NGHI 10-K & 10-Q changes, risk factors and insider trading
Galenfeha, Inc. · OTC · Services-Engineering Services · CIK 1574676 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Not applicable to smaller reporting companies.
Although information for this item is not required, the company chooses to provide the following disclosures:
CAUTIONARY NOTE TO INVESTORS: Investing in our securities, whether open market purchases or private transactions, comes with the high risk that you could lose your entire investment. Our independent registered public accountant has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern. We have a limited history of operations, and have to date incurred losses since the company’s inception. We recently sold all divisions of our commercialized products, but retain royalties from some of these product lines.
Since our inception on March 14, 2013, through December 31, 2018, we have not been profitable; have a cumulative net loss of $3,801,735; and have only generated significant revenues from operations beginning in 2018 following the acquisition of Fleaux Solutions. There is a substantial risk that we may never generate enough revenues to become profitable, and might have to discontinue operations, resulting in the loss of your entire investment.
Largest changes
Since our inception on March 14, 2013, through December 31,see in full comparison2017,2018, we have not been profitable;hadhave a cumulative net loss of$3,654,479$3,801,735; and havehaveonly generatedlimitedsignificant revenues fromoperations.operations beginning in 2018 following the acquisition of Fleaux Solutions. There is a substantial risk that wewemay never generate enough revenues to become profitable, and might have to discontinue operations, resulting in the loss of your entire investment.
Full comparison: every changed paragraph (1)
Since our inception on March 14, 2013, through December 31,
2017,2018, we have not been profitable; hadhave a cumulative net loss of $3,654,479$3,801,735; and
have have
only generated limitedsignificant revenues from operations.operations beginning in 2018
following the acquisition of Fleaux Solutions. There is a substantial risk that
we we
may never generate enough revenues to become profitable, and might have to
discontinue operations, resulting in the loss of your entire investment.
Management's Discussion & Analysis (MD&A)
Removed heading “Revenues- Discontinued Operations:”
Largest changes
Operating expenses for the year ended December 31,see in full comparison2017,2018, andDecember 31, 2016,2017, were$94,923$2,256,479 and$153,720,$1,728,400, respectively. Thedecreaseincrease in operatingoperatingexpenses waslargelyprimarily attributable totheincreaseBoardpayrollMembersandreceivingother general andlittleadministrativeif any compensationexpenses from theCompanyexplanationduringof thetwelveFleauxmonthsSolutionsendedbusinessDecemberduring31,2018,2017.andTheincreasedcompanyprofessionalhad impairment loss of $443,935 at December 31, 2016.fees.
“On July 10, 2018, the company wrote a convertible promissory note for $133,000, of which the company received proceeds of $130,000. The note is due on July 10, 2019 with an interest rate of 12% per annum, and with a conversion option into common stock after 180 days following the date of funding. The conversion discount is 35% determined on the basis of the lowest closing bid price for the common stock during the prior ten trading day period. The original issuance discount of $3,000 was recorded as a debt discount and is being amortized over the life of the note.”see in full comparison
“On August 22, 2018, the company wrote a convertible promissory note for $53,000, of which the company received proceeds of $50,000. The note is due on August 22, 2019 with an interest rate of 12% per annum, and with a conversion option into common stock after 180 days following the date of funding. The conversion discount is 35% determined on the basis of the lowest closing bid price for the common stock during the prior ten trading day period. The original issuance discount of $3,000 was recorded as a debt discount and is being amortized over the life of the note.”see in full comparison
Net cash usedsee in full comparisoninprovided by operating activities was$97,324$91,562 for the year ended December 31,2017,2018, from a netlossincome of$162,572,$233,165,decrease in deferreddepreciationrevenueexpense of$11,436,$193,563,cancelationotherofnon-cashunvestedchargessharestotalingissued$2,604forrelatedservicesto unrealizedof $12,750,and realizedgainslosses on sales ofinvestmentsinvestments, amortization of$9,656,debt discountunrealizedand gains oninvestmentsofderivative$1,003,instruments, partially offset byanadecreasechange in accounts receivable of$14,189,$281,429, inventory of$6,041,$164,978, due from related party of $14,000 andprepaid expenses of $1,000,an increase in accounts payable and accrued expenses of$30,667, losses on the sale of derivative instruments of $18,352, and amortization of discounts of $21,173.$95,980.
At December 31,see in full comparison2017,2018, we had current assets of$54,964$1,270,039 comprised of cash and cash equivalents of$469$181,645 and marketable securities of$54,495.$108,150, accounts receivable of $815,266 and inventory of $164,978. Our current liabilities were$27,373$2,018,843, comprised of $492,805 inconvertible notes, $38,767 inaccounts payable and accrued expenses,$30,238line of credit balances of $639,841, convertible notes payable of $182,507, other short term debt totaling $636,323 and $67,367 inderivativeamountsliabilities anddue$26,000 note payabletoanrelatedofficer,parties, resulting in working capital deficit of ($67,414$748,804).
Full comparison: every changed paragraph (31)
For the year ending December 31, 2017, the company had limited
revenues, and limited operations.
On January 21, 2017, the company entered into a non-binding
Letter of Intent to purchase Additive Manufacturing, LLC for a cash purchase of
$14,000,000. This acquisition attempt was terminated during the second quarter
of 2017.
On January 23, 2017, the Company announced on Form 8-K filed
with the commission that the company entered into an agreement to sell its
entire Daylight Pump inventory to SouthVestBDC, LLC for a cash selling price of
$400,000. A majority of the proceeds of this sale were to be used to repay a
note secured by the pump inventory with Kevin L. Wilson on August 23, 2016 for
$350,000 plus accrued interest.
On March 9, 2017, the Company sold its entire Daylight Pump
inventory to Fleaux Services, LLC. The sale was for a cash consideration of
$25,000 USD; and Fleaux Services, LLC will assume responsibility of a promissory
note held by Kevin L. Wilson in the amount of $350,000 and all accrued interest
this note had accumulated since issuance on August 23, 2016.
In June and July of 2017, the Company entered into two
Convertible Promissory Notes with Power Up Lending Group, Ltd. At the time of
this report, both of these notes have been paid in full and extinguished, and
there is no common stock remaining to be converted.
On July 10, 2018, the company wrote a convertible promissory note for $133,000, of which the company received proceeds of $130,000. The note is due on July 10, 2019 with an interest rate of 12% per annum, and with a conversion option into common stock after 180 days following the date of funding. The conversion discount is 35% determined on the basis of the lowest closing bid price for the common stock during the prior ten trading day period. The original issuance discount of $3,000 was recorded as a debt discount and is being amortized over the life of the note.
On August 22, 2018, the company wrote a convertible promissory note for $53,000, of which the company received proceeds of $50,000. The note is due on August 22, 2019 with an interest rate of 12% per annum, and with a conversion option into common stock after 180 days following the date of funding. The conversion discount is 35% determined on the basis of the lowest closing bid price for the common stock during the prior ten trading day period. The original issuance discount of $3,000 was recorded as a debt discount and is being amortized over the life of the note.
At December 31, 2017,2018, we had current assets of $54,964$1,270,039
comprised of cash and cash equivalents of $469$181,645 and marketable securities of
$54,495.$108,150, accounts receivable of $815,266 and inventory of $164,978. Our current
liabilities were $27,373$2,018,843, comprised of $492,805 in convertible notes, $38,767 in
accounts payable and
accrued expenses, $30,238line of credit balances of $639,841, convertible notes payable
of $182,507, other short term debt totaling $636,323 and $67,367 in derivativeamounts liabilities anddue
$26,000 note payable to anrelated officer,parties, resulting in working capital deficit of
($67,414$748,804).
To provide a meaningful presentation and comparison of our results of operations, our discussion combines the period of January 1, 2018 through January 28, 2018 (Predecessor) with the period of January 29, 2018 through December 31, 2018 (Successor). In the accompanying consolidated financial statements, a black line separates the Predecessor and Successor financial statements to highlight the lack of comparability between these two periods.
Net cash used inprovided by operating activities was $97,324$91,562 for
the year
ended December 31, 2017,2018, from a net lossincome of $162,572,$233,165, decrease in deferreddepreciation
revenueexpense of $11,436,$193,563, cancelationother ofnon-cash unvestedcharges sharestotaling issued$2,604 forrelated servicesto
unrealized of
$12,750,and realized gainslosses on sales of investmentsinvestments, amortization of $9,656,debt
discount unrealizedand gains on
investments ofderivative $1,003,instruments, partially offset by ana decreasechange in
accounts receivable of $14,189,
$281,429, inventory of $6,041,$164,978, due from related party
of $14,000 and prepaid expenses of $1,000, an increase in accounts
payable and accrued expenses of $30,667, losses on the sale of derivative instruments of $18,352, and
amortization of discounts of $21,173.$95,980.
Net cash used in investing activities for the year ended
December 31, 20172018 was $19,513,$58,111, consisting of cash received from the sale of the
pump division of $25,000, offset by $667 in repurchases and cancellation of
shares, and $43,836$96,069 in net purchases of
investments, investments.purchases of equipment of $16,610 and $913 in repurchases and
cancellation of shares.
Net cash used in financing
activities was $12,667,$181,165, consisting
of proceeds from noteslines payable/margin loans
of $49,805,credit of $845,177, proceeds from convertible
debentures of $70,000,$180,000, and proceeds from related parties of $650,000. These
were offset by $49,805
$1,000,656 in principal payments,payments bankon overdraftlines of $1,333,credit and $84,000notes
payable, $453,061 in payments on
loans from officers.related parties, $21,840 in payments
on convertible notes, and $18,455 in payments on margin loans. Since inception,
we have used our common stock to raise
money for the research and development of
our intended products, for corporate
expenses, and for current operations.
We did not have any material commitments at December 31, 2017.
To provide a meaningful presentation and comparison of our results of operations, our discussion combines the period of January 1, 2018 through January 28, 2018 (Predecessor) with the period of January 29, 2018 through December 31, 2018 (Successor). In the accompanying consolidated financial statements, a black line separates the Predecessor and Successor financial statements to highlight the lack of comparability between these two periods.
For the YearYears Ended December 31, 2018 and 2017
Revenues
We are a recently organized company and have incurred
$3,654,479 in deficit from inception (March 14, 2013) through December 31, 2017.
For the years ended December 31, 2017 and 2016 we incurred $94,923 and $153,720,
respectively, in general and administrative expenses, payroll expenses,
professional fees, and engineering research and development.
Revenues- Discontinued Operations:
Our revenues were $11,435$3,747,746 for the year ended December 31,
2018 2017
compared to $914,634$1,938,529 in 2016.2017. AllThe of93% theincrease $11,435 ofin revenue recorded during
2018 2017
was attributable to thirdsignificant partygrowth sales.in OfCosmic theservice $914,634lateral oflining
contracts, revenuemanhole recorded
duringrehabilitation 2016, $817,426 was to third partiesservices and $97,208CCTV was to related parties.
The decrease is from the Company selling its Stored Energy and Daylight Pump
divisions.services.
Cost of Revenues – Discontinued Operations:
Our cost of revenue was $6,041$1,169,316 for the year ended December
31, 31,
2017,2018, compared to $672,752$412,795 in 2016.2017. CostsThe wereincrease in cost of materialsrevenue andis
manufacturingprimarily supplies, with the decrease attributabledue to the saleincreased costs of theservices additional contracts as
Company’sdescribed Stored Energy and Daylight Pump divisions.above.
Operating Expenses – Continuing Operations:
Operating expenses for the year ended December 31, 2017,2018, and
December 31, 2016,2017, were $94,923$2,256,479 and $153,720,$1,728,400, respectively. The decreaseincrease in operating
operating expenses was largelyprimarily attributable to theincrease Boardpayroll Membersand receivingother general and
littleadministrative if any compensationexpenses from the Companyexplanation duringof the twelveFleaux monthsSolutions endedbusiness
Decemberduring 31,2018, 2017.and Theincreased companyprofessional had impairment loss of $443,935 at December 31,
2016.fees.
Net Operating Loss and Net Loss:Income
Income from operations for the year ended December 31, 2018 was $321,951 compared to an operating loss of $202,666 for the year ended December 31, 2017. The increase in 2018 was due to the significant revenue growth discussed above.
Other expense
Other Expense for the year ended December 31, 2018 consisted of a $102,604 gain on derivative instruments, interest expense of $136,890, unrealized losses on trading securities of $40,040 and realized losses on investments of $21,959. These were partially offset by miscellaneous income of $15,902 primarily related to royalty income from battery sales to a related party. For the year ended December 31, 2017, interest expense was $114,090.
Net Income
Net income for the year ended December 31, 2018 was $241,568 compared to net loss of $316,756 for the year ended December 31, 2017.
Net operating loss for the year ended December 31, 2017 and
2016 was $94,923 and $928,095, respectively. The Company realized a lower net
loss because of reduced payroll costs and corresponding share based compensation
relating to employee stock options, reduced option expense for initial research
and development engineering services, reduced expenses due to shares subscribed
for legal services rendered, and lower advertising costs.
Net loss for the year ended December 31, 2017 and 2016 was
$162,572 and $1,282,073, respectively. The Company realized a lower net loss
because of the sale of the Company’s Stored Energy and Daylight Pump divisions.
What changed in the latest 10-Q
Risk Factors
A description of the risks associated with our business, financial condition and results of operations is set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on May 22, 2019. These factors continue to be meaningful for your evaluation of the Company and we urge you to review and consider the risk factors presented in the Annual Report on Form 10-K. We believe there have been no changes that constitute material changes from these risk factors.
Largest changes
“A description of the risks associated with our business, financial condition and results of operations is set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on May 22, 2019. These factors continue to be meaningful for your evaluation of the Company and we urge you to review and consider the risk factors presented in the Annual Report on Form 10-K. We believe there have been no changes that constitute material changes from these risk factors.”see in full comparison
“We are a smaller reporting company and, therefore, we are not required to provide information required by this item.”see in full comparison
Full comparison: every changed paragraph (2)
A description of the risks associated with our business, financial condition and results of operations is set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on May 22, 2019. These factors continue to be meaningful for your evaluation of the Company and we urge you to review and consider the risk factors presented in the Annual Report on Form 10-K. We believe there have been no changes that constitute material changes from these risk factors.
We are a smaller reporting company and, therefore, we are not required to
provide information required by this item.
Management's Discussion & Analysis (MD&A)
New heading “Plan of Operation”
New heading “Other income/expense”
New heading “Net Income/Loss”
New heading “Future Financings”
New heading “Summary of Cash Flows”
New heading “Cashflow from operating activities”
New heading “Cashflow from investing activities”
New heading “Cashflow from financing activities”
Removed heading “Results of Operations for the Nine Months ending September 30, 2018 and 2017”
Removed heading “Equity Distribution”
Largest changes
“Our ability to continue as a going concern is dependent on our ability to raise additional capital and attain profitable operations. Since its inception, we have been funded by sales of company stock, and funds contributed by related parties through capital investment and borrowing funds. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.”see in full comparison
“Results of Operations for the Nine Months ending September 30, 2018 and 2017”see in full comparison
Full comparison: every changed paragraph (76)
The following discussion and analysis should
be read in
conjunction with the consolidated financial statements and related notes
included in this report and those in our Form 10-K
filed with the Securities and
Exchange Commission on MarchMay 26,22, 2018.2019. This discussion contains forward-looking
statements that involve risks
and uncertainties. Our actual results may differ
materially from those anticipated in such forward-looking statements as a result
of certain
factors, including but not limited to, those described under “Risk
Factors” included in Part II, Item IA of this report.
Certain information and footnote disclosures normally
included included
in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America
have been omitted. It is
suggested that these unaudited interim financial statements be read in
conjunction with the financial statements
and notes thereto included in the
Company’s December 31, 20172018 audited financial statements included in its Form
10-K filed with
the Securities and Exchange Commission. The results of
operations for the period ended SeptemberMarch 30,31, 20182019 and the same period last year are
are not necessarily indicative of the operating results for the full years.
Background Overview
On January 29, 2018, the Company entered into a Definitive Agreement to acquire Fleaux Solutions, LLC for a cash purchase of $1.00, with the Company assuming all liabilities of the business. On June 1, 2019, the Company agreed to sell the business back to the former owners for $70,000 cash in exchange for all equity interest of Fleaux Solutions, LLC.
On August 24, 2023, Darrell Peterson and New Green Holdings, Inc. a Florida C-Corporation (“New Green”) entered into an agreement whereby New Green paid $35,000 to Mr. Peterson to acquire 16,300,000 shares of Series A, 12,700,000 shares of Series B and 1 share of Series C Preferred stock held by Mr. Peterson, resulting in New Green being the controlled shareholder of the Company.
Following the New Green transaction, the Company intends to pursue the business of hemp cultivation and sales, focusing on developing hemp products infused with various items.
Plan of Operation
Galenfeha was incorporated on March 14, 2013 in the state of
Nevada. Our corporate office is located at 420 Throckmorton Street, Suite 200,
Ft. Worth Texas 76102, and our telephone number is 1-817-945-6448. Our website
is www.galenfeha.com.
The company generates revenue by receiving royalties from
products we developed, providing engineering, regulatory, and business
consulting services across numerous disciplines, such as energy, aerospace,
automotive, and medical, and by making investments in companies that our
management team feels to be undervalued. With the recent acquisition of Fleaux
Solutions, LLC, the company also generates revenues and earnings through
government contracts.
Results of Activities
To provide a meaningful presentation and comparison of our results of operations, our discussion combines the period of January 1, 2018 through January 28, 2018 (Predecessor) with the period of January 29, 2018 through March 31, 2018 (Successor). In the accompanying unaudited consolidated financial statements, a black line separates the Predecessor and Successor financial statements to highlight the lack of comparability between these two periods.
Although information for this item is not required, the company
chooses to provide the following disclosures:
CAUTIONARY NOTE TO INVESTORS: Investing in our
securities, whether open market purchases or private transactions, comes with
the high risk that you could lose your entire investment. Our independent
registered public accountant has issued an audit opinion which includes a
statement expressing substantial doubt as to our ability to continue as a going
concern. We have a limited history of operations, and have to date incurred
losses since the company’s inception. We recently sold all divisions of our
commercialized products, but retain royalties from some of these product
lines.
For the year ending December 31, 2017, the company had limited
revenues, and limited operations.
On January 21, 2017 Galenfeha entered into a non-binding Letter
of Intent to purchase Additive Manufacturing, LLC for a cash purchase of
$14,000,000. This acquisition attempt was terminated during the second quarter
of 2017.
On January 23, 2017, the Company announced on Form 8-K filed
with the commission that the company entered into an agreement to sell its
entire Daylight Pump inventory to SouthVestBDC, LLC for a cash selling price of
$400,000. A majority of the proceeds of this sale were to be used to repay a
note secured by the pump inventory with Kevin L. Wilson on August 23, 2016 for
$350,000 plus accrued interest.
On March 9, 2017, the Company sold its entire Daylight Pump
inventory to Fleaux Services, LLC. The sale was for a cash consideration of
$25,000 USD; and Fleaux Services, LLC will assume responsibility of a promissory
note held by Kevin L. Wilson in the amount of $350,000 and all accrued interest
this note had accumulated since issuance on August 23, 2016.
In June and July of 2017, the Company entered into two
Convertible Promissory Notes with Power Up Lending Group, Ltd. At the time of
this report, both of these notes have been paid in full and extinguished, and
there is no common stock remaining to be converted.
On January 29, 2018, the Company entered into a Definitive
Agreement to acquire Fleaux Solutions, LLC for a cash purchase of $1.00. On
January 29, 2018, Galenfeha’s President and CEO filed with the commission on
Form 4, disclosing the sale of 3,000,000 shares of preferred Series B stock to an affiliate of Fleaux Solutions, LLC, and to an affiliate of Fleaux Services of Louisiana, LLC. These shares will be moved into the Series A preferred stock. Series A votes 1:1; converts back to common 1:1; is
not subject to splits in order to facilitate mergers, acquisitions, or meeting the requirements of a listed exchange; and cannot be converted back to common for resale in the open market until a 30 day VWAP of $3.50 per share has been met in
Galenfeha’s public trading market. All future sales of company securities by affiliates will adhere to rules and regulations of the Commission.
On February 1, 2018; the Company announced that the Fleaux Solutions Division secured a $650,000 bank line of credit, as well as an additional $500,000 from a private investor. Fleaux Solutions is engaged in the business of sewer
rehabilitation with local government and municipality contracts.
On May 1, 2018, the Company signed a letter of intent to acquire all of the membership interest in Fleaux Services of Louisiana, LLC, a leading oil and gas measurement company, for $18,000,000. The acquisition is contingent on Galenfeha’s
ability to raise the funds, and the Company has engaged Wall Street firm Paulson Investment Company, LLC as the lead placement agent for financing the transaction. The Company was unable to secure funding for this transaction in the proscribed
amount of time, and therefore this transaction is no longer pending.
On May 3, 2018, the Company’s President and CEO, Mr. James Ketner, resigned his position as President and CEO.
On May 3, 2018, Mr. Trey Moore assumed the position of President/CEO of Galenfeha, Inc.
On May 3, 2018, the Company decided to eliminate the preferred stock structure in order to make the Company’s capital structure less complicated for potential investors funding the Fleaux Services transaction. All preferred shares will move
1:1 into the common. After further review, the company changed its position on this move, and will keep all preferred stock in place until otherwise disclosed.
On July 10, 2018, the company wrote a convertible promissory note for $133,000, of which the company received proceeds of $130,000. The note is due on July 10, 2019 with an interest rate of 12% per annum, and with a conversion option into
common stock after 180 days following the date of funding. The conversion discount is 35% determined on the basis of the lowest closing bid price for the common stock during the prior ten trading day period. The original issuance discount of
$3,000 was recorded as a debt discount and is being amortized over the life of the note.
On August 22, 2018, the company wrote a convertible promissory note for $53,000, of which the company received proceeds of $50,000. The note is due on August 22, 2019 with an interest rate of 12% per annum, and with a conversion option into
common stock after 180 days following the date of funding. The conversion discount is 35% determined on the basis of the lowest closing bid price for the common stock during the prior ten trading day period. The original issuance discount of
$3,000 was recorded as a debt discount and is being amortized over the life of the note.
Liquidity
Assets
At September 30, 2018 (Successor), we had total assets of $2,731,464, of which $17,799 was in cash.
The following discussion represents a comparison of our results of operations for the three months ended September 30, 2018 and 2017. For periods after the acquisition of Fleaux Solutions, LLC (since January 29, 2018), the Company is referred to as
the “Successor” and our results of operations combines the operations of Galenfeha, Inc. and Fleaux Solutions, LLC. For periods prior to the acquisition of Fleaux Solutions, LLC, the Company is referred to as the
“Predecessor” and our results of operations include that of Fleaux Solutions, LLC.
Results of Operations forFor the Three Months endingEnded SeptemberMarch 30,31, 20182019 and 2017
2018
Results of Operations
Our revenues were $1,007,082 for the period ended March 31, 2019 compared to $1,120,542 in 2018. The 10% decrease in revenue recorded during 2019 was attributable to a decrease in manhole rehabilitation services and CCTV. However, there was a significant growth in Cosmic service lateral lining contracts during 2019.
Revenues for the three months ended September 30, 2018 and 2017 were $1,109,667 and $582,560 respectively, a 90% increase from the previous year’s same quarter. The Company’s increase in revenue is due to the most recent
acquisition of Fleaux Solutions, LLC, and the continued expansion of operational activities.
Our cost of revenue was $264,433 for the three months ended March 31, 2019, compared to $252,021 in 2018. The increase in the cost of revenue is primarily due to the increased costs of services related to the additional contracts as described above.
Cost of Revenues for the three months ended September 30, 2018 and 2017 were $202,169 and $148,698 respectively. Increased costs were associated with increases in material cost of goods sold, and additional labor to perform Company
operations.
Total operating expenses for the three months ended September
30, 2018 and 2017 were $557,732 and $560,601 respectively, which was near flat
for the previous year’s same quarter.
Net Operating Income (Loss) and Net Loss
Net operating income (loss) for the three months ended
September 30, 2018 and 2017 was $349,766 and $(126,739) respectively, a more
than 300% increase from the previous year’s same quarter. Net income (loss) for
the three months ended September 30, 2018 and 2017 was $334,232 and $(138,108)
respectively, a more than 300% increase from the previous year’s same quarter.
Results of Operations for the Nine Months ending September
30, 2018 and 2017
To provide a meaningful presentation and comparison of our
results of operations, our discussion combines the period of January 1, 2018
through January 28, 2018 (Predecessor) with the period of January 29, 2018
through September 30, 2018 (Successor). In the accompanying unaudited interim
consolidated financial statements, a black line separates the Predecessor and
Successor financial statements to highlight the lack of comparability between
these two periods.
The results of operations for the interim periods shown in the
accompanying unaudited interim consolidated financial statements, including the
periods shown as Predecessor and Successor, are not necessarily indicative of
operating results for the entire period.
Revenues
Revenues for the nine months ended September 30, 2018 and 2017
were $2,852,024 and $1,260,277 (Predecessor) respectively, a 125% increase from
the previous year’s same period. The Company’s increase in revenue year over
year is due to the most recent acquisition of Fleaux Solutions, LLC.
Cost of Revenues
Cost of Revenues for the nine months ended September 30, 2018
and 2017 were $771,296 and $261,259 respectively. Increased costs were
associated with increases in material cost of goods sold, and additional labor
to perform Company operations. As a percentage of sales, cost of goods sold
increased by 6%.
Operating Expenses
Total operatingOperating expenses for the ninethree months ended
March September31, 2019, and 2018, were $761,747 and $549,303, respectively. The increase in operating expenses was primarily attributable to increase
30,payroll and other general and administrative expenses from the acquisition of the Fleaux Solutions business during 2018 and 2017increased
professional were $1,634,651 and $1,277,908, respectively. The Company’s
increase in Operating Expenses is due to the most recent acquisition of Fleaux
Solutions, LLC, and the continued expansion of operational activities.fees.
Net Operating Income (Loss) and Net Loss
Loss from operations for the three months ended March 31, 2019 was $19,098 compared to an operating income of $319,218 in 2018. The decrease in 2019 was due to the decrease in revenue growth and increased operating expenses discussed above.
Other income/expense
Total other expense for the three months ended March 31, 2019 was $233,647 compared to total other income of $8,966 in 2018. Other Expense for the three months ended March 31, 2019, consisted of a $77,272 loss on derivative instruments, interest expense of $177,285, unrealized gain on trading securities of $33,295 and realized losses on investments of $10,994. Other Expense for 2018 consisted of interest expense of $76,803, unrealized loss on trading securities of $9,912 and realized losses on investments of $7,590. These were offset by a $102,604 gain on derivative instruments and miscellaneous income of $667 primarily related to royalty income from battery sales to a related party.
Net Income/Loss
Net loss for the period ended March 31, 2019 was $252,745 compared to net income of $328,184 for 2018.
Liquidity and Capital Resources
“Liquidity” refers to our ability to generate adequate amounts of cash to meet our funding needs. We believe we have adequate capital resources and liquidity from our operations to maintain current operations during 2019 but continue to be dependent on sales of common stock and bank financing to fund operations until we achieve a positive cash flow.
We do not currently have material commitments for capital expenditures and do not anticipate entering into any such commitments during the next twelve months.
At March 31, 2019, we had current assets of $1,264,336 comprised of cash and cash equivalents of $20,644 and marketable securities of $102,000, accounts receivable of $983,941 and inventory of $157,751. Our current liabilities were $2,039,656, comprised of $485,379 in accounts payable and accrued expenses, line of credit balances of $640,418, convertible notes payable of $11,409, right of use liabilities totaling $250,977, derivative liabilities of $90,727, and other short term debt totaling $208,602 and $352,144 in amounts due to related parties, resulting in a working capital deficit of ($775,320).
At December 31, 2018, we had current assets of $1,270,039 comprised of cash and cash equivalents of $181,645 and marketable securities of $108,150, accounts receivable of $815,266 and inventory of $164,978. Our current liabilities were $2,018,843, comprised of $492,805 in accounts payable and accrued expenses, line of credit balances of $639,841, convertible notes payable of $182,507, other short-term debt totaling $376,546 and $327,144 in amounts due to related parties, resulting in working capital deficit of ($748,804).
To provide a meaningful presentation and comparison of our results of operations, our discussion combines the period of January 1, 2018, through January 28, 2018 (Predecessor) with the period of January 29, 2018 through December 31, 2018 (Successor). In the accompanying unaudited consolidated financial statements, a black line separates the Predecessor and Successor financial statements to highlight the lack of comparability between these two periods.
NGHI insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding NGHI (13F)
None of the 59 investors we track reported a position in their latest 13F.