prices in active markets for identical assets or liabilities at the measurement date.

 

Level 2 — Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.

 

Level 3 — Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.

 

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

Related Parties

 

A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

 

Recent Accounting Pronouncements

 

Because the Company has been recently reorganized and has not yet transacted any business, the new accounting standards have no significant impact on the financial statements and related disclosures. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.

 

NOTE 3 - GOING CONCERN

 

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company, as shown in the accompanying balance sheets, has an accumulated deficit of $617,702 as of June 30, 2022 and $589,698 as of December 31, 2021. The Company is establishing nominal source of revenue to cover its operating costs. These factors raise substantial doubt as to the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. The Company will engage in very limited activities that must be satisfied in cash until a source of funding is secured. The Company will offer noncash consideration and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders.

 

 
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NOTE 4 - PROPERTY AND EQUIPMENT

 

Fixed assets including molds, printing equipment  and a motorcycle for use in making products it sells. The value of the assets when acquired were $48,212. The assets are being depreciated over a 3 year life. Property and equipment consisted of the following at June 30, 2022 and December 31, 2021:

 

 

 

June 30,

2022

 

 

December 31,

2021

 

 

 

 

 

 

 

 

Property and equipment

 

$48,212

 

 

$48,212

 

Less: accumulation depreciation

 

 

37,285

 

 

 

35,245

 

Net property and equipment

 

 

10,927

 

 

 

12,967

 

 

Depreciation expense totaled $143 and $2,040 for the three and six  months periods ended June 30, 2022 and 2021, respectively

 

NOTE 5 - RELATED PARTY TRANSACTIONS

 

During the three months and six period ended June 30, 2022 and 2021 the Company paid compensation to a related party of $1,850 and $2,585 respectively.

 

NOTE 6 - CONVERTIBLE NOTES

 

During the six months period ended June 30, 2021 the Company issued a one year Convertible note to 0985358 BC, Ltd for $ 48,880. The note bears an interest of 10% per annum and is convertible into common stock at $0.005 per share.

 

As of June 30, 2022 the Company had $379,125 of convertible debt plus accrued interest of $157,764 for total of $467,423.

 

The Company determined the convertible note does not meets the requirements for derivative liability accounting as described in ASC 815. As the shares of the Company do not have a value other than par, are not readily convertible to cash at the date of issuance and are not registered to be traded. Additionally, there is no beneficial conversion feature described in ASC 470 on the date of issuance.

 

NOTE 7 - INVESTMENTS

 

On December 12, 2019, the Company signed a memorandum of understanding with Top of the Line Design, LLC whereas the Company will purchase 100% of Top of the Line for $250,000 and advance Top of the Line $350,000 in working capital as further expanded in a definitive agreement. The Company made a good faith deposit to Top of the Line (TOL) of  $40,000 at the  signing of the  agreement and an additional $142,500 as of June 30, 2021 for a total of $182,500. The agreement is effective for 90 days and if terminate by both parties the deposits were to be terminated.  As of June 30, 2021 the agreement was still in effect. The Company loaned TOL an additional $100,000 on demand with an interest rate of 13% per annum.

 

 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

The following information should be read in conjunction with (i) the financial statements of Evil Empire Designs, Inc., a Nevada corporation (the “Company”), and the notes thereto appearing elsewhere in this Form 10-Q together with (ii) the more detailed business information and the December 31, 2021 audited financial statements and related notes included in the Company’s Form 10-K (File No. 000-56212; the “Form 10-K”), as filed with the Securities and Exchange Commission on April 27, 2022. Statements in this section and elsewhere in this Form 10-Q that are not statements of historical or current fact constitute “forward-looking” statements.

 

OVERVIEW

 

The Company was incorporated in the State of Nevada on December 23, 2009, and has established a fiscal year end of December 31.

 

The Company’s authorized capital stock amounts to 125,000,000 shares, consisting of 100,000,000 of common stock with a par value of $0.001 per share, and 25,000,000 shares of preferred stock with a par value of $0.001 per share.

 

Going Concern

 

To date the Company has had operations and revenues of a developing business, and consequently has incurred recurring losses from operations. No substantial revenues are anticipated until we complete the financing we endeavor to obtain, as described in the Form 10-K, and implement our initial business plan. The ability of the Company to continue as a going concern is dependent on raising capital to fund our business plan and ultimately to attain profitable operations. Accordingly, these factors raise substantial doubt as to the Company’s ability to continue as a going concern.

 

Our activities have been financed from related-party loans and the proceeds of share subscriptions.

 

The Company plans to raise additional funds through debt or equity offerings. There is no guarantee that the Company will be able to raise any capital through this or any other offerings.

 

PLAN OF OPERATION

 

We are an operating motorcycle parts design, manufacturing, marketing and sales business and have generated revenues of $24,100 and $34,574, from our business for the three and six months, respectively, ended June 30, 2022. During the 12 months following the date of filing of this Quarterly Report on Form 10-Q, we will be focused on attempting to raise $750,000 of funds to expand our business. We have no assurance that future financing will materialize. If that financing is not available, we may be unable to continue. Management believes that if we are successful in raising $750,000, we will be able to generate sales revenue within the following twelve months thereof. However, if such public financing is not available, we could fail to satisfy our future cash requirements. We have no assurance that future financing will materialize. If that financing is not available we may be unable to continue. Management believes that if subsequent private placements are successful, we will be able to generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.

 

 
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If we are unsuccessful in raising the additional proceeds through a private placement offering we will then have to seek additional funds through debt financing, which would be highly difficult for an early-stage company to secure. Therefore, the Company is highly dependent upon the success of the anticipated private placement offering and failure thereof would result in the Company having to seek capital from other sources such as debt financing, which may not even be available to the Company. However, if such financing were available, because we are an early stage company, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If we cannot raise additional proceeds via a private placement of its common stock or secure debt financing it would be required to cease business operations. As a result, investors in our common stock would lose all of their investment.

 

With new investors joining, the Company will increase its current efforts on marketing and selling its already created variety of products.

 

RESULTS OF OPERATIONS

 

Comparison of the three and six months ended June 30, 2022 and 2021

 

The Company recorded revenue of $10,171 and $5,277 during the three months ended June 30, 2022 and 2021, respectively. The Company recorded revenue of $20,645 and $10,334 during the six months ended June 30, 2022 and 2021, respectively.

 

Operating expenses for the three-month periods ended June 30, 2022 and 2021, were $5,591 and $(6,475), respectively, consisting of a general and administrative expense of $5,448 and depreciation and amortization of $143 for the three months ended June 30, 2022, and consisting of a general and administrative expense of $5,448 and depreciation and amortization of $143 for the three months ended June 30, 2022

 

Operating expenses for the six-month periods ended June 30, 2022 and 2021, were $12,071 and $20,968, respectively, consisting of a general and administrative expense of $10,031 and depreciation and amortization of $2,040 for the six months ended June 30, 2022, and consisting of a general and administrative expense of $17,174 and depreciation and amortization of $3,794 for the six months ended June 30, 2021.

 

For the three-month periods ended June 30, 2022 and 2021, we had net losses of $(8,714) and $(830). For the six-month periods ended June 30, 2022 and 2021, we had net losses of $(28,004) and $(33,607), respectively.

 

Liquidity and Capital Resources

 

There are no agreements or understandings about future loans by or with the officers, directors, principals, affiliates, or shareholders of the Company. The Company will continue to raise outside capital through loans, equity sales and possible licensing agreements. These factors raise substantial doubt about the company’s ability to continue as a going concern

 

At June 30, 2022, the Company had negative working capital of 386,887. Total current assets were $16,533. Current liabilities as of the same date were $682,919, consisting of convertible debt of $379,125, outstanding notes of $158,958, and accounts payable and accrued liabilities $158,764.

 

Net cash used in operating activities in the six-month periods ended June 30, 2022 and 2021 was $15,747 and $23,728, respectively. The variance between the same periods relates mainly to a lower loss in 2022 over 2021.

 

Net cash used in investing activities was $0 and $27,500 for the six-month periods ended June 30, 2022 and 2021.

 

Net cash provided by financing activities for the six month periods ended June 30, 2022 was $15,911, compared to $53,836 in the same period in 2021. Cash provided was a result of proceeds from convertible notes and note payable in the principal amounts of $2,000 offset by overdraft $18 in 2022 and $53,836 in convertible notes issued plus a note payable of $40 in 2021.

 

As of June 30, 2022, the Company had total assets of $309,960 and total liabilities of $696,847. Our accumulated deficit as of March 31, 2022 was $617,702.

 

 
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Inflation

 

We believe that inflation has not had a significant impact on our operations since inception.

 

Off-Balance Sheet Arrangements

 

We had no off-balance sheet arrangements or guarantees of third party obligations at June 30, 2022.

 

Subsequent Events

 

None through date of this filing.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 3.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of disclosure controls and procedures

 

Our management, with the participation of our President and Chief Executive Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

Based on that evaluation, our President and Chief Executive Officer concluded that, as of June 30, 2022, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules, regulations and forms, and (ii) that such information is accumulated and communicated to our management, including our President and Chief Executive Officer, as appropriate, to allow timely decisions regarding required disclosure.

 

Changes in internal control over financial reporting

 

Our management, with the participation of the President and Chief Executive Officer, has concluded there were no significant changes in our internal controls over financial reporting that occurred during this 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.

 

The Company is not currently subject to any legal proceedings. From time to time, the Company may become subject to litigation or proceedings in connection with its business, as either a plaintiff or defendant. There are no such pending legal proceedings to which the Company is a party that, in the opinion of management, is likely to have a material adverse effect on the Company’s business, financial condition or results of operations.

 

ITEM 1A. RISK FACTORS

 

As a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act), we are not required to provide the information called for by this Item 1A.

 

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.

 

 
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ITEM 6. EXHIBITS.

 

(a) The following Exhibits, as required by Item 601 of Regulation SK, are attached or incorporated by reference, as stated below.

 

Number

Description

3.1.1

Articles of Incorporation, dated December 23, 2009

3.1.2

Certificate of Amendment, dated April 24, 2012

3.1.2

Certificate of Amendment, dated April 24, 2012

3.2

Bylaws

31.1

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

31.2

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

32.1*

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

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 Labels Linkbase Document.

101.PRE*

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104*

 

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

_______________ 

 *Furnished, not filed.

 

 
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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.

 

EVIL EMPIRE DESIGNS, INC.

Date: August 23, 2022

By:

/s/ Sheila Cunningham

Name:

Sheila Cunningham

Title:

President and Chief Executive Officer

(principal executive officer, principal accounting officer and principal financial officer)

 

 
17

 

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