10-Q/A: Accredited Solutions Files Amended Quarterly Report After Initial Filing Lacked Independent Accountant Review

Accredited Solutions has filed an amended quarterly report for the period ending March 31, 2024, after the original filing did not include a review by an independent public accountant.

Summary

• Accredited Solutions filed an amended 10-Q/A report for the quarter ended March 31, 2024, because the original filing did not have the required review by an independent public accountant.
• The company's financial statements for the quarter have now been reviewed in accordance with Statement of Auditing Standards No. 100.
• The amended report includes updated financial statements, management's discussion and analysis, and certifications from the principal executive and financial officers.
• The company's net sales were $109,373 for the three months ended March 31, 2024, compared to $156,238 for the same period in 2023.
• The company reported a net loss of $73,306 for the quarter ended March 31, 2024, compared to a net loss of $231,451 for the same period in 2023.
• The company had a working capital deficit of $5,151,377 as of March 31, 2024, and used $674 in cash for operating activities during the quarter.
• The company's cash and cash equivalents were $245 as of March 31, 2024.
• The company has a going concern issue due to recurring operating losses, an accumulated deficit, and a working capital deficiency.
• The company's ability to continue as a going concern is dependent on obtaining adequate capital.
• The company issued 566,163,482 shares of common stock for the conversion of $152,645 in convertible debt during the quarter.

Sentiment

Score: 2

Explanation: The document reveals significant financial distress, a going concern issue, and ineffective internal controls, indicating a very negative outlook for the company.

Positives

• The company's net loss improved to $73,306 for the quarter ended March 31, 2024, compared to a net loss of $231,451 for the same period in 2023.
• The company's cash used in operations decreased to $674 for the three months ended March 31, 2024, compared to $47,953 for the same period in 2023.

Negatives

• The company's net sales decreased to $109,373 for the three months ended March 31, 2024, from $156,238 in the same period of 2023.
• The company had a working capital deficit of $5,151,377 as of March 31, 2024.
• The company's cash and cash equivalents were $245 as of March 31, 2024.
• The company has a going concern issue due to recurring operating losses and a working capital deficiency.
• The company's disclosure controls and procedures are not effective due to several deficiencies.

Risks

• The company has a going concern issue due to recurring operating losses, an accumulated deficit, and a working capital deficiency.
• The company's ability to continue as a going concern is dependent on obtaining adequate capital.
• The company's disclosure controls and procedures are not effective due to a lack of independent directors, insufficient personnel, and inadequate written policies.
• The company is subject to potential legal claims that could have a material adverse effect on its financial condition.
• The company's business is unlikely to expand rapidly without additional capital.

Future Outlook

The company plans to expand its Diamond Creek Water business but acknowledges that without additional capital, such expansion is unlikely to be rapid.

Management Comments

• Management acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud.
• Management's plans include raising capital in the debt and equity markets.
• Management intends to implement measures to remediate internal control weaknesses as funding permits.

Industry Context

The company operates in the beverage industry with its Diamond Creek Water business, and the report highlights the challenges of scaling a business without sufficient capital, a common issue for small companies in competitive markets.

Comparison to Industry Standards

• The company's negative gross profit margin of -9% for the quarter is significantly below industry standards for beverage companies, which typically aim for gross margins of 40% or higher.
• The company's cash position of $245 is extremely low compared to other small beverage companies, which usually maintain a cash balance sufficient for at least a few months of operating expenses.
• The company's reliance on convertible debt for funding is a high-risk strategy, as it can lead to significant dilution for existing shareholders and potential default issues, which is not typical for established beverage companies.
• The company's lack of effective internal controls is a major concern, as it indicates a higher risk of financial misstatements and potential fraud, which is not acceptable for publicly traded companies.

Corporate Governance

Legal Proceedings

• The company is subject, from time to time, to claims by third parties under various legal disputes.
• As of August 22, 2024, the Company did not have any legal actions pending against it.

Related Party Transactions

• During the three months ended March 31, 2024, an officer and director of the Company, Eduardo Brito, made advances on behalf of the Company in the total amount of $150, which amounts were used to pay operating expenses of the Company.
• The amounts loaned by Mr. Brito are due on demand and bear no interest.

Stakeholder Impact

• Shareholders face significant risk due to the company's going concern issue and potential dilution from convertible debt.
• Employees may be impacted by the company's financial instability and potential restructuring.
• Customers may be affected by the company's ability to maintain operations and supply products.
• Creditors face increased risk of non-payment due to the company's financial difficulties.

Next Steps

• The company needs to obtain adequate capital to fund operating losses.
• The company needs to implement measures to remediate internal control weaknesses.
• The company needs to expand its Diamond Creek Water business.

Key Dates

Keywords

amended quarterly report, financial statements, going concern, convertible debt, derivative liabilities, working capital deficit, net loss, disclosure controls, independent accountant, common stock