Filed 2025-09-19 · Period ending 2025-06-30 · 45,741 words · SEC EDGAR
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# GenFlat Holdings, Inc. (GFLT) — 10-K
**Filed:** 2025-09-19
**Period ending:** 2025-06-30
**Accession:** 0001683168-25-007139
**Source:** [SEC EDGAR](https://www.sec.gov/Archives/edgar/data/1796949/000168316825007139/)
**Origin leaf:** cac5659ea74493608e7dd2a748051e976fa61c18b025d1bae4153e8de61fe0c4
**Words:** 45,741
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**Table
of Contents
UNITED STATES**
**SECURITIES AND EXCHANGE COMMISSION**
**WASHINGTON, D.C., 20549**
**FORM
10-K**
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
**For the fiscal year endedJune 30, 2025**
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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:000-56214**
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GenFlat Holdings, Inc. |
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(Exact Name of Registrant as Specified in its Charter) |
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Delaware |
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84-3639946 | |
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(State or other jurisdiction of
incorporation or organization) |
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(I.R.S. Employer
Identification No.) | |
**1983 N Berra Blvd, Tooele, UT 84074**
(Address of Principal Executive Offices) (Zip Code)
Registrants Telephone Number, including
Area Code:**435-830-6979**
**Securities registered pursuant to Section 12(b)
of the Exchange Act: None**
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered | |
Securities registered pursuant to section 12(g)
of the Act:
Common Stock, Par Value $0.001
(Title of class)
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes********No****
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes********No****
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 periods as 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 during the preceding
12 months (or for such shorter period that the registrant was required to submit such files).Yes********No****
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of large accelerated filer, accelerated filer, smaller reporting company
and emerging growth company in Rule 12b-2 of the Exchange Act. (check one)
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Large accelerated filer |
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Accelerated filer |
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Non-accelerated Filer |
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Smaller reporting company |
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Emerging growth company |
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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
has filed a report on and attestation to its managements assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.****
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.****
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrants
executive officers during the relevant recovery period pursuant to 240.10D-1(b).****
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes****No****
The aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant was approximately $91,449,650 as of December 31, 2024.
The number of shares of the registrants
common stock outstanding as of September 17, 2025 was10,781,902.
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**Table of Contents**
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PART I |
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Item 1. |
Business |
1 | |
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Item 1A. |
Risk Factors |
11 | |
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Item 1B. |
Unresolved Staff Comments |
32 | |
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Item 1C. |
Cybersecurity |
32 | |
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Item 2. |
Properties |
33 | |
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Item 3. |
Legal Proceedings |
33 | |
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Item 4. |
Mine Safety Disclosures |
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PART II |
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Item 5. |
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
34 | |
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Item 6. |
Reserved |
35 | |
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Item 7. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
35 | |
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Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk |
41 | |
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Item 8. |
Financial Statements and Supplementary Data |
42 | |
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Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
43 | |
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Item 9A. |
Controls and Procedures |
43 | |
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Item 9B. |
Other Information |
44 | |
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Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
44 | |
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PARTIII |
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Item 10. |
Directors, Executive Officers and Corporate Governance |
45 | |
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Item 11. |
Executive Compensation |
48 | |
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Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
51 | |
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Item 13. |
Certain Relationships and Related Transactions, and Director Independence |
52 | |
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Item 14. |
Principal Accountant Fees and Services |
53 | |
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PART IV |
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Item 15. |
Exhibits and Financial Statement Schedules |
54 | |
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Item 16. |
Form 10-K Summary |
56 | |
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**Forward-Looking Statements**
This Report on Form 10-K contains forward-looking
statements. Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations,
assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as anticipate,
estimate, plan, project, continuing, ongoing, expect,
we believe, we intend, may, should, will, could and
similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates,
assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future
results, performances or achievements expressed or implied by the forward-looking statements. You should not place undue reliance on these
forward-looking statements.
Examples of forward-looking statements
include, but are not limited to:
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the timing of the development of our products; | |
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projections of costs, revenue, earnings, capital structure and other financial items; | |
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statements of our plans and objectives; | |
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statements regarding the capabilities of our business operations; | |
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statements of expected future economic performance; | |
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statements regarding competition in our market; and | |
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assumptions underlying statements regarding us or our business. | |
Forward-looking statements are neither historical
facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding
the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions.
Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances
that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially
from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important
factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements
include, among others, the following:
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inability to generate revenue or to manage growth; | |
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lack of available funding; | |
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lack of a market for or market acceptance of our products; | |
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competition from third parties; | |
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general economic and business conditions; | |
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intellectual property rights of third parties; | |
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changes in the price of our stock and dilution; | |
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regulatory constraints and potential legal liability; | |
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ability to maintain effective internal controls; | |
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security breaches, cybersecurity attacks and other significant disruptions in our information technology systems; | |
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changes in technology and methods of marketing; | |
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delays in completing various engineering and manufacturing programs; | |
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changes in customer order patterns and qualification of new customers; | |
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changes in product mix; | |
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success in technological advances and delivering technological innovations; | |
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shortages in manufacturing supplies; | |
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production delays due to performance quality issues with outsourced manufacturing supplies; | |
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those events and factors described by us in Item 1.A Risk Factors; | |
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other risks to which our Company is subject; and | |
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other factors beyond the Companys control. | |
Any forward-looking statement
made by us in this AnnualReport on Form 10-K is based only on information currently available to us and speaks only as of the date
on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be
made from time to time, whether as a result of new information, future developments or otherwise.
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**PART I**
**ITEM 1. BUSINESS.**
**Overview**
*Business Overview*
GenFlat Holdings, Inc. (the
**Company**, **we**, **our** or **us**), is an early-stage company
that developed a more sustainable collapsible marine container (the **GenFlat Container**), that can be collapsed when
emptied and stacked in bundles of four collapsed containers that take the same space as a standard marine container. When GenFlat Containers
are stacked 4-to-1, they can save up to 75% on: 1) freight costs, terminal handling fees, transloading fees, and other fees; 2) carbon
emitted by ocean vessels, trucks, and trains by reducing the number of trips necessary; and 3) space required at ports, container yards,
and distribution centers. We operate as a container sales and leasing company and supply GenFlats patented marine container primarily
to shipping line customers under a variety of short and long-term lease structures.
We commenced commercial operations
in May 2024. Presently, our commercial operations consist of one rental agreement and two equipment lease agreements to provide GenFlat
Containers with a total of three customers, including one agreement entered into in August 2025 and one agreement entered into in September
2025. The rental and lease agreements demonstrate commercial acceptance of our GenFlat Container. Our Company is also in various stages
of evaluation with potential customers to lease GenFlat Containers, including shipping lines, retailers, logistics companies, and the
United States military.
The GenFlat Containers are
manufactured by China International Mariner Containers (CIMC) in Dalian, China. Manufacturing and marketing of the containers
commenced in September 2023.
*Company History*
On September 9, 2019 (commencement
of operations), the Company, operating as Healthcare Business Resources Inc. was organized in Delaware to provide consulting services
to healthcare organizations.
On October 18, 2023, the
Company entered into a Share Exchange Agreement (**Share Exchange Agreement**) with GenFlat, Inc. (**GenFlat,
Inc.**), a Delaware corporation incorporated in Delaware on July 25, 2022, and GenFlat, Inc. stockholders who own 97.22% of the
outstanding shares of common stock of GenFlat, Inc. Pursuant to the Share Exchange Agreement, all GenFlat, Inc. stockholders who are
parties to the Share Exchange Agreement will receive ninety eight percent (98%) of the issued and outstanding shares of common stock of
the Company in exchange for their shares of GenFlat, Inc. common stock on a pro rata basis.
The Share Exchange Agreement
closed on December 20, 2023 (the **Closing Date**). Pursuant to the Share Exchange Agreement, and on the terms and subject
to the conditions contained therein, at the closing, the Company acquired 97.22% of the outstanding shares of common stock of GenFlat,
Inc. from GenFlat, Inc. stockholders who were a party to the Share Exchange Agreement in exchange for 10,438,470 shares of common stock
of the Company. Additionally, 110,000 shares of outstanding Company common stock were canceled, resulting in 10,541,500 shares of common
stock issued and outstanding as of the Closing Date.
Additionally, at the closing,
a change in control of the Company occurred whereby the existing members of the Companys executive management and board of directors
resigned, and Genflat, Inc.s designees were appointed as members of the Companys executive management and board of directors.
Also, Genflat, Inc. paid $77,500 in Company payables and paid the Companys outstanding balance due on its senior secured convertible
credit line.
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As a result of the closing
of the Share Exchange Agreement, the Company discontinued all aspects of its health care consulting business, and now solely focuses on
developing the GenFlat, Inc. business plan. The Company operates globally through its 97.22% owned subsidiary GenFlat, Inc. Further, in
accordance with reverse acquisition accounting treatment, the historical financial statements of GenFlat, Inc. as of period
ends, and for periods ended, prior to the acquisition became the historical financial statements of our Company in all post Share Exchange
closing filings with the SEC, and our fiscal year end changed to June 30.
On February 5, 2024, we
filed an Information Statement on Schedule 14C with the U.S. Securities and Exchange Commission and distributed the Information Statement
to our stockholders of record as of the close of business on January 25, 2024. The purpose of the Information Statement was to notify
our stockholders that, pursuant to Sections 228 and 242 of the Delaware General Corporation Law (the **DGCL**), the Board
of Directors of the Company approved and adopted, and the holders of the majority of the voting power of the Company as of the Record
Date approved the following corporate action (the **Corporate Action**):
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The amendment to the First Article of the Companys Certificate of Incorporation (the Certificate of Incorporation) to change the Companys name from Healthcare Business Resources Inc. to GenFlat Holdings, Inc. (the Name Change). | |
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The amendment to the Fourth Article of the Certificate of Incorporation to authorize, but not require, the Board to effect a reverse split of our common stock at a ratio of one-for-one hundred (1:100) (the Reverse Split) at any time prior to the date on which our 2024 annual meeting of stockholders is held, at the sole discretion of the Board. The par value of our common stock will remain $0.001 per share. The number of authorized shares of common stock after the Reverse Split will be fixed at twenty-five million (25,000,000) shares of common stock. | |
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The amendment (the 2020 Plan Amendment) to the Companys 2020 Equity Incentive Plan (the 2020 Plan) to increase the number of shares of common stock reserved pursuant to the Companys 2020 Plan from 80,000 to 1,500,000 shares of common stock, after giving effect to the Reverse Split. | |
On May 9, 2024, the Companys
Board of directors decided to effectuate the Reverse Split and our Company filed a certificate of amendment to the Certificate of Incorporation
with the State of Delaware to effect the Name Change and Reverse Split effective May 17, 2024, at 4:00 p.m. EDT (the **effective
date**). Accordingly, at the effective date:
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Our Company changed its name from Healthcare Business Resources Inc. to GenFlat Holdings, Inc. | |
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Our CUSIP number changed to 42240P205 | |
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The number of our outstanding post-Reverse Split shares equaled 10,541,500 | |
Unless the context otherwise requires, all references
to the **Company**, **GenFlat,** **we**, **our** or **us**
and other similar terms means GenFlat Holdings, Inc. and its subsidiaries, and all share amounts and per share amounts have been presented
to reflect the Reverse Split effective May 17, 2024. Our principal executive offices are located at 1983 N Berra Blvd, Tooele, UT 84074
and our telephone number 435-830-6979 Our website is www.genflat.com. Information contained on our website does not constitute
part of this Annual Report on Form 10-K.
**Our Business Plan**
We intend to answer the *$20
billion empty container repositioning* problem by helping our customers to save money, optimize space, and reduce carbon emissions.
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Our business strategy anticipates
that our revenue stream will be derived from the sale and lease of our patented collapsible marine container (the **GenFlat Container**).
Our GenFlat Container is engineered to be a substitute for the standard marine container. Built from mild steel and Corten, our GenFlat
Container exceeds current industry strength and rigidity standards. When GenFlat Containers are stacked 4-to-1, they can save up to 75%
on: 1) freight costs, terminal handling fees, transloading fees, and other fees; 2) carbon emitted by ocean vessels, trucks, and trains
by reducing the number of trips necessary; and 3) space required at ports, container yards, and distribution centers. We operate as a
container sales and leasing company and supply GenFlats patented marine container primarily to shipping line customers under a
variety of short and long-term lease structures. We commenced commercial operations in May of 2024.
Presently, our commercial
operations consist of one rental agreement and two equipment lease agreements to provide GenFlat Containers to a total of three customers,
including one agreement entered into in August 2025 and one agreement entered into in September 2025. The lease agreements demonstrate
commercial acceptance of our GenFlat Container. Our Company is also in various stages of evaluation with potential customers to lease
GenFlat Containers, including shipping lines, retailers, logistics companies, and the United States military.
We are partnered with China
International Marine Containers (CIMC) in Dalian, China, to manufacture our GenFlat Containers.
We will operate our business
in one industry, intermodal transportation equipment, and we will have two business segments:
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Equipment leasing. Our equipment leasing operations will include the acquisition, leasing, re-leasing and ultimate sale of multiple types of intermodal transportation equipment, primarily intermodal containers. | |
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Equipment sales. We contract-manufacture containers and sell these containers to container retailers and users of containers. | |
**Commencement of Commercial Operations**
Manufacturing and marketing
of GenFlat containers commenced in September 2023, and we commenced commercial operations in May of 2024. Presently, our commercial operations
consist of one rental agreement and two equipment lease agreements to provide GenFlat Containers to a total of three customers, including
one agreement entered into in August 2025 and one agreement entered into in September 2025. The lease agreements demonstrate commercial
acceptance of our GenFlat Container. Our Company is also in various stages of evaluation with potential customers to lease GenFlat Containers,
including shipping lines, retailers, logistics companies, and the United States military. .
**Industry Overview**
Intermodal-marine containers
provide a secure and cost-effective method of transporting raw materials, component parts and finished goods because they can be used
in multiple modes of transport. By making it possible to move cargo from a point of origin to a destination without repeated unpacking
and repacking, marine containers reduce freight and labor costs. In addition, automated handling of marine containers permits faster loading
and unloading of vessels, more efficient utilization of transportation equipment and reduced transit times. The protection provided by
sealed marine containers also reduces cargo damage, loss and theft of goods during shipment.
According to Rail Gateway, estimates suggest that
over 35 million intermodal containers are actively used in use across global supply chains. In a year defined by disruption, the worlds
leading container ports defied expectations transforming volatility into opportunity to post their strongest growth in nearly
a decade. In 2024, total container throughput across the Lloyds list One Hundred Ports climbed 8.1% reaching 743.6
million TEUs (Twenty Foot Equivalent Units) marking a strong rebound following sluggish growth in previous years. The worlds
top 20 container ports collectively handled about 416.6 million TEUs in 2024, a 7.1% increase year over year.
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Leasing marine containers
helps shipping lines improve their container fleet efficiency and provides shipping lines with an alternative source of equipment financing.
Given the uncertainty and variability of export volumes, and the fact that shipping lines have difficulty in accurately forecasting their
marine containers requirements on a day-by-day, port-by-port basis, the availability of marine containers for lease on short notice reduces
shipping lines' need to purchase and maintain larger container inventory buffers. In addition, the drop-off flexibility provided by operating
leases also allows the shipping lines to adjust their container fleet sizes and the mix of container types in their fleets both seasonally
and over time and helps balance their trade flows.
Spot leasing rates are typically
a function of, among other things, new equipment prices (which are heavily influenced by steel prices), interest rates and the equipment
supply and demand balance at a particular time and location. Average leasing rates on an entire portfolio of leases respond more gradually
to changes in new equipment prices or changes in the balance of container supply and demand because lease agreements are generally only
re-priced upon the expiration of the lease. The value that lessors receive upon resale of equipment is closely related to the cost of
new equipment.
**Our Principal Products**
**Shipping Containers**
GenFlat has engineered a 20-foot
standard collapsible container, a 40-foot standard container and a 40-foot high-cube collapsible container. GenFlat collapsible intermodal-marine
containers exceed international strength and rigidity standards. Intermodal-marine containers are large, standardized steel or aluminum
boxes used to transport freight by ship, barge, rail, or truck. Intermodal-marine containers are the primary means by which goods and
materials are shipped internationally and domestically.
However, GenFlat Containers
are collapsible so that four GenFlat Containers can be stacked, locked together (in stacks of 4) and shipped in the space of one high
cube intermodal-marine shipping container. We expect our GenFlat Container fleet to primarily consist of dry containers. A dry container
is a steel constructed box with a set of doors on one end. Dry containers are the most widely used type of intermodal container and are
used to carry general cargo such as manufactured component parts, consumer staples, electronics and apparel.
When fully loaded, the GenFlat
20-foot standard containers have the same approximate internal dimensions, 96% of capacity and 96% of payload as other intermodal-marine
shipping containers 2,438 mm wide and 2,591 mm high, and have a gross rating of 30,480 kgs, tare weight of 2,300 kgs and load capacity
of 24,000 kgs).
When fully loaded, the GenFlat
40-foot standard containers have the same approximate internal dimensions, 96% of capacity and 96% of payload as other intermodal-marine
shipping containers (2,438mm wide and 2,591mm high, and have a gross rating of 30,480 kgs, tare weight of 3,750 kgs and load capacity
of 26,740 kgs).
When fully loaded, the GenFlat
40-foot high-cube containers have the same approximate internal dimensions, 96% of capacity and 96% of payload as other intermodal-marine
shipping containers 2,438 mm wide and 2,896 mm high, and have a gross rating of 30,480 kgs, tare weight of 3,900 kgs and load capacity
of 26,740 kgs).
**Equipment**
GenFlat Containers collapse
using either the patented GenFlat Actuator or the GenFlat Genny (patent pending):
The GenFlat Actuator
is a hydraulically powered device with electrical controls that attaches to a large top loader, the type of which is typically used to
lift move standard shipping containers. The GenFlat Actuator lifts GenFlat Containers and uses a double-action armature on each end to
push in or lower down the container end frames when collapsing/expanding. The process to collapse or expand a GenFlat Container takes
approximately 80 seconds. The GenFlat Actuator was designed for high-volume environments.
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The GenFlat Genny
(patent pending), is a t-shaped steel apparatus with wheels on the end that affixes to forks of any standard forklift capable of lifting
three tons. The Genny lifts GenFlat Container doors into the roof of the container, allowing for the collapsing of the container. The
process to collapse or expand a GenFlat Container takes approximately 80 seconds. The GenFlat Genny was designed for low-volume environments.
The GenFlat Container with
Actuator or Genny provides three significant benefits:
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Cost Savings. Many marine containers are transported empty. Once marine containers are emptied at the destination (e.g., a retailer), the marine containers are returned to the manufacturer or distributor empty. According to our own internal data, we believe the GenFlat Container reduces this repositioning cost by up to 75%, and we expect a typical client to realize a return of investment within approximately eighteen months. | |
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Space Creating. When collapsed, GenFlat Containers reduce overall congestion at ports, terminals, depots, and related storage facilities and remove the burden of finding solutions to capacity constraints. At ports, terminals and yards, twenty GenFlat Containers can be stacked in the traditional space once containing five stacked empty marine containers. On trains, eight GenFlat Containers can be stacked where two could be stacked previously. On trucks, four GenFlat Containers can be stacked replacing one single marine container. On ships, 48,000 GenFlat Containers can be stacked in the place once consumed by 12,000 marine containers. | |
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Carbon Emission Reduction. The use of GenFlat Containers reduces the space required for empty shipping containers to be transported around the world. As a result, theres reduced fuel consumption, reduced traffic and a significant reduction in emissions and environmental contamination. The GenFlat Container helps reach carbon emissions pledges with minimal investment or disruption. | |
Our GenFlat Container was
recognized as the Most Inspiring Container Technology Solution of 2023 at the prestigious Transport and Logistics Conference
in the Middle East (Dubai). At the 2024 conference our GenFlat Container won the award for Game-changer in container handling.
These awards not only underscore our commitment to innovation, sustainability and efficiency, but also the impact our solution can have
on revolutionizing the shipping industry.
We have an exclusive Teaming
Agreement with China International Marine Containers (CIMC) to manufacture our GenFlat Containers in Dalian, China. Our management team
has developed a strong working relationship with CIMC and make regular trips to Dalian to inspect the manufacturing process and maintain
close ties to our contacts there.
****
**Our Growth, Sales and Marketing Strategy**
Our business strategy anticipates
that our revenue stream will be derived from the sale and lease of our GenFlat Containers. Our objective is to replace the standard marine
container with GenFlat Containers. In order to meet this objective, we are:
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Utilizing traditional business development strategies to establish and leverage relationships with potential customers including container shipping companies, container leasing companies and the U.S. Military. We are currently identifying prospective clients through the personal and professional relationships of our management team. | |
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Building channel partnerships with logistics companies, associations, ports and consultants. | |
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Attending conferences, trade shows and other industry events. | |
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Utilizing online advertisements through a third-party marketing firm, which has generated significant exposure within the industry. | |
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Working to position ourselves as an opinion leader in the field through the creation of media and content; podcasts, articles, essays and other such materials to build good PR for the business and attract interest for our products. This includes possibly exhibiting and speaking at conferences and advertising in trade journals, associations, etc. | |
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Working to generate referrals and engaging in word-of-mouth programs to obtain customers. | |
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Our marketing budget is subject to several factors, including our current capital raising efforts, future results of operations and cash
flow. If our current capital raising efforts are successful or if our results from operations exceed our expectations over the next twelve
months, we expect to significantly increase our marketing budget, which we expect will enable us to increase revenues. We currently
have one rental agreement in place with our sole customer for use of GenFlat containers, and we have generated nominal revenue to date
pursuant to this rental agreement, as a result, it is difficult to draw any correlation between revenues and marketing expenses.
**Our Leases**
We expect most of our revenues
will be derived from leasing our equipment to customers. Most of our leases will be structured as operating leases, though we also plan
to provide customers with finance leases. Regardless of the lease type, we seek to exceed our targeted return on our investments over
the life cycle of the equipment by managing utilization, lease rates, and the used equipment sale/purchase process.
*Lease Products*
Our leased products will be
structured to provide numerous operational and financial benefits to our customers. These benefits include:
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Operating Flexibility. The timing, location and daily volume of cargo movements for a shipping line are often unpredictable. Leasing containers helps customers manage this uncertainty and reduces the requirement for inventory buffers by allowing them to pick up leased equipment on short notice. | |
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Fleet Size and Mix Flexibility. The drop-off flexibility included in container operating leases allows customers to more quickly adjust the size of their fleets and the mix of container types in their fleets as their trade volumes and patterns change due to seasonality, market changes or changes in company strategies. | |
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Alternative Source of Financing. Container leases provide an additional source of equipment financing to help customers manage the high level of investment required to keep pace with the growth of the asset intensive container shipping industry. | |
*Operating Leases*
Operating leases are structured
to allow customers flexibility to pick-up equipment on short notice and to drop-off equipment prior to the end of its useful life. Because
of this flexibility, most of our containers will go through several pick-up and drop-off cycles. Our operating lease contracts may specify
an upfront payment, a per diem rate for equipment on-hire, a quarterly rate for equipment on-hire, where and when such equipment can be
returned, how the customer will be charged for damage and the charge for lost or destroyed equipment, among other things.
We will categorize our operating
leases as either long-term leases or service leases. Some leases will have contractual terms that have features reflective of both long-term
and service leases. We will classify such leases as either long-term or service leases, depending upon which features we believe are predominant.
For example, some leases that provide redelivery flexibility during the lease term will be classified as long-term leases in cases where
lessees have made large upfront payments to reduce their lease payment during the lease term or in cases where lessees will incur significant
redelivery fees if containers are returned during the lease term. Such leases are generally considered to be long-term leases based on
the expected on-hire time and the economic protection achieved by the lease economics. Our long-term leases will generally require our
customers to maintain specific units on-hire for the duration of the lease term, and they will provide us with predictable recurring cash
flow. Long-term leases typically have initial contractual terms ranging from five to eight or more years. We may offer an option to purchase
our containers during the lease term.
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*Finance Leases*
Finance leases will provide
our customers with an alternative method to finance their equipment acquisitions. Finance leases are generally structured for specific
quantities of equipment, generally require the customer to keep the equipment on-hire for its remaining useful life, and typically provide
the customer with a purchase option at the end of the lease term.
**Customers**
Currently, we have one paying
customer. We have one rental agreement in place with this customer for use of GenFlat containers, and we have generated nominal
revenue to date pursuant to this rental agreement. In addition, we have lease agreements with two customers to provide GenFlat containers
starting during the fourth quarter of 2025.
We expect our customers to
be mainly comprised of regional and international shipping lines, though we also expect to lease containers to freight forwarding companies,
retailers, and manufacturers. The shipping industry has been consolidating for several years, and further consolidation could increase
the portion of our revenues that come from our largest customers. A default by one of our major customers could have a material adverse
impact on our business, financial condition and future prospects.
**Credit Controls **
We plan to monitor our customers
performance and our lease exposures on an ongoing basis. Our credit management processes will be aided by our broad network of relationships
in the shipping industry that provides current information about our customers market reputations. Credit criteria may include,
but are not limited to, customer payment history, customer financial position and performance (e.g., net worth, leverage, and profitability),
trade routes, country of domicile and the type of, and location of, equipment that is to be supplied.
**Competition**
We operate in a highly competitive
industry. The market for our products is competitive and rapidly changing. We experience competition from large, established intermodal
equipment leasing companies possessing large, existing customer bases, substantial financial resources and established distribution channels.
We compete with at least four other collapsible intermodal-marine equipment companies in addition to many manufacturers of standard intermodal-marine
equipment, and companies offering finance leases as distinct from operating leases. It is common for our prospective customers to utilize
several leasing companies to meet their equipment needs. We expect competition to persist and intensify in the future. Competition could
result in reduced sales, reduced margins or the failure of our products and services to achieve or maintain more widespread market acceptance,
any of which could harm our business and our operating results could be harmed. Our primary competitors include 4Fold, Spectainer, Staxxon,
Compact Container Systems, and Navlandis. None of GenFlats competitors has penetrated the container shipping market.
While none of our competitors
has penetrated the market, a few of our current and potential competitors may have more financial resources than we do and may be able
to devote greater resources to the development, promotion, sale and support of their offerings. Our current and potential competitors
have more extensive customer bases and broader customer relationships than we have. If we are unable to compete with such companies, the
demand for our products and services could substantially decline.
Our competitors compete with
us in many ways, including lease pricing, lease flexibility, supply reliability and customer service. In times of weak demand or excess
supply, leasing companies often respond by lowering leasing rates and increasing the logistical flexibility offered in their lease agreements.
In addition, new entrants into the leasing business are often aggressive on pricing and lease flexibility. Furthermore, customers also
have the option to purchase intermodal equipment and utilize owned equipment instead of leasing, relying on their own fleets to satisfy
their intermodal equipment needs and even leasing their excess container stock to other shipping companies.
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While we are forced to compete
aggressively on price, we attempt to emphasize our overall value with efficiency in collapsing and expanding our containers, the strength
and durability of our containers, supply reliability and high level of customer service to our customers. We plan to invest heavily to
ensure adequate equipment availability in high demand locations, dedicate large portions of our organization to building customer relationships
and maintaining close day-to-day coordination with customers operating staffs, and have developed self-service systems that allow
our customers to transact with us through the Internet.
**Suppliers**
We do not manufacture any
of our products. We have an exclusive Teaming Agreement with China International Marine Containers (CIMC) to manufacture
GenFlat Containers in Dalian, China. Our team members have developed a strong working relationship with CIMC and make regular trips to
Dalian to inspect the manufacturing process and maintain close ties to our contacts there. Nevertheless, defects and quality control lapses
in our containers can occur. We intend to work with the manufacturer to correct these defects, and we expect our manufacturer to honor
its warranty obligations in such cases.
We estimate that the four
largest container manufacturers in China account for more than 90% of global production volume.
**Intellectual Property**
Our GenFlat Containers have
five patents in the United States and two patents in China. Our Actuator has one patent in the United States and one in China. The Genny
has a patent pending in the United States and one patent pending in China. To protect our proprietary rights, we generally rely on copyright,
trademark and trade secret laws, confidentiality agreements with employees and third parties. Our patents cover the various iterations
of our containers, the Actuator, and the Genny, including integral component parts of the container technology.
Third parties may copy or
obtain and use our proprietary ideas, know-how and other proprietary information without authorization or independently develop similar
or superior intellectual property. Our competitors may obtain proprietary rights that would prevent, or limit or interfere with our ability
to sell our products. If we are found to infringe on the proprietary rights of others, we may be required to incur substantial costs to
defend any litigation, cease offering our products, obtain a license from the holder of the infringed intellectual property right or redesign
our products.
Legal standards relating
to the validity, enforceability and scope of protection of certain proprietary rights are still evolving. We cannot be sure of the future
viability or value of any of our proprietary rights or of the similar rights of other companies within this market. We cannot be certain
that the steps taken by us will prevent misappropriation or infringement of our proprietary information.
Any litigation might result
in substantial costs and diversion of resources and management attention and could have a material adverse effect on our business, results
of operations and financial condition.
**Research and Development**
To date, our total research
and development expenses since inception are approximately $1,079,000 and have been focused on designing and developing our collapsible
marine containers, actuators and the Gennys.
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**Systems and Information Technology**
We use off-the-shelf technology
to operate our business. The efficient operation of our business is highly dependent on our information technology systems to track transactions,
bill customers and provide the information needed to report our financial results. Our systems allow customers to facilitate sales orders
and drop-off requests on the Internet, view current inventories and check contractual terms in effect with respect to any given container
lease agreement. Our systems also maintain a database, which accounts for the containers in our fleet and our leasing agreements, processes
leasing and sale transactions, and bill our customers for their use of and damage to our containers. We also use the information provided
by these systems in our day-to-day business to make business decisions and improve our operations and customer service.
**Environmental and Other Regulation**
We are subject to various
business impacts associated with environmental regulations, including potential liability due to accidental discharge from our containers,
potential equipment obsolescence or retrofitting expenses due to changes in environmental regulations, and increased risk of container
performance problems due to container design changes driven by environmental factors.
While we maintain environmental
liability insurance coverage, and the terms of our leases and other arrangements for use of our containers place the responsibility for
environmental liability on the end user, we still may be subject to environmental liability in connection with our operations. In certain
countries like the United States, the owner of a leased container may be liable for the costs of environmental damage from the discharge
of the contents of the container even though the owner is not at fault.
Our operations are also
subject to regulations promulgated in various countries, including the United States, seeking to protect the integrity of international
commerce and prevent the use of equipment for international terrorism or other illicit activities, as well as regulations implementing
equipment safety measures. As these regulations develop and change, we may incur increased compliance costs. Violations of these rules
and regulations can also result in substantial fines and penalties, including potential limitations on operations or forfeitures of assets.
Additionally, we may be affected by future regulation related to supply chain management that could impact our equipment and operations.
**Employees and Human Capital**
We
have two full-time employees and one part-time employee in the United States. From time to time, we expect to employ additional employees
and independent contractors as well as legal, accounting and other specialized professionals to support our sales, marketing, business
development and administrative needs. Our team has diverse professional backgrounds, allowing each employee to contribute in myriad ways,
allowing us to operate with low overhead. Some of our executive officers and directors are engaged in outside business activities that
we do not believe conflict with our business.
Our success will depend on
our ability to hire and retain additional qualified marketing, sales, technical and other personnel. Qualified personnel are in
high demand. We face considerable competition from other firms for these personnel, many of which have significantly greater resources
than we have.
**Properties**
Our corporate headquarters
is in Tooele, Utah. Substantially all our operating activities are conducted from 1,614 square feet of office space that we lease for
$1,320 per month. We expect that additional space will be required as our business expands and we believe that we can obtain suitable
space as needed.
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**Legal proceedings**
We may from time to time be
involved in routine legal matters incidental to our business; however, we are currently not involved in any litigation, nor are we aware
of any threatened or impending litigation.
**Emerging Growth Company**
We are and we will remain
an emerging growth company as defined under The Jumpstart Our Business Startups Act, or the JOBS Act, until the earliest
to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1.235 billion, (ii) the last day
of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on which we have, during the previous
three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a large
accelerated filer (with at least $700 million in public float) under the Exchange Act.
As an emerging growth
company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to
public companies. These provisions include:
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only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced Managements Discussion and Analysis disclosure; | |
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reduced disclosure about our executive compensation arrangements; | |
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no requirement that we hold non-binding advisory votes on executive compensation or golden parachute arrangements; and | |
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exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting. | |
We have taken advantage of
some of these reduced burdens, and thus the information we provide you may be different from what you might receive from other public
companies in which you hold securities.
In addition, Section 107 of
the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the
adoption of certain accounting standards until those standards would otherwise apply to private companies.
Notwithstanding the above,
we are also currently a smaller reporting company, meaning that we are not an investment company, an asset-backed issuer,
or a majority-owned subsidiary of a parent company that is not a smaller reporting company and that had a public float of less than $250
million or annual revenues of less than $100 million during the most recently completed fiscal year. In the event that we are still considered
a smaller reporting company, at such time as we cease being an emerging growth company, the disclosure we will be required to provide
in our SEC filings will increase, but it will still be less than it would be if we were not considered either an emerging growth company
or a smaller reporting company. Specifically, similar to emerging growth companies, smaller reporting companies are able to provide simplified
executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring
that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial
reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required
to provide two years of audited financial statements in annual reports.
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**ITEM 1A. RISK FACTORS.**
*An investment in our securities
involves a high degree of risk and represents a highly speculative investment. In addition to the other information contained in this
Report on Form 10-K, you should carefully consider the following risks before investing in our securities. If any of the following risks
occur, our business, operating results and financial condition could be materially adversely affected. As a result, the price of our common
stock could decline, and you may lose all or part of your investment in our securities. The risks discussed below also include forward-looking
statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See Forward-Looking
Statements in this Report on Form 10-K.*
*The risks described below
are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also significantly
impair our business operations and could result in a complete loss of your investment.*
**RISKS RELATED TO OUR COMPANY AND OUR BUSINESS**
**Our registered public accounting firm has
expressed substantial doubt about the Companys ability to continue as a going concern in their audit report.**
GenFlat does not have a history
of profitable operations. As a result, the Companys registered public accounting firm in their audit report has expressed substantial
doubt about the Companys ability to continue as a going concern. Continued operations are dependent on the Companys ability
to generate profitable operations. Furthermore, our Company has incurred an accumulated deficit of $7,818,388 from inception to June 30,
2025 and has not fully implemented its business plan. The financial statements do not include any adjustments that might result from the
uncertainty about the Companys ability to continue its business. If we are unable to obtain additional financing from outside sources
and eventually produce sufficient revenue, we may be forced to sell our assets, or curtail or discontinue our operations.
As described in Note 1 of
our audited financial statements contained in this Annual Report on Form 10-K, our auditors have issued a going concern opinion on our
June 30, 2025 financial statements, expressing substantial doubt that we can continue as an ongoing business for the next twelve months
after issuance of their report based on our history of negative cash flows from operations and reporting of a net loss, and the expectation
that we will continue to report negative cash flows from operations and a net loss. At June 30, 2025, the Company had not yet achieved
consistent profitable operations and expects to incur further losses in the development of its business, all of which raise substantial
doubt about the Companys ability to continue as a going concern. The Companys ability to continue as a going concern is
dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they come due. Management has initiated a formal sales and marketing
plan including direct email campaigns, industry events, and business to business digital advertising to generate sales. The Company also
intends to raise funds through equity offerings to meet the capital requirements to manufacturer its products. However, there is no assurance
of additional funding being available through these plans or other sources.
**We have incurred substantial operating losses
since our inception and will continue to incur substantial operating losses for the foreseeable future.**
Since its inception, GenFlat
has been engaged primarily in the research and development of the GenFlat Container. As a result of these activities, we incurred significant
losses and generated negative cash flow since our inception. We incurred a net loss of $4,668,034for the year ended June 30, 2025
and$1,214,383 for the year ended June 30, 2024.As of June 30, 2025, we had an accumulated deficit of $7,818,388.We anticipate
that we will continue to incur operating losses through at least June 2026.
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We may not be able to generate
significant revenue either through customer contracts for our potential products or technologies or through development contracts from
the U.S. government or government subcontractors. We expect to improve and expand production, sales, marketing and administrative systems
and processes. As a result, we will need to generate significant revenue to achieve profitability. We cannot assure you that we will ever
achieve profitability.
**We will require additional capital to continue
to fund our operations and if we do not obtain additional capital, we may be required to substantially limit our operations.**
Currently, we have one paying
customer. We have one rental agreement in place with this customer for use of GenFlat containers, and we have generated nominal
revenue to date pursuant to this rental agreement. In addition, we have lease agreements with two customers to provide GenFlat containers
starting during the fourth quarter of 2025. Our business does not presently generate the cash needed to finance our current and anticipated
operations and we need to obtain additional future financing to finance our operations until such time that we can conduct profitable
revenue-generating activities. We intend to obtain financing through an equity offering to meet the capital requirements to manufacture
our current customers products; however, there is no assurance that such financing will be available through these plans or other
sources. We also expect that we will need to seek other additional financing in the future through public or private financings, including
equity or debt financings. Poor financial results, unanticipated expenses or unanticipated opportunities could require additional financing
sooner than we expect. We cannot assure you that any amount raised will be sufficient to finance our operations. Other additional
financing may not be available when we need it or may not be available on acceptable terms.
Our forecast of the period
of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks
and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed herein. We have based
this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.
Additional financing may not be
available to us, due to, among other things, our Company not having a sufficient credit history, income stream, profit level, asset base
eligible to be collateralized, or market for its securities. If we raise additional funds by issuing equity or convertible debt securities,
the percentage ownership of our existing stockholders may be reduced, and these securities may have rights superior to those of our common
stock. If adequate funds are not available to satisfy our near-term and long-term capital requirements, or if planned revenues are not
generated, we may be required to substantially limit our operations.
**Our Company is in an early stage of development
and it may not be able to develop its business as anticipated.**
GenFlat is an early stage
company that developed a more sustainable collapsible marine container to replace traditional standard marine containers. GenFlat operates
as a marine container sales and leasing company and supplies GenFlats patented marine container primarily to shipping line customers
under a variety of short and long-term lease structures.
Currently, we have one paying
customer. We have one rental agreement in place with this customer for use of GenFlat containers, and we have generated nominal
revenue to date pursuant to this rental agreement. In addition, we have lease agreements with two customers to provide GenFlat containers
starting during the fourth quarter of 2025.
Our business prospects are difficult
to predict because of our limited operating history, early stage of development, limited financial resources, and unproven business strategy.
Although our management believes that our current business plan has significant potential, our Company may never attain profitable operations,
and our management may not succeed in realizing its business objectives. If we are not able to execute our business plan as anticipated,
our Company may not be able to achieve profitability, and you may lose your entire investment in our securities.
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**Because we have a limited operating history,
you may not be able to accurately evaluate our operations.**
Our GenFlat business has had
limited operations to date. Therefore, we have a limited history upon which to evaluate the merits of investing in our Company. You should
be aware of the difficulties normally encountered by newer businesses and the high rate of failure of such enterprises. The likelihood
of success must be considered considering the problems, expenses, difficulties, complications and delays encountered in connection with
the operations that we may undertake. These potential problems include, but are not limited to, unanticipated problems relating
to the ability to generate enough cash flow to operate our business, and additional costs and expenses that may exceed current estimates.
We expect to incur significant losses into the foreseeable future. We recognize that if our business is not succeeding, we will not be
able to continue business operations. There is limited history upon which to base any assumption as to the likelihood that we will
prove successful, and we may never achieve profitable operations. If we are unsuccessful in addressing these risks, our business
will most likely fail.
**We are marketing a new product, the GenFlat
Container, and if we fail to accurately predict market growth for the GenFlat Container, we may suffer substantial losses.**
We are devoting significant
resources to bring to market the GenFlat Container. We cannot assure you that the market for the GenFlat Container will grow or
that we will be able to accurately forecast market demand, or lack thereof, in time to respond appropriately. Our investment of resources
into the GenFlat Container may either be insufficient to meet actual demand or result in expenses that are excessive in light of actual
sales volumes. Failure to predict growth and demand accurately may cause us to suffer substantial losses. In addition, as we enter this
market, there is a significant risk that:
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The market may not accept the price and/or performance of our GenFlat Container; | |
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There may be issued patents we are not aware of that could block our entry into the market or could result in excessive litigation; and | |
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The time required for us to achieve market acceptance of our GenFlat Container may exceed our capital resources that would require additional investment. | |
**If we fail to develop our brands cost-effectively,
our business may be adversely affected.**
Successful promotion of our
GenFlat Container will depend largely on the effectiveness of our marketing efforts and on our ability to provide a reliable and useful
product at competitive prices. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue
may not offset the expenses we incur in building our brand. If we fail to successfully promote and maintain our brand or incur substantial
expenses in an unsuccessful attempt to promote and maintain our brand, we may fail to attract enough new customers or retain existing
customers to the extent necessary to realize a sufficient return on our brand-building efforts, and our business and results of operations
could suffer.
**We will need to attract and retain new customers.
If we are unable to attract new customers and retain customers on a cost-effective basis, our business and results of operations will
be affected adversely.**
We currently have one rental
agreement and two equipment lease agreements with a total of three customers. While we are in in various stages of evaluation with potential
additional customers, to succeed, we must attract and retain new customers on a cost-effective basis, many of whom have not previously
used marine container products like ours. We will rely upon various third-parties, including channel partnerships with logistics companies,
associations, ports and consultants. In addition, we intend to rely on a variety of other methods to market our product, including, among
others, identifying prospective clients through the personal and professional relationships of our management team, attending conferences,
trade shows and other industry events, online advertising and word of mouth. If we are unable to utilize any of our current or intended
marketing initiatives or the cost of such initiatives were to significantly increase or such initiatives or our efforts to satisfy our
existing customers are not successful, we may not be able to attract new customers or retain customers on a cost-effective basis and,
as a result, our revenue and results of operations would be affected adversely.
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**Our operating plan relies in large part
upon assumptions and analyses developed by our Company. If these assumptions or analyses prove to be incorrect, our actual operating results
may be materially different from our forecasted results.**
Whether actual operating results
and business developments will be consistent with our Companys expectations and assumptions as reflected in its forecast depends
on a number of factors, many of which are outside of our control, including, but not limited to:
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whether we can obtain sufficient capital to sustain and grow its business; | |
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our ability to manage the companys growth; | |
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whether we can manage relationships with key vendors and advertisers; | |
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demand for our products and services; | |
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the timing and costs of new and existing marketing and promotional efforts and/or competition; | |
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our ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel; and | |
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the overall strength and stability of domestic and international economies; | |
Unfavorable changes in any
of these or other factors, most of which are beyond our control, could materially and adversely affect our business, results of operations
and financial condition.
**Our business plan is speculative and our
business model is evolving.**
Our present business and planned
business are speculative and subject to numerous risks and uncertainties. There is no assurance that our Company will generate significant
revenues or profits. In addition, our business model is unproven and is likely to continue to evolve. Accordingly, our initial business
model may not be successful and may need to be changed. Our ability to generate significant revenues will depend, in large part, on our
ability to successfully market our products to potential users who may not be convinced of the need for our products and services. We
intend to continue to develop our business model as our Company continues to grow.
**We purchase our GenFlat Containers from
one container manufacturer based in China, potentially limiting our ability to maintain an adequate supply of GenFlat Containers and increasing
our risk of negative outcomes from any manufacturing disputes.**
All of our GenFlat Containers
are currently manufactured pursuant to our exclusive Teaming Agreement with China International Marine Containers (**CIMC**)
in Dalian, China. In addition, the container manufacturing industry in China is highly concentrated. In the event that it were to become
more difficult or more expensive for us to procure containers in China because of further consolidation among container suppliers, reduced
production by our supplier, increased tariffs imposed by the United States or other governments or for any other reason, we may be unable
to fully pass these increased costs through to our customers in the form of higher lease rates and we may not be able to adequately invest
in and grow our container fleet.
Additionally, we may face
significant challenges in the event of disputes with CIMC due to the limited number of potential alternative suppliers and higher uncertainty
of outcomes for commercial disputes in China. Such disputes could involve the manufacturers warranties or the manufacturers
ability and willingness to comply with key terms of our Teaming Agreement or other purchase agreements such as container quantities, container
quality, delivery timing and price. Moreover, if CIMC were to go out of business or suspend services, we might be unable to find a replacement
supplier in a timely manner or at all, which could have a material adverse impact on our business, financial condition and operating results.
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**The market for the sale and lease of shipping
containers is competitive and, if we do not compete effectively, our operating results could be harmed.**
The market for the sale and
lease of shipping containers is competitive, and the barriers to entry into this market are relatively low. We expect competition to persist
and intensify in the future, which could harm our ability to increase sales, limit customer attrition and maintain our prices.
Competition could result in
reduced sales, reduced margins or the failure of our GenFlat Containers to achieve or maintain more widespread market acceptance, any
of which could harm our business. We will be competing with large established businesses possessing large, existing customer bases, substantial
financial and marketing resources and established distribution channels, customer bases and customer relationships. If we are unable to
compete with such companies, our Company could fail in its entirety.
**We are subject to the risks frequently experienced
by early-stage companies***.*
The likelihood of our success
must be considered in light of the risks frequently encountered by early-stage companies, especially those formed to develop and market
new products. These risks include our potential inability to:
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Establish product sales and marketing capabilities; | |
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Establish and maintain markets for our products; | |
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Identify, attract, retain and motivate qualified personnel; | |
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Develop outside contractor relationships; | |
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Maintain our reputation and build trust with customers; | |
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Scale up from small initial operations to larger scale operations on a consistent basis; | |
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Contract for or develop the internal skills needed to master larger operational scales; and | |
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Sufficiently fund the capital expenditures required to scale up from small initial operations to larger operations. | |
**If we fail to effectively manage our growth
our business could suffer***.*
Our Company anticipates that
a period of significant expansion will be required to achieve the objectives set forth in our GenFlat business plan. This expansion will
place a significant strain on our Companys management, operational and financial resources. To manage the expected growth of our
operations and personnel, we must establish appropriate and scalable operational and financial systems, procedures and controls, and we
must continue to establish qualified finance, administrative and operations staff. As a reporting company, our Company and its management
will have to implement internal controls to comply with government-mandated regulations. Our management may be unable to hire, train,
retain, motivate and manage the necessary personnel or to identify, manage and exploit potential strategic relationships and market opportunities.
Our failure to manage growth effectively could have a material and adverse effect on our business, results of operations and financial
condition, including the value of our securities.
**The international nature of our business
exposes us to numerous risks.**
We are subject to numerous
risks inherent in conducting business across national boundaries, any one of which could adversely impact our business. Risks of international
operations include, but are not limited to:
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the imposition of tariffs or other trade barriers; | |
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difficulties with enforcement of lessees' obligations across various jurisdictions; | |
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changes in governmental policy or regulation affecting our business and industry, including as a result of the political relationship between the U.S. and other countries; | |
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restrictions on the transfer of funds into or out of countries in which we operate; | |
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political and social unrest or instability; | |
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nationalization of foreign assets; | |
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military conflicts; | |
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government protectionism; | |
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health or similar issues, including epidemics and pandemics; and | |
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labor or other disruptions at key ports or at manufacturing facilities of our suppliers. | |
Our ability to enforce lessees
obligations will be subject to applicable law in the jurisdiction in which enforcement is sought. As containers are used in international
commerce, it is not possible to predict, with any degree of certainty, the jurisdictions in which enforcement proceedings may commence.
For example, repossession from defaulting lessees may be difficult and more expensive in jurisdictions in which laws do not confer the
same security interests and rights to creditors and lessors as those in the United States and in other jurisdictions where recovery of
containers from defaulting lessees is more cumbersome. As a result, the costs, relative success and expedience of collecting receivables
or pursuing enforcement proceedings with respect to containers in various jurisdictions cannot be predicted.
Substantial supply chain bottlenecks
and other logistical constraints such as the ones experienced in 2021 could lead to increased government regulation which may negatively
impact container flows and container demand, as well as lead to higher costs of conducting business globally. Any one or more of these
or other factors could adversely affect our current or future international operations and business.
**Marine Container leasing demand can be negatively
affected by decreases in global trade due to global and regional economic downturns.**
Overall demand for marine
containers depends largely on the rate of world trade and economic growth. Significant downturns in global economic growth or recessionary
conditions in major geographic regions can negatively affect marine container demand and lessors' decisions to lease marine containers.
During economic downturns and periods of reduced trade, shipping lines tend to use and lease fewer containers, or lease containers only
at reduced rates, and tend to rely more on their own fleets to satisfy a greater percentage of their requirements. As a result, during
periods of weak global economic activity or reduced trade, container lessors typically experience decreased leasing demand, decreased
equipment utilization, lower average rental rates, decreased leasing revenue, decreased used container resale prices and significantly
decreased profitability. These effects can be and have been severe.
**Market leasing rates may decrease due to
a decrease in new container prices, weak leasing demand, increased competition or other factors.**
Market leasing rates have
historically varied widely and changed suddenly. Market leasing rates are typically a function of, among other things, new equipment prices
(which are heavily influenced by steel prices), interest rates, the type and length of the lease, the equipment supply and demand balance
at a particular time and location, and other factors described in this Risk Factors section.
A decrease in market leasing
rates will negatively impact the leasing rates on both new marine container investments and any existing containers in our fleet. Most
of our containers are expected to be contracted on operating leases with lease terms shorter than the expected life of the container,
thus the lease rate we may receive for the container would be subject to change at the expiration of the current lease. The profitability
impact of decreasing lease rates on existing containers can be particularly severe since it leads to a reduction in revenue with no corresponding
reduction in investment or expenses.
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**Increased tariffs or other trade actions
could adversely affect our business, financial condition and results of operations.**
The international nature of
our business and the container shipping industry exposes us to risks relating to the imposition of import and export duties, quotas and
tariffs. These risks have increased over the last several years as the United States and other countries have adopted protectionist trade
policies and as companies look to on-shoring or near-shoring their production to address material and parts shortages and/or increased
costs due to these actions. Significant uncertainty remains about the future relationship between the United States and trading partners
as tariffs and other trade barriers remain historically high, other key areas of economic and foreign policy difference remain unresolved
and tensions remain elevated. Given the importance of the United States and trading partners in the global economy, continued or increased
tensions between these countries could significantly reduce the volume of goods traded internationally and reduce the rate of global economic
growth. Increased trade barriers and the risk of further disruptions is also motivating some manufacturers and retailers to reduce their
reliance on overseas production and could reduce the long-term growth rate for international trade, leading to decreased demand for leased
containers, lower new container prices, decreased market leasing rates and lower used container disposal prices. These impacts could have
a material adverse effect on our business, profitability and cash flows.
**Our business and results of operations are
subject to risks resulting from the political and economic policies of China.**
A substantial portion of our
containers are expected to be leased out from locations in China and we expect to have several customers that are domiciled in China.
CIMC, the manufacturer of our GenFlat Container is also located in China. The political and economic policies of China and the level of
economic activity in China may have a significant impact on our business and financial performance.
Changes in laws and policies
in China such as restrictions on private enterprise or foreign investment, the introduction of measures to control inflation, changes
in the rate or method of taxation, and the imposition of additional restrictions on currency conversion or remittances abroad could significantly
impact business investment and exports in China. Additionally, government policies that reduce the emphasis on manufacturing and increase
priorities for domestic consumption and services may alter trade patterns and reduce demand for containers in China. Chinese government
environmental laws and regulations may increase the cost of manufacturing in China, leading to reduced exports and decreased container
demand. Additionally, the re-imposition of policies aimed at controlling the COVID-19 pandemic or future disease outbreaks may reduce
manufacturing activity and exports and lead to further logistical disruptions in global shipping. Changes in Chinas laws and regulations
could also impact the cost and availability of new containers from our container manufacturer in China. These factors could have a significant
negative effect on our customers, the cost and availability of new containers and have a material adverse effect on our business and results
of operations.
In addition, a geo-political
conflict involving China could significantly reduce global economic activity and trade and have a material adverse effect on our business
given the large share of global exports and container lease-outs represented by China.
**We will be exposed to customer credit risk,
including the risk of lessee defaults.**
Our GenFlat Containers may
be leased to numerous customers, who may be responsible to pay lease rentals and other charges, including repair fees and costs for damage
to or loss of equipment. Some of our customers may be privately owned and would not provide detailed financial information regarding their
operations. Our future customers could incur financial difficulties or otherwise have difficulty making payments to us when due for any
number of factors which we may be unable to anticipate. A delay or diminution in amounts received under the leases, or a default in the
performance of our lessees' obligations under the leases could adversely affect our business, financial condition, results of operations
and cash flows.
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In addition, when lessees
default, we may fail to recover all of our equipment, and the equipment we do recover may be returned in damaged condition or to locations
where we may not be able to efficiently re-lease or sell the equipment. As a result, we may have to repair our equipment and reposition
it to other locations and we may lose lease revenues and incur significant operating expenses. We will likely often incur extra costs
when repossessing containers from a defaulting lessee. These costs typically arise when a lessee also defaults on payments owed to container
terminals or depot facilities where the repossessed containers are located. In such cases, the terminal or depot facility may delay or
bar us from taking possession of our containers or sometimes seek to have us repay a portion of the lessee's unpaid bills as a condition
to releasing the containers back to us.
It is difficult and expensive
to obtain credit insurance in our industry and we do not expect to purchase credit insurance policies. As a result, a major customer default
could have a significant adverse impact on our business, financial condition and cash flows.
**Used marine container sales prices are volatile
and sale prices can fall below our accounting residual values, leading to losses on the disposal of our equipment.**
Although our future revenues
primarily depend upon equipment leasing, any future profitability will also be affected by the gains or losses we realize on the sale
of used containers because we expect that, in the ordinary course of our business, we will sell certain containers when they are returned
by customers upon lease expiration. The volatility of the selling prices and gains or losses from the disposal of such equipment can be
significant. Used marine container selling prices, which can vary substantially, depend upon, among other factors, the cost of new containers,
the global supply and demand balance for marine container generally, the location of the containers, the supply and demand balance for
used containers at a particular location, the physical condition of the container and related refurbishment needs, materials and labor
costs and obsolescence of certain equipment or technology. Most of these factors are outside of our control.
At some point during their
useful lifetime, we may sell our used GenFlat Containers if it is in our best interest to do so after taking into consideration local
and global leasing and sale market conditions and the age, location and physical condition of the container. As these considerations vary,
gains or losses on sale of equipment will also fluctuate and may be significant if we sell large quantities of containers.
**We may incur significant costs associated
with relocation of leased equipment.**
When lessees return equipment
to locations where supply exceeds demand, marine containers are expected to be routinely repositioned to higher demand areas. Positioning
expenses vary depending on geographic location, distance, freight rates and other factors. Positioning expenses can be significant if
a large portion of our containers are returned to locations with weak demand. We will seek to limit the number of containers that can
be returned to areas where demand is not expected to be strong; however, future market conditions may not enable us to do so. In addition,
we may not be successful in accurately anticipating which port locations will be characterized by weak or strong demand in the future,
and any existing contracts will not provide much protection against positioning costs if ports that are expected to be strong demand ports
turn out to be low demand ports when the equipment is returned. In particular, many of our lease contracts are expected to be structured
so that most containers will be returned to areas with current strong demand, especially major ports in China. If the economy in China
continues to evolve in a way that leads to less focus on manufacturing and exports and more focus on consumer spending, imports and services,
we may face large positioning costs in the future to relocate containers dropped off into China.
**Severe weather, climate change, international
hostilities, terrorist attacks or other catastrophic events could negatively impact our operations and profitability and may expose us
to liability.**
Catastrophic natural events
such as hurricanes, earthquakes, or fires, or other events, such as chemical explosions or other industrial accidents could lead to extensive
damage to our equipment, significant disruptions to trade and reduced demand for marine containers. In addition, climate change could
worsen some of these risks and lead to economic instability and extensive disruptions to world trade. These events could also impact the
profitability of our customers and lead to higher credit risk. The incidence, severity and consequences of any of these events are unpredictable.
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Military conflicts or other
serious international disputes could also significantly impact our business. International conflicts often lead to economic sanctions
and decreased trade activity and military conflicts often involve the blockade of ports. A serious conflict involving major global trading
partners could have a material impact on global trade, the demand for containers, our profitability and our customers ability to
honor their lease obligations.
It is also possible that our
containers could be involved in a terrorist attack. Although our lease agreements will likely typically require our customers to indemnify
us against all damages and liabilities arising out of the use of our containers and we will carry insurance to potentially offset any
costs in the event that our customer indemnifications prove to be insufficient, our insurance will likely not cover certain types of terrorist
attacks. We may also experience reputational harm from a terrorist attack in which one of our containers is involved.
**The lack of an international title registry
for containers increases the risk of ownership disputes.**
There is no internationally
recognized system for recording or filing to evidence our title to containers nor is there an internationally recognized system for filing
security interests in containers. Although this has not occurred to date, the lack of an international title recordation system for containers
could result in disputes with lessees, end-users, or third parties who may improperly claim ownership of the containers.
**Our quarter-to-quarter performance may vary
substantially, and this variance, as well as general market conditions, may cause the value of our securities to vary greatly and even
potentially expose us to litigation.**
We cannot accurately estimate
future quarterly revenue and operating expenses. Our quarterly operating results may vary significantly based on many factors, including:
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Fluctuating demand for our products; | |
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Announcements or implementation by our competitors of new products; | |
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Amount and timing of our costs related to our marketing efforts or other initiatives; | |
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Timing and amounts relating to the expansion of our operations; | |
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Our ability to enter into, renegotiate or renew key agreements; | |
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Timing and amounts relating to the expansion of our operations; | |
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Developing regulations specific to our industry or customers; or | |
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Economic conditions specific to our industry, as well as general economic conditions. | |
Our current and future expense
estimates are based, in large part, on estimates of future revenue, which is difficult to predict. We expect to make significant operating
and capital expenditures in connection with the development of our plan of business. We may be unable to, or may elect not to, adjust
spending quickly enough to offset any unexpected revenue shortfall. If our increased expenses were not accompanied by increased revenue
in the same quarter, our quarterly operating results would be harmed.
**We will rely on third parties in many aspects
of our business, which creates additional risk.**
We will rely on third parties
in many aspects of our business, including:
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Third parties that provide GenFlat Container manufacturing services; | |
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Third parties that provide marketing and sales leads; | |
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Third parties that provide certain outsourced customer support; and | |
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Third parties that provide facilities, infrastructure, components and services. | |
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Any of the third parties
we use may breach their agreements with us, refuse to renew these agreements on commercially reasonable terms, take actions that degrade
the functionality of our services, impose additional costs or requirements on us, or give preferential treatment to competing services.
Political issues, financial or regulatory issues, labor issues, or other problems that prevent these third parties from providing services
to us or our customers could harm our business. If our service providers do not perform satisfactorily, our operations could be disrupted,
which could result in customer dissatisfaction, damage to our reputation, and harm our business operations, all of which could adversely
affect the value of our securities.
**We may incur increased costs or be required
to comply with increased restrictions due to the implementation of government regulations.**
Trade and transportation activity
is regulated in most major economies. International container leasing companies have historically not been heavily impacted by regulations
since containers have typically been viewed as international assets. Moreover, after the first use, they are not typically subject to
duties as globally, they qualify as instruments of international traffic. However, many governments, including the United
States, have enacted and/or are considering increased regulation of the ocean shipping sector in response to supply chain disruptions
and increased transportation costs caused by the COVID-19 pandemic. We could incur increased costs and face operational complexity as
a result of future regulations.
We also may become subject
to regulations seeking to protect the integrity of international commerce and prevent the use of containers for international terrorism
or other illicit activities or to set increased safety standards. For example, the Container Safety Initiative, the Customs-Trade Partnership
Against Terrorism Act and Operation Safe Commerce are among the programs administered by the U.S. Department of Homeland Security that
are designed to enhance security for containerized cargo entering and leaving the United States. Moreover, the International Convention
for Safe Containers (CSC) applies to containers and seeks to maintain a high level of safety of human life in the transport
and handling of containers by providing uniform international safety regulations. As these regulations develop and change, we may incur
increased costs for the acquisition of new, compliant equipment and/or the adaptation of existing equipment to meet any new requirements
imposed by such regulations. Additionally, future development of products designed to enhance the security of containers transported in
international commerce may result in increased costs associated with the adoption of these products, which could have a material adverse
effect on our business, financial condition, results of operations and cash flows.
**If we fail to comply with applicable regulations
that impact our international operations, our business, results of operations or financial condition could be adversely affected.**
Due to the international scope
of our planned operations, we will be subject to numerous laws and regulations, including economic sanctions, anti-corruption, anti-money
laundering, import and export and similar laws. Recent years have seen a substantial increase in the enforcement of many of these laws
in the United States and other countries. Any failure or perceived failure to comply with existing or new laws and regulations may subject
us to significant fines, penalties, criminal and civil lawsuits, forfeiture of significant assets, and other enforcement actions in one
or more jurisdictions, result in significant additional compliance requirements and costs, increase regulatory scrutiny of our business,
result in the loss of customers, restrict our operations and limit our ability to grow our business, adversely affect our results of operations,
and harm our reputation.
**Environmental regulations and liability
may adversely affect our business and financial condition.**
We are subject to U.S. federal,
state, local and foreign laws and regulations relating to the protection of the environment, including those governing the discharge of
pollutants to air and water, the management and disposal of hazardous substances and wastes and the cleanup of contaminated sites. We
could incur substantial costs, including cleanup costs, fines and third-party claims for property damage and personal injury, as a result
of violations of or liabilities under environmental laws and regulations in connection with our or our lessees current or historical
operations. Under some environmental laws in the United States and certain other countries, the owner of a leased container may be liable
for environmental damage, cleanup or other costs in the event of a spill or discharge of material from a container without regard to the
owner's fault. Our insurance coverage and any indemnities provided by our lessees may be insufficient to compensate us for losses arising
from environmental damage.
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Changes in laws and regulations,
or actions by authorities under existing laws or regulations, to address greenhouse gas emissions and climate change could negatively
impact our and our customers business. For example, restrictions on emissions could significantly increase costs for our customers
whose operations require significant amounts of energy. Customers increased costs could reduce their demand to lease our assets.
**We are dependent upon our key executives
for future success and our failure to retain and attract qualified personnel could harm our business.**
Our Company depends greatly
on our Chief Executive Officer, Drew Hall and our President, Garrett Hall. Our success will depend, in part, upon our ability to attract
and retain additional skilled personnel, which will require substantial additional funds. We cannot assure you that our Company will be
able to find, attract and retain additional qualified employees, directors, and advisors having the skills necessary to operate, develop
and grow our business. Our inability to hire qualified personnel, the loss of services of Mr. Drew Hall or Mr. Garrett Hall, or the loss
of services of other executive officers, key employees, or advisors that may be hired in the future, may have a material and adverse effect
on our Companys business. We currently do not maintain key man insurance policies on the lives of these individuals
or the lives of any of our other officers or employees.
In the future, the Company
could experience difficulties attracting and retaining qualified employees. Competition for qualified personnel in our industry is intense.
We may need to hire additional personnel as we expand our development and commercial activities. We may not be able to attract and retain
quality personnel on acceptable terms or at all.
Furthermore, we have limited
resources and as such we may not be able to provide an employee with the same amount of compensation that he or she would likely receive
at a larger company and as a result we may face difficulty in finding qualified employees. Additionally, we can only afford a limited
amount of director and officers insurance coverage, making it more likely that we would be unable to attract or retain experienced
business executives. The inability to attract, retain and motivate any additional highly skilled employees required for the expansion
of our planned activities could have a materially adverse effect on our ability to conduct our business and as such can impair our operations.
**Because our executive officers engage in
other business activities, they may not be able or willing to devote a sufficient amount of time to our business operations, causing our
business to fail.**
Our Chief Executive Officer,
Drew Hall, currently devotes approximately 95% of his working time providing management services to our Company. Our other executive officers
expect to devote approximately 40 hours per week providing management services to our Company. Since none of our executive officers are
required to commit their full time to the affairs of the Company, such persons may have conflicts of interest in allocating management
time among their various business activities. It is possible that their demands from their various other business obligations could increase,
with the result that they would no longer be able to devote sufficient time to the management of our business. The loss of any of our
officers or directors could negatively impact our business development.
**We do not currently have any general liability
insurance to protect us in case of customer or other claims.**
We do not have any general
liability insurance to cover any potential claims to which we are exposed. Any imposition of liability would increase our operating losses
and reduce our net worth and working capital.
**Currency exchange rate fluctuations may
disrupt our business and make our products less competitive, having a material adverse impact on our business.**
We expect a substantial amount
of our future revenue to arise from foreign net sales. Products and services sold by our Company and the cost of these products may be
affected by relative changes in the value of the local currencies of the markets we operate in. Price increases caused by currency exchange
rate fluctuations may make our products and services less competitive or have an adverse effect on our net revenues, margins and operating
results. As a result, currency fluctuations may have a material adverse effect on our financial condition.
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**Our management team has limited experience
managing a reporting company, and regulatory compliance may divert its attention from the day-to-day management of our business.**
Our management team has limited
experience managing a publicly-traded company and limited experience complying with the increasingly complex laws pertaining to reporting
companies. Our management team may not successfully or efficiently manage a reporting company that is subject to significant regulatory
oversight and reporting obligations under the federal securities laws. In particular, these new obligations will require substantial attention
from our senior management and could divert their attention away from the day-to-day management of our business.
**Because our Company does not have nomination
and corporate governance, audit or compensation committees, you will have to rely on the board of directors to perform these functions.**
Our Company does not have
a nomination and corporate governance, audit or compensation committee and these functions are performed by the board of directors as
a whole, which is currently comprised of one director, our Chief Executive Officer, Drew Hall. Thus, there is a potential conflict in
that the board member who is also part of management participates in discussions concerning management compensation and audit issues that
may affect management decisions. These decisions may not be in your best interests.
**Our Company has limited the liability of
its board of directors and management.**
Our Companys certificate
of incorporation, as amended, limits the liability of our directors generally provides that directors shall have no personal liability
to the Company or its stockholders for monetary damages for breaches of their fiduciary duties as directors, except pursuant to applicable
Delaware law. Our bylaws provide for indemnification by the Company of our officers and directors to the fullest extent permitted by Delaware
corporate law. Such provisions substantially limit stockholders ability to hold directors liable for breaches of fiduciary duty.
**Our GenFlat business will continue to incur
costs as a result of operating as a reporting company, and our management will be required to devote substantial time to compliance initiatives.**
We will continue to incur
certain costs of compliance with applicable SEC reporting rules and regulations including, but not limited to attorneys fees, accounting
and auditing fees, other professional fees and Sarbanes-Oxley Act of 2002 (**SOX**) compliance costs. However, for as
long as we remain an emerging growth company as defined in the JOBS Act, our Company intends to take advantage of certain
exemptions from various reporting requirements that are applicable to other reporting companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of SOX, reduced disclosure
obligations regarding executive compensation in our Companys periodic reports and other SEC filings, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. We intend to take advantage of these reporting exemptions until we are no longer an emerging growth company. After,
and if ever, the Company is no longer an emerging growth company, it expects to incur significant additional expenses and
devote substantial management effort toward ensuring compliance with those requirements applicable to companies that are not emerging
growth companies, including Section 404 of SOX.
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**The Companys internal controls
over financial reporting may not be effective and its independent registered public accounting firm may not be able to certify as to their
effectiveness, which could have a significant and adverse effect on the Companys business and reputation.**
Pursuant to Section 404 of
SOX, the Company is required to furnish a report by its management on the Companys internal control over financial reporting. However,
while the Company remains an emerging growth company, it will not be required to include an attestation report on internal control over
financial reporting issued by its independent registered public accounting firm. To achieve compliance with Section 404 of SOX within
the prescribed period, the Company will be engaged in a process to document and evaluate its internal control over financial reporting,
which is both costly and challenging. In this regard, the Company will need to continue to dedicate internal resources, potentially engage
outside consultants and counsel and adopt a detailed work plan to assess and document the adequacy of internal control over financial
reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented
and implement a continuous reporting and improvement process for internal control over financial reporting. Despite the Companys
efforts, to date, our Company has not been able to conclude that its internal control over financial reporting is effective as required
by Section 404 of SOX. As a result, our securities could decline in value due to a loss of confidence in the reliability of the Companys
financial statements. In addition, the Company will be required to incur costs in improving its internal control system and the hiring
of additional personnel. Any such action could negatively affect the Companys results of operations and cash flows.
**RISKS RELATED TO INFORMATION TECHNOLOGY SYSTEMS,
INTELLECTUAL PROPERTY AND PRIVACY LAWS**
**We are reliant upon information technology
to operate our business and maintain our competitiveness.**
Our ability to leverage our
technology and data scale is critical to our long-term strategy. Our business increasingly depends upon the use of sophisticated information
technologies and systems, including technology and systems (cloud solutions, mobile and otherwise) utilized for communications, marketing,
productivity tools, training, lead generation, records of transactions, business records (employment, accounting, tax, etc.), procurement
and administrative systems. The operation of these technologies and systems is dependent upon third-party technologies, systems and services,
for which there are no assurances of continued or uninterrupted availability and support by the applicable third-party vendors on commercially
reasonable terms. We also cannot assure that we will be able to continue to effectively operate and maintain our information technologies
and systems. In addition, our information technologies and systems are expected to require refinements and enhancements on an ongoing
basis, and we expect that advanced new technologies and systems will continue to be introduced. We may not be able to obtain such new
technologies and systems, or to replace or introduce new technologies and systems as quickly as our competitors or in a cost-effective
manner. Also, we may not achieve the benefits anticipated or required from any new technology or system, and we may not be able to devote
financial resources to new technologies and systems in the future.
**Cybersecurity incidents could disrupt business
operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations.**
We face growing risks and
costs related to cybersecurity threats to our data and customer, franchisee, employee and independent sales agent data, including but
not limited to:
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the failure or significant disruption of our operations from various causes, including human error, computer malware, ransomware, insecure software, zero-day threats, or other events related to our critical information technologies and systems; | |
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the increasing level and sophistication of cybersecurity attacks, including distributed denial of service attacks, data theft, fraud or malicious acts on the part of trusted insiders, social engineering, or other unlawful tactics aimed at compromising the systems and data of our officers and employees (including via systems not directly controlled by us, such as those maintained by joint venture partners and third-party service providers); | |
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the reputational and financial risks associated with a loss of data or material data breach (including unauthorized access to our proprietary business information or personal information of our customers, employees and independent sales agents), the transmission of computer malware, or the diversion of home sale transaction closing funds. | |
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Global cybersecurity
threats can range from uncoordinated individual attempts to gain unauthorized access to information technology systems via viruses, worms,
and other malicious software, to phishing to advanced and targeted hacking launched by individuals or organizations. These attacks may
be directed at the Company, its employees, third-party service providers and joint venture partners.
In the ordinary course of
our business, we and our third-party service providers collect and store sensitive data, including our proprietary business information
and intellectual property and that of our clients as well as personally identifiable information, sensitive financial information and
other confidential information of our employees and customers. Additionally, we increasingly rely on third-party data processing, storage
providers, and critical infrastructure services, including cloud solution providers. The secure processing, maintenance and transmission
of this information are critical to our operations and with respect to information collected and stored by our third-party service providers,
we are reliant upon their security procedures. A breach or attack affecting one of our third-party service providers or partners could
harm our business even if we do not control the service that is attacked.
In addition, the increasing
prevalence and the evolution of cyber-attacks and other efforts to breach or disrupt our systems or those of our employees, customers,
third-party service providers and joint venture partners, have and will likely lead to increased costs to us with respect to preventing,
investigating, mitigating and remediating these risks.
Moreover, we are required
to comply with regulations both in the United States and in other countries where we do business that regulate cybersecurity, privacy
and related matters.
While we, our third-party
service providers and our joint venture partners have experienced, and expect to continue to experience, these types of threats and incidents,
none of them to date has been material to the Company. Although we employ measures to prevent, detect, address and mitigate these threats
(including access controls, data encryption, penetration testing, vulnerability assessments and maintenance of backup and protective systems),
and conduct diligence on the security measures employed by key third- party service providers, cybersecurity incidents, depending on their
nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential
or proprietary information (our own or that of third parties, including personally identifiable information and financial information)
and the disruption of business operations.
**Our facilities and systems are vulnerable
to natural disasters and other unexpected events and any of these events could result in an interruption of our ability to execute clients
email campaigns.**
We will depend on the efficient
and uninterrupted operations of our third-party data centers and hardware systems. The data centers and hardware systems are vulnerable
to damage from earthquakes, tornados, hurricanes, fire, floods, power loss, telecommunications failures and similar events. If any of
these events results in damage to third-party data centers or systems, we may be unable to provide our clients with our service until
the damage is repaired and may accordingly lose clients and revenues. In addition, subject to applicable insurance coverage, we may incur
substantial costs in repairing any damage.
**Any significant disruption in service on
our website or in our computer systems, or in our customer support services, could reduce the attractiveness of our services and result
in a loss of customers.**
The satisfactory performance,
reliability and availability of our services are critical to our operations, level of customer service, reputation and ability to attract
new customers and retain customers. Most of our computing hardware is co-located in third-party hosting facilities. None of the companies
who host our systems guarantee that our customers access to our products will be uninterrupted, error-free or secure. Our operations
depend on their ability to protect their and our systems in their facilities against damage or interruption from natural disasters, power
or telecommunications failures, air quality, temperature, humidity and other environmental concerns, computer viruses or other attempts
to harm our systems, criminal acts and similar events. If our arrangements with third-party data centers are terminated, or there is a
lapse of service or damage to their facilities, we could experience interruptions in our service as well as delays and additional expense
in arranging new facilities. Any interruptions or delays in access to our services, whether as a result of a third-party error, our own
error, natural disasters or security breaches, whether accidental or willful, could harm our relationships with customers and our reputation.
These factors could damage our brand and reputation, divert our employees attention, reduce our revenue, subject us to liability
and cause customers to cancel their accounts, any of which could adversely affect our business, financial condition and results of operations.
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**If the security of customers confidential
information stored in our systems is breached or otherwise subjected to unauthorized access, our reputation may be severely harmed, we
may be exposed to liability and we may lose the ability to offer our customers a credit payment option.**
Our systems may store customers
credit information and other critical data. Any accidental or willful security breaches or other unauthorized access could expose us to
liability for the loss of such information, adverse regulatory action by federal and state governments, time-consuming and expensive litigation
and other possible liabilities as well as negative publicity, which could severely damage our reputation. If security measures are breached
because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our software are exposed and exploited,
and, as a result, a third party obtains unauthorized access to any of our customers data, our relationships with our customers
will be severely damaged, and we could incur significant liability. Because techniques used to obtain unauthorized access or to sabotage
systems change frequently and generally are not recognized until they are launched against a target, we and our third-party hosting facilities
may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, many states have enacted laws
requiring companies to notify customers of data security breaches involving their personal data. These mandatory disclosures regarding
a security breach often lead to widespread negative publicity, which may cause our customers to lose confidence in the effectiveness of
our data security measures. Any security breach, whether actual or perceived, would harm our reputation, and we could lose customers and
fail to acquire new customers.
If we fail to maintain our
compliance with the data protection policy documentation standards adopted by the major credit companies, we could lose our ability to
offer our customers a credit payment option. Any loss of our ability to offer our customers a credit payment option would make our products
less attractive to many small organizations by negatively impacting our customer experience and significantly increasing our administrative
costs related to customer payment processing.
**We do not have a disaster recovery system,
which could lead to service interruptions and result in a loss of customers.**
We do not have any disaster
recovery systems. In the event of a disaster in which our software or hardware are irreparably damaged or destroyed, we would experience
interruptions in access to our services. Any or all these events could cause our customers to lose access to our services.
**We may be unable to obtain effective intellectual
property protection for our potential products and technology.**
Our intellectual property,
or any intellectual property that we have or may acquire, license or develop in the future, may not provide meaningful competitive advantages.
Our patents and patent applications, including those we license, may be challenged by competitors, and the rights granted under such patents
or patent applications may not provide meaningful proprietary protection. For example, numerous patents held by third parties could be
used as a basis to challenge the validity or limit the scope of our patents or patent applications. A successful challenge to the validity
or limitation of the scope of our patents or patent applications could limit our ability to commercialize our GenFlat Container and, consequently,
reduce our revenues.
Moreover, competitors
may infringe our patents or those that we license, or successfully avoid these patents through design innovation. To combat infringement
or unauthorized use, we may need to resort to litigation, which can be expensive and time-consuming and may not succeed in protecting
our proprietary rights. In addition, in an infringement proceeding a court may decide that our patents or other intellectual property
rights are not valid or are unenforceable, or may refuse to stop the other party from using the intellectual property at issue on the
ground that it is non-infringing. Policing unauthorized use of our intellectual property is difficult and expensive, and we may not be
able to, or have the resources to, prevent misappropriation of our proprietary rights, particularly in countries where the laws may not
protect these rights as fully as the laws of the United States.
| | 25 | | |
We also rely on the law of
trade secrets to protect unpatented technology and know-how. We try to protect this technology and know-how by limiting access to those
employees, contractors and strategic partners with a need to know this information and by entering into confidentiality agreements with
these parties. Any of these parties could breach the agreements and disclose our trade secrets or confidential information to our competitors,
or these competitors might learn of the information in other ways. Disclosure of any trade secret not protected by a patent could materially
harm our business.
**We may be subject to patent infringement
claims, which could result in substantial costs and liability and prevent us from commercializing our potential products.**
Third parties may assert patent
and other intellectual property infringement claims against us in the form of lawsuits, letters or other forms of communication. These
claims, whether or not successful, could, among other things, divert managements attention, result in costly and time-consuming
litigation, require us to enter into royalty or licensing agreements, which may not be available on acceptable terms, or at all, require
us to redesign our GenFlat Container to avoid infringement.
As a result, any third-party
intellectual property claims against us could increase our expenses and adversely affect our business. Even if we have not infringed any
third parties intellectual property rights, we cannot be sure our legal defenses will be successful, and even if we are successful
in defending against such claims, our legal defense could require significant financial resources and management time. Finally, if a third
party successfully asserts a claim that our products infringe its proprietary rights, royalty or licensing agreements might not be available
on terms we find acceptable or at all and we may be required to pay significant monetary damages to such third party.
Ultimately, we may be unable
to successfully commercialize our GenFlat Container or may have to cease our business operations as a result of patent infringement claims.
**Our technology may be subject to foreign
or domestic government rights.**
We may have obligations to
foreign or domestic government agencies in connection with the technology that we have developed, including the right to require that
a compulsory license be granted to one or more third parties selected by certain government agencies. It may be difficult to monitor whether
these third parties will limit their use of our technology to these licensed uses, and we could incur substantial expenses to enforce
our rights to our licensed technology in the event of misuse.
**RISKS RELATED TO OUR SECURITIES**
**There is noactivemarket for
ourcommon stock, which may make it more difficult for you to sell your stock;purchasers of our stock may have difficulty selling
their shares.**
There is currently no active
public trading market for our common stock and an active trading market in our common may not develop or, if developed, may not be sustained.
Our common stock is quoted on the OTC Markets (OTC Pink) under the symbol GFLT. To date, however, minimal public trading
market has developed, so purchasers and/or holders of our securities may have difficulty selling their shares should they desire to do
so. In the event an active market develops inour securities, it may not be sustained. As a result, you should purchase shares only
as a long-term investment, and you must be prepared to hold your shares for an indefinite period.
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**In the event an active trading market
for our common stock develops, the*****price of our common stock may fluctuate significantly.***
You should consider an investment
in our common stock to be risky, and you should invest in our common stock only if you can withstand a significant loss and wide fluctuations
in the market value of your investment. Some factors that may cause the market price of our common stock to fluctuate, in addition to
the other risks mentioned in this Risk Factors section and elsewhere in this Annual Report on Form 10-K, are:
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sale of our common stock by our stockholders, executives, and directors | |
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volatility and limitations in trading volumes of our shares of common stock | |
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our ability to obtain financing | |
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the timing and success of introductions of new products by us or our competitors or any other change in the competitive dynamics of our business industries | |
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our ability to attract new customers | |
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changes in our capital structure or dividend policy, future issuances of securities, sales of large blocks of common stock by our stockholders | |
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our cash position | |
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announcements and events surrounding financing efforts, including debt and equity securities | |
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our inability to enter into our target markets | |
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reputational issues | |
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announcements of acquisitions, partnerships, collaborations, joint ventures, new products, capital commitments, or other events by us or our competitors | |
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changes in general economic, political and market conditions in or any of the regions in which we conduct our business | |
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changes in industry conditions or perceptions | |
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analyst research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage | |
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departures and additions of key personnel | |
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disputes and litigations related to intellectual properties, proprietary rights, and contractual obligations | |
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changes in applicable laws, rules, regulations, or accounting practices and other dynamics and | |
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other events or factors, many of which may be out of our control. | |
In addition, if the market
for stocks in our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence,
the trading price of our common stock could decline for reasons unrelated to our business, financial condition and results of operations.
If any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if unsuccessful, could
be costly to defend and a distraction to management.
**Our securities are subject to the
penny stock rules, which make it more difficult to trade our shares.**
The Securities and Exchange
Commission, or the SEC, has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities
exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or system. If we do not retain a listing on Nasdaq or another national
securities exchange and if the price of our securities is less than $5.00, our securities could be deemed a penny stock. The penny stock
rules require a broker-dealer, before a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized
risk disclosure document containing specified information. In addition, the penny stock rules require that before effecting any transaction
in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock
is a suitable investment for the purchaser and receive (i) the purchasers written acknowledgment of the receipt of a risk disclosure
statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability
statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our securities,
and therefore stockholders may have difficulty selling their securities.
| | 27 | | |
**FINRA sales practice requirements may limit
a stockholders ability to buy and sell our stock.**
In addition to the penny
stock rules described above, the Financial Industry Regulatory Authority (FINRA), has adopted rules that require
that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable
for that customer. Prior to recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must
make reasonable efforts to obtain information about the customers financial status, tax status, investment objectives and other
information. The FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy our common stock,
which may have the effect of reducing the level of trading activity in our common stock. As a result, fewer broker-dealers may be willing
to make a market in our common stock, reducing a stockholders ability to resell shares, as well as overall liquidity, of our common
stock.
**State securities laws may limit secondary
trading, which may restrict the states in which, and conditions under which, you can sell the securities sold in this offering.**
Secondary trading in our securities
will not be possible in any state in the U.S. unless and until the securities are qualified for sale under the applicable securities laws
of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary
trading in such state. We cannot assure you that we will be successful in registering or qualifying our securities for secondary trading
or identifying an available exemption for secondary trading in our securities in every state. If we fail to register or qualify,
or to obtain or verify an exemption for the secondary trading of, the securities in any state, the securities could not be offered or
sold to, or purchased by, a resident of that state. If a significant number of states refuse to permit secondary trading in our
securities, the market for our securities could be adversely affected.
**We may issue additional equity securities,
or engage in other transactions that could dilute our book value or relative rights of our common stock, which may adversely affect the
market price of our common stock.**
We are authorized to issue
up to 25,000,000 shares of common stock. As of September 17, 2025, we have 10,781,902 shares of common stock issued and outstanding.
Our Board may determine from time to time that it needs to raise additional capital by issuing additional shares of our common stock
or other securities. Except as otherwise described in this Annual Report on Form 10-K, we will not be restricted from issuing additional
common stock, including securities that are convertible into or exchangeable for, or that represent the right to receive, shares of our
common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond
our control, we cannot predict or estimate the amount, timing, or nature of any future offerings, or the prices at which such offerings
may be affected. Additional equity offerings may dilute the holdings of existing stockholders or reduce the market price of our common
stock. Holders of our securities are not entitled to pre-emptive rights or other protections against dilution. New investors also may
have rights, preferences and privileges that are senior to, and that adversely affect, then current holders of our securities. Additionally,
if we raise additional capital by making offerings of debt or preferred shares, upon our liquidation, holders of our debt securities,
if any, and lenders with respect to other borrowings, if any, may receive distributions of our available assets before the holders of
our common stock.
**The ability of a stockholder to recover
all or any portion of such stockholders investment in the event of a dissolution or termination may be limited.**
In the event of a dissolution
or termination of our Company, the proceeds realized from the liquidation of the assets of our Company, or our subsidiaries will be distributed
among the common stockholders, but only after the satisfaction of the claims of third-party creditors of our Company. The ability of a
common stockholder to recover all or any portion of such stockholders investment under such circumstances will, accordingly, depend
on the amount of net proceeds realized from such liquidation and the amount of claims to be satisfied therefrom. There can be no assurance
that our Company will recognize gains on such liquidation, nor is there any assurance that common stockholders will receive a distribution
in such a case.
| | 28 | | |
**We do not anticipate paying any cash dividends
on our common stock in the foreseeable future and, as such, capital appreciation, if any, of our common stock will be your sole source
of gain for the foreseeable future.**
We do not anticipate paying
any cash dividends on our common stock for the foreseeable future. Our Company has never declared any cash dividends on its common stock.
We currently intend to use all available funds and any future earnings for use in financing the growth of our business. In addition,
any future loan arrangements we enter into may contain terms prohibiting or limiting the amount of dividends that may be declared or paid
on our common stock. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable
future.
**We are an emerging growth company
and are able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common
stock less attractive to investors.**
We are an emerging
growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the **JOBS Act**), and we have
elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies including not being required to comply with the auditor attestation requirements of Section
404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved. In addition, pursuant to Section 107 of the JOBS Act, as an emerging growth company
we have elected to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act, for complying
with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting
standards until those standards would otherwise apply to private companies. As such, our financial statements may not be comparable to
companies that comply with public company effective dates.
We cannot predict if
investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock
less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
We may take advantage of these reporting exemptions until we are no longer an emerging growth company. We will remain an
emerging growth company until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues
of $1.235 billion or more (ii) the last day of our fiscal year following the fifth anniversary of our initial public offering
(iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (iv) the
date on which we are deemed to be a large accelerated filer under the rules of the SEC.
**We are considered a smaller reporting company
and are able to avail ourselves of reduced disclosure requirements applicable to smaller reporting companies, which could make our common
stock less attractive to investors.**
Rule 12b-2 of the Exchange
Act, defines a smaller reporting company as an issuer that is not an investment company, an asset-backed issuer, or a majority-
owned subsidiary of a parent that is not a smaller reporting company and that, among other criteria, (i) had a public float of less
than $250 million as of the last business day of its most recently completed second fiscal quarter, computed by multiplying the aggregate
worldwide number of shares of its voting and non-voting common equity held by non-affiliates by the price at which the common equity was
last sold, or the average of the bid and asked prices of common equity, in the principal market for the common equity or (ii) had
annual revenues of less than $100 million and either no public float or a public float of less than $700 million.
As a smaller reporting company,
we are not required and may not include a Compensation Discussion and Analysis section in our proxy statements we provide only two
years of financial statements and we do not need to provide the table of selected financial data. We also have other scaled
disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our common
stock less attractive to potential investors, and also could make it more difficult for our stockholders to sell their shares.
| | 29 | | |
**Financial reporting obligations of being
a public company in the United States are expensive and time-consuming, and our management is required to devote substantial time to compliance
matters.**
As a publicly traded company,
we incur significant additional legal, accounting and other expenses. The obligations of being a public company in the United States require
significant expenditures and place significant demands on our management and other personnel, including costs resulting from public company
reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance practices, including those under
the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) and the Dodd-Frank Wall Street Reform and Consumer Protection Act. These
rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial
reporting and changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor
and maintain compliance with. Moreover, despite recent reforms made possible by the JOBS Act, the reporting requirements, rules, and regulations
will make some activities more time-consuming and costly, particularly after we are no longer an emerging growth company.
In addition, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance.
Our management and other personnel devote a substantial amount of time to ensure that we comply with all of these requirements and keep
pace with new regulations so that we do not fall out of compliance and risk becoming subject to litigation or being delisted, among other
potential problems.
**The Sarbanes-Oxley Act requires, among
other things, that we maintain effective disclosure controls and procedures, and internal control over financial reporting. We have identified
weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional
material weaknesses will not occur in the future.**
We do not yet have effective
disclosure controls and procedures, or internal controls over all aspects of our financial reporting. We are continuing to develop and
refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the
reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules
and forms. Our management has deemed certain conditions to be material weaknesses and significant deficiencies in our internal controls.
For example, we do not have written documentation of our internal control policies and procedures and due to our size and nature, segregation
of all conflicting duties may not always be possible and may not be economically feasible. Our management is responsible for establishing
and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. We will be
required to expend time and resources to further improve our internal controls over financial reporting, including by expanding our staff.
However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify or avoid material
weaknesses in the future.
Our current controls and any
new controls that we develop may become inadequate because of changes in conditions in our business, including increased complexity resulting
from our international expansion. Further, weaknesses in our disclosure controls or our internal control over financial reporting may
be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation
or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement
of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting
could also adversely affect the results of management reports and independent registered public accounting firm audits of our internal
control over financial reporting that we are required to include in our periodic reports that we file with the SEC. Ineffective disclosure
controls and procedures, and internal control over financial reporting could also cause investors to lose confidence in our reported financial
and other information, which could have a negative effect on the market price of our common stock.
**Changes in accounting principles and guidance,
or their interpretation, could result in unfavorable accounting charges or effects, including changes to our previously filed financial
statements, which could cause our stock price to decline.**
We prepare our financial statements
in accordance with GAAP. These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate
accounting principles and guidance. A change in these principles or guidance, or in their interpretations, may have a significant effect
on our reported results and retroactively affect previously reported results.
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**Our principal stockholders and management
own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.**
Our directors, executive officers
and affiliates own approximately [26%] of our outstanding common stock. Accordingly, these stockholders may exert significant influence
over the outcome of corporate actions requiring stockholder approval, including the election of directors, a merger, the consolidation
or sale of all or substantially all of our assets or any other significant corporate transaction. The interests of these stockholders
may not be the same as or may even conflict with our other investors interests. For example, these stockholders could delay or
prevent a change in control of us, even if such a change in control would benefit our other stockholders, which could deprive our stockholders
of an opportunity to receive a premium for their common stock as part of a sale of our Company or our assets. The significant concentration
of stock ownership may negatively impact the value of our common stock due to potential investors perception that conflicts of
interest may exist or arise.
**Liability of directors for breach of duty
is limited under Delaware law.**
Our certificate of incorporation,
as amended, limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of
a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability
for any:
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breach of their duty of loyalty to us or our stockholders | |
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act or omission not in good faith or that involves intentional misconduct or a knowing violation of law | |
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unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law or | |
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transaction from which the directors derived an improper personal benefit. | |
These limitations of liability
do not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies
such as injunctive relief or rescission.
**Our bylaws provide that we will indemnify
our directors and officers to the fullest extent permitted by law, and may indemnify employees and other agents. Our bylaws also provide
that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding.**
We expect to enter into separate
indemnification agreements with our directors and officers or provide additional indemnification to our directors and officers through
indemnification provisions in their employment agreements. These agreements or provisions, among other things, will require us to indemnify
our directors and officers for any and all expenses (including reasonable attorneys fees, retainers, court costs, transcript costs,
fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service
fees) judgments, fines and amounts paid in settlement actually and reasonably incurred by such directors or officers or on his or her
behalf in connection with any action or proceeding arising out of their services as one of our directors or officers, or any of our subsidiaries
or any other company or enterprise to which the person provides services at our request provided that such person follows the procedures
for determining entitlement to indemnification and advancement of expenses set forth in the indemnification agreement or employment agreement.
We believe that these certificate of incorporation provisions, bylaw provisions and indemnification agreements/provisions are necessary
to attract and retain qualified persons as directors and officers.
The limitation of liability
and indemnification provisions in our certificate of incorporation, as amended, and bylaws may discourage stockholders from bringing a
lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors
and officers, even though an action, if successful, might provide a benefit to us and our stockholders. Our results of operations and
financial condition may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers pursuant
to these indemnification provisions.
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**Our bylaws designate the Court of Chancery
of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders,
which could limit our stockholders ability to obtain a favorable judicial forum for disputes with us or our directors, officers,
employees or agents.**
Our bylaws provide that unless
we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery
does not have jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for:
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any derivative action or proceeding brought on behalf of our Company; | |
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any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee, or agent of the Company to the Company or the Company's stockholders; | |
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any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the Certificate of Incorporation, or these by-laws; or | |
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any action asserting a claim governed by the internal affairs doctrine; | |
This provision may have the
effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other
companies bylaws and certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection
with any action, a court could find the choice of forum provisions contained in our bylaws to be inapplicable or unenforceable in such
action. Additionally, these provisions would not apply to suits brought to enforce a duty or liability created by the Exchange Act, the
Securities Act or any other claim for which the federal courts have exclusive or concurrent jurisdiction. Any person or entity purchasing
or otherwise acquiring any interest in our securities shall be deemed to have notice of and consented to these provisions. Our exclusive
forum provision will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder,
and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.
**Item 1B.****Unresolved Staff Comments.**
None.
**Item 1C. Cybersecurity.**
We are an early-stage company with limited operations,
yet we recognize that we are subject to various cybersecurity risks that could adversely affect our business. Cyberattacks on companies
around the world continue to increase, which cause operational failures, compromised sensitive corporate or customer data, and/or result
in significant financial damages. These attacks occur over the internet, through malware, viruses or attachments to e-mails, or through
inside actors with access to systems within the organization.
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*Risk Management and Strategy*
As part of our overall risk management, we focus
on a comprehensive approach to identifying, preventing and mitigating cybersecurity threats and incidents. We deploy technical safeguards
that are designed to protect our Companys information systems from cybersecurity threats, including firewalls, intrusion prevention
and detection systems, anti-malware functionality and access controls, which we evaluate and improve on a periodic basis.
*Governance*
Our Chief Executive officer is the sole member
of our Board of Directors, and he is responsible for oversight of cybersecurity risk. Our Chief Executive Officer, along with our President
is responsible for the ongoing managing and assessing of our cybersecurity practices and reporting on such practices and risks. Should
any cybersecurity threat or incident be detected, our senior management team would timely report such threat or incident to the Board
of Directors and provide regular communications and updates throughout the incident and any subsequent investigation, in order that the
impact, materiality, and reporting requirements of such incident are appropriately identified and assessed for further necessary or appropriate
action to be taken. We believe we are appropriately staffed (as supported by IT consultants and service providers, as needed) to support
a healthy cybersecurity posture given our Companys size and scope.
To date, there have been no risks identified from
cybersecurity threats or previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect
our Company. However, despite all of the above aforementioned efforts, a cyberattack, if it occurred, could cause system operational problems,
compromise important data or systems or result in an unintended release of confidential information. See Item 1A. Risk Factors
for additional discussion of cybersecurity risks impacting our Company.
**Item 2.****Properties.**
Our corporate headquarters
is in Tooele, Utah. Substantially all our operating activities are conducted from 1,500 square feet of office space provided by our CEO
at a cost to us of $1,320 per month. We expect that additional space will be required as our business expands and we believe that we can
obtain suitable space as needed on commercially reasonable terms.
**Item 3.****Legal Proceedings.**
We may from time to time be
involved in routine legal matters incidental to our business; however, we are currently not involved in any litigation, nor are we aware
of any threatened or impending litigation.
**Item 4.****Mine Safety Disclosures.**
Not applicable.
****
****
****
****
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****
**PART II**
**Item5.Market for Registrants
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.**
**Market Information**
Our common stock is quoted
on the OTC Markets (OTC Pink) under the symbol GFLT. To date, however, a minimal public trading market has developed.
Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
**Holders of Common Equity**
As of September 17, 2025,
we had approximately 141 stockholders of record of our common stock.
**Dividends**
Our Company does not pay any
cash dividends on its common stock.
**Purchases of Equity Securities by the Issuer
and Affiliated Purchasers**
None.
**Equity Compensation Plan Information**
**Equity Compensation Plan Information**
As of our fiscal year ending June 30, 2025
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Plan category | |
Number of securities to be issued upon exercise of outstanding options, warrants and rights | | |
Weighted-average exercise price of outstanding options, warrants and rights | | |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | | |
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(a) | | |
(b) | | |
(c) | | |
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Equity compensation plans approved by security holders | |
| 700,000 | (1) | |
$ | 6.00 | | |
| 1,500,000 | | |
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Equity compensation plans not approved by security holders | |
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Total | |
| 700,000 | | |
$ | 6.00 | | |
| 1,500,000 | | |
|
(1) |
Reflects our 2020 Equity Incentive Plan for the benefit of our directors, officers, employees and consultants. We have reserved 1,500,000 shares of common stock for such persons pursuant to that plan. | |
| | 34 | | |
**Recent Sales of Unregistered Securities**
None.
**Item 6.****[Reserved].**
**Item 7. Managements Discussion and Analysis
of Financial Condition and Results of Operations**
*You should read the following
discussion and analysis of our financial condition and results of operations in conjunction with the financial statements and the related
notes appearing elsewhere in this report on Form 10-K. This discussion contains forward-looking statements reflecting our current expectations
that involve risks and uncertainties, including those set forth under Cautionary Statement About Forward-Looking Statements.
Actual results and experience could differ materially from the anticipated results and other expectations expressed in our forward-looking
statements as a result of a number of factors, including but not limited to those discussed in this Item and in Item 1A - Risk
Factors. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements
as a result of many factors, including those set forth under Risk Factors and elsewhere in this report on Form 10-K.*
**Overview**
We are an early-stage company
that developed a more sustainable collapsible marine container (the **GenFlat Container**), that can be collapsed when
emptied and stacked in bundles of four collapsed containers that take the same space as a standard marine container. When GenFlat Containers
are stacked 4-to-1, they can save up to 75% on: 1) freight costs, terminal handling fees, transloading fees, and other fees; 2) carbon
emitted by ocean vessels, trucks, and trains by reducing the number of trips necessary; and 3) space required at ports, container yards,
and distribution centers. We operate as a container sales and leasing company and supply GenFlats patented marine container primarily
to shipping line customers under a variety of short and long-term lease structures.
The GenFlat Containers are
manufactured by China International Mariner Containers (CIMC) in Dalian, China. Manufacturing and marketing of the containers
commenced in September 2023.
**Commencement of Commercial Operations**
We commenced commercial operations
in May 2024. Presently, our commercial operations consist of one rental agreement and two equipment lease agreements to provide GenFlat
Containers to a total of three customers, including one agreement entered into in August 2025 and one agreement entered into in September
2025. The lease agreements demonstrate commercial acceptance of our GenFlat Container. Our Company is also in various stages of evaluation
with potential customers to lease GenFlat Containers, including shipping lines, retailers, logistics companies, and the United States
military.
For the years ended June 30,
2025, and 2024, respectively, we generated revenue from our operations of $7,894 and $5,234, and our net losses from operations were $4,709,006
and $1,232,730, respectively.
**Components of Results of Operations**
**Revenue**
Revenue is from fees charged
for rental and lease of collapsible marine shipping containers.
| | 35 | | |
**Costs of Revenue**
Costs of revenue include
depreciation expense on rental inventory, freight and transportation costs to move collapsible marine shipping containers.
**General and Administrative Expenses**
General and administrative
expenses include all corporate and administrative functions that support our Company, including personnel-related expense; costs related
to investor relations activities; professional fees; consulting and marketing and advertising-related expenses.
**Research and Development Costs**
These expenses are substantially
related to our engineering, consulting and research and development activity.
**Other Income/Expenses, Net**
Other income/expenses includenon-operatingincome
and expenses, including interest income and expense.
**Results of Operations**
**For the Year ended June 30, 2025, compared
to the Year ended June 30, 2024**
The following discussion compares
operating data for the year ended June 30, 2025, to the data for the year ended June 30, 2024:
|
| |
Year Ended June 30, | | |
| | |
| | |
|
| |
2025 | | |
2024 | | |
$ Change | | |
%Change | | |
|
| |
| | |
| | |
| | |
| | |
|
Revenue | |
$ | 7,894 | | |
$ | 5,234 | | |
$ | 2,660 | | |
| 51% | | |
|
Cost of Goods Sold | |
| 177,279 | | |
| 168,540 | | |
| 1,138,739 | | |
| 5% | | |
|
Gross Profit | |
| (169,385 | ) | |
| (163,306 | ) | |
| (6,079 | ) | |
| 4% | | |
|
Research and Development | |
| 103,322 | | |
| | | |
| 103,322 | | |
| 100% | | |
|
General and administrative | |
| 3,306,299 | | |
| 1,069,424 | | |
| 2,236,875 | | |
| 209% | | |
|
Impairment loss | |
| 1,130,000 | | |
| | | |
| 1,130,000 | | |
| 100% | | |
|
Total operating expenses | |
| 4,539,621 | | |
| 1,069,424 | | |
| 3,470,197 | | |
| 324% | | |
|
Loss from operations | |
$ | (4,709,006 | ) | |
$ | (1,232,730 | ) | |
$ | (3,476,276 | ) | |
| 282% | | |
*Revenue*
Revenue was $7,894 for the
year ended June 30, 2025, as compared to $5,234 for 2024, an increase of $2,660, which was the result of the Companys first contract
for the leasing of GenFlat Containers.
| | 36 | | |
*Cost of Goods Sold*
Cost of goods sold was $177,279
for the year ended June 30, 2025, as compared to $168,540 for 2024, an increase of $8,739. The cost of goods sold for the year ended June
30, 2025 primarily related to $124,920 of depreciation expense of rental inventory, and $52,359 transportation expenses of the Companys
collapsible marine container. The cost of goods sold for the year ended June 30, 2024 related to $79,500 of depreciation expense of rental
inventory and $89,040 transportation expenses of the Companys collapsible marine container.
*Research and Development
Expenses*
Research and development expenses
were $103,322 for the year ended June 30, 2025, as compared to $0 for 2024, an increase of $103,322, which was the result of increased
engineering, consulting and research and development activity of the Companys collapsible marine container.
*General and Administrative
Expenses*
General and administrative
expenses for the year ended June 30, 2025, were $3,306,299, compared to $1,069,424 for 2024, an increase of $2,236,875, which was primarily
related to an increase in stock-based compensation expense of $2,365,648 associated with new advisor agreements, an increase of approximately
$46,000 in payroll costs, partially offset by a decline of $67,000 in professional fees and $229,000 in advertising costs.
*Impairment Loss*
**
Impairment loss was $1,130,000
for the year ended June 30, 2025, as compared to $0 for 2024, an increase of $1,130,000. The impairment loss for the year ended June 30,
2025 primarily related to $1,130,000 of impairment expense of rental inventory.
****
**Cash Flows**
The following table summarizes
our cash flows from operating, investing, and financing activities for the years ended June 30, 2025, and 2024:
|
| |
Year ended June 30, | | |
|
| |
2025 | | |
2024 | | |
|
Cash flows used in operating activities | |
$ | (1,177,670 | ) | |
$ | (2,438,593 | ) | |
|
Cash flows used in investing activities | |
| | | |
| | | |
|
Cash flows provided by financing activities | |
| 1,188,529 | | |
| 2,198,808 | | |
|
| |
| | | |
| | | |
|
Net change in cash | |
$ | 10,859 | | |
$ | (239,785 | ) | |
*Operating Activities*
Cash used in operating activities
is primarily the result of our operating losses, reduced by the impact ofnon-cash expenses, includingnon-cashdepreciation
and amortization expenses, and changes in the asset and liability accounts.
Net used in operating activities
for the year ended June 30, 2025, was $1,177,670 versus net cash used in operating activities of $2,438,593 for the year ended June 30,
2024, a decrease of $1,260,923. The decrease in net cash used in operating activities was primarily due to limited spending on the Companys
inventory compared to the prior year.
| | 37 | | |
We expect cash used in operating
activities to fluctuate significantly in future periods because of a number of factors, some of which are outside of our control, including,
among others: obtaining additional lease contracts and the success we achieve in generating revenue.
*Investing Activities*
There was no cashflow from
investing activities during the years ended June 30, 2025 and June 30, 2024.
*Financing Activities*
Net cash provided by financing
activities during the year ended June 30, 2025 was $1,188,529, a decrease of $1,010,279 from cash provided by financing activities in
2024 of $2,198,808. Proceeds from notes payable were $199,996 and proceeds from related party notes were $94,750 during the year ended
June 30, 2025, and the Company repaid related party notes payable and advances of $199,750 and $8,731, respectively during the same year.
During the year ended June 30, 2024 the Company received related party loan proceeds of $205,000, repaid $100,000 to related parties,
$67,026 on other notes payable, and $128,466 on a line of credit. Proceeds from sale of common stock were $1,102,264 and $2,289,300 in
2025 and 2024, respectively, a decrease of $1,187,036.
**Liquidity and Capital Resources**
Our future expenditures and
capital requirements will depend on numerous factors, including: the rate at which we can lease additional GenFlat containers to new and
existing customers, the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;
market acceptance of our products and competing products, and the rate at which we hire employees to support operations. We expect that
we will incur approximately $131,000 of expenditures per month over the next 12 months.
As of June 30, 2025, we had
cash of $49,830, and working capital deficit of $123,645. We believe that our existing cash will not be sufficient to fund our present
operations during the next 12 months and beyond. The Companys audited annual consolidated financial statements have been prepared
in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able
to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying
values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification
of assets and liabilities should the Company be unable to continue as a going concern. At June 30, 2025 the Company had not yet achieved
consistent profitable operations and expects to incur further losses in the development of its business, all of which raise substantial
doubt about the Companys ability to continue as a going concern. The Companys ability to continue as a going concern is
dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they come due. Management has initiated a formal sales and marketing
plan including direct email campaigns, industry events, and business to business digital advertising to generate sales. The Company also
intends to raise funds through an equity offering to meet the capital requirements to manufacture its products. However, there is no
assurance of additional funding being available through these plans or other sources.
During the year ended June
30, 2025, the Company sold a total of 183,711 shares of common stock in exchange for gross cash proceeds of $1,102,264.Of these
shares, 43,667 shares sold for $262,000 were not issued as of June 30, 2025 and are recorded as subscription payable on the consolidated
balance sheet as of June 30, 2025. The Company also issued 33,333 shares related to subscriptions received during the year ended June
30, 2024. In aggregate the Company issued 173,377 shares of common stock during the year ended June 30, 2025.
During the year ended June
30, 2024, prior to closing of the Share Exchange, GenFlat sold a total of564,628shares of its common stock in exchange for
net cash proceeds of $2,289,300. Of these shares,33,333were issued after June 30, 2024.
| | 38 | | |
**Capital Expenditures**
We do not have any contractual
obligations for ongoing capital expenditures at this time. We do, however, purchase equipment necessary to conduct our operations on an
as needed basis.
**Contractual Obligations**
On March 26, 2021, the Company
entered into a promissory note agreement with a third party for a total principal of $125,000. The Company will pay 2.5% per annum, compounded
annually until the total principal is paid in full. The note has no maturity date and no default interest rate. As of June 30, 2025 and
June 30, 2024, the balance owed on the note was $57,974 and $50,500, respectively.
During the year ended June
30, 2024, the Company entered into three promissory note agreements with the Companys CEO, Drew Hall, for a total principal of
$205,000. The Company will pay 2.5% per annum, until the total principal is paid in full. The note has no maturity date and no default
interest rate. During the years ended June 30, 2025 and June 30, 2024, the Company repaid $105,000 and $100,000, respectively. The promissory
notes and accrued interest were fully paid off as of June 30, 2025.
During the year ended June
30, 2025, the Company received additional proceeds of $44,750in aggregate from Mr. Hall and repaid a total of $44,750on the
promissory note agreements. As of June 30, 2025, the balance owed on the note was $0. Accrued interest on the notes was $0and $260as
of June 30, 2025 and June 30, 2024, respectively. The promissory notes and accrued interest were fully paid off as of June 30, 2025.
On July 1, 2024, the Company
entered into six separate Advisory Committee Member Agreements and agreed to the following compensation in each agreement.
|
|
a. |
Cash Compensation. $5,000 annually, payable on June 30th of each year of service. | |
|
|
|
| |
|
|
b. |
Equity Compensation. Subject to Board approval, in respect of calendar year 2024, stock options for 100,000 shares of Company stock. The stock options vest as follows: 1) Fifty thousand (50,000) options upon execution of the Advisory Committee Member Agreements; 2) Twenty-five thousand (25,000) options on the first anniversary, and 3) Twenty-five thousand (25,000) options on the second anniversary, in all cases subject to continued service as of such vesting dates. Vested stock options must be exercised within ten (10) years of the vesting date. | |
The exercise price of the options will be the
fair market value of a share of common stock on the date of grant.
The Company maintains an operating lease for its
office space with the Companys CEO, Drew Hall. On January 3, 2025, the Company extended the operating lease for its office space
to expire on January 1, 2027, and agreed to pay $1,320 on a monthly basis.
**Off-Balance Sheet Arrangements**
We did not have during the
periods presented, and we do not currently have, any off-balancesheet arrangements, as defined in the rules and regulations of the
SEC.
**Critical Accounting Policies and Estimates**
The Company considers its
critical accounting policies and estimates to be as follows:
| | 39 | | |
Revenue Recognition
The Company is principally
engaged in the business of renting collapsible marine shipping containers. The Companys rental transactions are accounted for under
ASC Topic 842,*Leases,*("Topic 842"). Our revenue includes revenue generated from renting equipment to customers
and is recognized on a straight-line basis over the length of the rental contract. As part of this straight-line methodology, when the
equipment is returned, the Company recognizes as incremental revenue the excess, if any, between the amount the customer is contractually
required to pay, which is based on the rental contract period applicable to the actual number of days the equipment was out on rent, over
the cumulative amount of revenue recognized to date. In any given accounting period, the Company will have customers return equipment
and be contractually required to pay more than the cumulative amount of revenue recognized to date under the straight-line methodology.
Provisions for discounts, rebates to customers and other adjustments are provided for in the period the related revenue is recorded.
The Companys sale
of rental and new equipment, parts and supplies to customers are recognized under ASC Topic 606,*Revenue from Contracts with
Customers,*("Topic 606"). The Company recognizes revenue in these transactions when it satisfies a performance obligation
by transferring control over a product or service to a customer. These transactions typically contain a single performance obligation,
and a recognized at a point in time. The amount of revenue recognized reflects the consideration the Company expects to be entitled to
in exchange for such products or services.
Rental Inventory
Rental inventory consists
of collapsible marine shipping containers. Rental inventory is stated at cost, with an estimated useful life of 10 years. Generally, when
rental equipment is acquired, the Company estimates the period that it will hold the asset, primarily based on historical measures of
the amount of rental activity (e.g. equipment usage) and the targeted age of equipment at the time of disposal. The Company also estimates
the residual value of the applicable rental equipment at the expected time of disposal. The residual value for rental equipment is affected
by factors which include equipment age and amount of usage. Depreciation is recorded over the estimated holding period. Depreciation rates
are reviewed on a quarterly basis based on management's ongoing assessment of present and estimated future market conditions, their effect
on residual values at the time of disposal and the estimated holding periods. Market conditions for used equipment sales can also be affected
by external factors such as the economy, natural disasters, fuel prices, supply of similar used equipment, the market price for similar
new equipment and incentives offered by manufacturers of new equipment. These key factors are considered when estimating future residual
values and assessing depreciation rates. As a result of this ongoing assessment, the Company makes periodic adjustments to depreciation
rates of rental equipment in response to changed market conditions. We had an inventory impairment loss of $1,130,000 and $0 at June 30,
2025, and 2024, respectively, related to a decline in the expected net realizable value of the 40 foot containers.
Accounts Receivable
Accounts receivable is carried
at their estimated collectible amounts. Accounts receivable is periodically evaluated for collectability based on past credit history
with customers and their current financial condition. We had an allowance of $13,127 at June 30, 2025, and 2024 and recognized credit
losses of $13,127 during the year ended June 30, 2025.
Long-lived Assets
The Company amortizes acquired
definite-lived intangible assets over their estimated useful lives. Other indefinite-lived intangible assets are not amortized but subject
to annual impairment tests.In accordance with ASC 360 Property Plant and Equipment, the Company reviews the carrying
value of intangibles subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of long-lived
assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate.
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of
the property, if any, exceeds its fair market value.
| | 40 | | |
Leases
We account for our leases
under ASC 842 -*Leases*. We determine if an arrangement is a lease at inception. Operating leases are included in operating
lease right-of-use (ROU) assets, current portion of obligations under operating leases, and obligations under operating
leases, non-current on our balance sheets.
Operating lease ROU assets
and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at
commencement date, adjusted by the deferred rent liabilities at the adoption date. Short-term leases of one year or less are not recognized
as ROU assets and liabilities. If our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on
the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also
includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our terms may include options to extend
or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line
basis over the lease term.
**Recent Accounting Pronouncements**
From time to time, new accounting
pronouncements are issued by the Financial Accounting Standards Board (FASB) that are adopted by us as of the specified
effective date.
In November 2023, the Financial Accounting Standard Board (FASB)
issued ASU 2023-07,*Improvements to Reportable Segment Disclosures*, which amends the existing segment reporting guidance (ASC
Topic 280) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses
that are regularly provided to theCODMand included within each reported measure of segment profit or loss, an amount for other
segment items by reportable segment and a description of its composition, the title and position of theCODMand an explanation
of how theCODMuses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to
allocate resources. The Company adopted this standard effective July 1, 2024.
There are no other recently
issued accounting pronouncements that we have yet to adopt that are expected to have a material effect on our financial position, results
of operations, or cash flows.
**JOBS Act**
On April 5, 2012, the JOBS
Act was enacted. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other
words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies.
We have chosen to take advantage
of the extended transition periods available to emerging growth companies under the JOBS Act for complying with new or revised accounting
standards until those standards would otherwise apply to private companies provided under the JOBS Act. As a result, our financial statements
may not be comparable to those of companies that comply with public company effective dates for complying with new or revised accounting
standards.
We are in the process of evaluating
the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions
set forth in the JOBS Act, as an emerging growth company, we intend to rely on certain of these exemptions, including without
limitation, (i) providing an auditors attestation report on our system of internal controls over financial reporting pursuant to
Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting
Oversight Board (PCAOB) regarding mandatory audit firm rotation or a supplement to the auditors report providing
additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an emerging
growth company until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235
billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of this offering;
(iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on
which we are deemed to be a large accelerated filer under the rules of the SEC.
**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.**
We are not required to provide
the information required by this Item as we are a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act.
| | 41 | | |
****
**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA**
**GenFlat Holdings, Inc.**
**(formerly Healthcare Business Resources,
Inc.)**
**Index to Financial Statements**
|
|
Page | |
|
Report of Independent Registered Public Accounting Firm (PCAOB Firm ID: 2738) |
F-1 | |
|
Consolidated Balance Sheets as of June 30, 2025 and 2024 |
F-3 | |
|
Consolidated Statements of Operations for the years ended June 30, 2025 and 2024 |
F-4 | |
|
Consolidated Statements of Stockholders Equity for the years ended June 30, 2025 and 2024 |
F-5 | |
|
Consolidated Statements of Cash Flows for the years ended June 30, 2025 and 2024 |
F-6 | |
|
Notes to the Consolidated Financial Statements |
F-7 | |
| | 42 | | |
*****
**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM**
To the Board of Directors and Stockholders
GenFlat Holdings, Inc.
**Opinion on the Consolidated Financial Statements**
We have audited the accompanying consolidated
balance sheets of GenFlat Holdings, Inc. (the Company) as of June 30, 2025 and 2024, and the related consolidated statements of operations,
stockholders equity (deficit), and cash flows for the years in the two-year period ended June 30, 2025, and the related notes (collectively
referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its
cash flows for each the years in the two-year period ended June 30, 2025, in conformity with accounting principles generally accepted
in the United States of America.
**Going Concern**
The accompanying consolidated financial
statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial
statements, the Company has yet to achieve profitable operations, has negative cash flows from operating activities, and is dependent
upon future issuances of equity or other financings to fund ongoing operations all of which raises substantial doubt about its ability
to continue as a going concern. Managements plans regarding these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
**Basis for Opinion**
These consolidated financial statements
are the responsibility of the Companys management. Our responsibility is to express an opinion on the Companys consolidated
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB .
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required
to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness
of the Companys internal control over financial reporting. Accordingly, we express no such opinion.
| | F-1 | | |
Our audits included performing procedures
to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and the significant estimates made
by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe our audits provide
a reasonable basis for our opinion.
**Critical Audit Matter**
The critical audit matter communicated below is
a matter arising from the current period audits of the consolidated financial statements that was communicated or required to be communicated
to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and
(2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audits
matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Going Concern*
As discussed in Note 1 to the financial statements,
the Company had a going concern due to a working capital deficiency, and stockholders deficiency. Auditing managements
evaluation of a going concern can be a significant judgment. To evaluate the appropriateness of the going concern, we examined and evaluated
the financial information that was the initial cause along with managements plans to mitigate the going concern and managements
disclosure of going concern.
/s/ M&K CPAS, PLLC
M&K
CPAS, PLLC
PCAOB ID: 2738
We have served as the Companys auditor since 2024
The
Woodlands, TX
September 19, 2025
| | F-2 | | |
**GenFlat Holdings, Inc.**
**Consolidated Balance Sheets**
|
| |
| | | |
| | | |
|
| |
June 30, 2025 | | |
June 30, 2024 | | |
|
Assets | |
| | | |
| | | |
|
Current Assets: | |
| | | |
| | | |
|
Cash | |
$ | 49,830 | | |
$ | 38,971 | | |
|
Accounts receivable | |
| | | |
| 5,235 | | |
|
Prepaid expenses | |
| 20,514 | | |
| | | |
|
Total current assets | |
| 70,344 | | |
| 44,206 | | |
|
| |
| | | |
| | | |
|
Property and equipment, net | |
| 403 | | |
| 1,208 | | |
|
Right of use asset, operating lease | |
| 22,989 | | |
| 8,127 | | |
|
Intangible assets, net | |
| 48,580 | | |
| 81,115 | | |
|
Rental inventory, net | |
| 543,737 | | |
| 1,660,720 | | |
|
Total Assets | |
$ | 686,053 | | |
$ | 1,795,376 | | |
|
| |
| | | |
| | | |
|
Liabilities and Stockholders' Equity | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Current Liabilities: | |
| | | |
| | | |
|
Accounts payable and accrued liabilities | |
$ | 113,026 | | |
$ | 104,980 | | |
|
Notes payable related party, current | |
| | | |
| 105,000 | | |
|
Notes payable current | |
| 57,974 | | |
| | | |
|
Related party advances | |
| | | |
| 8,731 | | |
|
Right of use liability, operating lease, current | |
| 22,989 | | |
| 8,127 | | |
|
Total current liabilities | |
| 193,989 | | |
| 226,838 | | |
|
| |
| | | |
| | | |
|
Notes payable non current | |
| 199,996 | | |
| 50,500 | | |
|
Total Liabilities | |
| 393,985 | | |
| 277,338 | | |
|
| |
| | | |
| | | |
|
Commitments and contingencies | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Stockholders' Equity: | |
| | | |
| | | |
|
Common stock, $0.001 par value 25,000,000 shares authorized, 10,721,568 and 10,548,191 shares issued and outstanding, respectively | |
| 10,721 | | |
| 10,548 | | |
|
Additional paid-in capital | |
| 7,841,135 | | |
| 4,615,732 | | |
|
Subscription payable | |
| 262,000 | | |
| | | |
|
Accumulated deficit | |
| (7,818,388 | ) | |
| (3,150,354 | ) | |
|
Total Stockholders' equity attributable to GenFlat Holdings, Inc. | |
| 295,468 | | |
| 1,475,926 | | |
|
Noncontrolling interest | |
| (3,400 | ) | |
| 42,112 | | |
|
Total stockholders equity | |
| 292,068 | | |
| 1,518,038 | | |
|
Total Liabilities and Stockholders' Equity | |
$ | 686,053 | | |
$ | 1,795,376 | | |
See
accompanying notes to the consolidated financial statements.
| | F-3 | | |
**GenFlat Holdings, Inc.**
**Consolidated Statements of Operations**
|
| |
| | | |
| | | |
|
| |
Year Ended
June 30, 2025 | | |
Year Ended
June 30, 2024 | | |
|
| |
| | |
| | |
|
Revenue | |
$ | 7,894 | | |
$ | 5,234 | | |
|
Cost of revenue | |
| 177,279 | | |
| 168,540 | | |
|
Gross profit | |
| (169,385 | ) | |
| (163,306 | ) | |
|
| |
| | | |
| | | |
|
Operating expenses: | |
| | | |
| | | |
|
Research and development | |
| 103,322 | | |
| | | |
|
General and administrative | |
| 3,306,299 | | |
| 1,069,424 | | |
|
Impairment loss | |
| 1,130,000 | | |
| | | |
|
| |
| | | |
| | | |
|
Total operating expenses | |
| 4,539,621 | | |
| 1,069,424 | | |
|
| |
| | | |
| | | |
|
Loss from operations | |
| (4,709,006 | ) | |
| (1,232,730 | ) | |
|
| |
| | | |
| | | |
|
Other income (expense): | |
| | | |
| | | |
|
Interest expense | |
| (4,765 | ) | |
| (1,961 | ) | |
|
Other income | |
| 225 | | |
| 2,023 | | |
|
Total other income (expense) | |
| (4,540 | ) | |
| 62 | | |
|
| |
| | | |
| | | |
|
Net loss | |
| (4,713,546 | ) | |
| (1,232,668 | ) | |
|
Noncontrolling interest | |
| (45,512 | ) | |
| (18,285 | ) | |
|
Net loss attributable to GenFlat Holdings, Inc. | |
$ | (4,668,034 | ) | |
$ | (1,214,383 | ) | |
|
| |
| | | |
| | | |
|
Loss per share basic and diluted attributable to GenFlat Holdings, Inc. | |
$ | (0.44 | ) | |
$ | (0.12 | ) | |
|
Loss per share - basic and diluted attributable to noncontrolling interest. | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
|
| |
| | | |
| | | |
|
Weighted average shares outstanding basic and diluted | |
| 10,651,990 | | |
| 10,438,400 | | |
See accompanying notes to the consolidated financial
statements.
| | F-4 | | |
**GenFlat Holdings, Inc.**
**Consolidated Statements of Stockholders' Equity**
**For
the Years Ended June 30, 2025 and 2024**
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
| |
Common Stock | | |
Paid In | | |
Stock | | |
Accumulated | | |
| | |
Noncontrolling | | |
| | |
|
| |
Shares | | |
Amount | | |
Capital | | |
Payable | | |
Deficit | | |
Total | | |
Interest | | |
Total | | |
|
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Balance, June 30, 2023 | |
| 10,205,195 | | |
$ | 10,205 | | |
$ | 2,583,395 | | |
$ | 50,000 | | |
$ | (1,935,971 | ) | |
$ | 707,629 | | |
$ | | | |
$ | 707,629 | | |
|
Common stock sold for cash | |
| 531,295 | | |
| 531 | | |
| 2,338,769 | | |
| (50,000 | ) | |
| | | |
| 2,289,300 | | |
| | | |
| 2,289,300 | | |
|
Recapitalization | |
| 103,030 | | |
| 103 | | |
| (246,326 | ) | |
| | | |
| | | |
| (246,223 | ) | |
| | | |
| (246,223 | ) | |
|
Reclassification of noncontrolling interest | |
| (298,020 | ) | |
| (298 | ) | |
| (60,099 | ) | |
| | | |
| | | |
| (60,397 | ) | |
| 60,397 | | |
| | | |
|
Issuance of common stock for reverse stock split | |
| 6,691 | | |
| 7 | | |
| (7 | ) | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Net loss | |
| | | |
| | | |
| | | |
| | | |
| (1,214,383 | ) | |
| (1,214,383 | ) | |
| (18,285 | ) | |
| (1,232,668 | ) | |
|
Balance, June 30, 2024 | |
| 10,548,191 | | |
| 10,548 | | |
| 4,615,732 | | |
| | | |
| (3,150,354 | ) | |
| 1,475,926 | | |
| 42,112 | | |
| 1,518,038 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Common stock sold for cash | |
| 173,377 | | |
| 173 | | |
| 840,091 | | |
| 262,000 | | |
| | | |
| 1,102,264 | | |
| | | |
| 1,102,264 | | |
|
Stock-based compensation | |
| | | |
| | | |
| 2,385,312 | | |
| | | |
| | | |
| 2,385,312 | | |
| | | |
| 2,385,312 | | |
|
Net Loss | |
| | | |
| | | |
| | | |
| | | |
| (4,668,034 | ) | |
| (4,668,034 | ) | |
| (45,512 | ) | |
| (4,713,546 | ) | |
|
Balance, June 30, 2025 | |
| 10,721,568 | | |
$ | 10,721 | | |
$ | 7,841,135 | | |
$ | 262,000 | | |
$ | (7,818,388 | ) | |
$ | 295,468 | | |
$ | (3,400 | ) | |
$ | 292,068 | | |
See accompanying notes to the consolidated financial
statements.
| | F-5 | | |
**GenFlat Holdings, Inc.**
**Consolidated Statements of Cash Flows**
**For the Years Ended June 30, 2025 and 2024**
|
| |
| | | |
| | | |
|
| |
June 30, 2025 | | |
June 30, 2024 | | |
|
| |
| | |
| | |
|
Cash Flows from Operating Activities: | |
| | | |
| | | |
|
Net loss | |
$ | (4,713,546 | ) | |
$ | (1,232,668 | ) | |
|
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | | |
|
Depreciation and amortization expense | |
| 33,340 | | |
| 33,628 | | |
|
Stock-based compensation expense | |
| 2,385,312 | | |
| | | |
|
Impairment loss | |
| 1,130,000 | | |
| | | |
|
Credit losses | |
| 13,127 | | |
| | | |
|
Rental inventory depreciation expense | |
| 124,920 | | |
| 79,500 | | |
|
Amortization of right of use assets | |
| | | |
| (116 | ) | |
|
Changes in operating assets and liabilities: | |
| | | |
| | | |
|
Accounts receivable | |
| (7,892 | ) | |
| (5,235 | ) | |
|
Prepaid expenses | |
| (20,514 | ) | |
| 477,000 | | |
|
Right of use asset | |
| (14,862 | ) | |
| | | |
|
Rental inventory | |
| (137,937 | ) | |
| (1,740,220 | ) | |
|
Accounts payable and accrued liabilities | |
| 15,520 | | |
| (50,482 | ) | |
|
Right of use liabilities | |
| 14,862 | | |
| | | |
|
Net cash used in operating activities | |
| (1,177,670 | ) | |
| (2,438,593 | ) | |
|
| |
| | | |
| | | |
|
Cash Flows from Investing Activities: | |
| | | |
| | | |
|
Purchases of property and equipment | |
| | | |
| | | |
|
Net cash used in investing activities | |
| | | |
| | | |
|
| |
| | | |
| | | |
|
Cash Flows from Financing Activities: | |
| | | |
| | | |
|
Repayment on notes payable | |
| | | |
| (67,026 | ) | |
|
Repayment of related party advances | |
| (8,731 | ) | |
| | | |
|
Repayment of line of credit | |
| | | |
| (128,466 | ) | |
|
Repayment of notes payable related party | |
| (199,750 | ) | |
| (100,000 | ) | |
|
Proceeds from notes payable | |
| 199,996 | | |
| | | |
|
Proceeds from notes payable related party | |
| 94,750 | | |
| 205,000 | | |
|
Proceeds from sale of common stock | |
| 1,102,264 | | |
| 2,289,300 | | |
|
Net cash provided by financing activities | |
| 1,188,529 | | |
| 2,198,808 | | |
|
| |
| | | |
| | | |
|
Net change in cash | |
| 10,859 | | |
| (239,785 | ) | |
|
| |
| | | |
| | | |
|
Cash, at beginning of period | |
| 38,971 | | |
| 278,756 | | |
|
| |
| | | |
| | | |
|
Cash, at end of period | |
$ | 49,830 | | |
$ | 38,971 | | |
|
| |
| | | |
| | | |
|
Supplemental disclosures of cash flow information: | |
| | | |
| | | |
|
Cash paid for interest | |
$ | | | |
$ | | | |
|
Cash paid for income taxes | |
$ | | | |
$ | | | |
See accompanying notes to the audited consolidated
financial statements.
| | F-6 | | |
**GenFlat Holdings, Inc.**
**Notes to Consolidated Financial Statements**
**For the years ended June 30, 2025 and 2024**
**NOTE 1. NATURE OF BUSINESS AND GOING CONCERN**
On September 9, 2019 (commencement of operations),
GenFlat Holdings, Inc. (formerly Healthcare Business Resources Inc.), a domestic corporation was organized in Delaware to provide consulting
services to healthcare organizations. Unless the context otherwise requires, all references to **GenFlat** **Company**,
**we**, **our** or **us** and other similar terms means GenFlat Holdings, Inc. (formerly
Healthcare Business Resources Inc.), and its subsidiaries.
On October 18, 2023, the Company entered into
a Share Exchange Agreement (Share Exchange Agreement) with GenFlat, Inc*.*(**GenFlat, Inc.**),
a Delaware corporation, and GenFlat, Inc. shareholders who own97.1% of the outstanding shares of common stock of GenFlat, Inc. Pursuant
to the Share Exchange Agreement, all GenFlat, Inc. shareholders who are parties to the Share Exchange Agreement will receive ninety eight
percent (98%) of the issued and outstanding shares of common stock of the Company in exchange for their shares of GenFlat, Inc. common
stock on a pro rata basis.
The Share Exchange Agreement closed on
December 20, 2023. Pursuant to the Share Exchange Agreement, and on the terms and subject to the conditions contained therein, at
the closing, the Company acquired 97.22% of the outstanding shares of common stock of GenFlat, Inc. from GenFlat, Inc. stockholders
who were a party to the Share Exchange Agreement in exchange for 10,438,470 shares of common stock of the Company.
Additionally, 110,000 shares
of outstanding Company common stock were canceled, resulting in 10,541,500
shares of common stock issued and outstanding as of the closing date.
As a result of the closing of the Share Exchange
Agreement, the Company discontinued all aspects of its health care consulting business, and the Company is now focused on developing the
GenFlat business plan. GenFlat is a start-up company that developed a more sustainable collapsible marine container, replacing traditional
standard marine containers. GenFlat operates as a container sales and leasing company and supplies GenFlats patented marine container
primarily to shipping line customers under a variety of short and long-term lease structures. In accordance with reverse acquisition
accounting treatment, the historical financial statements of GenFlat, Inc. as of period ends, and for periods ended, prior to the acquisition
became the historical financial statements of the Company in all future filings with the SEC, and the Companys fiscal year end
became June 30. All prior period information presented within this filing is of GenFlat, Inc. historical operations. The Company changed
its name from Healthcare Business Resources Inc. to GenFlat Holdings, Inc. to better reflect its new business operations.
Unless the context otherwise requires, all references
to **GenFlat** **Company**, **we**, **our** or **us**
and other similar terms means GenFlat Holdings, Inc. (formerly Healthcare Business Resources Inc.), and its subsidiaries.
**Liquidity and Going Concern**
These consolidated financial statements have been
prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will
be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different
from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying
values and classification of assets and liabilities should the Company be unable to continue as a going concern. At June 30, 2025
the Company had not yet achieved consistent profitable operations and expects to incur further losses in the development of its business,
all of which raise substantial doubt about the Companys ability to continue as a going concern. The Companys ability to
continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing
to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has initiated
a formal sales and marketing plan including direct email campaigns, industry events, and business to business digital advertising to generate
sales. The Company also intends to raise funds through an equity offering to meet the capital requirements to manufacturer its products.
However, there is no assurance of additional funding being available through these plans or other sources.
| | F-7 | | |
**NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
**Basis of Presentation**
The accompanying audited consolidated financial
statements of the Company have been prepared in accordance with accounting principles generally accepted in the United Stated of America
(U.S. GAAP) and, as such, include amounts based on judgments, estimates, and assumptions made by management that affect
the reported amounts of assets and liabilities and 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.
**Principles of Consolidation**
The accompanying consolidated financial statements
include the accounts of the Company and its majority owned subsidiary, GenFlat, Inc, and its wholly-owned subsidiaries Collapsible Revolution,
LLC, and Sub Oceanic Genflat LLC. All intercompany accounts, transactions and balances have been eliminated in consolidation.
**Use of Estimates**
The preparation of financial statements in conformity
with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
**Cash and Cash Equivalents**
Cash and cash equivalents include cash on hand,
demand deposits with banks and liquid investments with an original maturity of three months or less.
**Accounts Receivable and the Allowances for
Credit losses**
Accounts receivable are recorded in the period
when the right to receive payment or other consideration becomes unconditional. Accounts receivable are recorded at the invoiced amount
and do not earn interest. The Company maintains an allowance for credit losses based upon the best estimate of probable credit losses
in existing accounts receivable. The Company determines the allowance based upon individual accounts when information indicates the customers
may have an inability to meet their financial obligations, as well as historical collection and write-off experience. As of June
30, 2025 and 2024, the Company had an allowance of $13,127 and $0, respectively. During the years ended June 30, 2025 and 2024, the Company
recognized credit losses of $13,127 and $0, respectively.
****
**Rental Inventory**
Rental inventory consists of collapsible marine
shipping containers. Rental inventory is stated at cost, with an estimated useful life of 10 years. Generally, when rental equipment is
acquired, the Company estimates the period that it will hold the asset, primarily based on historical measures of the amount of rental
activity (e.g. equipment usage) and the targeted age of equipment at the time of disposal. The Company also estimates the residual value
of the applicable rental equipment at the expected time of disposal. The residual value for rental equipment is affected by factors which
include equipment age and amount of usage. Depreciation is recorded over the estimated holding period. Depreciation rates are reviewed
on a quarterly basis based on management's ongoing assessment of present and estimated future market conditions, their effect on residual
values at the time of disposal and the estimated holding periods. Market conditions for used equipment sales can also be affected by external
factors such as the economy, natural disasters, fuel prices, supply of similar used equipment, the market price for similar new equipment
and incentives offered by manufacturers of new equipment. These key factors are considered when estimating future residual values and
assessing depreciation rates. As a result of this ongoing assessment, the Company makes periodic adjustments to depreciation rates of
rental equipment in response to changed market conditions. During the year ended June 30, 2025, the Company recognized an impairment loss
of $1,130,000 related to the decline in the expected net realizable value of the Companys 40 foot containers.
| | F-8 | | |
**Long-Lived Assets**
The Company amortizes acquired definite-lived
intangible assets over their estimated useful lives. Other indefinite-lived intangible assets are not amortized but subject to annual
impairment tests. In accordance with ASC 360 Property Plant and Equipment, the Company reviews the carrying value of intangibles
subject to amortization and long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of long-lived assets is measured
by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets
are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property,
if any, exceeds its fair market value.
**Impairment of Long-lived Assets**
Long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated
undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an
impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.
**Revenue Recognition**
The Company is principally engaged in the business
of renting equipment. Equipment rental revenue includes revenue generated from renting equipment to customers and is recognized on a straight-line
basis over the length of the rental contract. As part of this straight-line methodology, when the equipment is returned, the Company recognizes
as incremental revenue the excess, if any, between the amount the customer is contractually required to pay, which is based on the rental
contract period applicable to the actual number of days the equipment was out on rent, over the cumulative amount of revenue recognized
to date. In any given accounting period, the Company will have customers return equipment and be contractually required to pay more than
the cumulative amount of revenue recognized to date under the straight-line methodology. Also included in equipment rental revenue is
re-rent revenue in which the Company will rent specific pieces of equipment from vendors and then re-rent that equipment to its customers.
Provisions for discounts, rebates to customers and other adjustments are provided for in the period the related revenue is recorded.
The Companys sale of rental and new equipment,
parts and supplies to customers are recognized under ASC Topic 606, *Revenue from Contracts with Customers,*(Topic 606).
The Company recognizes revenue in these transactions when it satisfies a performance obligation by transferring control over a product
or service to a customer. These transactions typically contain a single performance obligation, and a recognized at a point in time. The
amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for such products or services.
**Basic and Diluted Loss Per Share**
In accordance with ASC 260 Earnings per
Share, basic net loss per common share is computed by dividing net loss for the period by the weighted average number of common
shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted average
number of common and common equivalent shares, such as stock options and warrants, outstanding during the period. Such common equivalent
shares have not been included in the computation of net loss per share as their effect would be anti-dilutive.
**Income Taxes**
The Company accounts for income taxes in accordance
with ASC 740, which requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition
and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability
approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets
if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility
is uncertain.
| | F-9 | | |
Tax benefits of uncertain tax positions are recorded
only where the position is more likely than not to be sustained based on their technical merits. The amount recognized is
the amount that represents the largest amount of tax benefit that is greater than 50% likely of being ultimately realized. A liability
is recognized for any benefit claimed or expected to be claimed, in a tax return in excess of the benefit recorded in the financial statements,
along with any interest and penalty (if applicable) in such excess. The Company has no uncertain tax positions as of June 30, 2025, or
June 30, 2024.
**Fair Value of Financial Instruments**
The carrying value of short-term instruments,
including cash, accounts receivable, rental inventory, prepaid expenses, accounts payable and accrued expenses, and notes payable approximate
fair value due to the relatively short period to maturity for these instruments.
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. Valuation techniques used to measure fair
value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation
hierarchy for disclosures of fair value measurements, defined as follows:
Level 1 - inputs to the valuation methodology
are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 - inputs to the valuation methodology
include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability,
either directly or indirectly, for substantially the full term of the financial instruments.
Level 3 - inputs to the valuation methodology
are unobservable and significant to the fair value.
The Company does not have any assets or liabilities
that are required to be measured and recorded at fair value on a recurring basis.
**Stock-Based Compensation**
Accounting Standards Codification (ASC)
718, Accounting for Stock-Based Compensation established financial accounting and reporting standards for stock-based compensation
plans. It defines a fair value-based method of accounting for an employee stock option or similar equity instrument. Accordingly, employee
share-based payment compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense
over the requisite service period. The valuation of employee stock options is an inherently subjective process, since market values are
generally not available for long-term, non-transferable employee stock options. Accordingly, the Black-Scholes option pricing model is
utilized to derive an estimated fair value. The Black-Scholes pricing model requires the consideration of the following six variables
for purposes of estimating fair value:
Expected Dividends. We have never
declared or paid any cash dividends on any of our capital stock and do not expect to do so in the foreseeable future. Accordingly, we
use an expected dividend yield of zero to calculate the grant-date fair value of a stock option.
Expected Volatility. The expected
volatility is a measure of the amount by which our stock price is expected to fluctuate during the expected term of options granted. We
determine the expected volatility solely based upon the historical volatility of a peer group of companies of similar size and with similar
operations.
Risk-Free Interest Rate. The
risk-free interest rate is the implied yield available on U.S. Treasury zero-coupon issues with a remaining term equal to the options
expected term on the grant date.
Expected Term. The expected life
of stock options granted is based on the actual vesting date and the end of the contractual term.
| | F-10 | | |
Stock Option Exercise Price and Grant
Date Price of Common Stock. Currently the Company utilizes the most recent cash sale price of its common stock as the most reasonable
indication of fair value.
The Company accounts for compensation cost for
stock option plans and for share based payments to non-employees in accordance with ASC 505, Accounting for Equity Instruments
Issued to Non-Employees for Acquiring, or in Conjunction with Selling, Goods or Services. Share-based awards to non-employees are
expensed over the period in which the related services are rendered at their fair value.
**Research and Development Costs**
Research and development costs are expensed as
incurred.
**Segment Reporting**
ASC Topic 280, *Segment Reporting*,
requires annual and interim reporting for an enterprises operating segments and related disclosures about its products, services,
geographic areas and major customers. An operating segment is defined as a component of an enterprise that engages in business activities
from which it may earn revenues and expenses, and about which separate financial information is regularly evaluated by the chief operating
decision maker in deciding how to allocate resources. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic
280): Improvements to Reportable Segment Disclosure. The ASU updates reportable segment disclosure requirements, primarily through
requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. The amendments do
not change how segments are determined, aggregated, or how thresholds are applied to determine reportable segments. The Company adopted
ASU No. 2023-07 during the year ended June 30, 2025.
Segment information is prepared on the same basis
that the Companys CEO, who is the Chief Operating Decision Maker (CODM), manages the business, evaluates financial
results, and makes key operating decisions. The Company has a single reportable operating segment, equipment leasing, the primary activity
from which the Company earns revenue. The CODM uses net income to evaluate and make key operating decisions of the business. As such,
no further segment disclosures are presented within the consolidated financial statements and footnotes.
**Leases**
The Company accounts for leases under ASC 842
-*Leases*. The Company determine if an arrangement is a lease at inception. Operating leases are included in operating lease
right-of-use (ROU) assets, current portion of obligations under operating leases, and obligations under operating leases,
non-current on our balance sheets.
Operating lease ROU assets and operating lease
liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date, adjusted
by the deferred rent liabilities at the adoption date. Short-term leases of one year or less are not recognized as ROU assets and liabilities.
If our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the information available at commencement
date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes
lease incentives and initial direct costs incurred. Our terms may include options to extend or terminate the lease when it is reasonably
certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term.
**Reclassification**
****
Certain prior year amounts have been reclassified
for consistency with the current year presentation. These reclassifications had no effect on the reported consolidated results of operations.
****
**Recent Accounting Pronouncements**
From time to time, new accounting pronouncements
are issued by the FASB that are adopted by the Company as of the specified effective date.
In November 2023, the
Financial Accounting Standard Board (FASB) issued ASU 2023-07,*Improvements to Reportable Segment Disclosures*,
which amends the existing segment reporting guidance (ASC Topic 280) to improve reportable segment disclosure requirements, primarily
through enhanced disclosures about significant segment expenses that are regularly provided to theCODMand included within
each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition,
the title and position of theCODMand an explanation of how theCODMuses the reported measure(s) of segment profit
or loss in assessing segment performance and deciding how to allocate resources. The Company adopted this standard effective July 1, 2024.
The Company does not believe that any other recently
issued effective pronouncements, or pronouncements issued but not yet effective, if adopted, would have a material effect on the accompanying
consolidated financial statements.
**NOTE 3. INTANGIBLE ASSETS, NET**
On March 26, 2021, the Company acquired a group
of patents related to the container design and functionality for a purchase price of $185,000. The Company paid $60,000 in cash and issued
a $125,000 note payable for the transaction. The patents acquired are recognized as a long-lived intangible asset and are amortized over
their estimated useful lives.
The following table represents the balances of
intangible assets as of June 30, 2025 and June 30, 2024:
|
Schedule of intangible assets | |
| |
| | | |
| | | |
|
| |
Estimated life | |
June 30, 2025 | | |
June 30, 2024 | | |
|
| |
| |
| | |
| | |
|
Patent costs | |
5.75years | |
$ | 186,300 | | |
$ | 186,300 | | |
|
| |
| |
| 186,300 | | |
| 186,300 | | |
|
Accumulated Amortization | |
| |
| (137,720 | ) | |
| (105,185 | ) | |
|
Net Intangible | |
| |
$ | 48,580 | | |
$ | 81,115 | | |
| | F-11 | | |
During the years ended June 30, 2025 and June
30, 2024, the Company recognized amortization expense of $32,535 and $32,624 respectively,on the intangible assets.
**NOTE 4. RENTAL INVENTORY, NET**
During the years ended June 30, 2025 and 2024,
the Company developed and built its collapsible containers and actuators used to collapse the marine containers. The containers purchased
are recognized as rental inventory and are depreciated over their estimated useful lives.
As of June 30, 2025 and 2024, rental inventory
consists of the following:
|
Schedule of rental inventory | |
| |
| | | |
| | | |
|
| |
Estimated life | |
June 30, 2025 | | |
June 30, 2024 | | |
|
| |
| |
| | |
| | |
|
Collapsible Containers | |
10 years | |
$ | 460,000 | | |
$ | 1,590,000 | | |
|
Actuators | |
10 years | |
| 237,676 | | |
| 150,220 | | |
|
Gennys | |
10 years | |
| 50,484 | | |
| | | |
|
| |
| |
| 748,160 | | |
| 1,740,220 | | |
|
Accumulated Depreciation | |
| |
| (204,423 | ) | |
| (79,500 | ) | |
|
Rental Inventory, net | |
| |
$ | 543,737 | | |
$ | 1,660,720 | | |
Depreciation on rental inventory of $124,920 and
$79,500 was recognized during the years ended June 30, 2025 and June 30, 2024, respectively and is included in costs of goods sold on
the accompanying consolidated statements of operations. During the year ended June 30, 2025, the Company recorded impairment loss of $1,130,000
on its rental inventory related to a decline in the expected net realizable value of the 40 foot containers.
**NOTE 5. LEASES**
The Company maintains an operating lease for
its office space. The lease has a remaining term of 18 months. The Company determines if an arrangement is a lease at inception. As the
rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate based on information available
at commencement to determine the present value of the lease payments. Right-of-use assets and lease liabilities are recognized at commencement
date based on the present value of lease payments over the lease term. On January 3, 2025, the Company extended the operating lease for
its office space to expire on January 31, 2026, and agreed to pay $1,320 on a monthly basis. Leases with an initial term of 12 months
or less (short-term leases) are not recorded on the balance sheet and are recognized on a straight-line basis over the
lease term. The amount of right-of-use assets and lease liabilities were $22,989
as of June 30, 2025 and $8,127, respectively
as of June 30, 2024. Aggregate lease expense for the years ended June 30, 2025, and 2024 was $15,000
and $10,800, respectively.
|
Schedule of lease cost | |
| | | |
| | | |
|
| |
| | |
Remaining | | |
|
| |
Operating | | |
Term in | | |
|
| |
Lease | | |
Years | | |
|
2026 | |
| 15,840 | | |
| | | |
|
2027 | |
| 10,560 | | |
| | | |
|
Total lease payments | |
| 26,400 | | |
| | | |
|
Less: imputed interest | |
| (3,411 | ) | |
| | | |
|
Present value of lease liability | |
| 22,989 | | |
| 1.58 | | |
| | F-12 | | |
**NOTE 6. DEBT**
*Note Payable*
On March 26, 2021, the Company entered into a
promissory note agreement with a third party for a total principal of $125,000.
The Company will pay 2.5%
per annum, compounded annually until the total principal is paid in full. The note has no maturity date and no default interest rate.
During the year ended June 30, 2024, the Company repaid a total of $74,500,
$67,026
and $7,474
of principal and accrued interest. As of June 30, 2025, and June 30, 2024, the balance owed on the note was $57,974. Accrued interest on the note was $1,815
and $358
as of June 30, 2025, and June 30, 2024, respectively.
On July 30, 2024, the Company entered into a promissory
note agreement for a total principal of $99,996. The Company will pay 2.5% per annum, until the total principal is paid in full. The note
has no maturity date and a default interest rate of 18%. As of June 30, 2025, the balance owed on the note was $99,996. Accrued interest
on the note was $2,294 as of June 30, 2025. In December 2024, the noteholder elected to receive shares in settlement of the principal
balance. The Company agreed to issue 16,666 shares of common stock to settle the note payable in January 2025 but those shares have not
yet been issued.
On June 13, 2025, the Company entered into a promissory
note agreement for a total principal of $100,000. The Company will pay 8.0% per annum, until the total principal is paid in full. The
note matures on January 2, 2026 and has no default interest rate. As of June 30, 2025, the balance owed on the note was $100,000. Accrued
interest on the note was $373 as of June 30, 2025.
*Note Payable related party*
During the year ended June 30, 2024, the Company
entered into three promissory note agreements with a related party for a total principal of $205,000. The Company will pay 2.5% per annum,
until the total principal is paid in full. The note has no maturity date and no default interest rate. During the years ended June 30,
2025 and June 30, 2024, the Company repaid $105,000 and $100,000, respectively. As of June 30, 2025 and June 30, 2024, the balance owed
on the note was $0 and $105,000. Accrued interest on the note was $0 and $260 as of June 30, 2025 and June 30, 2024, respectively.
On October 1, 2024, the Company entered into a
promissory note agreement with a significant shareholder for a total principal of $50,000. The Company will pay 10.00% per annum, until
the total principal is paid in full. The note has a maturity date of November 1, 2024 and a default interest rate of 18%. During the year
ended June 30, 2025, the Company repaid a total of $50,000 on the promissory note agreement and $573 of accrued interest. As of June 30,
2025, the balance owed on the note was $0.
**NOTE 7. STOCKHOLDERS EQUITY**
On September 8, 2023, the stockholders of GenFlat
Holdings, Inc. (f/k/a Healthcare Business Resources Inc.) approved an amendment (the Amendment) to GenFlat Holdings, Inc.s
Certificate of Incorporation to increase the total number of shares of common stock that it shall have authority to issue from 2,000,000
shares to 2,500,000,000 shares. The Amendment was filed with the Secretary of the State of Delaware and became effective on October 16,
2023.
Effective May 17, 2024, the Company effected a
reverse split of its common stock at a ratio of one-for-one hundred (1:100) (the Reverse Split). The par value of the common
stock will remain at $0.001 per share. The number of authorized shares of common stock after the Reverse Split is fixed at twenty-five
million (25,000,000) shares of common stock. The Reverse Split is presented retroactively in these consolidated financial statements.
| | F-13 | | |
During the year ended June 30, 2025, the Company
sold a total of 183,711 shares of common stock in exchange for gross cash proceeds of $1,102,264.Of these shares, 43,667 shares,
sold for $262,000, were not issued as of June 30, 2025, and are recorded as subscription payable on the consolidated balance sheet as
of June 30, 2025. The Company also issued 33,333 shares related to a subscription during the year ended June 30, 2024. In aggregate the
Company issued a total of 173,377 shares of common stock during the year ended June 30, 2025.
During the year ended June 30, 2024, prior
to closing of the Share Exchange, GenFlat sold a total of 564,628 shares of its common stock in exchange for net cash proceeds of $2,289,300.
Of these shares, 33,333 were issued during the year ended June 30, 2025. GenFlat also returned $50,000 in cash to an investor who subscribed
to shares during the year ended June 30, 2023.
On October 18, 2023, the Company entered into
the Share Exchange Agreement with GenFlat and GenFlat shareholders who owned 97.22% of the outstanding shares of common stock of GenFlat.
Pursuant to the Share Exchange Agreement, all GenFlat shareholders who were parties to the Share Exchange Agreement received 10,438,470
shares of common stock of the Company in exchange for their shares of GenFlat common stock on a pro rata basis.The Share Exchange
Agreement closed on December 20, 2023. Additionally, 110,000 shares of outstanding Company common stock were canceled, resulting in 10,541,500
shares of common stock issued and outstanding as of the Closing Date.
The Share Exchange was accounted for as a reverse
acquisition under ASC 805 due to the change in voting control of the legal acquirer. GenFlat was determined to be the accounting acquirer.
As a result of the transaction, the Company has presented the historical operations of GenFlat prior to the merger in its consolidated
financial statements. The balance sheet of Healthcare Business Resources Inc. at the date of the Share Exchange Agreement consisted of
the following:
|
Schedule of business combination | |
| | | |
|
Accounts payable | |
$ | 107,880 | | |
|
Accrued interest | |
| 9,877 | | |
|
Senior Secured Convertible Credit line | |
| 128,466 | | |
|
Total liabilities assumed | |
$ | 246,223 | | |
Subsequent to the closing of the Share Exchange,
the Company repaid the Senior Secured Convertible Credit Line and accrued interest in full.
As a result of the Share Exchange, the Company
recognized a noncontrolling interest related to the portion of GenFlat equity held by a shareholder not party to the Share Exchange agreement,
representing 2.78% of outstanding GenFlat shares prior to the merger.
*Incentive Stock Options*
Pursuant to the Companys 2020 Equity Incentive
Plan, as amended, no more than 1,500,000 shares of Common Stock shall be available for the grant of Awards under the 2020 Equity Incentive
Plan. During the terms of the Awards, the Company shall keep available at all times the number of shares of Common Stock required to satisfy
such Awards. Shares available for future issuance under the 2020 Equity Plan is 1,500,000.
| | F-14 | | |
The following table summarizes the stock option
activity for the year ended June 30, 2025:
|
Schedule of option activity | |
| | | |
| | | |
|
| |
Number of | | |
Weighted Average Exercise Price | | |
|
| |
Options | | |
Per Share | | |
|
Outstanding at June 30, 2024 | |
| | | |
$ | | | |
|
Granted | |
| 700,000 | | |
| 6.00 | | |
|
Exercised | |
| | | |
| | | |
|
Cancelled and expired | |
| | | |
| | | |
|
Forfeited and expired | |
| | | |
| | | |
|
Outstanding at June 30, 2025 | |
| 700,000 | | |
$ | 6.00 | | |
As of June 30, 2025, there were 350,000
stock options exercisable.
The estimated fair value of the options issued
in connection with the advisory agreements discussion in Note 10 was estimated using a Black-Scholes option pricing model and the following
assumptions: 1) dividend yield of0%; 2) risk-free rate of3.67-4.45%; 3) volatility of119-122%;4) a common stock
price of $6.00, and 5) an expected term of6.25 years using the simplified method of calculating expected term. The estimated fair
value of the options was $3,195,169. During the year ended June 30, 2025, the Company recognized expense of $2,385,312 for these awards
and expects to recognize an additional $809,857 through the end of the vesting period.
**NOTE 8. RELATED PARTY TRANSACTIONS**
From time to time, the Companys CEO paid
expenses on behalf of the Company. As of June 30, 2025, and June 30, 2024, the Company owed $0 and $8,731, respectively, in advances to
the Companys CEO. These advances were repaid in full by the Company in August 2024. The Companys President is a family member
of the CEO and receives an annual salary of $175,000.
In May 2022, Collapsible Revolution, LLC entered
into a consulting agreement with an advisor for consulting services related to public market listing of the Company. The Company paid
$20,000 in cash to the consultant and agreed to pay an additional $20,000 upon filing of a prospectus, $25,000 upon effectiveness of such
prospectus, and $25,000 upon public listing of the Companys shares of common stock. The Company also agreed to issue 10% of the
outstanding common shares of the Company to the consultant. The consultant formed GenFlat, Inc. in July 2022, and was its sole officer
and Director until the closing of a reverse merger. The consultant held 1,000,000 shares of common stock of the Company that were issued
at par value upon formation of GenFlat. At the time of the reverse merger, the consultant resigned as a Director and Officer, and amended
the consulting agreement to remove the equity consideration described above. The consultant was paid $70,000 as a transaction fee as a
result of the Share Exchange between GenFlat and the Company. This consultant was also a shareholder of the Company, and the holder of
the Senior Secured Line of Credit.
The Company maintains an operating lease for
its office space. The lease has a remaining term of 18 months. On January 3, 2025, the Company extended the operating lease for its office
space to expire on January 31, 2026, and agreed to pay $1,320 on a monthly basis. The Company determines if an arrangement is a lease
at inception. As the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate based on
information available at commencement to determine the present value of the lease payments. Right-of-use assets and lease liabilities
are recognized at commencement date based on the present value of lease payments over the lease term. Leases with an initial term of
12 months or less (short-term leases) are not recorded on the balance sheet and are recognized on a straight-line basis
over the lease term. See Note 5.
| | F-15 | | |
No member of management has benefited from the
transactions with related parties.
During the year ended June 30, 2024, the Company
entered into three promissory note agreements with a related party for a total principal of $205,000. The Company will pay 2.5% per annum,
until the total principal is paid in full. The note has no maturity date and no default interest rate. During the years ended June 30,
2025 and June 30, 2024, the Company repaid $105,000 and $100,000, respectively. As of June 30, 2025 and June 30, 2024, the balance owed
on the note was $0 and $105,000. Accrued interest on the note was $0 and $260 as of June 30, 2025 and June 30, 2024, respectively.
On October 1, 2024, the Company entered into a
promissory note agreement with a significant shareholder for a total principal of $50,000. The Company will pay 10.00% per annum, until
the total principal is paid in full. The note has a maturity date of November 1, 2024 and a default interest rate of 18%. During the year
ended June 30, 2025, the Company repaid a total of $50,000 on the promissory note agreement and $573 of accrued interest. As of June 30,
2025, the balance owed on the note was $0.
**NOTE 9. INCOME TAXES**
The Company is subject to United States federal
income taxes at an approximate rate of21%. The reconciliation of the provision for income taxes at the United States federal statutory
rate compared to the Companys income tax expense as reported is as follows:
The effective income tax rate for the years ended
June 30, 2025 and 2024 consisted of the following:
|
Schedule of effective income tax rate | |
| | | |
| | | |
|
| |
June 30, | | |
June 30, | | |
|
| |
2025 | | |
2024 | | |
|
Federal statutory income tax rate | |
| 21% | | |
| 21% | | |
|
Change in valuation allowance | |
| (21)% | |
| (21)% | | |
|
Net effective income tax rate | |
| | | |
| | | |
Our reconciliation between the expected federal
income tax benefit computed by applying the federal statutory rate to our net loss and the actual benefit for taxes on net loss for 2025
and 2024 is as follows:
|
Schedule of reconciliation expected federal
income tax benefit | |
| | | |
| | | |
|
|
June 30, | | |
|
| |
2025 | | |
2024 | | |
|
Expected federal income tax benefit at statutory rate before valuation allowance | |
$ | 980,287 | | |
$ | 255,020 | | |
|
Less: Valuation allowance | |
| (980,287 | ) | |
| (255,020 | ) | |
|
Income tax benefit | |
$ | | | |
$ | | | |
The Company has current net operating loss carryforwards
of approximately $7,818,000 as of June 30, 2025, to offset future taxable income, which expires beginning 2031.
| | F-16 | | |
The components of the Companys deferred
tax asset are as follows:
|
Schedule of components of deferred tax asset | |
| | | |
| | | |
|
| |
June 30, | | |
|
| |
2025 | | |
2024 | | |
|
Deferred tax assets: | |
| | | |
| | | |
|
Net deferred tax assets before valuation allowance | |
$ | 1,641,861 | | |
$ | 661,574 | | |
|
Less: Valuation allowance | |
| (1,641,861 | ) | |
| (661,574 | ) | |
|
Net deferred tax assets | |
$ | | | |
$ | | | |
Based on the available objective evidence, including
the Companys history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully
realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at June 30, 2025 and
2024, respectively.
In accordance with FASB ASC 740, the Company has
evaluated its tax positions and determined there are no uncertain tax positions.
**NOTE 10. COMMITMENTS AND CONTINGENCIES**
*Litigation*
From time to time, the Company may be subject
to routine litigation, claims, or disputes in the ordinary course of business. In the opinion of management, no pending or known threatened
claims, actions or proceedings against the Company are expected to have a material adverse effect on the Companys financial position,
results of operations or cash flows. The Company cannot predict with certainty, however, the outcome or effect of any litigation, investigatory
matters, or claims. There can be no assurance as to the ultimate outcome of any lawsuits and investigations.
*Commitments*
On July 1, 2024 and August 21, 2024, the Company
entered an aggregate of seven separate Advisory Committee Member Agreements and agreed to the following compensation in each agreement.
|
|
a. |
Cash Compensation. $5,000 annually, payable on June 30th of each year of service. | |
|
|
|
| |
|
|
b. |
Equity Compensation. Stock options for 100,000 shares of Company stock. The stock options will have an exercise price of $6.00 per share and vest as follows: 1) Fifty thousand (50,000) options will vest immediately; 2) Twenty-five thousand (25,000) options on the first anniversary of the agreement, and 3) Twenty-five thousand (25,000) options on the second anniversary of the agreement, in all cases subject to continued Advisory Committee service as of such vesting dates and pursuant to the Companys standard Non-Qualified Stock Option Award Agreement. Vested stock options must be exercised within ten (10) years of the grant date. | |
The exercise price of the options will be
the fair market value of a share of common stock on the date of grant.
During the year ended June 30, 2025, the Company
recognized expense of $2,385,312 for these awards and expects to recognize an additional $809,857 through the end of the vesting period.
| | F-17 | | |
**NOTE 11 SUBSEQUENT EVENTS**
Management has evaluated events through September
18 2025, the date these financial statements were available for issuance, and determined there were no events requiring disclosures, except
as disclosed below:
On July 22, 2025, the Company entered
into a promissory note agreement with a significant shareholder for total principal of $100,000. The Company will pay 9% per annum, until
the total principal is paid in full. The note matures on April 18, 2026 and has no default interest rate.
In September 2025, the Company issued 16,667 shares
pursuant to the conversion of $99,996 in notes payable as discussed in Note 6 and issued 43,667 shares subscribed to during the year ended
June 30, 2025.
On September 2, 2025, the Company entered into
a promissory note agreement with the Companys CEO Drew Hall for total principal of $75,000. The Company will pay 2.5% per annum,
until the total principal is paid in full. The note matures on November 2, 2027 and has no default interest rate.
On September 15, 2025, the Company entered into
a promissory note agreement with the Companys CEO Drew Hall for total principal of $35,000. The Company will pay 2.5% per annum,
until the total principal is paid in full. The note matures on November 15, 2027 and has no default interest rate.
****
****
****
****
****
****
****
****
****
****
****
****
****
****
| | F-18 | | |
****
**Item 9.****Changes in and Disagreements
with Accountants on Accounting and Financial Disclosures.**
None.
**Item9A.****Controls and Procedures.**
*Evaluation of Disclosure
Controls and Procedures.*
Our chief executive officer,
who serves as our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls
and procedures as of June 30, 2025. The term disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, means controls and other procedures of a company that are designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the SECs rules and forms. Disclosure controls and procedures include
controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits
under the Securities Exchange Act of 1934 is accumulated and communicated to the companys management, including its principal executive
and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any
controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives
and management necessarily applies its judgment in evaluating the cost- benefit relationship of possible controls and procedures. Based
on the evaluation of our disclosure controls and procedures as of June 30, 2025, our principal executive officer/principal financial officer
concluded that, as of such date, our disclosure controls and procedures were not effectivebecause of the identification of a material
weakness in our internal control over financial reporting, which is identified below, which we view as an integral part of our disclosure
controls and procedures.
*Management's Report on
Internal Control Over Financial Reporting*
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules13a-15(f) and
15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles.
Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change
in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an
evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2025 using the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO)in Internal Control-Integrated Framework- 2013. Based on
its evaluation, our management concluded that the following are material weaknesses in our internal control over financial reporting:
|
|
|
We do not have written documentation of our internal control policies and procedures. | |
|
|
|
| |
|
|
|
Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. To the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. | |
A material weakness is a control
deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard 1305) or combination
of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim financial statements
will not be prevented or detected.
| | 43 | | |
It should be noted that any
system of controls, however well designed and operated, can provide only reasonable and not absolute assurance that the objectives of
the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of certain
events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions, regardless of how remote.
In light of the material weakness
described above, we performed additional analysis and other post-closing procedures to ensure our financial statements were prepared in
accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report
fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
*Managements Plan to Remediate the Material
Weakness*
With the oversight of senior
management, management is working towards remediation of these weaknesses, including addition of accounting personnel and to evaluate
and implement written procedures that will strengthen our internal controls. While we believe these measures will remediate the material
weakness identified and strengthen our internal control over financial reporting, there is no assurance that we will demonstrate sufficient
improvement that the material weakness will be remediated. We are committed to continuing to improve our internal control processes and
will continue to diligently review our financial reporting controls and procedures
*Attestation Report of the
Registered Public Accounting Firm*
This Annual Report does not
include an attestation report of our Companys independent registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to attestation by our Companys registered public accounting firm pursuant
to rules of the Securities and Exchange Commission that permit our Company to provide only managements attestation in this Annual
Report.
*Changes in Internal Control
Over Financial Reporting*.
No change in our Companys
internal control over financial reporting occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting.
**Item 9B.****Other Information.**
During the three months
ended June30, 2025, no director or officer of the Company adopted
or terminated
a Rule10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is
defined in Item 408 of Regulation S-K.
**Item 9C.****Disclosure Regarding Foreign
Jurisdictions that Prevent Inspections.**
Not Applicable
****
****
| | 44 | | |
****
**PART III**
**Item 10. Directors, Executive Officers and
Corporate Governance**
**Information about our Executive Officer and
Directors**
The following table sets
forth the name, age and position of each director and executive officer of the Company:
|
Name |
|
Age |
|
Title |
|
Held Position Since | |
|
Drew D. Hall |
|
76 |
|
Chief Executive Officer/Chief Financial Officer, Director |
|
December 20, 2023 | |
|
Garrett R. Hall |
|
46 |
|
President |
|
November 27, 2024 | |
|
Joseph J. Maggio |
|
67 |
|
Chief Operations Officer |
|
November 27, 2024 | |
The following information
sets forth the backgrounds and business experience of the director and executive officers of the Company.
*Drew D. Hall*. Mr. Hall has been
serving as GenFlat Holdings, Inc.s Chief Executive Officer/Chief Financial Officer, and sole Director since December 20,
2023. Additionally, Mr. Hall is GenFlat, Inc.s (and/or its subsidiaries) co-founder and has been serving as its Chief
Executive Officer/Chief Financial Officer since January 2018 to present where he has managed operations and finances. Since 2019,
Mr. Hall has served as Managing Member of Collapsible Revolution, LLC, a wholly owned subsidiary of GenFlat, Inc. Since 1994 to
present, Mr Hall has served as Managing Partner of Tooele Associates, LP, responsible for all real estate development for that
entity since 1994. Tooele Associates, LP owns property in Tooele City, UT. Mr. Hall is Managing Member of Bakken Development,
LLC, Beach Railport, LLC and Beach Inn, LLC, land holding companies since 2012. He oversees all leasing and financing for those
entities. Mr. Hall is Managing Member of Jacks Market, LLC, leasing commercial real estate since 1997 in charge of all
leasing and financing of Jacks Market, LLC. Mr. Hall has been retained by the Utah Department of Transportation and The Salt
Airport Authority as a land development expert in land condemnation litigation since 2022. Since 1999, Mr. Hall, as Managing Member
of Overlake Golf, LLC, has been responsible for all aspects of supervising the operation of the Links at Overlake Golf Course
located in Tooele, UT. Mr. Hall received his B.S. degree in Accounting from Brigham Young University in 1975. Mr. Hall
was a practicing CPA from 1976 thru 1994 and is a life time member of the American Society of Certified Accountants. Mr. Hall has
served on the University of Utah Crimson Club Board of Directors since 2012 and served as its President from July 2019 thru June
2023. Mr. Halls qualifications to serve on our Board include his years practicing as a CPA, his knowledge managing various
businesses and his leadership of our Company.
*Garrett Hall*. Mr. Hall had been serving
as GenFlat, Inc.s President since November 27, 2024. Previously, Mr. Hall had been serving as GenFlat, Inc.s Chief Operations
Officer since December 20, 2023. Additionally, Mr. Hall has been serving as GenFlat, Inc.s (and/or its subsidiaries) Chief Operations
Officer since December 2021 to present where he has provided strategic and advisory expertise to GenFlat in the form of developing and
implementing its go-to-market strategy, supporting its sales team, and establishing channel partnerships. From April 2019 to 2023, Mr.
Hall served as Co-Founder/Chief Operations Officer at CSQ Index, a market research publication firm serving cannabis and hemp supply chain
vendors where he managed operations, conducted customer satisfaction research on supply chain vendors, consulted on customer experience
and retention matters, managed research, methodology, vendor relations, government relations, and grower outreach, managed consulting
services to ensure vendors received proper feedback on how to improve their products and services, and lead the sales team and tracked
all sales goals and opportunities. Mr. Hall received his B.A. in English from Brigham Young University in 2006 and his Juris Doctor Degree
Case Western Reserve University School of Law in 2009.
| | 45 | | |
*Joseph J. Maggio*. Mr. Maggio has been
serving as GenFlat Holdings, Inc.s Chief Operations Officer since November 27, 2024. Previously, Mr. Maggio had been serving as
GenFlat Holdings, Inc.s President since December 20, 2023. Additionally, Mr. Maggio has been President of GenFlat, Inc. since
2022. From 2021 to present, Mr. Maggio has been serving as National Sales Manager with Lanter Delivery Systems, a national overnight,
unattended delivery solution company where he is responsible for business development and logistics operations, including ocean freight,
trucking, warehousing, drayage, container yard operations, documentation, contracting and administration services. From 2018 to 2021,
Mr. Maggio served as Director of Sales with NFI, a leading provider ofNorth American supply chain solutions, where he was
responsible for growing NFIs book of business in both contract logistics and supply chain services (warehousing, truck and rail
services). Mr. Maggio received his Bachelor of Science degree (Business Administration) from California State University Long Beach in
1979.
**Significant Employees**
We have no significant employees
other than the officers and director described above.
**Family Relationships**
Drew D. Hall is Garrett Halls
father. There are no other family relationships among our current officers or directors.
**Section 16(a) Reports**
Section 16(a)of the
Securities Exchange Act of 1934 requires that our executive officers and directors, and persons who own more than ten percent of a registered
class of our equity securities, file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater-than-ten
percent stockholders are required by SEC regulations to furnish us with all Section 16(a) forms they file.To the best of our knowledge,
based solely upon a review of Forms 3 and 4 and amendments thereto furnished to our Company during its most recent fiscal year and Forms
5 and amendments thereto furnished to our Company with respect to its most recent fiscal year, and any written representation referred
to in paragraph (b)(1) of Item 405 of Regulation S-K,all of our executive officers, directors and greater-than-ten percent stockholders
complied with all Section 16(a) filing requirements.
**Code of Ethics**
Our Company has adopted a
Code of Business Conduct and Ethics that applies to all of the Companys employees, including its principal executive officer and
principal financial officer. A copy of our Code of Business Conduct and Ethics is attached as Exhibit 14.1 to this Form 10-K and is available
for review on our Companys website www.genflat.com. The Company intends to disclose any changes in or waivers from its Code of
Business Conduct and Ethics by posting such information on its website.
**Changes to Director Nomination Procedures**
None.
**Term of office**
The term of office of each
director of the Company ends at the next annual meeting of the Companys stockholders or when such directors successor is
elected and qualifies.Each executive officer serves at the discretion of our board of directors and holds office until his or her
successor is duly elected and qualified or until his or her earlier resignation or removal.
| | 46 | | |
**Involvement in Certain Legal Proceedings**
During the past ten years,
none of our directors or executive officers have been involved in any of the proceedings described in Item 401(f) of Regulation S-K.
To the best of our knowledge,
there is no material proceeding to which any director or executive officer, affiliate of the Company, any owner of record or beneficially
of more than 5% of any class of voting securities of the Company, or any associate of such director, nominated director, officer, affiliate
of the Company, or security holder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to
the Company or any of its subsidiaries.
****
**Director Independence**
Although we do not currently
trade on the NASDAQ or any other trading medium, our board of directors has reviewed each of our former and current directors relationships
with the Company in conjunction with NASDAQ Listing Rule 5605(a)(2) that provides that an independent director is a
person other than an executive officer or employee of the Company or any other individual having a relationship which, in the opinion
of the Companys board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director. Our board of directors has affirmatively determined that Drew D. Hall, our sole director is not an independent director
that is independent of management or free of any relationship that would interfere with his independent judgment as a member of our board
of directors. The following former members of our board of directors, Stephen Epstein (resigned December 20, 2023) and Howard T. Wall,
III (resigned December 20, 2023) are/were not independent directors pursuant to the standards described above.
**Audit Committee**
Our Company does not have
a separately designated standing audit committee in place; our Companys entire board of directors has served, and currently serves,
in that capacity. This is due to our development stage and small executive management team. Our board of directors will continue to evaluate,
from time to time, whether a separately designated standing audit committee should be put in place. We do not have an audit committee
financial expert as that term is defined by the rules promulgated by the Securities and Exchange Commission. We currently have nominal
revenues and our Company does not carry a sufficient amount of directors and officers insurance, which makes it difficult for us
to find candidates willing to serve on our board of directors, especially independent directors to sit on an audit committee. If we are
able to generate sufficient revenues in the future, or raise a sufficient amount of capital to expand our operations, then we will likely
obtain a sufficient amount of directors and officers insurance, retain independent directors and form a separately designated standing
audit committee and other applicable committees. Drew D. Hall, our sole director is not independent within the meaning of
Rule 10A-3 under the Exchange Act and the NASDAQ Stock Market Rules for Audit Committee purposes.
**Nominating Committee**
We do not presently have a
separately designated standing nominating committee. This is due to our development stage and smaller sized board of directors. We do
not have a nominating committee charter. Instead of having such a committee, our board of directors historically has searched for and
evaluated qualified individuals to become nominees for membership on our board of directors. The directors recommend candidates for nomination
for election or reelection for each annual meeting of stockholders and, as necessary, to fill vacancies and newly created directorships.
| | 47 | | |
**Insider Trading Policies And Procedures**
Our Company has not adopted
any insider trading policies and procedures governing the purchase, sale, and/or other dispositions of the registrant's securities by
directors, officers and employees, or the Company itself, that are reasonably designed to promote compliance with insider trading laws,
rules and regulations, and any listing standards applicable to the Company. This is due to our development stage and small executive management
team and one person Board of Directors, and the absence of any other additional employees.
**Item 11. Executive Compensation.**
The table below summarizes
all compensation awarded to, earned by, or paid to our Named Executive Officers for the fiscal years ended June 30, 2025 and 2024.
**Summary Compensation Table**
|
Name and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($) | | |
Option Awards ($) | | |
All Other Compensation ($) | | |
Total ($) | | |
|
(a) | |
(b) | | |
(c) | | |
(d) | | |
(e) | | |
(f) | | |
(g) | | |
(h) | | |
|
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
|
Drew D. Hall | |
| 2025 | | |
$ | 180,000 | | |
| | | |
| | | |
| | | |
| | | |
| 180,000 | | |
|
CEO/CFO, Director | |
| 2024 | | |
$ | 180,000 | | |
| | | |
| | | |
| | | |
| | | |
| 180,000 | | |
|
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
|
Garrett R. Hall(1) | |
| 2025 | | |
$ | 162,500 | | |
| | | |
| | | |
| | | |
| | | |
| 162,500 | | |
|
President | |
| 2024 | | |
$ | 150,000 | | |
| | | |
| | | |
| | | |
| | | |
| 150,000 | | |
|
1. | On November 27, 2024, Garrett Hall resigned as the Companys and GenFlat, Inc.s Chief Operating
Officer and he was appointed as the Companys and GenFlat, Inc.s President. | |
****
**Employee, Severance, Separation and Change
in Control Agreements**
*Drew Hall Employment Agreement.*
On December 20, 2023, GenFlat
entered into a written employment agreement with Mr. Hall as Chief Executive Officer and Chief Financial Officer providing for an annual
salary of $180,000 per year, which is paid in regular installments in accordance with GenFlats general payroll practices. The Board
may suspend the obligation to pay Mr. Hall for periods of time in order to meet other cash flow demands. Mr. Hall is also eligible to
participate in GenFlats standard employee benefit programs, when available, for which executives of GenFlat are generally eligible,
including, insurance and health benefits, GenFlats 401(k) plan, equity compensation plan and bonuses under any bonus plan program
that may be established by our Board of Directors. Mr. Hall also serves as a member of our Board for no additional compensation.
| | 48 | | |
*Garret Hall Employment
Agreement*
On December 20, 2023, GenFlat
entered into a written employment agreement with Mr. Hall as Chief Operating Officer providing for an annual salary of $150,000 per year,
which is paid in regular installments in accordance with GenFlats general payroll practices. On November 27, 2024, Mr. Halls
employment agreement was amended solely to reflect his new position as President. Effective January 1, 2025, Mr. Halls employment
agreement was modified to provide for an annual salary of $175,000 per year, which is paid in regular installments in accordance with
GenFlats general payroll practices. The Board may suspend the obligation to pay Mr. Hall for periods of time in order to meet other
cash flow demands. Mr. Hall is also eligible to participate in GenFlats standard employee benefit programs, when available, for
which executives of GenFlat are generally eligible, including, insurance and health benefits, GenFlats 401(k) plan, equity compensation
plan and bonuses under any bonus plan program that may be established by our Board of Directors.
*Change in Control Benefits*
If, prior to the expiration
of the Employment Period and within twelve (12) months following a Change in Control, any of the above-named officers (Officer)
is subject to an Involuntary Termination (as defined in their Employment Agreement), then GenFlat will pay Change in Control Severance
Benefits to such officer, which will consist of (i) a payment (less applicable withholdings and deductions) equivalent to 18 months
of the officers base salary (as in effect immediately prior to (a) the Change in Control, or (b) the date of the termination of
Officers employment, whichever is greater), payable as a single lump sum within 74 days of Officers termination of employment;
(ii) the greater of 150% of the Officers (i) Target Bonus or (ii) most recent actual bonus payout payable as a single lump sum
within 74 days of the termination of Officers employment; (iii) taxable cash payments paid each calendar month for 18 months in
an amount equal to the monthly COBRA premium at the time of Officers termination for the health dental and vision benefits that
Officer and Officers eligible dependents had in effect under the Companys welfare plans immediately prior to Officers
termination (the COBRA Payment); and (iv) Acceleration of vesting of one hundred percent (100%) of Officers unvested
equity award compensation under any equity incentive plan maintained by Company, to the extent permitted by such plan and by applicable
laws.
*Involuntary Termination
No Change in Control*.
If, prior to the expiration
of the Employment Period, no Change in Control has occurred in the preceding twelve (12) months and Officer is subject to an Involuntary
Termination (as defined in their Employment Agreement), then the Company will pay Severance Benefits to Officer. The Severance
Benefits will consist of: (i) a payment (less applicable withholdings and deductions) equivalent to 12 months of Officers base
salary as in effect immediately prior to the date of Officers termination of employment, payable as a single lump sum within 74
days of the termination of Officers employment; (ii) the pro-rated amount of the bonus the Officer would have received had the
Officer remained employed through the calendar year, to be determined at the Companys sole discretion based on the Officers
performance and payable as a single lump sum within 74 days of Officers termination of employment; and (iii) taxable cash payments
paid each calendar month for 12 months in an amount equal to the monthly COBRA premium at the time of Officers termination for
the health dental and vision benefits that Officer and Officers eligible dependents had in effect under the Companys welfare
plans immediately prior to Officers termination (also, the COBRA Payment).
**2020 Restated Equity Incentive Plan**
We adopted our 2020 Equity
Incentive Plan in May 2020, which was subsequently amended and then restated as of September 2024. Under the Restated 2020 Equity Plan,
our Company may grant awards to our employees, consultants and directors and such other individuals who are reasonably expected to become
employees, consultants and directors. Awards that may be granted under the 2020 Equity Plan include: incentive stock options, non-qualified
stock options, stock appreciation rights, restricted awards, performance share awards, cash awards, and other equity-based awards. We
have reserved 1,500,000 shares of common stock available for the grant of awards under the 2020 Plan. As of June 30, 2025, 700,000shares
of common stock are issuable upon the exercise of outstanding common stock options at a weighted exercise price of $6.00 per share.
| | 49 | | |
**Pension, retirement or similar benefit plans**
There are no annuity, pension
or retirement benefits proposed to be paid to the officer or director or employees in the event of retirement at normal retirement date
pursuant to any presently existing plan provided or contributed to by the Company or any of its subsidiaries.
**Stock Option Grants**
None.
**Outstanding Equity Awards at Fiscal Year End**
None.
**Potential Payments Upon Termination or Change
In Control**
See *Employee, Severance,
Separation and Change in Control Agreements* above.
**Director Compensation**
Presently, Drew Hall,
our sole director, receives no additional compensation for serving as a director.
**Indemnification**
Our certificate of incorporation
provides that no director shall be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty
as a director.
**Compensation Policies and Practices as They
Relate to Our Risk Management**
No risks arise from our Companys
compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on our Company.
**Recovery of Erroneously Awarded Compensation**
None
**Equity Grant Timing**
The Board does not grant
equity awards to executives or directors pursuant to any predetermined schedule. The Board considers and approves interim or
mid-year grants, from time to time based on business needs. The Board may take material nonpublic information into account when
determining the timing and terms of equity awards. The Board does not time the disclosure of material nonpublic information for the
purpose of affecting the value of executive compensation.
| | 50 | | |
**Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters**
The following table sets
forth, as of September 17, 2025, the names, addresses, amount and nature of beneficial ownership and percent of such ownership of (i)
each person or group known to our Company to be the beneficial owner of more than five percent (5%) of our common stock; and (ii) each
of our officers and directors, and officers and directors as a group:
|
| |
Shares Beneficially Owned | | |
|
Name and Address of Beneficial Owner (1)(2) | |
Number | | |
Percent (3)(4) | | |
|
5% Stockholders | |
| | |
| | |
|
Roy Hearrean | |
| 1,048,037 | | |
| 9.72% | | |
|
Elda Hearrean | |
| 1,048,037 | | |
| 9.72% | | |
|
Contained Resources, LLC(5) | |
| 2,115,942 | | |
| 19.62% | | |
|
Charles G. Peterson Living Trust Dated May 25, 2010(6) | |
| 993,400 | | |
| 9.21% | | |
|
Meraki Partners LLC (7) | |
| 1,011,300 | | |
| 9.38% | | |
|
| |
| | | |
| | | |
|
Directors and Executive Officers | |
| | | |
| | | |
|
Drew D. Hall, Chief Executive Officer/Chief Financial Officer, Director(8) | |
| 2,225,216 | | |
| 20.64% | | |
|
Joseph J. Maggio, President | |
| 596,040 | | |
| 5.563% | | |
|
Garrett R. Hall, Chief Operations Officer | |
| | | |
| | | |
|
All executive officers and directors as a group (3 persons) | |
| 2,821,255 | | |
| 26.17% | | |
|
(1) |
Calculated based upon the outstanding shares of the Company as of September
17, 2025. Such holders have the sole voting and investment power with respect to the voting securities beneficially owned by them,
unless otherwise indicated herein. Includes the persons right to obtain additional shares of common stock within 60 days of
as of the Closing Date. | |
|
(2) |
In care of the Company at 1983 N. Berra Blvd., Tooele, Utah 84074. | |
|
(3) |
Based on 10,781,902 shares of common stock outstanding. | |
|
(4) |
If a person listed on this table has the right to obtain additional shares of common stock within 60 days from as of the Closing Date, the additional shares are deemed to be outstanding for the purpose of computing the percentage of class owned by such person, but are not deemed to be outstanding for the purpose of computing the percentage of any other person. | |
|
(5) |
Alex Bellehumeur and Linda Bellehumeur are Managing Members of Contained Resources, LLC and each has voting and investment power over these securities. | |
|
(6) |
Charles G Peterson is the Trustee of the Charles G. Peterson Living Trust Dated May 25, 2010 and has sole voting and investment power over these securities. | |
|
(7) |
Joel Arberman is the Managing Member of Meraki Partners, LLC and has sole voting and investment power over these securities. | |
|
(8) |
Includes 99,340 shares of common stock owned by Drew Hall and Theresa Hall and 2,125,876 shares of common stock owned by FEU Collapse, LLC. Drew Hall is the Managing Member of FEU Collapse, LLC and has sole voting and investment power over these securities. | |
**Change in Control Arrangements**
We are not aware of any arrangements
that could result in a change of control.
| | 51 | | |
**Securities Authorized For Issuance Under Equity
Compensation Plans**
Information regarding our
compensation plans under which our equity securities are authorized for issuance can be found in Part II Item 5 of this Report
on Form 10-K.
**Item 13. Certain Relationships and Related
Transactions, and Director Independence**
**Transactions with Related Persons**
|
|
|
On September 15, 2025, the Company entered into a promissory note agreement with the Companys CEO Drew Hall for total principal of $35,000. The Company will pay 2.5% per annum, until the total principal is paid in full. The note matures on November 15, 2027 and has no default interest rate. | |
|
|
|
| |
|
|
|
On September 2, 2025, the Company entered into a promissory note agreement with the Companys CEO Drew Hall for total principal of $75,000. The Company will pay 2.5% per annum, until the total principal is paid in full. The note matures on November 2, 2027 and has no default interest rate. | |
|
|
|
| |
|
|
|
As of June 30, 2025, and June 30, 2024, GenFlat
owed $0 and $8,731, respectively, in advances to Drew Hall, Chief Executive Officer of the Company. These advances were repaid by the
Company in full in August 2024. | |
|
|
|
| |
|
|
|
During the year ended June 30, 2024, the
Company entered into three promissory note agreements with Drew Hall, Chief Executive Officer of the Company, for a total principal of
$205,000. The Company will pay 2.5% per annum, until the total principal is paid in full. The note has no maturity date and no default
interest rate. During the years ended June 30, 2025 and June 30, 2024, the Company repaid $105,000 and $100,000, respectively. As of
June 30, 2025 and June 30, 2024, the balance owed on the note was $0 and $105,000. Accrued interest on the note was $0 and $260 as of
June 30, 2025 and June 30, 2024, respectively. | |
|
|
|
| |
|
|
|
The Company maintains an operating lease
for its office space with an entity related to Drew Hall, Chief Executive Officer of the Company. The lease has a remaining term of 18
months. On January 3, 2025, the Company extended the operating lease for its office space to expire on January 31, 2026, and agreed to
pay $1,320 on a monthly basis. See Note 5. | |
|
|
|
| |
|
|
|
Pursuant to the Share Exchange Agreement, on the Closing Date, the Companys outstanding note receivable from PointClear Solutions, Inc. in the approximate amount of $98,438 (as of the Closing Date) was assigned to Stephen Epstein, our former Chief Executive Officer, in consideration of (i) his resignation from any and all Company positions, including, but not limited to, CEO and member of the board of directors on the Closing Date, and (ii) his delivery to the Company of 110,000 shares of Company common stock held in his name, all of which were cancelled on the Closing Date. | |
**Policies and Procedures for Related-Party
Transactions**
Our Company does not have
any formal written policies or procedures for related party transactions, however in practice, our board of directors reviews and approves
all related party transactions and other matters pertaining to the integrity of management, including potential conflicts of interest
and adherence to standards of business conduct. We have no independent directors on our board of directors.
**Director Independence**
Although we are currently
traded on the Over-the-Counter Markets, our Board has reviewed each of the Directors relationships with the Company in conjunction
with NASDAQ Listing Rule 5605(a)(2) that provides that an independent director is a person other than an Executive
Officer or employee of our Company or any other individual having a relationship which, in the opinion of the Board, would interfere with
the exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has affirmatively determined
that Drew D. Hall, our sole director, is not an independent director that is independent of management or free of any relationship that
would interfere with his independent judgment as a member of our board of directors.
| | 52 | | |
**Item 14.****Principal Accounting Fees
and Services**
The following table represents
aggregate fees billed to the Company for the fiscal years ended June 30, 2025 and June 30, 2024 by the Companys independent registered
public accounting firms.
|
| |
2025 | | |
2024 | | |
|
Audit Fees | |
$ | 48,000 | | |
$ | 42,000 | | |
|
Audit Related Fees | |
| | | |
| | | |
|
Tax Fees | |
| | | |
| | | |
|
All Other Fees | |
| | | |
| | | |
|
Total | |
$ | 48,000 | | |
$ | 42,000 | | |
*Audit Fees*are
the aggregate fees billed during the years ended June 30, 2025 and June 30, 2024 for professional services rendered by the Companys
independent registered public accounting firms for the audit of the Companys annual financial statements and review of financial
statements included in the Companys Form 10-Q or services that are normally provided by the Companys independent registered
public accounting firm in connection with statutory and regulatory filings or engagements.
*Audit-Related Fees*are
the aggregate fees billed during the years ended June 30, 2025 and June 30, 2024 for assurance and related services rendered by the Companys
independent registered public accounting firm that are reasonably related to the performance of the audit or review of the Companys
financial statements and are not reported under the category Audit Fees described above.
*Tax Fees*are the
aggregate fees billed during the years ended June 30, 2025 and June 30, 2024 fortax compliance services rendered by the Companys
independent registered public accounting firm.
*All Other Fees*are
the aggregate fees billed during the years ended June 30, 2025 and June 30, 2024 for products and services provided by the Companys
independent registered public accounting firm, other than the services reported in the Audit Fees, Audit-Related Fees, and Tax Fees categories
above.
*Audit Committee Pre-Approval Policies.*
All the services performed
by the Companys independent registered public accounting firms that are described above were pre-approved by the Companys
Audit Committee.The Audit Committee pre-approves all audit and permissible non-audit services on a case-by-case basis.
None of the hours expended
on the Companys independent registered public accounting firms engagement to audit the Companys financial statements
for the years ended June 30, 2025 and June 30, 2024, were attributed to work performed by persons other than the Companys independent
registered public accounting firms full-time, permanent employees.
****
****
| | 53 | | |
****
**PART IV**
**Item 15.****Exhibits, Financial Statement
Schedules**
|
|
(a) |
The following documents are filed or furnished as part of this Form 10-K: | |
|
|
1. |
Financial Statements. Reference is made to the Index to Financial Statements under Item 8. Financial Statements and Supplementary Data in Part II hereof. | |
|
|
|
| |
|
|
2. |
Financial Statement Schedules. The Financial Statement Schedules have been omitted either because they are not required or because the information has been included in the financial statements or the notes thereto included in this Annual Report on Form 10-K. | |
|
|
(b) |
The following exhibits are filed as part of this report. | |
**Exhibit Index**
|
SEC Reference Number | |
Title of Document | |
Location | |
|
| |
| |
| |
|
2.1 | |
Share Exchange Agreement dated October 18, 2023 | |
Incorporated by reference to Companys Form 8-K filed on 10/23/2023 | |
|
| |
| |
| |
|
3.1 | |
Certificate of Incorporation | |
Incorporated by reference to Companys Form S-1 Registration Statement filed on 06/08/2020 | |
|
| |
| |
| |
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3.2 | |
Certificate of Amendment to Certificate of Incorporation | |
Incorporated by reference to Companys Form 8-K filed on 10/17/2023 | |
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3.3 | |
Second Certificate of Amendment to Certificate of Incorporation | |
Incorporated by reference to Companys Form 10-Q filed on 05/15/2024 | |
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3.4 | |
Bylaws | |
Incorporated by reference to Companys Form S-1/A Registration Statement filed on 09/09/2020 | |
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4.1 | |
Description of Registrants Securities | |
Incorporated by reference to Companys Form 10-K filed on 10/01/24 | |
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10.1 | |
Restated 2020 Equity Incentive Plan | |
Incorporated by reference to Companys Form 10-K filed on 10/01/24 | |
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10.2 | |
Employment Agreement - Drew D. Hall dated 12/20/2023 | |
Incorporated by reference to Companys Form 8-K filed on 12/27/2023 | |
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10.3 | |
Employment Agreement - Garrett R. Hall dated 12/20/2023 | |
Incorporated by reference to Companys Form 8-K filed on 12/27/2023 | |
| | 54 | | |
|
10.4 | |
Employment Agreement Amendment - Garrett R. Hall dated 11/27/2024 | |
Incorporated by reference to Companys Form 8-K filed on 11/29/2024 | |
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10.5 | |
Employment Agreement - Joseph J. Maggio dated 12/20/2023 | |
Incorporated by reference to Companys Form 8-K filed on 12/27/2023 | |
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10.6 | |
Employment Agreement Amendment - Joseph J. Maggio dated 11/27/2024 | |
Incorporated by reference to Companys Form 8-K filed on 11/29/2024 | |
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10.7 | |
Collapsable Container and Actuator Agreement with China International Marine Containers dated 7/6/2018 (included in Exhibit 10.6) | |
Incorporated by reference to Companys Form 8-K filed on 12/27/2023 | |
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10.8 |
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Assignment of Collapsable Container and Actuator Agreement to Collapsible Revolution, LLC . dated 5/31/2021 |
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Incorporated by reference to Companys Form 8-K filed on 12/27/2023 | |
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10.9 |
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Consulting Agreement - Meraki Partners LLC dated 5/20/2022, as amended on 10/31/2022 (included in Exhibit 10.1) |
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Incorporated by reference to Companys Form 8-K filed on 12/27/2023 | |
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10.10 |
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Consulting Agreement - Alex Bellehumeur dated 01/05/2024 |
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Incorporated by reference to Companys Form 8-K filed on 01/19/2024 | |
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10.11 |
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Form of Indemnification Agreement for Directors and Officers |
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Incorporated by reference to Companys Form 10-K filed on 10/01/24 | |
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10.12 |
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Form of Advisory Board Agreement |
|
Incorporated by reference to Companys Form 10-K filed on 10/01/24 | |
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|
10.13 |
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Promissory
Note - $99,996 Dated July 30, 2024 |
|
Incorporated by reference to Companys Form 10-Q filed on 11/15/2024 | |
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10.14 |
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Promissory Note - $10,000 Dated July 2, 2024 |
|
Incorporated by reference to Companys Form 10-Q filed on 11/15/2024 | |
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10.15 |
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Promissory Note - $50,000 Dated October 1, 2024 |
|
Filed herewith | |
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10.16 |
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Promissory Note - $100,000 Dated June 13, 2025 |
|
Filed herewith | |
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10.17 |
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Promissory note - $100,000 Dated July 22, 2025 |
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Filed herewith | |
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10.18 |
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Promissory note - $75,000 Dated September 2, 2025 |
|
Filed herewith | |
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10.19 |
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Promissory note - $35,000 Dated September 15, 2025 |
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Filed herewith | |
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10.20 |
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Office Lease Agreement dated January 30, 2025 |
|
Filed herewith | |
| | 55 | | |
|
14.1 |
|
Code of Business Conduct and Ethics |
|
Incorporated by reference to Companys Form 10-K filed on 10/01/24 | |
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21.1 |
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Subsidiaries of the Registrant |
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Incorporated by reference to Companys Form 10-K filed on 10/01/24 | |
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23.1 |
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Consent of Independent Registered Public Accounting Firm M&K CPAS, PLLC |
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Filed Herewith | |
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31.1 |
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Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Executive Officer of the Company Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Executive Officer of the Company |
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Filed Herewith | |
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31.2 |
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Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Financial Officer of the Company Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Financial Officer of the Company |
|
Filed Herewith | |
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32.1 |
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Executive Officer and Principal Financial Officer of the Company Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Executive Officer and Principal Financial Officer of the Company |
|
Furnished | |
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32.2 |
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Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Executive Officer and Principal Financial Officer of the Company Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Executive Officer and Principal Financial Officer of the Company |
|
Furnished | |
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|
101 |
|
XBRL data files of Financial Statements and Notes contained in this Annual Report on Form 10-K |
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|
104 |
|
Cover Page Interactive Data File |
|
| |
Management contract or compensatory plan
arrangement
|
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(c) |
None. | |
**Item 16.****10-K Summary**
None.
| | 56 | | |
****
**SIGNATURES**
Pursuant to the requirements
of Section13 or 15(d) Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
|
GenFlat Holdings, Inc.,
Registrant |
| |
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|
Date: September 19, 2025 |
By: |
/s/ Drew D. Hall |
| |
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|
Drew D. Hall |
| |
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|
Chief Executive Officer and Chief Financial
Officer
(Principal Executive and Financial Officer) |
| |
Pursuant to the requirements
of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in
the capacity and on the dates indicated.
|
Signature |
|
Title |
| |
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| |
|
Date: September 19, 2025 |
|
/s/ Drew D.
Hall |
| |
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|
Drew D. Hall |
| |
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|
|
Chief Executive Officer, Chief Financial Officer, Principal Executive Officer, Principal Financial Officer, Director |
| |
| | 57 | | |
****