10-K: Rest EZ, Inc. Reports Modest Revenue Increase Amidst Going Concern Uncertainty in 10-K Filing

Rest EZ, Inc.'s 10-K filing reveals a slight revenue increase but ongoing concerns about the company's ability to continue as a going concern.

Summary

• Rest EZ, Inc., a Wyoming-based company marketing a sleep aid soft gel capsule, filed its Form 10-K for the fiscal year ended March 31, 2024.
• The company reported a revenue of $5,000 for the year ended March 31, 2024, compared to no revenue in the previous year.
• The company's cost of sales was $2,550 for the year ended March 31, 2024.
• Selling, general, and administrative costs were $21,836 for the year ended March 31, 2024, and $13,408 for the year ended March 31, 2023.
• The company recorded a net loss of $19,386 for the year ended March 31, 2024, compared to a net loss of $428,706 for the year ended March 31, 2023.
• As of March 31, 2024, the company had a working capital deficit of $36,805 and an accumulated deficit of $321,579.
• The company's auditor has raised substantial doubt about its ability to continue as a going concern.
• The company relies on its sole director and executive officer, Mr. Sosa, and funding from him.
• The company's product is manufactured by Sport Energy, an unaffiliated outside provider.
• The company plans to increase its client base through wholesalers, online sales, and retail chain stores.
• The company acknowledges intense competition in the sleeping aid supplement business.
• The company does not currently have an established customer base.
• The company's internal controls over financial reporting are considered ineffective due to a lack of segregation of duties.
• Mr. Sosa beneficially owns approximately 60% of the company's capital stock.
• The company has never declared or paid any cash dividends.
• The company's common stock is considered a penny stock, which may be subject to restrictions on marketability.

Sentiment

Score: 3

Explanation: The sentiment is low due to the going concern warning, working capital deficit, and ineffective internal controls, despite a slight revenue increase and reduced net loss.

Positives

• The company generated revenue of $5,000 for the year ended March 31, 2024, compared to no revenue in the previous year.
• The company's net loss decreased significantly from $428,706 in 2023 to $19,386 in 2024.
• The company has a verbal agreement with Sport Energy for manufacturing and packaging.
• Mr. Sosa has indicated he would be able to fund another $100,000 if the company needs further assistance.

Negatives

• The company's auditor has expressed substantial doubt about its ability to continue as a going concern.
• The company has a working capital deficit of $36,805 as of March 31, 2024.
• The company relies heavily on its sole director and executive officer, Mr. Sosa.
• The company's internal controls over financial reporting are considered ineffective due to a lack of segregation of duties.
• The company impaired a vendor deposit in the amount of $405,000 on inventory during the year ended March 31, 2023.
• The company does not currently have an established customer base.
• The company's common stock is considered a penny stock, which may be subject to restrictions on marketability.

Risks

• The company's ability to continue as a going concern is uncertain.
• The company is heavily dependent on its sole director and executive officer, Mr. Sosa.
• The company faces intense competition in the sleeping aid supplement business.
• The company may not be able to build brand awareness.
• The company's product sales were to one major customer.
• The company may incur significant costs to be a public company.
• The lack of public company experience of the company's sole officer and director could adversely impact its ability to comply with reporting requirements.
• The company's operating results may fluctuate due to factors which are not within its control.
• The company may never pay any dividends to shareholders.
• The company's controlling security holder may take actions that conflict with other shareholders' interests.
• The offering price of the common stock was arbitrarily determined.
• The company's common stock is considered a penny stock, which may be subject to restrictions on marketability.
• Side effects of the product may deter potential customers.

Future Outlook

Over the next twelve months, Rest EZ, Inc. plans to build out its reputation further, and expand to additional wholesalers, retail chain stores, as well as expand sales to the public.

Management Comments

• Mr. Sosa has indicated he would be able to fund another $100,000 if the company needs further assistance.
• Mr. Sosa is providing his own facility free of charge until the company needs additional space to store inventory over 100,000 bottles.
• Mr. Sosa currently devotes approximately 28 hours per week to the affairs of the Company and will devote 40 hours per week to the Company, and draw a salary of $2,000 per month, after the company is self-sufficient.

Industry Context

The company acknowledges intense competition in the sleeping aid supplement business, with many competitors having greater financial and managerial resources.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• The company's reliance on a single product and limited customer base is not typical of established players in the supplement industry.
• The company's lack of internal controls and dependence on a single individual are also areas of concern compared to industry best practices.
• The company's auditor has expressed substantial doubt about its ability to continue as a going concern, which is a significant deviation from industry norms for publicly traded companies.

Related Party Transactions

• The Company uses a corporate office located at: 1398 W. Mason Hollow Drive, Riverton, Utah 84065.
• This facility is being provided to the Company free of charge by the Company's CEO.
• As of March 31, 2024, Brandon Sosa, President and sole shareholder of the Company, had loaned the Company the amount of $131,375, net of repayments of $35,214.

Stakeholder Impact

• Shareholders face a high degree of risk due to the company's financial condition and penny stock status.
• Employees are limited to the sole director and executive officer, Mr. Sosa, with plans to hire additional staff as the business grows.
• Customers may be impacted by the company's ability to maintain operations and provide a consistent product supply.
• Suppliers and creditors face uncertainty due to the company's going concern warning.

Next Steps

• The company plans to increase its client base through wholesalers, online sales, and retail chain stores.
• The company plans to build out its reputation further, and expand to additional wholesalers, retail chain stores, as well as expand sales to the public.
• The company may expand the size of our Board of Directors in the future.
• As the Company grows, management will hire additional staff in order to address this weakness.

Key Dates

Keywords

Rest EZ, Inc., sleep aid supplement, soft gel capsule, financial statements, going concern, risk factors, 10-K, Brandon Sosa, Sport Energy, revenue, net loss, internal control, penny stock