UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Mark One

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

For the quarterly period ended November 30, 2021

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

For the transition period from ______ to _______

Commission File No. 333-234487

NOWTRANSIT INC.

(Exact name of registrant as specified in its charter)

2825 East Cottonwood Parkway

Suite 500 - #5130

Salt Lake City, UT 84121

(Address of principal executive offices)

Registrant’s telephone number, including area code: (801) 810-6209

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: Common stock, par value $0.0001

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit 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 definition of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 7(a)(2)(B) of the exchange act. ☒

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the practicable date:

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

While the information presented in the accompanying financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. These financial statements should be read in conjunction with the Company's August 31, 2021 audited financial statements and notes thereto. Operating results for the three months ended November 30, 2021 are not necessarily indicative of the results that can be expected for the year ending August 31, 2022.

NOWTRANSIT INC

BALANCE SHEETS

See accompanying notes, which are an integral part of these unaudited financial statements.

NOWTRANSIT INC

STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes, which are an integral part of these unaudited financial statements.

NOWTRANSIT INC

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

For the Three Months Ended November 30, 2021 and 2020

See accompanying notes, which are an integral part of these unaudited financial statements.

NOWTRANSIT INC

STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying notes, which are an integral part of these unaudited financial statements.

NOWTRANSIT INC

NOTES TO THE FINANCIAL STATEMENTS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The Company has no operations since inception other than the expenditures related to running the Company, and has generated no revenue since inception. We have terminated our plans for operations in the online delivery industry following the Change of Control, and are currently in the process of developing a business plan, including with respect to searching for, evaluating and obtaining a business opportunity in the U.S.

Plan of Operation

The Company has no operations since inception other than the expenditures related to running the Company, and has no revenue from continuing operations as of the date of this Report. We have terminated our operations in the online delivery industry following the Change of Control, and are currently in the process of developing a business plan, including with respect to searching for, evaluating and obtaining a business opportunity in the U.S.

Management intends to explore and identify business opportunities within the U.S., including a potential acquisition of an operating entity through a reverse merger, asset purchase or similar transaction. Our President has experience in management and business consulting, although no assurances can be given that he can identify and implement a viable business strategy or that any such strategy will result in profits. Our ability to effectively identify, develop and implement a viable plan for our business may be hindered by risks and uncertainties which are beyond our control, including without limitation, the continued negative effects of the COVID-19 pandemic on the U.S. and global economies. See Item 1A - Risk Factors in our Annual Report on Form 10-K for the fiscal year ended August 31, 2021, filed with the Securities and Exchange Commission (the “SEC”) on November 26, 2021.

We do not currently engage in any business activities that provide revenue or cash flow. During the next 12 month period we anticipate incurring costs in connection with investigating, evaluating and negotiating potential business combinations, filing SEC reports, and consummating an acquisition of an operating business.

Given our limited capital resources, we may consider a business combination with an entity which has recently commenced operations, is a developing company or is otherwise in need of additional funds for the development of new products or services or expansion into new markets, or is an established business experiencing financial or operating difficulties and is in need of additional capital. Alternatively, a business combination may involve the acquisition of, or merger with, an entity which desires access to the U.S. capital markets.

As of the date of this Report, our management has not had any discussions with any representative of any other entity regarding a potential business combination. Any target business that is selected may be financially unstable or in the early stages of development. In such event, we expect to be subject to numerous risks inherent in the business and operations of a financially unstable or early stage entity. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk or in which our management has limited experience, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks.

Our management anticipates that we will likely only be able to effect one business combination due to our limited capital. This lack of diversification will likely pose a substantial risk in investing in the Company for the indefinite future, because it will not permit us to offset potential losses from one venture or operating territory against gains from another. The risks we face will likely be heightened to the extent we acquire a business operating in a single industry or geographic region.

We anticipate that the selection of a business combination will be a complex and risk-prone process. Because of general economic conditions, including unfavorable conditions caused by the COVID-19 pandemic, rapid technological advances being made in some industries and shortages of available capital, management believes that there are a number of firms seeking business opportunities at this time at discounted rates with which we will compete. We expect that any potentially available business combinations may appear in a variety of different industries or regions and at various stages of development, all of which will likely render the task of comparative investigation and analysis of such business opportunities extremely difficult and complicated.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s discussion and analysis and results of operations are based upon our accompanying financial statements for the three months ended November 30, 2021 and 2020, which have been prepared in conformity with U.S. generally accepted accounting principles, or U.S. GAAP, and which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Note 3. Summary of Significant Accounting Policies, to the financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, describes the significant accounting policies and methods used in the preparation of the Company’s financial statements. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. These estimates are the basis for our judgments about the carrying values of assets and liabilities, which in turn may impact our reported revenue and expenses. Our actual results could differ significantly from these estimates under different assumptions or conditions.

Results Of Operations

We are a start-up corporation with no operations and no revenues from our business operations. We do not anticipate that we will generate significant revenues until we have raised the funds necessary to engage in a reverse merger or other business combination or otherwise commence operations. There is no assurance we will ever commence material operations or generate revenue even if we raise all necessary funds.

THREE MONTHS ENDED NOVEMBER 30, 2021 COMPARED TO NOVEMBER 30, 2020

Our net loss for the three months ended November 30, 2021 was $14,089 compared to a net loss of $5,578 during the three months ended November 30, 2020; the Company has not generated any revenue in either period. The increase in net loss was due to an increase in general administrative expenses including professional fees in connection with the preparation of SEC reports, our change in control,  and our ongoing search for a business to acquire. Expenses incurred were general administrative expenses of $14,089 during the three months ended November 30, 2021 compared to $5,578 during the three months ended November 30, 2020.

LIQUIDITY AND CAPITAL RESOURCES

As of November 30, 2021, our total assets were $96,134 consisting of cash. As of August 31, 2021, our total assets were $6,314 consisting of prepaid expenses and cash.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities since inception. For the three months ended November 30, 2021, net cash flows used in operating activities were $5,901, consisting of our net loss of $14,089, and a decrease of $4,279 in prepaid expenses, and increases of $3,284 in accounts payable, and $625 in credit card payable. Cash flows used in operating activities for the three months ended November 30, 2020 were $578, consisting of our net loss of $5,578 and an increase in accrued expenses of $5,000.

Cash Flows from Investing Activities

We have not engaged in any investing activities since our inception.

Cash Flows from Financing Activities

For the three months ended November 30, 2021, net cash flows provided by financing activities was $100,000 consisting of proceeds from the sale of Series A Convertible Preferred Stock (the “Series A”) for cash as described in the following paragraphs. For the three months ended November 30, 2020, net cash flows provided by financing activities was $0.

On November 3, 2021, the Company entered into a Stock Purchase Agreement with an accredited investor pursuant to which the Company sold to the purchaser 100,000 shares of the Company’s Series A at a purchase price of $1.00 per share. The Company received $100,000 in  proceeds from the Offering. Each share of the Series A is convertible into three shares of the Company’s common stock.

Our existing working capital is expected to be adequate to fund our operations over the next 12 months. We have financed operations to date through the proceeds of loans from insiders and the private placement of equity. We expect we will need to raise additional capital to meet long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current stockholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations.

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Going Concern

There is no historical financial information about us upon which to base an evaluation of our performance. We have no operations, cumulative losses, and have not generated any revenues. We cannot guarantee we will be successful in acquiring an operating business or commencing material business operations. Our business is subject to risks inherent in the search for and establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

There can be no assurance that future financing will be available to us on acceptable terms or at all. If financing is not available on satisfactory terms as and when needed, we may be unable to commence, develop or expand our operations. Equity financing could result in additional dilution to existing stockholders.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of November 30, 2021 (the “Evaluation Date”), the Company’s management evaluated, with participation of its principal executive officer, the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, the Company’s principal executive officer concluded that the Company’s disclosure controls and procedures were ineffective as of November 30, 2021.

Management assessed the effectiveness of its internal control over financial reporting as of the Evaluation Date based on criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. The material weaknesses identified during management’s assessment were (i) a lack of sufficient internal accounting resources; and (ii) a lack of segregation of duties to ensure adequate review of financial statement preparation. In light of these material weaknesses, management has concluded that we did not maintain effective internal control over financial reporting at the Evaluation Date. There were no changes in controls during the quarter ended November 30, 2021.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

Item 2. Unregistered Sales Of Equity Securities and Use Of Proceeds

On November 3, 2021, the Company entered into a Stock Purchase Agreement with an accredited investor pursuant to which the Company sold to the purchaser 100,000 shares of the Company’s Series A Convertible Preferred Stock (the “Series A”) at a purchase price of $1.00 per share. The Company received $100,000 in proceeds from the transaction. Each share of the Series A is convertible into three shares of the Company’s common stock at the holder’s discretion. The offer and sale of the Series A was not registered under the Securities Act of 1933 and was exempt from registration pursuant to Section 4(a)(2) thereof and Rule 506(b) promulgated thereunder.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

* Certain schedules, appendices and exhibits have been omitted in accordance with Item 601 of Regulation S-K. A copy of any omitted schedule, appendix and/or exhibit will be furnished supplementally to the Staff of the Securities and Exchange Commission upon request.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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 capacities and on the dates indicated.