10-K/A: Awaysis Capital Files Amended 10-K, Removes Going Concern Qualification After Re-Audit

Awaysis Capital, Inc. files an amendment to its annual report to include re-audited financials, removing a prior going concern qualification and addressing SEC comments.

Summary

• Awaysis Capital, Inc. filed an amendment to its annual report on Form 10-K for the fiscal year ended June 30, 2023, in response to SEC comments regarding the omission of the auditor's report for the 2022 financial statements.
• The company engaged its current auditors to re-audit the 2022 financial statements, resulting in the inclusion of re-audited statements and a reissued auditor's report.
• The amendment removes the company's going concern qualification, taking into account financing transactions after June 30, 2023.
• The company's authorized capital stock consists of 1,000,000,000 shares of common stock and 25,000,000 shares of preferred stock.
• As of June 30, 2023, there were 252,227,053 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding.
• The company's business model focuses on acquiring, developing, and managing residential vacation home communities.
• Awaysis has identified five properties in Belize as its initial real estate portfolio, with the first acquisition, Casamora Awaysis Assets, completed on June 30, 2022, for $11.4 million.
• The company plans to generate revenue through sales of developed resort inventory, management services, and short-term unit rentals.
• The company reported a net loss of $4,295,446 for the fiscal year ended June 30, 2023, and $239,851 for the fiscal year ended June 30, 2022.
• As of June 30, 2023, the company had cash of $79 and a positive working capital of $5,742,463.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While the company has taken steps to address SEC concerns and remove the going concern qualification, the significant net loss, low cash reserves, and dependence on future capital raises raise concerns. The company's business model and strategy are sound, but execution and financial stability are still uncertain.

Positives

• The company successfully addressed SEC comments and re-audited its 2022 financials.
• The removal of the going concern qualification indicates improved financial stability.
• The company has a clear business strategy focused on real estate investment and management.
• Awaysis has identified and acquired initial properties in Belize, setting the stage for future growth.
• The company has a diversified revenue model including sales, management, and rentals.

Negatives

• The company incurred a significant net loss of $4,295,446 for the fiscal year ended June 30, 2023.
• The company had very low cash reserves of $79 as of June 30, 2023.
• The company is dependent on additional capital raises to fund operations and development.
• The company has a limited operating history and is still in the development stage.
• The company is subject to various risks, including competition and economic conditions.

Risks

• The company is a development stage company with a limited operating history.
• Awaysis may not achieve profitability and is dependent on raising additional capital.
• The company faces significant competition in the resort and hotel industry.
• The company's financial success is dependent on general economic conditions.
• The company's properties may be subject to environmental laws and regulations.
• The company's common stock has a limited trading market and is subject to penny stock rules.
• The company is subject to risks related to the geographic locations of its properties.
• There are potential conflicts of interest due to the ownership structure and related party transactions.

Future Outlook

The company expects to raise additional capital through the sale of equity or debt securities to meet its long-term operating requirements and to fund its business plan. The company also expects to generate revenue through sales of developed resort inventory, management services, and short-term unit rentals.

Management Comments

• Management believes that the current financial position of the Company enables it to continue as a going concern.
• Management is seeking to remedy the deficiency in disclosure controls and procedures.
• Management reserves the right, at any time, to make significant modifications to the Companys stated strategies depending on future events.

Industry Context

The company operates in the highly competitive resort and hotel industry, facing competition from other resorts, hotels, cruises, and accommodation alternatives. The company also competes with home and apartment sharing services. The company's business is subject to seasonality and cyclicality, with stronger revenue generation during traditional vacation periods.

Comparison to Industry Standards

• Awaysis is a relatively small player compared to established national and regional companies in the resort and hotel industry.
• The company's focus on acquiring and developing undervalued assets in emerging markets is a common strategy in the real estate investment sector.
• The company's reliance on a cost-plus management fee structure is different from traditional revenue-based hotel management fees, which may provide more predictable income.
• The company's financial results, particularly the net loss and low cash reserves, are concerning compared to industry benchmarks for established companies.
• The company's strategy of offering owner financing up to 50% of the price of the units is a common practice in the vacation home market.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not currently a party in any legal proceeding or governmental regulatory proceeding nor are they currently aware of any pending or potential legal proceeding or governmental regulatory proceeding proposed to be initiated against them that would have a material adverse effect on them or their business.

Related Party Transactions

• Each of Mr. Singh, Dr. Trumbach and Ms. Iannitelli are Executive Directors of Harthorne, the owner of approximately 38.7% of the issued and outstanding shares of common stock of the Company.
• During the fiscal years ended June 30, 2023 and 2022, Harthorne advanced $255,489 and $12,497, respectively, relating to costs paid on behalf of the Company.
• Tyler Trumbach, a director of the Company and its Chief Legal Officer, performed certain general counsel and legal services for the Company through The Law Offices of Tyler A. Trumbach, P.A., and in September 2022, received through his holding company River Rock Holdings, Inc., 333,333 shares of the Companys common stock as payment in full for $50,000 of legal services provided by such firm.

Stakeholder Impact

• Shareholders may experience dilution of their equity investment if the company issues additional shares of common stock.
• Employees may benefit from the company's growth and development, but also face risks associated with the company's financial instability.
• Customers may benefit from the company's vacation rental services, but also face risks associated with the company's financial instability.
• Suppliers and creditors may face risks associated with the company's financial instability and dependence on additional capital raises.

Next Steps

• The company plans to continue developing its real estate portfolio in Belize.
• The company intends to expand into other resort markets as funds allow.
• The company will focus on generating revenue through sales, management services, and rentals.
• The company will seek to raise additional capital to fund its operations and development plans.
• The company will continue to implement its business plan to become a real estate investment and management company.

Key Dates

Keywords

real estate investment, resort development, vacation rentals, property management, Belize, financial statements, common stock, capital raise, going concern, audited financials