GNVR.OQBGenvor INC
10-K/A: Genvor Amends 10-K, Reveals Going Concern Doubts
Sentiment:
Annual Report Amendment
Genvor Incorporated filed an amended annual report to correct an audit opinion date, reiterating significant financial challenges and a going concern warning.
Capital raiseManagement intends to raise additional funds through public and/or private offerings of its stock.The company issued 300,000 shares of common stock for $150,000 on November 17, 2022.Numerous common stock issuances for cash occurred in May, July, August, and September 2023, totaling approximately $175,000.Post-fiscal year end (October 2023 January 2024), the company issued common stock for cash totaling approximately $403,600.A convertible promissory note for $200,000 was entered into with Barkley Capital LLC on September 13, 2023.Warrants for common stock were issued for services and conversion of notes payable, including 250,000 warrants to Good Works Funding, Inc. (potentially related to Interim CEO Judith S. Miller) on November 21, 2023.
Worse than expectedThe company's cash position significantly deteriorated, decreasing from $296,386 to $44,354.Net cash used in operating activities increased from $553,235 (9 months 2022) to $871,734 (FY2023), indicating an accelerated cash burn.The audit opinion explicitly highlights 'substantial doubt about its ability to continue as a going concern,' which is a critical negative indicator.Total liabilities increased, and several convertible notes payable are past due and in dispute.The PPP loan is in default.
Summary
- Genvor Incorporated filed an Amendment No. 2 to its 2023 Annual Report on Form 10-K/A.
- The primary purpose of this amendment is to correct a typographical error in the Report of Independent Registered Public Accounting Firm, changing the signature date from December 20, 2023, to January 16, 2024.
- No other changes were made to the consolidated financial statements or notes, nor does it reflect events after the original filing date.
- The company continues to face substantial doubt about its ability to continue as a going concern due to recurring losses, a net capital deficiency, and no revenues.
- Genvor reported a net loss of $1,707,481 for the year ended September 30, 2023, and used $871,734 in cash from operating activities.
- Cash balances significantly decreased from $296,386 in September 2022 to $44,354 in September 2023.
- Total liabilities increased to $1,787,059 in 2023 from $1,710,395 in 2022.
- The company has an accumulated deficit of $17,719,307 as of September 30, 2023.
- Management intends to raise additional funds through public and/or private offerings of its stock.
- Several unsecured notes payable are past due, and the company is disputing amounts owed to two noteholders under state usury laws.
- Bradley White, former CEO and director, was terminated on June 20, 2023, and a settlement agreement was reached for $300,000, in exchange for the return of Series A and Series B preferred stock.
- Judith S. Miller was appointed Interim CEO effective June 20, 2023, and entered into an Executive Consulting Agreement on October 5, 2023.
- The company holds a patent (#11083775) granted on August 10, 2021, related to plant-based defense technology.
Sentiment
Score: 2
Explanation: The filing reveals severe financial distress, including a going concern warning, significant cash burn, increasing liabilities, and no revenue. While the net loss decreased, the overall financial health is precarious, and the company's stock is illiquid. The amendment itself is minor, but it draws attention to the underlying negative financial position.
Positives
- Net loss decreased to $1,707,481 for FY2023 compared to $4,240,109 for the nine months ended September 30, 2022, indicating a reduction in the rate of loss.
- The company holds a patent (#11083775) for plant-based defense technology, indicating intellectual property.
- The USDA CRADA liability was reduced to $0 as of September 30, 2023, from $246,400 in the prior year.
- Successful issuance of common stock and warrants post-fiscal year end, raising capital.
Negatives
- Substantial doubt about the company's ability to continue as a going concern due to recurring losses and a net capital deficiency.
- No revenues generated for the year ended September 30, 2023, or the nine months ended September 30, 2022.
- Significant decrease in cash from $296,386 in 2022 to $44,354 in 2023.
- Increased net cash used in operating activities from $553,235 (9 months 2022) to $871,734 (FY2023).
- Accumulated deficit grew to $17,719,307.
- Convertible notes payable increased, with several notes past due and amounts in dispute under state usury laws.
- A PPP loan of $48,750 is in default.
- The company's common stock is not eligible for proprietary broker-dealer quotations, and trading data is unavailable, indicating liquidity issues for shareholders.
Risks
- Ability to continue as a going concern is dependent on raising additional funds and generating revenues, with no assurances to that effect.
- Disputes over amounts owed to noteholders under state usury laws could lead to further legal challenges and financial obligations.
- Reliance on future capital raises, which 'there can be no assurances to that effect'.
- Lack of operational history and no current revenues.
- Default on a PPP loan.
- Common stock not eligible for broker-dealer quotations, impacting market liquidity and valuation.
- Potential for impairment losses on long-lived assets if future cash flows differ from management estimates.
- Net operating loss carry forwards may be subject to annual limitations due to ownership changes.
Future Outlook
Management believes that actions being taken to implement its business plan, develop products, and generate revenues should allow the company to continue as a going concern. However, there are no assurances that the company will be able to raise additional funds or achieve its strategic objectives.
Management Comments
- Management intends to raise additional funds by way of additional public and/or private offerings of its stock.
- Management believes that the actions presently being taken to further implement its business plan, develop its products and technologies, and generate revenues should provide the opportunity for the Company to continue as a going concern.
- While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds in the future, there can be no assurances to that effect.
Industry Context
Genvor operates in the agricultural biotechnology sector, focusing on plant-based defense technology to address global food security. This sector is characterized by long research and development cycles, significant capital requirements, and regulatory hurdles. The company's current lack of revenue and reliance on external funding is typical for early-stage biotech firms, but the going concern warning and disputes over debt highlight severe operational and financial challenges that could hinder its ability to compete or bring products to market.
Comparison to Industry Standards
- Genvor's lack of revenue and significant accumulated deficit are common for early-stage biotechnology companies, which often require substantial investment in R&D before commercialization. However, the explicit 'going concern' warning from auditors indicates a more severe financial distress than typically seen in well-funded peers.
- The default on a PPP loan and disputes over unsecured notes payable suggest a higher level of financial instability and potential governance issues compared to established industry players or even many emerging growth companies that maintain better financial discipline.
- The company's market value being 'undetermined' and common stock not eligible for broker-dealer quotations contrasts sharply with publicly traded biotech companies that typically have active trading and clear market valuations, reflecting a severe lack of investor confidence and market access.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Executive Officer and Director | Bradley White | NA | 2023-06-20 | Termination; subsequent settlement agreement. |
| Interim CEO & Executive Consultant | NA | Judith S. Miller | 2023-06-20 | Appointment to lead the company and assist in recruiting a full-time CEO. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Preferred Stock Designation | Designation of Series A Preferred Stock on August 10, 2022, granting 10,000,000 votes per share, issued to key officers and directors. | 2022-08-10 | Concentrates voting power among a small group of insiders, potentially impacting minority shareholder influence. |
| Preferred Stock Designation and Conversion | Designation of Series B Preferred Stock on October 19, 2022, granting 10 votes per share, with common stock converted into Series B by related parties to modify outstanding common stock. | 2022-10-19 | Alters the capital structure and voting rights, potentially consolidating control among related parties while reducing the number of outstanding common shares. |
| Stock Cancellation | Return of 3 Series A preferred shares and 502,512 Series B preferred shares by former CEO Bradley White as part of a settlement agreement. | 2023-09-28 | Reduces the number of high-voting preferred shares held by a former executive, potentially rebalancing some control. |
| Certifications | New certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 included as Exhibits. | 2025-09-09 | Enhances compliance with regulatory requirements for financial reporting and internal controls. |
Legal Proceedings
- Company is disputing amounts claimed to be owed to two noteholders (Brent Lilienthal and Mel Wentz) under state usury laws.
- Settlement Agreement with former CEO Bradley White for $300,000, resolving claims related to his termination.
Related Party Transactions
- Consulting agreement with the former CEO (from NBFL), paid $171,856 in FY2023 and $284,746 in 9 months ended Sep 2022.
- Interim CEO Judith S. Miller's Executive Consulting Agreement, earning $65,000 in FY2023 with $14,500 payable.
- Issuance of 6,000,000 common shares valued at $3,000,000 to three directors on March 8, 2022.
- Issuance of Series A preferred stock to Bradley White (former CEO), Dr. Clayton Yates (CSO & Chairman), and Dr. Jesse Jaynes (CRO & Director).
- Conversion of common stock into Series B preferred stock by related parties including Jaynes Investment LLC, ACT Holdings LLC, LASB Family Trust, Jesse Michael Jaynes, and Bradley White.
- Payments to the daughter of the CEO and Board member for clerical services ($21,900 in 9 months ended Sep 2022, $16,925 in FY2021).
- Receivable of $3,846 from Robert Bubeck, former CEO, for expenses paid on behalf of the company.
- Issuance of 600,000 warrants for common stock to a related party for services, valued at $600,000.
Stakeholder Impact
- Shareholders face significant dilution risk from ongoing stock issuances and conversions. The 'going concern' warning and illiquid market for common stock pose substantial risks to investment value.
- Creditors, particularly noteholders with past-due notes, face uncertainty regarding repayment, exacerbated by the company disputing amounts owed and a PPP loan in default.
- Management and employees are operating in a period of transition, with a new Interim CEO and ongoing efforts to recruit a full-time CEO, which could affect stability and strategic direction.
- The USDA, as a partner in the CRADA, has seen the associated liability reduced to $0, suggesting a positive resolution or fulfillment of obligations under that agreement.
Next Steps
- Management plans to continue implementing its business plan, developing products and technologies.
- Management intends to raise additional funds through public and/or private offerings of its stock.
- Recruiting a full-time CEO and/or agricultural biotechnology management professional.
- Interim CEO Judith S. Miller will be retained as an executive consultant for 6 months after a full-time CEO is appointed.
- Resolution of disputes with noteholders regarding past due amounts and late fees.
Key Dates
| Date | Description |
|---|---|
| 2018-12-28 | Nexion Biosciences LLC (NBLLC) formed in Delaware. |
| 2019-03-01 | Origination date for Kirk Huntsman's unsecured note payable. |
| 2019-03-19 | Origination date for Mel Wentz's unsecured note payable. |
| 2019-04-09 | Company received a Paycheck Protection Program (PPP) loan of $48,750. |
| 2019-04-29 | Origination date for John Hare's unsecured note payable. |
| 2019-05 | Old Genvor acquired Nexion Biosciences LLC (NBLLC). |
| 2019-08-01 | Effective date of sublease agreement for office space. |
| 2020-07-24 | Company entered into a consulting agreement for business development activities. |
| 2020-09 | Company assumed a Cooperative Research and Development Agreement (CRADA) with the USDA. |
| 2021-01-11 | Date of the original Exchange Agreement for the acquisition of Old Genvor. |
| 2021-08-10 | Patent (#11083775) granted by the United States Patent and Trademark Office. |
| 2021-09 | Office lease moved to a month-to-month basis. |
| 2021-10-01 | Start of period for stock purchase agreements (SPAs) for common stock issuance. |
| 2021-12-31 | Fiscal year-end for the wholly owned subsidiary. |
| 2022-01-01 | Start of period for stock purchase agreements (SPAs) for common stock issuance. |
| 2022-02-18 | Company issued 20,000 shares of common stock to an investor for stock compensation. |
| 2022-03-02 | Date of the Merger Agreement. |
| 2022-03-08 | Company issued 6,000,000 shares of common stock to its three directors. |
| 2022-04 | Company issued 5,000 shares of common stock to a consultant. |
| 2022-04-21 | Company issued 569 shares of common stock under a transfer and exchange agreement. |
| 2022-05-12 | Company entered into an SPA for the issuance of 25,000 shares of common stock. |
| 2022-05-27 | Genvor Incorporated (formerly Allure Worldwide, Inc.) completed merger transaction with Old Genvor; Company renamed Genvor Incorporated. |
| 2022-06-20 | Bradley White, former CEO and director, was terminated. |
| 2022-07 | Company issued 975,000 common stock shares to prior S-1 investors. |
| 2022-07 | Company issued 50,000 shares of common stock to a shareholder pursuant to a December 2021 SPA. |
| 2022-07 | Company entered into a transfer and exchange agreement to issue 99,600 shares of common stock. |
| 2022-08-10 | Company designated 10 shares of its preferred stock as Series A Preferred Stock. |
| 2022-08-16 | Series A preferred stock issued to Bradley White, Dr. Clayton Yates, and Dr. Jesse Jaynes. |
| 2022-09-08 | Company issued 100,000 shares of common stock to a prior Nexion contractor as settlement. |
| 2022-09-13 | Company issued 170,000 shares of common stock to Scott Gann for services. |
| 2022-09-30 | Fiscal year end for Genvor Incorporated. |
| 2022-10-19 | Company filed a Certificate of Designation for Series B Preferred Stock. |
| 2022-10-19 | Shareholders converted common stock into Series B preferred stock. |
| 2022-11-17 | Company issued 300,000 shares of common stock to an investor for $150,000. |
| 2023-05-03 | Company issued 100,000 shares of common stock to an investor for $50,000. |
| 2023-05-12 | Company issued 15,000 shares of common stock to an investor for $15,000. |
| 2023-05-29 | Company issued 10,000 shares of common stock to an investor for $10,000. |
| 2023-06-14 | Company issued 25,000 shares of common stock related to conversion of a note payable. |
| 2023-07-01 | Company issued 29,665 shares of common stock related to conversion of a note payable and accrued interest. |
| 2023-07-12 | Company issued 20,000 shares of common stock to an investor for $10,000. |
| 2023-07-13 | Company issued 20,000 shares of common stock to an investor for $10,000. |
| 2023-07-14 | Company issued 50,000 shares of common stock to an investor for $25,000. |
| 2023-07-14 | Company issued 4,665 shares of common stock for conversion of accrued interest. |
| 2023-07-17 | Company issued 25,000 shares of common stock to an investor for $10,000. |
| 2023-07-17 | Company issued 50,000 shares of common stock to an investor for $25,000. |
| 2023-08-25 | Company issued 50,000 shares of common stock to an investor for $25,000. |
| 2023-09-13 | Company entered into a convertible promissory note with Barkley Capital LLC for $200,000. |
| 2023-09-16 | Company issued 75,000 shares of common stock for settlement of debt and accrued interest. |
| 2023-09-19 | Company issued 20,000 shares of common stock to an investor for $20,000. |
| 2023-09-28 | Company entered into a Settlement Agreement with Bradley White. |
| 2023-09-30 | Fiscal year end for Genvor Incorporated. |
| 2023-10-05 | Company entered into an Interim CEO & Executive Consultant Agreement with Judith S. Miller. |
| 2023-11-01 | Company issued 20,000 shares of common stock for $20,000. |
| 2023-11-01 | Company issued 50,000 shares of common stock for $50,000. |
| 2023-11-01 | Company issued 20,000 shares of common stock for $20,000. |
| 2023-11-01 | Company issued 20,000 shares of common stock for $20,000. |
| 2023-11-08 | Company issued 20,000 shares of common stock for $20,000. |
| 2023-11-08 | Company issued 25,000 shares of common stock for $25,000. |
| 2023-11-08 | Company issued 20,000 shares of common stock for $20,000. |
| 2023-11-08 | Company issued 20,000 shares of common stock for $20,000. |
| 2023-11-10 | Company issued 25,600 shares of common stock for $25,600. |
| 2023-11-13 | Company issued 20,000 shares of common stock for $20,000. |
| 2023-11-21 | Company issued 250,000 warrants for common stock to Good Works Funding, Inc. |
| 2023-12-08 | Company issued 50,000 shares of common stock for $50,000. |
| 2023-12-11 | Company issued 10,000 shares of common stock for $10,000. |
| 2023-12-13 | Company issued 100,000 shares of common stock for $100,000. |
| 2023-12-14 | Company issued 50,000 shares of common stock for $50,000. |
| 2023-12-20 | Company issued 53,000 shares of common stock for $53,000. |
| 2023-12-26 | Company issued 50,000 shares of common stock for $50,000. |
| 2024-01-08 | Company issued 8,000 shares of common stock for $8,000. |
| 2024-01-16 | Corrected signature date for the Audit Opinion. |
| 2024-03-13 | Maturity date for Barkley Capital LLC convertible promissory note. |
| 2024-03-29 | Last business day of the registrant's most recently completed second fiscal quarter. |
| 2025-09-09 | Number of registrant's shares of common stock outstanding was 29,825,763. |
Recommendation
strong sellThe company faces severe financial distress, explicitly highlighted by the auditor's 'going concern' warning. It has no revenue, a rapidly depleting cash balance, increasing liabilities, and an accumulated deficit exceeding $17 million. The default on a PPP loan and disputes with noteholders further underscore its precarious financial position. While the net loss decreased, the cash burn from operations increased, and the common stock lacks market liquidity. Management's plan to raise additional capital offers no assurance of success, and the company's ability to continue operations is highly uncertain. These factors collectively point to a high risk of further value erosion for investors.
Keywords
Genvor Incorporated, SEC filing, 10-K/A, Annual Report Amendment, Going Concern, Financial Statements, Net Loss, Cash Flow, Plant-based defense technology, Biotechnology, Agricultural technology, Convertible notes, Capital raise, Corporate governance, Related party transactions, Patent, SEC compliance
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