NetBrands Corp.
For the period ended Mar 31, 2025. Filed May 13, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 13, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-25.
0001493152-24-047532
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-13.
0001641172-25-009835
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 64 previous paragraphs and 37 current paragraphs.
25 unchanged; 11 reworded; 1 added; 23 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 0 previous and 0 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
We operate through diversified subsidiaries with merger and acquisition interest in acquiring ecommerce assets as well as private businesses in various verticals which may include health, wellness, beauty sectors as well as digital app and asset space which could include web 3.0 applications. As a result of numerous events described throughout this Report, we have not generated any revenue since December 31, 2023. We are currently undergoing internal transformation and we seek to enhance shareholder value by acquiring income producing businesses and assets as our operating subsidiaries.
Removed paragraphs (23)
Previous report
On August 31, 2022, the Company entered into an asset purchase agreement (the “Purchase Agreement”) with InPlay Capital Inc., a Delaware corporation (“InPlay”), pursuant to which, on the same date, the Company purchased from InPlay all of the assets used in the operation and conduct of its business relating to the online home fitness store known as “The Hula Fit”, including the Shopify Store and the TikTok, Facebook and Google ad accounts, for a purchase price of $50,000. Paul Adler, the sole executive officer and a director of the Company, and the Company’s majority stockholder, is also the sole officer, director, and 100% stockholder of InPlay. The Company intends to make additional acquisitions of e-commerce businesses and assets in an attempt to grow its digital business.
Previous report
Recent Developments
Previous report
Purchase Agreement with 1800 Diagonal
Previous report
On June 6, 2023, the Company entered into a securities purchase agreement (the “1800 Purchase Agreement”) with 1800 Diagonal Lending LLC, a Virginia limited liability company (“1800 Diagonal”), pursuant to which the Company issued 1800 Diagonal an unsecured convertible promissory note (the “1800 Diagonal Note”). The 1800 Diagonal Note had a principal balance of $117,320, and a stated maturity date of April 15, 2024. A one-time interest charge of 13%, or $15,251, was applied on the date of issuance and was immediately expensed. The 1800 Diagonal Note provided that the interest and outstanding principal shall be paid in nine payments, each in the amount of $14,730.11 (a total payback to 1800 Diagonal of $132,571), starting on July 15, 2023, with eight subsequent payments due each month thereafter.
Previous report
The Company did not make payments when required under the 1800 Diagonal Note, resulting in a default and the commencement of a lawsuit against the Company by 1800 Diagonal Lending in the Circuit Court of Fairfax County, Virginia (the “Action”) seeking to recover $151,325.08 of outstanding indebtedness due under the 1800 Diagonal Note. As of January 10, 2024, the Company acknowledged the outstanding indebtedness under the 1800 Diagonal Note, and agreed to pay 1800 Diagonal (a) $5,000 on each of March 1, 2024, April 1, 2024, and May 1, 2024, and (b) $7,500 on June 1, 2024, and the 1st day of each successive month thereafter until the indebtedness is paid in full (anticipated to span approximately 18 months). Provided that all payments are timely made, 1800 Diagonal agreed to forbear and not (a) prosecute the Action, or (b) convert all or any part of the outstanding and unpaid amount of the 1800 Diagonal Note into shares of the Company’s common stock. Any payment not timely received shall constitute a default, and upon such default 1800 Diagonal’s forbearance shall immediately be vacated and 1800 Diagonal shall be free, without restriction, to pursue the Action.
Previous report
Purchase Agreement with Cove Funding
Previous report
On March 22, 2024, the Company entered into a securities purchase agreement (the “Cove Purchase Agreement”) with Cove Funding LP, a Delaware limited partnership (“Cove Funding”), pursuant to which Cove Funding agreed to loan the Company up to $300,000, in two tranches (the “Cove Loan”), and the Company issued Cove Funding a 12% senior secured convertible promissory note (the “Cove Note”), evidencing the first tranche of the Cove Loan (the “First Tranche”). The Company received net proceeds of $150,000 (after deducting a 5% commitment fee, a 5% diligence fee, and Cove Funding’s fees and expenses related to the transaction, including attorney’s fees). The difference between the amount of the First Tranche and $300,000 (less a 5% commitment fee, a 5% diligence fee, and Cove Funding’s fees and expenses related to the transaction, including attorney’s fees) may be funded in a second tranche (the “Second Tranche” and, together with the First Tranche, the “Principal Amount”), upon the Company’s written request, and subject to certain conditions.
Previous report
The Cove Note has a stated maturity date of July 22, 2024 (as such date may be extended by the parties, the “Maturity Date”), and an interest rate of 12% per annum, which begins to accrue on the First Tranche on the Closing Date and will begin to accrue on the Second Tranche if and when such amount is funded by Cove Funding. Any Principal Amount that is not paid when due will bear interest at a rate of the lesser of (a) 24% per annum, or (b) the maximum amount permitted by law. The Cove Convertible Note may not be prepaid in whole or in part, except as otherwise set forth in the Cove Note. Pursuant to the terms of Cove Note, if the Cove Loan is not repaid on or before the Maturity Date, the Company is required to issue Cove Funding shares of its Common Stock, on a monthly basis (subject to a 4.99% beneficial ownership limitation), with a value of 16.67% of the principal amount of the Cove Loan outstanding as of each issuance date, plus a commitment fee equal to 5% of such outstanding principal amount, until the Cove Loan is repaid in full (collectively, the “Penalty Shares”). In addition, commencing on the Maturity Date, Cove Funding may (subject to a 4.99% beneficial ownership limitation) convert amounts due under the Cove Note into shares of the Company’s Common Stock (collectively, the “Conversion Shares”) at a conversion price equal to the lesser of (a) $0.07, or (b) the five-trading day closing price average immediately prior to the conversion date. The number of Conversion Shares issuable upon conversion of the Cove Note will be subject to adjustment from time-to-time in the event of any combination, extraordinary distribution, dilutive issuance, or similar event. Upon the occurrence of an event of default under the Cove Note, 125% of the amounts due under the Cove Note will become immediately due and payable. In addition, as long as the Company has any obligations outstanding under the Cove Note, the Company may not (among other things), without Cove Funding’s written consent, incur any senior or pari passu indebtedness, sell a significant amount of the Company’s assets, or issue equity securities in an amount greater than 10% of the Company’s outstanding Common Stock, subject to certain exceptions.
Previous report
In order to further induce Cove Funding to make the Cove Loan to the Company, (a) the Company entered into a security agreement with Cove Funding (the “Cove Security Agreement”), pursuant to which Cove Funding was granted a first priority security interest in the Company’s assets, and (b) Paul Adler, the Company’s President, and a director of the Company, entered into a pledge agreement with Cove Funding (the “Cove Pledge Agreement”), pursuant to which Mr. Adler pledged 1,000 shares of the Company’s Class A Super Voting Preferred Stock and 11,568,843 shares of the Company’s common stock that he owns (collectively, the “Adler Shares”). As a result, if the Company defaults on its obligations under the Cove Note, Cove Funding could foreclose on their security interests and liquidate or take possession of some or all of the assets of the Company and/or the Adler Shares, which would harm our business, financial condition and results of operations and could require us to curtail, or even to cease our operations.
Previous report
Currently the Cove funding is in default and Cove Funding is in negotiations with Mr. Adler on how to address the default.
Previous report
Addendum to the Engagement Agreement with Spencer Clarke
Previous report
On March 22, 2024, the Company and Spencer Clarke, LLC (“Spencer Clarke”) executed an addendum to their engagement agreement for investment banking related services, dated November 14, 2022 (the “Engagement Agreement”), pursuant to which the term of the Engagement Agreement was further extended to June 21, 2024, as such term may be further extended pursuant to the terms and conditions of the Engagement Agreement.
Previous report
In addition, in connection with the closing of the Cove Loan, the Company (a) paid Spencer Clarke a cash fee of $25,000 (for up to $300,000 raised in the financing), and (b) issued Spencer Clarke a Common Stock Purchase Warrant (the “Warrant”) to purchase 814,285 shares of the Company’s Common Stock (for up to $300,000 raised in the financing) (the “Warrant Shares”). The Warrant is exercisable for a term of five years from the date of issuance. The Warrant has an exercise price of $0.07 per share, subject to adjustment. The Warrant may be exercised for cash, or on a cashless basis. Spencer Clarke may not exercise the Warrant with respect to any number of shares that would cause it to beneficially own in excess of 9.99% of the Company’s number of issued and outstanding shares of Common Stock, waivable upon 61 days’ prior notice to the Company. The exercise price of the Warrant is subject to adjustment for subdivision or consolidation of the Company’s shares, or other dilutive issuances. Spencer Clarke has piggyback registration rights with respect to the Warrant Shares.
Previous report
Loans from an Officer
Previous report
On April 10, 2023, Paul Adler, the President and a director of the Company, made a loan to the Company in the amount of $124,000, at an interest rate of 14.9% per annum. The principal amount of the loan, and any accrued and unpaid interest thereon, were due and payable on July 9. 2023, in cash or shares of the Company’s common stock, at Mr. Adler’s sole discretion. The due date of this loan has been extended to July 9, 2024. If repaid in shares of common stock, the number of shares to be issued to be calculated using the closing sale price of the Company’s common stock on the OTC Pink marketplace on the payment date.
Previous report
On April 8, 2024, Mr. Adler had advanced an additional $54,728.99 to the Company, at an interest rate of 14.9% per annum. The principal amount of the loan, and any accrued and unpaid interest thereon, are due and payable on July 9. 2024, in cash or shares of the Company’s common stock, at Mr. Adler’s sole discretion. If repaid in shares of common stock, the number of shares to be issued to be calculated using the closing sale price of the Company’s common stock on the OTC Pink marketplace on the payment date.
Previous report
Revenues and Cost of Sales
Previous report
Operating expenses
Previous report
Operating expenses for the nine months ended September 30, 2024 were $791,991 compared to $933,818 during the same nine months ended September 30, 2023. During the nine months ended September 30, 2024 we incurred $425,139 in non-cash stock based compensation compared to $164,500 during the same three month period ended in 2023.
Previous report
Other income and (expense)
Previous report
Other expense is comprised solely of interest expense and finance charges related to our fundings. Other expense was $237,217 for the nine months ended September 30, 2024 compared to $407,987 in other expense during the nine months ended September 30, 2023, as a result of higher levels of borrowings due to the loss of liquidity from operating activities.
Previous report
Net loss
Previous report
On March 22, 2024, the Company received net proceeds of $150,000 from the Cove Loan. The Company used the net proceeds for working capital.
Reworded paragraphs (11)
Previous wording
The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited condensed financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such condensed financial statements and the related notes thereto.
Current wording
The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.
Previous wording
The audited condensed financial statements for our fiscal year ended December 31, 2023, contained in our Annual Report, include a summary of our significant accounting policies and should be read in conjunction with the discussion below. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in these audited condensed financial statements. All such adjustments are of a normal recurring nature.
Current wording
The audited financial statements for our fiscal year ended December 31, 2024, contained in our Annual Report, include a summary of our significant accounting policies and should be read in conjunction with the discussion below. In the opinion of management, all material adjustments necessary to present fairly the results of operations for such periods have been included in these audited financial statements. All such adjustments are of a normal recurring nature.
Previous wording
Sales for the three months ended September 30, 2024, were $-0- compared to sales of $71,938 for the three months ended September 30, 2023 .
Current wording
Sales for the three months ended March 31, 2025, were $-0- compared to sales of $-0- for the three months ended March 31, 2024 . We have not generated any sales since the year ended December 31, 2023.
Previous wording
Operating expenses for the three months ended September 30, 2024 were $52,122 compared to $151,697 during the same three months ended September 30, 2023. The material decrease in expenses is attributable to limited expenses due to the lack of revenue in the 2024 period.
Current wording
Operating expenses for the three months ended March 31, 2025 were $6,191 compared to $211,042 during the same three months ended March 31, 2024. The material decrease in expenses is attributable to limited expenses is due to the lack of revenue in the 2025 period.
Previous wording
Other income (expense) is comprised solely of interest expense and finance charges related to our fundings. Other expense was $4,117 for the three months ended September 30, 2024, compared to $304,372 in other expense during the three months ended September 30, 2023.
Current wording
Other income (expense) is comprised solely of interest expense and a loss on the extinguishment of debt related to our fundings. Other expense was $96,854 for the three months ended March 31, 2025, compared to $228,516 in other expense during the three months ended March 31, 2024.
Previous wording
As a result of the foregoing, we recorded a net loss of $56,239 or $(0.00) per share for the three months ended September 30, 2024, compared to a loss of $422,740 or $(0.03) per share for the three months ended September 30, 2023.
Current wording
As a result of the foregoing, we recorded a net loss of $103,045 or $(0.00) per share for the three months ended March 31, 2025, compared to a loss of $439,559 or $(0.03) per share for the three months ended March 31, 2024.
Previous wording
As of September 30, 2024, we had $9 in cash, compared to $1,013 in cash as of December 31, 2023.
Current wording
As of March 31, 2025, we had $-0- in cash, compared to $-0- in cash as of December 31, 2024.
Previous wording
Net cash used in operating activities decreased to $182,111 in the nine months ended September 30, 2024, compared to $384,447 in the nine months ended September 30, 2023. The decrease in cash used in operating is primarily due to changes in balance sheet accounts and reduced activities at the Company.
Current wording
Net cash used in operating activities decreased to $-0- in the three months ended March 31, 2025, compared to $143,469 in the three months ended March 31, 2024. The decrease in cash used in operating is primarily due to changes in balance sheet accounts and reduced activities at the Company.
Previous wording
Net cash provided by financing activities was $181,107 during the nine months ended September 30, 2024, compared to $330,262 of net cash provided by financing activities in the nine months ended September 30, 2023. The decrease in net cash provided in the nine-month period ended September 30, 2024, as compared to the same period in 2023, is primarily due to lower proceeds from notes and loans payable.
Current wording
Net cash provided by financing activities was $-0- during the three months ended March 31, 2025, compared to $184,446 of net cash provided by financing activities in the three months ended March 31, 2024. The decrease in net cash provided in the three-month period ended March 31, 2025, as compared to the same period in 2024, is primarily due to lower proceeds from notes and loans payable.
Previous wording
The accompanying consolidated condensed financial statements have been prepared assuming we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these condensed financial statements. On a consolidated basis, we have incurred significant operating losses since inception. The Company’s independent auditor has indicated substantial doubt about the Company continuing as a going concern based on the Company’s accumulated deficit and accrued liabilities. Our ability to continue our operations as a going concern, realize the carrying value of our assets, and discharge our liabilities in the normal course of business is dependent upon our ability to raise capital sufficient to fund our commitments and ongoing losses, and ultimately generate profitable operations. If we cannot obtain needed funds, we may be forced to reduce or cease our activities with a consequent loss to investors. In addition, should we incur significant presently unforeseen expenses or delays, we may not be able to accomplish our goals. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
Current wording
The accompanying consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. On a consolidated basis, we have incurred significant operating losses since inception. The Company’s independent auditor has indicated substantial doubt about the Company continuing as a going concern based on the Company’s accumulated deficit and accrued liabilities. Our ability to continue our operations as a going concern, realize the carrying value of our assets, and discharge our liabilities in the normal course of business is dependent upon our ability to raise capital sufficient to fund our commitments and ongoing losses, and ultimately generate profitable operations. If we cannot obtain needed funds, we may be forced to reduce or cease our activities with a consequent loss to investors. In addition, should we incur significant presently unforeseen expenses or delays, we may not be able to accomplish our goals. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.
Previous wording
Our condensed financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of these condensed financial statements requires management to make estimates, judgments, and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare our condensed financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of our operations or financial position. Our critical accounting estimates are more fully discussed in Note 2 to our unaudited condensed financial statements contained herein.
Current wording
Our financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates, judgments, and assumptions that affect reported amounts of assets, liabilities, revenues and expenses. We continually evaluate the accounting policies and estimates used to prepare our financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of our operations or financial position. Our critical accounting estimates are more fully discussed in Note 2 to our unaudited financial statements contained herein.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
Comparison of Results of Operations for the Nine Months Ended September 30, 2024 and 2023
Previous report — wording carried elsewhere
Sales for the nine months ended September 30, 2024, were $-0- compared to sales of $584,004 for the nine months ended September 30, 2024 .
Previous report — wording carried elsewhere
During 2023 we incurred a significant loss of revenue due to the supply, shipping and logistic issues, transitioning from a public warehouse to our own warehousing facility, and the significant loss of revenue on a product with eight SKUs that was produced in Russia that is no longer available to us. Without having an adequate amount of inventory on hand to fulfill existing and future orders, and our lack of sufficient liquidity, our ability to conduct future business with our customers is materially impaired. We are currently seeking new lines of business, new sources of liquidity and an acquisition target.
Previous report — wording carried elsewhere
We have not generated any sales in 2024 and have no inventory on hand. If we are unsuccessful in our efforts to raise capital it will have a material adverse impact on our Company and our ability to remain a going concern.
Previous report — wording carried elsewhere
As a result of the foregoing, we recorded a net loss of $1,029,210 or $(0.05) per share for the nine months ended September 30, 2024, compared to a loss of $1,140,565 or $(0.07) per share for the nine months ended September 30, 2023.