10-Q: NFiniTi Reports Q3 Loss Amid Business Shift & Capital Needs

NFiniTi Inc. reported a significant net loss for Q3 2025, driven by increased operating expenses and a substantial working capital deficit, despite completing its acquisition of Artisan Beverages.

Summary

• Net loss for the nine months ended July 31, 2025, was $(102,933), compared to $(18,667) for the same period in 2024.
• Operating expenses for the nine months ended July 31, 2025, increased to $102,916 from $18,667 in 2024, primarily due to professional fees.
• The company completed the reverse acquisition of Artisan Beverages Inc. on February 13, 2025, making ready-to-drink cocktails its principal business.
• As of July 31, 2025, the cash balance was $23,999, with a working capital deficit of $680,511.
• Total current liabilities amounted to $704,510, including $235,000 from unrelated convertible notes and $158,058 in related party loans.
• 15,788,578,500 shares are contingently issuable to Artisan Beverages shareholders pending a reverse stock split.
• Management anticipates total expenditures of approximately $1,610,000 over the next 12 months, including $1,500,000 for working capital.

Sentiment

Score: 2

Explanation: The company faces severe liquidity issues, has no revenue, significantly increased losses, and ineffective internal controls. While the acquisition of Artisan Beverages offers a strategic direction, the financial health and operational challenges present substantial risks, leading to a going concern warning.

Positives

• Successfully completed the reverse acquisition of Artisan Beverages Inc. on February 13, 2025, transitioning into the alcoholic beverage market with an exclusive TGI Fridays-branded license for the Western Hemisphere.
• Received $350,000 in net proceeds from a $700,000 principal convertible promissory note, with $200,000 received by July 31, 2025, and an additional $150,000 received on August 4, 2025.
• Net cash used in operating activities decreased to $7,599 for the nine months ended July 31, 2025, from $20,199 in the prior year period.

Negatives

• Reported a net loss of $(102,933) for the nine months ended July 31, 2025, a significant increase from $(18,667) in the prior year.
• Operating expenses substantially increased to $102,916 for the nine months ended July 31, 2025, from $18,667 in the prior year, primarily due to professional fees.
• The company has not generated any revenue since its inception.
• A significant working capital deficit of $680,511 as of July 31, 2025, compared to $156,439 as of October 31, 2024.
• Current cash balance of $23,999 is deemed insufficient to cover anticipated expenses for the next twelve months.
• Management concluded that disclosure controls and procedures were not effective as of July 31, 2025.
• The auditor issued a going concern opinion on the October 31, 2024 financial statements, indicating substantial doubt about the company's ability to continue operations.
• Significant amounts are owed to related parties, including $150,908 to CEO Brian Johnston and $6,744 to former CEO Michael Noble, with no specific repayment terms.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to limited operations, an accumulated deficit of $318,794, and insufficient cash to cover expenses for the next twelve months.
• Dependence on continued financial support from shareholders and the ability to obtain necessary equity financing to sustain operations and achieve profitability.
• Disclosure controls and procedures were not effective as of July 31, 2025, which could lead to material information not being recorded, processed, summarized, or reported accurately or timely.
• The company has not generated any revenue since inception, indicating a lack of established income streams.
• The success of the Artisan Beverages business depends on factors such as demand for brands, competitive pricing, and ability to deliver products, which are subject to market risks.
• Officers and directors may face conflicts of interest in pursuing other business opportunities, and the company has not formulated a policy for resolving such conflicts.
• Convertible promissory notes contain terms that could lead to significant dilution if converted, as the conversion price is 75% of the lowest average daily trading price during the thirty days prior to conversion.
• Events of default on convertible notes could increase interest rates to 18% per annum and make the outstanding balance immediately due and payable.

Future Outlook

The company plans to grow its Artisan Beverages business by contacting and entering into agreements with manufacturers and distributors in countries where it holds licenses for TGI Fridays beverages. Success is contingent on market demand, competitive pricing, and efficient product delivery. Management anticipates spending approximately $1,610,000 over the next 12 months, with a significant portion allocated to working capital.

Management Comments

• Management believes that the Company's current cash is insufficient to cover the expenses they will incur during the next twelve months in a limited operations scenario or until it raises additional funding.
• If we experience a shortage of funds in the next twelve months, we may utilize additional funds from Mr. Noble, and Mr. Johnston, who have agreed to advance funds for operations, however they have no formal commitment, arrangement or legal obligation to advance or loan funds to us.
• Management concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Securities and Exchange Commission's rules and forms.

Industry Context

NFiniTi Inc.'s strategic shift into the ready-to-drink (RTD) cocktail market with the acquisition of Artisan Beverages positions it in a rapidly growing segment of the alcoholic beverage industry. The exclusive license for TGI Fridays-branded beverages provides a recognized brand for market entry. However, the RTD market is highly competitive, requiring significant investment in distribution, marketing, and product innovation to establish market share against established players and emerging brands.

Comparison to Industry Standards

• The company's lack of revenue generation since inception and significant accumulated deficit are far below industry standards for established beverage companies.
• A working capital deficit of $680,511 and insufficient cash for 12 months of operations indicate severe liquidity issues, contrasting sharply with the robust balance sheets and cash flows typically seen in successful beverage industry players like Diageo, Pernod Ricard, or even smaller, growing craft beverage companies.
• The reliance on related party loans and the absence of formal commitments for future funding highlight a precarious financial position, unlike well-capitalized industry peers who access diverse funding sources.
• The ineffectiveness of disclosure controls and procedures is a significant corporate governance weakness, falling short of the standards expected for publicly traded companies, especially compared to industry leaders with mature internal control frameworks.

Corporate Governance

Legal Proceedings

• The company is not involved in any material litigation and is unaware of any threatened material litigation.

Related Party Transactions

• $6,744 owed to Michael Noble, current Director and former president, from loaned funds; non-interest bearing with no specific repayment terms.
• $150,908 owed to Brian Johnston, current Director and CEO, from loaned funds; non-interest bearing with no specific repayment terms, including $64,000 Management Fee Payable and $4,762 for expenses.
• $140,482 owed to shareholders from loaned funds; non-interest bearing with no specific repayment terms.
• Officers and directors may become involved in other business opportunities, potentially creating conflicts of interest, for which the company has no resolution policy.

Stakeholder Impact

• Shareholders face significant dilution risk from convertible notes and the pending issuance of 15.79 billion shares for the Artisan Beverages acquisition. The going concern warning and ineffective controls pose substantial risks to investment value.
• Creditors are exposed to high risk due to the company's severe working capital deficit, insufficient cash, and dependence on future financing. Related party loans are non-interest bearing and lack specific repayment terms, potentially complicating repayment priorities.
• Employees (Management) are providing financial support, indicating their vested interest, but also highlighting the company's reliance on them. The lack of a conflict of interest policy could impact management's focus.
• Customers/Distributors (Artisan Beverages) may be impacted by the company's financial instability, which could affect its ability to establish and maintain a reliable distribution network and deliver products consistently, potentially affecting brand reputation and market penetration for TGI Fridays-branded beverages.

Next Steps

• Complete the planned reverse stock split to formally issue 15,788,578,500 shares to Artisan Beverages shareholders.
• Contact and enter into agreements with manufacturers and distributors in countries where the company has a license to sell TGI Fridays beverages.
• Market and sell TGI Fridays-branded beverages in licensed countries.
• Create a system to garner and analyze information related to demand, pricing, and delivery capabilities to support growth strategy.
• Raise additional funding to cover anticipated expenditures of approximately $1,610,000 over the next 12 months, including $1,500,000 for working capital.
• Address the identified ineffectiveness of disclosure controls and procedures.

Key Dates

Recommendation

The company presents a highly speculative investment with significant red flags. It has no revenue, a rapidly increasing net loss, and a severe working capital deficit. The 'going concern' warning from the auditor, coupled with management's admission of insufficient cash for the next 12 months and ineffective disclosure controls, points to fundamental operational and financial instability. While the Artisan Beverages acquisition offers a new business direction, the company's current financial state and heavy reliance on related party loans and highly dilutive convertible notes make it a high-risk proposition. The potential for massive dilution from the pending share issuance and convertible notes, combined with the lack of a clear path to profitability and weak governance, suggests a strong likelihood of further share price depreciation and potential loss of capital for investors.

Keywords

NFiniTi Inc., Artisan Beverages, TGI Fridays, Ready-to-Drink Cocktails, SEC 10-Q, Financial Report, Going Concern, Liquidity, Capital Raise, Convertible Notes, Beverage Industry, Corporate Governance, Financial Performance, Shareholder Value