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xbrli:pure utr:acre

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~March~~June 3130, 2023

☐	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from____to _______

Commission File Number: 000-30233

Endexx Corporation

(Exact name of registrant as specified in its charter)

Nevada

30-0353162

(State or other jurisdiction

of incorporation or organization)

(IRS Employer

Identification No.)

38246 North Hazelwood Circle

Cave Creek, AZ 85331

(Address of principal executive offices)

(480) 595-6900

(Registrant’s telephone number)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes ☒ No

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~504~~506,~~095~~357,~~364~~952 shares of common ~~shares~~stock as of ~~May~~September 22, 2023

TABLE OF CONTENTS

		Page
	PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	910
Item 4:	Controls and Procedures	910
	PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	1011
Item 1A:	Risk Factors	1112
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	1112
Item 3:	Defaults Upon Senior Securities	1112
Item 4:	Mine Safety Disclosures	1113
Item 5:	Other Information	1113
Item 6:	Exhibits	1213

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our unaudited consolidated financial statements included in this Form 10-Q are as follows:

F-1	Condensed Consolidated Balance Sheets as of ~~March~~June 3130, 2023 (unaudited) and September 30, 2022 (unaudited);
F-2	Condensed Consolidated Statements of Operations for the three ~~months~~ and ~~six~~nine months ended ~~March~~June 3130, 2023 and ~~2021~~2022 (unaudited);
F-3	Condensed Consolidated Statements of Stockholder’s Deficit asfor ofthe ~~March~~nine 31months ended June 30, 2023 and ~~2021~~2022 (unaudited);
F-4	Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~March~~June 3130, 2023 and ~~2021~~2022 (unaudited); and
F-5	Notes to Condensed Consolidated Financial Statements (unaudited).

These interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended ~~March~~June 3130, 2023 are not necessarily indicative of the results that can be expected for the full year.

ENDEXX CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

~~MARCH~~JUNE 3130, 2023 AND SEPTEMBER 30, 2022

	March 31,			September 30,
	2023			2022
Assets
Current assets
Cash	$	154,812		$	656,776
Accounts receivable, net of allowance of $113,257 and $621,042, respectively		425,345			570,406
Inventory, net of allowance of $1,124,646 and $1,071,469, respectively		644,971			777,912
Prepaid expenses		1,760,967			1,367,100
Total current assets		2,986,095			3,372,194
Investment in marketable securities		420			420
Property and equipment, net of accumulated depreciation of $81,976 and $77,044, respectively		43,073			48,005
Right of use asset		30,038			34,160
Intangible - website domains		16,250			16,250
Goodwill		9,807,361			9,807,361
Total assets	$	12,883,237		$	13,278,390
Liabilities, Mezzanine Equity and Stockholders’ Deficit
Current liabilities
Accounts payable	$	3,051,687		$	2,647,533
Customer deposits		122,970			43,366
Accrued expenses		122,597			172,711
Accrued interest		746,706			237,703
Payroll and taxes payable, including related party		944,607			915,230
Notes payable, current portion, net of discount of $-0- and $4,291, respectively		4,705,663			4,623,872
Convertible notes payable, net of discount of $631,854 and $1,474,338, respectively		1,642,059			799,575
Line of credit		1,000,000			-
Derivative liability		7,998,699			8,908,686
Lease liability right of use		35,656			35,656
Total current liabilities		20,370,644			18,384,332
Notes payable, net of current portion and net of discount of $7,481,482 and $7,925,926, respectively		4,354,232			4,587,718
Total liabilities		24,724,876			22,972,050
Commitments and contingencies (Note 8)
Mezzanine equity
Series H preferred stock, 4,878,049 issued and outstanding, respectively		2,000,000			2,000,000
Stockholders’ deficit
Preferred stock, $0.0001 Par Value, 10,000,000 share authorized
Series A preferred stock, 1,824,000 issued and outstanding, respectively		182			182
Common stock, $0.0001 Par Value, 1,000,000,000 share authorized, 504,095,364 and 501,376,264 issued and outstanding, respectively		50,410			50,138
Additional paid-in capital		33,101,152			32,914,424
Accumulated deficit		(46,208,070	)		(44,398,312	)
Non-controlling interest		(785,313	)		(260,092	)
Total stockholders’ deficit		(13,841,639	)		(11,693,660	)
Total liabilities, mezzanine equity and stockholders’ deficit	$	12,883,237		$	13,278,390

(UNAUDITED)

	June 30,			September 30,
	2023			2022

Assets
Current assets
Cash	$	23,727		$	656,776
Accounts receivable, net of allowance of $113,257 and $621,042, respectively		448,734			570,406
Inventory, net of allowance of $1,165,078 and $1,071,469, respectively		586,933			777,912
Prepaid expenses		1,208,617			1,367,100
Total current assets		2,268,011			3,372,194

Investment in marketable securities		420			420
Property and equipment, net of accumulated depreciation of $84,144 and $77,044, respectively		40,905			48,005
Right of use asset		30,038			34,160
Intangible - website domains		16,250			16,250
Goodwill		9,807,361			9,807,361
Total assets	$	12,162,985		$	13,278,390

Liabilities, Temporary Equity and Stockholders’ Deficit
Current liabilities
Accounts payable	$	3,313,480		$	2,647,533
Customer deposits		100,032			43,366
Accrued expenses		73,880			172,711
Accrued interest		1,039,350			237,703
Payroll and taxes payable, including related party		938,268			915,230
Notes payable, current portion, net of discount of $57,345 and $4,291, respectively		8,671,591			4,623,872
Convertible notes payable, net of discount of $210,612 and $1,474,338, respectively		2,063,301			799,575
Line of credit		930,000			-
Derivative liability		8,160,129			8,908,686
Lease liability right of use		35,656			35,656
Total current liabilities		25,325,687			18,384,332

Notes payable, net of current portion and net of discount of $7,259,260 and $7,925,926, respectively		760,623			4,587,718

Total liabilities		26,086,310			22,972,050

Commitments and contingencies (Note 8)		-

Temporary equity
Series H preferred stock, 4,878,049 issued and outstanding, respectively		2,000,000			2,000,000

Stockholders’ deficit
Preferred stock, $0.0001 Par Value, 10,000,000 share authorized
Series A preferred stock, 1,824,000 issued and outstanding, respectively		182			182
Common stock, $0.0001 Par Value, 1,000,000,000 share authorized, 506,357,952 and 501,376,264 issued and outstanding, respectively		50,636			50,138
Additional paid-in capital		33,290,481			32,914,424
Accumulated deficit		(48,262,132	)		(44,398,312	)
Total stockholders’ deficit - Endexx Corporation		(14,920,833	)		(11,433,568	)
Non-controlling interest		(1,002,492	)		(260,092	)
Total liabilities, temporary equity and stockholders’ deficit	$	12,162,985		$	13,278,390

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-1

ENDEXX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND ~~SIX~~NINE MONTHS ENDED ~~MARCH~~JUNE 3130, 2023 AND 2022

	For the three months ended						For the six months ended
	March 31,						March 31,
	2023			2022			2023			2022
Revenues	$	2,457,354		$	254,686		$	2,949,063		$	529,277
Cost of revenues		1,822,912			78,956			2,170,436			309,379
Inventory impairment		47,930			-			53,177			27,913
Gross profit (loss)		586,512			175,730			725,450			191,985
Operating expenses
Depreciation		2,366			5,100			4,932			10,200
Advertising and promotion		109,292			26,293			254,856			349,944
Payroll expenses		87,786			150,281			170,069			318,367
Professional fees		252,085			350,958			950,196			1,037,331
Research and development		1,487			16,586			4,549			18,937
General and administrative expenses		273,657			202,459			671,941			457,098
Total operating expenses		726,673			751,677			2,056,543			2,191,877
Loss from operations		(140,161	)		(575,947	)		(1,331,093	)		(1,999,892	)
Other (income) and expense
Change in fair value of derivative liability		177,161			2,047,894			(909,987	)		1,620,185
Financing costs and discount amortization		660,598			27,397			1,306,219			550,593
Interest expenses		271,025			236,123			546,392			478,377
Gain on settlement of liabilities		-			(108,270	)		-			(222,748	)
Total other (income) expense		1,108,784			2,203,144			942,624			2,426,407
Net loss	$	(1,248,945	)	$	(2,779,091	)	$	(2,273,717	)	$	(4,426,299	)
Net loss attributable to non-controlling interest		6,920			-			(463,959	)		-
Net loss attributable to Endexx shareholders	$	(1,255,865	)	$	(2,779,091	)	$	(1,809,758	)	$	(4,426,299	)
Net loss per share - basic	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.01	)
Weighted average shares outstanding - basic		504,095,364			495,086,738			503,638,888			493,923,801

(UNAUDITED)

	2023			2022			2023			2022
	For the three months ended						For the nine months ended
	June 30,						June 30,
	2023			2022			2023			2022

Revenues	$	118,599		$	418,151		$	3,444,686		$	947,428
Cost of revenues		114,472			211,359			2,912,501			548,651
Gross profit		4,127			206,792			532,185			398,777

Operating expenses
Depreciation		2,168			6,638			7,100			16,838
Advertising and promotion		132,409			94,311			387,265			444,255
Payroll expenses		55,408			161,317			225,477			479,684
Professional fees		383,752			405,015			1,389,265			1,442,346
Research and development		700			2,738			5,249			21,675
General and administrative expenses		179,897			169,766			881,402			626,864
Total operating expenses		754,334			839,785			2,895,758			3,031,662

Loss from operations		(750,207	)		(632,993	)		(2,363,573	)		(2,632,885	)

Other (income) and expense
Change in fair value of derivative liability		295,985			9,424,041			(614,002	)		11,044,226
Financing costs and discount amortization		648,341			543,230			1,954,560			1,093,823
Interest expenses		327,009			450,287			902,089			928,664
Default penalty		-			584,738			-			584,738
Gain on settlement of liabilities		-			-			-			(222,748	)
Gain on disposition of assets		-			(423,950	)		-			(423,950	)
Total other (income) expense		1,271,335			10,578,346			2,242,647			13,004,753

Net loss	$	(2,021,542	)	$	(11,211,339	)	$	(4,606,220	)	$	(15,637,638	)
Net loss attributable to non-controlling interest		(182,531	)		-			(742,400	)		-
Net loss attributable to Endexx shareholders	$	(1,839,011	)	$	(11,211,339	)	$	(3,863,820	)	$	(15,637,638	)

Net loss per share - basic	$	(0.00	)	$	(0.02	)	$	(0.01	)	$	(0.03	)

Weighted average shares outstanding - basic		505,295,364			504,758,044			504,511,926			500,181,299

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-2

ENDEXX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE ~~SIX~~NINE MONTHS ENDED ~~MARCH~~JUNE 3130, 2023 AND 2022

	Preferred Stock - Series A				Preferred Stock - Series Z				Common Stock				Additional Paid-in		Accumulated			Non-controlling
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Interest			Total
Balances at September 30, 2021		1,824,000	$	182		719,571	$	72		486,313,058	$	48,631	$	29,477,818	$	(39,513,844	)	$	-		$	(9,987,141	)
Shares issued for services		-		-		-		-		6,211,180		621		299,379		-			-			300,000
Shares issued for financing		-		-		-		-		2,562,500		256		135,557		-			-			135,813
Warrants issued for financing		-		-		-		-		-		-		360,906		-			-			360,906
Net loss		-		-		-		-		-		-		-		(1,647,205	)		-			(1,647,205	)
Balances at December 31, 2021		1,824,000	$	182		719,571	$	72		495,086,738	$	49,508	$	30,273,660	$	(41,161,049	)	$	-		$	(10,837,627	)
Net loss		-		-		-		-		-		-		-		(2,779,094	)		-			(2,779,094	)
Balances at March 31, 2022		1,824,000	$	182		719,571	$	72		495,086,738	$	49,508	$	30,273,660	$	(43,940,143	)	$	-		$	(13,616,721	)
Balances at September 30, 2022		1,824,000	$	182		-	$	-		501,376,264	$	50,138	$	32,914,424	$	(44,398,312	)	$	(260,092	)	$	(11,693,660	)
Shares issued for settlement of accounts payable		-		-		-		-		1,719,100		172		102,828		-			-			103,000
Shares issued for settlement of accrued expenses		-		-		-		-		1,000,000		100		83,900		-			-			84,000
Distributions to non-controlling interest		-		-		-		-		-		-		-		-			(1,262	)		(1,262	)
Net loss		-		-		-		-		-		-		-		(553,893	)		(470,879	)		(1,024,772	)
Balances at December 31, 2022		1,824,000	$	182		-	$	-		504,095,364	$	50,410	$	33,101,152	$	(44,952,205	)	$	(732,233	)	$	(12,532,694	)
Distributions to non-controlling interest		-		-		-		-		-		-		-		-			(60,000	)		(60,000	)
Net income (loss)		-		-		-		-		-		-		-		(1,255,865	)		6,920			(1,248,945	)
Balances at March 31, 2023		1,824,000	$	182		-	$	-		504,095,364	$	50,410	$	33,101,152	$	(46,208,070	)	$	(785,313	)	$	(13,841,639	)

(UNAUDITED)

	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Interest			Total
	Preferred Stock - Series A				Preferred Stock- Series Z				Common Stock				Additional Paid-in			Accumulated			Non-controlling
	Shares		Amount		Shares		Amount		Shares		Amount		Capital			Deficit			Interest			Total

Balances at September 30, 2021		1,824,000	$	182		719,571	$	72		486,313,058	$	48,631	$	29,477,818		$	(39,513,844	)	$	-		$	(9,987,141	)
Shares issued for services		-		-		-		-		6,211,180		621		299,379			-			-			300,000
Shares issued for financing		-		-		-		-		2,562,500		256		135,557			-			-			135,813
Warrants issued for financing		-		-		-		-		-		-		360,906			-			-			360,906
Net loss		-		-		-		-		-		-		-			(1,647,205	)		-			(1,647,205	)
Balances at December 31, 2021		1,824,000	$	182		719,571	$	72		495,086,738	$	49,508	$	30,273,660		$	(41,161,049	)	$	-		$	(10,837,627	)
Net loss		-		-		-		-		-		-		-			(2,779,094	)		-			(2,779,094	)
Balances at March 31, 2022		1,824,000	$	182		719,571	$	72		495,086,738	$	49,508	$	30,273,660		$	(43,940,143	)	$	-		$	(13,616,721	)
Shares issued for services		-		-		-		-		4,100,000		410		155,390			-			-			155,800
Shares issued for financing		-		-		-		-		8,928,571		894		293,749			-			-			294,643
Warrants issued for financing		-		-		-		-		-		-		162,332			-			-			162,332
Shares issued for conversion of interest		-		-		-		-		4,111,111		411		221,589			-			-			222,000
Shares issued for default penalty		-		-		-		-		9,761,904		976		583,762			-			-			584,738
Net loss		-		-		-		-		-		-		-			(11,211,339	)		-			(11,211,339	)
Balances at June 30, 2022		1,824,000	$	182		719,571	$	72		521,988,324	$	52,199	$	31,690,482		$	(55,151,482	)	$	-		$	(23,408,547	)

Balances at September 30, 2022		1,824,000	$	182		-	$	-		501,376,264	$	50,138	$	32,914,424		$	(44,398,312	)	$	(260,092	)	$	(11,693,660	)
Shares issued for settlement of accounts payable		-		-		-		-		1,719,100		172		102,828			-			-			103,000
Shares issued for settlement of accrued expenses		-		-		-		-		1,000,000		100		83,900			-			-			84,000
Net loss		-		-		-		-		-		-		-			(596,895	)		(461,990	)		(1,058,885	)
Balances at December 31, 2022		1,824,000	$	182		-	$	-		504,095,364	$	50,410	$	33,101,152		$	(44,995,207	)	$	(722,082	)	$	(12,565,545	)
Settlement of derivative liability		-		-		-		-		-		-		60,533			-			-			60,533
Shares issued for services		-		-		-		-		1,200,000		120		54,880			-			-			55,000
Net loss		-		-		-		-		-		-		-			(1,427,914	)		(97,879	)		(1,525,793	)
Balances at March 31, 2023		1,824,000	$	182		-	$	-		505,295,364	$	50,530	$	33,216,565		$	(46,423,121	)	$	(819,961	)	$	(13,975,805	)
Settlement of derivative liability		-		-		-		-		-		-		74,022			-			-			74,022
Correction of prior issuance		-		-		-		-		1,062,588		106		(106	)		-			-			-
Net loss		-		-		-		-		-		-		-			(1,839,011	)		(182,531	)		(2,021,542	)
Balances at June 30, 2023		1,824,000	$	182		-	$	-		506,357,952	$	50,636	$	33,290,481		$	(48,262,132	)	$	(1,002,492	)	$	(15,923,325	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-3

ENDEXX CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE ~~SIX~~NINE MONTHS ENDED ~~MARCH~~JUNE 3130, 2023 AND 2022

	For the six months ended
	March 31,
	2023			2022
Operating activities
Net loss	$	(2,273,717	)	$	(4,426,299	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		-			300,000
Shares issued for financing costs		-			135,813
Warrants issued for financing costs		-			360,906
Depreciation and amortization		4,932			10,200
Amortization of debt discount		1,291,219			53,727
Change in fair value of derivative liability		(909,987	)		1,620,185
Gain from settlement of liabilities		-			(222,748	)
Gain from settlement of derivative liabilities		-			-
Gain on disposition of assets		-			-
Bad debt expense		57,250			-
Impairment expense		53,177			27,913
Financing costs		-			147
Default penalty		-			-
Changes in operating assets and liabilities:
Accounts receivable		87,811			(7,389	)
Inventory		79,764			(59,214	)
Prepaid expenses		(393,867	)		15,952
Right of use asset and liability		4,122			-
Accounts payable		507,154			519,603
Customer deposits		79,604			(21,523	)
Accrued expenses		33,886			(26,744	)
Accrued interest		509,003			434,574
Payroll and taxes payable, including related party		29,377			164,277
Net cash used in operating activities		(840,272	)		(1,120,620	)
Investing activities:
Proceeds from sale of investments in marketable securities		-			9,500
Net cash provided by investing activities		-			9,500
Financing activities:
Proceeds from sale of common stock		-			-
Proceeds from convertible notes payable		-			999,853
Proceeds from notes payable		227,500			116,980
Proceeds from line of credit		1,000,000			-
Repayment of note payable		(827,930	)		-
Distribution to non-controlling interest		(61,262	)		-
Net cash provided by financing activities		338,308			1,116,833
Net increase (decrease) in cash	$	(501,964	)	$	5,713
Cash, beginning of period		656,776			20,867
Cash, end of period	$	154,812		$	26,580
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	37,389		$	43,803
Supplemental schedule of non-cash investing and financing activities:
Debt discount at origination	$	-		$	111,111

(UNAUDITED)

	2023			2022
	For the nine months ended
	June 30,
	2023			2022
Operating activities
Net loss	$	(4,606,220	)	$	(15,637,638	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		55,000			455,800
Shares issued for financing costs		-			430,456
Warrants issued for financing costs		-			523,238
Depreciation and amortization		7,100			16,838
Amortization of debt discount		1,939,560			105,447
Change in fair value of derivative liability		(614,002	)		11,044,226
Gain from settlement of liabilities		-			(222,748	)
Gain from disposition of assets		-			(423,950	)
Bad debt expense		57,250			-
Impairment expense		93,609			59,622
Financing costs		-			34,682
Default penalty		-			584,738
Changes in operating assets and liabilities:
Accounts receivable		64,422			(185,009	)
Inventory		97,370			(63,278	)
Prepaid expenses		158,483			42,088
Right of use asset and liability		4,122			-
Accounts payable		768,947			908,789
Customer deposits		56,666			(21,523	)
Accrued expenses		(14,831	)		(14,448	)
Accrued interest		801,647			871,053
Payroll and taxes payable, including related party		23,038			264,334
Net cash used in operating activities		(1,107,839	)		(1,227,283	)

Investing activities:
Proceeds from sale of investments in marketable securities		-			9,500
Net cash provided by investing activities		-			9,500

Financing activities:
Proceeds from convertible notes payable		-			999,853
Proceeds from notes payable		537,500			203,623
Proceeds from line of credit, net		1,000,000			-
Repayment of note payable		(992,710	)		-
Repayment of line of credit		(70,000	)		-
Net cash provided by financing activities		474,790			1,203,476

Net increase (decrease) in cash	$	(633,049	)	$	(14,307	)
Cash, beginning of period		656,776			20,867
Cash, end of period	$	23,727		$	6,560

Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	100,442		$	57,611

Supplemental schedule of non-cash investing and financing activities:
Settlement of derivative liability	$	134,555		$	-
Debt discount at origination	$	62,222		$	213,420
Convertible notes and interest converted to common stock	$	-		$	222,000
Prepaid expenses from note payable	$	-		$	60,000
Accrued interest settled through note payable	$	-		$	7,107
Property and equipment, net, sold for settlement of convertible note and interest payable	$	-		$	401,050
Convertible notes and interest payable settled through the sale of property and equipment	$	-		$	825,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F-4

ENDEXX CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization and Basis of Presentation

We were incorporated under the laws of State of Nevada on September 5, 1997, as Micron Solutions. From 2002-2005, the Company operated as Panamed Corporation, a biotech service and licensing company. Panamed Corporation merged with Visual Board Books Inc. (VBB) in February 2005 and changed the consolidated company name to Endexx Corporation (the Company).

Our primary business is the manufacturing and sale of hemp products and organic, plant-based, all-natural, zero-nicotine vape products. The Company has the following operating subsidiaries:

	●	CBD Unlimited, Inc. (70% owner)
	●	Khode, LLC (70% owner)
	●	Hyla US Holdco Limited (51% owner)

Basis of Presentation and Going Concern

The Company prepares its ~~condensed~~ consolidated financial statements ~~(or “consolidated financial statements”)~~ in conformity with generally accepted accounting principles in the United States of America. These principles require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates. The operating results of the above listed wholly owned subsidiaries were consolidated with the consolidated financial statements of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation.

Our consolidated financial statements have been presented on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have sustained operating losses since inception, which raises substantial doubt about the Company’s ability to continue as a going concern.

As of ~~March~~June 3130, 2023, we have a working capital deficit of $1723,~~384~~057,~~549~~676, and an accumulated deficit of $4648,~~208~~262,~~070~~132. During the ~~six~~year ~~months~~ ended September ~~March~~30, 312022, we had a net loss of $5,144,560 and cash used in operating activities of $2,088,304. During the nine months ended June 30, 2023, we had a net loss of $24,~~273~~606,~~717~~220 and cash used in operating activities of $~~840~~1,~~272~~107,839. The Company’s ability to continue in existence is dependent on its ability to develop additional sources of capital, and/or achieve profitable operations and ~~positive~~ positive cash flows. Management’s plans with respect to operations include the sustained and aggressive marketing of hemp cannabidiol ~~products~~ products and raising additional capital through sales of equity or debt securities as may be necessary to pursue its business plans and ~~sustain~~ sustain operations until such time as the Company can achieve profitability. Management believes that aggressive marketing combined with ~~additional~~ additional financing as necessary will result in improved operations and cash flow in 2023 and beyond. However, there can be no assurance that management will be successful in obtaining additional funding or in attaining profitable operations. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

F-5

2. Summary of Significant Accounting Policies

Use of Estimates

The Company’s financial statement preparation requires that management make estimates and assumptions which affect the reporting of assets and liabilities and the related disclosure of contingent assets and liabilities in order to report these financial statements in conformity with GAAP. Actual results could differ from those estimates.

Cash

Cash includes all highly liquid investments that are readily convertible to known amounts of cash and have original maturities at the date of purchase of three months or less. There were no cash equivalents as of ~~March~~June 3130, 2023 and September 30, 2022. The Company maintains its cash balances at financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”). The FDIC provides coverage of up to $250,000 per depositor, per financial institution, for the aggregate total of depositors’ interest and non-interest-bearing accounts. AtThe ~~March 31, 2023, none of the~~ Company’s cash balances ~~were~~may at times be in excess of FDIC limits. The Company has not experienced any losses on these accounts and management does not believe that the Company is exposed to any significant risks.

Accounts Receivable

Accounts receivable consists of invoiced and unpaid product sales. The Company records an allowance for doubtful accounts to allow for any amounts that may not be recoverable, which is based on an analysis of the Company’s prior collection experience, customer credit worthiness, and current economic trends. Accounts are considered delinquent when payments have not been received within the agreed upon terms and are written off when management determines that collection is not probable.

Inventory

Inventory is composed of finished goods, in-process, and raw goods inventory, valued onat athe ~~first~~lower inof ~~first~~cost ~~out~~or ~~basis~~net realizable value, and includes production cost, product freight in, and packaging costs. Slow moving and obsolete inventories are written down based on a comparison of on-hand quantities to historical and projected usages.

The Company has authorized a consignment inventory arrangement with one of its mass retail customers. After consignment inventory has been sold by this customer, the customer notifies the Company of the sale and the Company records revenue in that accounting period. The Company authorizes the replenishment of consignment inventory based on orders placed by the customer. The Company is provided with weekly reports of consignment sales activity and balances.

Prepaid Expenses

The Company considers all items incurred for future products and services to be prepaid expenses. At June 30, 2023 and September 30, 2022, the Company had prepaid expenses totaling $1,208,617 and $1,367,100, respectively, which primarily consisted of prepayments for wholesale inventory purchases, which are shipped directly from the vendor to our customers when fulfilled.

F-6

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Maintenance and repairs are charged to operations as incurred. Depreciation and amortization are based on the straight-line method over the estimated useful lives of the related assets. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any resulting gain or loss is reflected in operations in the period realized.

Depreciation is computed on the straight-line method net of salvage value with useful lives as follows:

	Computer equipment and software	5 years
	Business equipment and fixtures	7 years
	Property and buildings	39 years

F-6

Intangible Assets

Intangible assets are amortized over their estimated useful lives. Each period, the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Management tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Impairment Assessment

The Company evaluates intangible assets and other long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. This includes but is not limited to significant adverse changes in business climate, market conditions or other events that indicate an asset’s carrying amount may not be recoverable. Recoverability of these assets is measured by comparing the carrying amount of each asset to the future cash flows the asset is expected to generate. If the cash flows used in the test for recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value.

The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during its fourth quarter of each fiscal year or more often if and when circumstances indicate that goodwill may not be recoverable.

Customer Deposits

From time-to-time the Company receives payment from customers in advance of delivering products to the customer. All such deposits are short term in nature as the Company delivers the product, unfulfilled portions, or engineering services to the customer before the end of its next annual fiscal period. These deposits are credited to the customer against product deliveries or at the completion of the customer’s order.

Revenue Recognition

Revenue is recognized from the sale of hemp products when our performance obligation is satisfied. Our primary performance obligation (the distribution and sales of hemp products) is satisfied upon the shipment of products to our customers, which is also when control is transferred. The transfer of control of products to our customers is typically based on written sales terms that do not allow for a right of return after 30 days from the date of purchase. ~~Revenue~~Wholesale products are primarily drop-shipped directly from our vendors to our customers. Revenue is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.

The following table presents the Company’s revenues disaggregated by customer type for the ~~six~~periods ~~months~~ ended ~~March~~June 3130, 2023 and 2022:

	2023		2022
Wholesale	$	2,896,442	$	438,339
Retail		52,621		90,938
	$	2,949,063	$	529,277

Schedule of Disaggregation of Revenue

The following table presents the Company’s revenues disaggregated by location for the six months ended March 31, 2023 and 2022:

	2023		2022
Wholesale	$	3,230,563	$	637,748
Retail		214,123		309,680
	$	3,444,686	$	947,428

	2023			2022
United States		11	%		100	%
Russia		20	%		*
Italy		68	%		*

* = Less than 10%

F-7

The following table presents the Company’s revenues ~~from~~disaggregated ~~significant~~by ~~customers~~location for the ~~six~~periods ~~months~~ ended ~~March~~June 3130, 2023 and 2022:

	2023			2022
Customer A		65	%		*
Customer B		19	%		*
Customer C		10	%		*
* = Less than 10%

	2023			2022
USA		21	%		100	%
Russia		10	%		*
Italy		66	%		*

* = Less than 10%

The following table presents the Company’s revenues from significant customers for the periods ended June 30, 2023 and 2022:

	2023			2022
Customer A		66	%		*
Customer B		10	%		*

* = Less than 10%

Financial Instruments

In accordance with the reporting requirements of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 825, Financial Instruments, the Company calculates the fair value of its assets and liabilities which qualify as financial instruments under this standard and includes this additional information in the notes to the financial statements when the fair value is different than the carrying value of those financial instruments. The Company does not have assets or liabilities measured at fair value on a recurring basis except its derivative liability.

Consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at the balance sheet dates, nor gains or losses reported in the statements of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held during the periods ended ~~March~~June 3130, 2023 and 2022, except as disclosed.

Fair Value Measurement

ASC Topic 820, Fair Value Measurements, provides a comprehensive framework for measuring fair value and expands disclosures which are required about fair value measurements. Specifically, ASC 820 sets forth a definition of fair value and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable value inputs. ASC 820 defines the hierarchy as follows:

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reported date. The types of assets and liabilities included in Level 1 are highly liquid and actively traded instruments with quoted prices, such as equities listed on the New York Stock Exchange.

Level 2 - Pricing inputs are other than quoted prices in active markets but are either directly or indirectly observable as of the reported date. The types of assets and liabilities in Level 2 are typically either comparable to actively traded securities or contracts or priced with models using highly observable inputs.

Level 3 - Significant inputs to pricing that are unobservable as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as complex and subjective models and forecasts used to determine the fair value.

The following tables present the Company’s assets and liabilities that were measured and recognized at fair value as of September 30, 2022 and March 31, 2023:

September 30, 2022
	Level 1		Level 2		Level 3		Total
Derivative liability		-		-		8,908,686		8,908,686

March 31, 2023
	Level 1		Level 2		Level 3		Total
Derivative liability		-		-		7,998,699		7,998,699

F-8

The following tables present the Company’s assets and liabilities that were measured and recognized at fair value as of June 30, 2023 and September 30, 2022:

June 30, 2023

	Level 1		Level 2		Level 3		Total
Derivative liability		-		-		8,160,129		8,160,129

September 30, 2022

	Level 1		Level 2		Level 3		Total
Derivative liability		-		-		8,908,686		8,908,686

Under the Company’s contract ordering policy, the Company first considers common shares issued and outstanding as well as reserved but unissued equity awards, such as under an equity award program. All remaining equity linked instruments such as, but not limited to, options, warrants, and debt and equity with conversion features are evaluated based on the date of issuance. If the number of shares which may be issued under the Company’s agreements exceed the authorized number of shares or are unable to be determined, equity linked instruments from that date forward are considered to be derivative liabilities until such time as the number of shares which may be issued under the Company’s agreements no longer exceed the authorized number of shares and are able to be determined.

During August 2022, the Company issued a note agreement containing provisions meeting the definition of a derivative liability which therefore require bifurcation. Further, pursuant to the Company’s contract ordering policy, any issuances of equity linked instruments subsequent to August 31, 2022, will result in derivative liabilities.

At September 30, 2022, the Company estimated the fair value of the conversion feature derivatives embedded in the promissory note based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following weighted-average inputs: the price of the Company’s common stock of $0.10; a risk-free interest rate of 3.83%; expected volatility of the Company’s common stock of 400%; estimated exercise price of $0.0898; and term of approximately nine years.

At ~~March~~June 3130, 2023, the Company estimated the fair value of the conversion feature derivatives embedded in the promissory note based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following weighted-average inputs: the price of the Company’s common stock of $0.04042; a risk-free interest rate of 3.4881%; expected volatility of the Company’s common stock of ~~268~~261%; estimated exercise price of $0.04041; and term of approximately nine years.

A reconciliation of the changes in the Company’s Level 3 derivative liability at fair value is as follows:

Balance - September 30, 2022	$	8,908,686
Additions		-
Settlements		-
Change in fair value		(909,987	)
Balance - March 31, 2023	$	7,998,699

Balance - September 30, 2022	$	8,908,686
Settlements		(134,555	)
Change in fair value		(614,002	)
Balance – June 30, 2023	$	8,160,129

Balance - September 30, 2021	$	1,799,354
Change in fair value		11,044,226
Balance – June 30, 2022	$	12,843,580

F-9

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC Topic 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

Beneficial Conversion Features

ASC 470-20 applies to convertible securities with beneficial conversion features that must be settled in stock and to those that give the issuer a choice in settling the obligation in either stock or cash. ASC 470-20 requires that the beneficial conversion feature should be valued at the commitment date as the difference between the conversion price and the fair market value of the common stock into which the security is convertible, multiplied by the number of shares into which the security is convertible. This amount is recorded as a debt discount and amortized over the life of the debt. ASC 470-20 further limits this amount to the proceeds allocated to the convertible instrument.

F-9

Research and development costs

Research and development costs are charged to expense as incurred and are included in operating expenses.

Advertising Costs

The costs of advertising are expensed as incurred. Advertising expenses are included in the Company’s operating expenses. Advertising expenses were $387,265 and $444,255 for the periods ended June 30, 2023 and 2022, respectively.

Income Taxes

The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.

The Company follows ASC 740-10, Accounting for Uncertainty in Income Taxes. This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The Company evaluates its tax positions on an annual basis, and as of ~~September~~June 30, ~~2022~~2023, no additional accrual for income taxes is necessary. The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest or penalties since its inception. The Company is required to file income tax returns in the U.S. federal tax jurisdiction and in various state tax jurisdictions and the prior three fiscal years remain open for examination by federal and/or state tax jurisdictions. The Company is currently not under examination by any other tax jurisdictions for any tax year.

F-10

(Loss) Income Per Share of Common Stock

FASB ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings (loss) per share (EPS) computations.

Basic earnings (loss) per share are computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

The Company had total potential additional dilutive securities outstanding at ~~March~~June 3130, 2023 and September 30, 2022, as follows.

	March 31,		September 30,
	2023		2022
Preferred H		48,780,490		48,780,490
Warrants		88,918,645		88,918,645
Options		22,500,000		22,500,000
Convertible debt		90,426,058		90,426,058
		250,625,193		250,625,193

	June 30,		September 30,
	2023		2022
Preferred H		48,780,490		48,780,490
Warrants		88,918,645		88,918,645
Options		22,500,000		22,500,000
Convertible debt		90,426,058		90,426,058
		250,625,193		250,625,193

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and other sources are recorded when management assesses that it is probable that a liability has been incurred and the amount can be ~~reasonable~~reasonably estimated.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (a) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (b) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (c) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share for convertible instruments by using the “if-converted” method. In addition, entities must presume share settlement for purposes of calculating diluted earnings per share when an instrument may be settled in cash or shares. For smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact that ASU 2020-06 may have on its consolidated financial statements and related disclosures.

As of ~~March~~June 3130, 2023, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements.

F-1011

3. Inventory

The Company’s inventory consisted of the following at the respective balance sheet dates:

	March 31,			September 30,
	2023			2022
Raw materials and packaging components	$	244,383		$	249,043
Finished goods		1,350,048			1,427,017
Consigned goods		79,000			77,135
Apparel		96,186			96,186
Less obsolescence allowance		(1,124,646	)		(1,071,469	)
	$	644,971		$	777,912

Schedule of Inventory

	June 30,			September 30,
	2023			2022
Raw materials and packaging components	$	242,264		$	249,043
Finished goods		1,341,596			1,427,017
Consigned goods		71,965			77,135
Apparel		96,186			96,186
Less obsolescence allowance		(1,165,078	)		(1,071,469	)
Inventory net	$	586,933		$	777,912

4. Property and Equipment

The Company’s property and equipment consisted of the following at the respective balance sheet dates:

	March 31,			September 30,
	2023			2022
Machinery and equipment	$	86,264		$	86,264
Computer/office equipment		38,785			38,785
		125,049			125,049
Less accumulated depreciation		(81,976	)		(75,388	)
	$	43,073		$	48,005

	June 30,			September 30,
	2023			2022
Machinery and equipment	$	86,264		$	86,264
Computer/office equipment		38,785			38,785
Property and equipment , gross		125,049			125,049
Less accumulated depreciation		(84,144	)		(77,044	)
Property and equipment , net	$	40,905		$	48,005

5. Debt

Line of credit

On November 29, 2022, the Company entered into a 9% agreement for the purchase of inventory with a total capacity of $886,469. During March 2023, the Company replaced the November 29, 2022 agreement with an 8% inventory financing facility totaling $1,000,000 for the purchase of inventory. $500,000 is due on June 11, 2023, with the remaining balance and accrued interest due at maturity on July 11, 2023.

Notes payable

The Company’s notes payable as of June 30, 2023, are summarized as follows:

Schedule of Notes Payable

Noteholder	Origination	Maturity		Interest			Principal		Discount
Noteholder A1	8/15/2022	2/15/2024			6.667	%	$	540,758	$	-
Noteholder A2	8/15/2022	2/15/2024			6.667	%		1,498,450		-
Noteholder A3	8/15/2022	2/15/2024			6.667	%		2,336,858		-
Noteholder B	9/2/2021	9/2/2022	*		12	%		100,000		-
Noteholder B	10/7/2021	10/7/2022			15	%		50,000		-
Noteholder C	4/1/2022	4/1/2023			10	%		85,594		4,291
Noteholder C	8/15/2022	2/15/2024			6.667	%		1,876,191		-
Noteholder G	6/20/2017	8/5/2017	*		18	%		55,353		-
Noteholder F	8/15/2022	2/15/2024			6.667	%		288,720		-
Noteholder D	8/15/2022	2/15/2024			6.667	%		1,263,164		-
Noteholder I	6/17/2020	6/17/2050			4	%		160,000		-
Noteholder J	8/15/2022	2/15/2024			6.667	%		640,239		-
Noteholder K	8/28/2021	9/1/2022	*		15	%		50,000		-
Noteholder K	10/6/2021	10/6/2022			15	%		66,980		-
Noteholder L	7/12/2022	-			10	%		24,500		-
Noteholder M	7/12/2022	-			10	%		25,000		-
Noteholder M	7/25/2022	-			5	%		30,000		-
Noteholder N	7/28/2022	-			10	%		50,000		-
Noteholder O	8/31/2022	8/31/2031			3.15	%		8,000,000		7,925,926
							$	17,141,807	$	7,930,217

*	In default at June 30, 2023

**	In default subsequent to June 30, 2023

F-12

The Company’s notes payable as of September 30, 2022, are summarized as follows:

Noteholder	Origination		Maturity		~~Maturity~~		Interest		~~Interest~~		Principal		~~Principal~~		Discount		~~Discount~~
Noteholder A1	8/15/2022	~~8/15/2022~~		2/15/2024		~~2/15/2024~~		6.667	%	~~6.667~~	%$	540,758	$	~~540,758~~	$	-	$	-
Noteholder A2	8/15/2022	~~8/15/2022~~		2/15/2024		~~2/15/2024~~		6.667	%	~~6.667~~	%	1,498,450		~~1,498,450~~		-		-
Noteholder A3	8/15/2022	~~8/15/2022~~		2/15/2024		~~2/15/2024~~		6.667	%	~~6.667~~	%	2,336,858		~~2,336,858~~		-		-
Noteholder B	9/2/2021	~~9/2/2021~~		9/2/2022	*	9/2/2022 *		12	%	12	%	100,000		~~100,000~~		-		-
Noteholder B	10/7/2021	~~10/7/2021~~		10/7/2022		10/7/2022**		15	%	15	%	50,000		~~50,000~~		-		-
Noteholder C	4/1/2022	~~4/1/2022~~		4/1/2023		4/1/2023**		10	%	10	%	85,594		~~85,594~~		4,291		~~4,291~~
Noteholder C	8/15/2022	~~8/15/2022~~		2/15/2024		~~2/15/2024~~		6.667	%	~~6.667~~	%	1,876,191		~~1,876,191~~		-		-
Noteholder G	6/20/2017	~~6/20/2017~~		8/5/2017	*	8/5/2017*		18	%	18	%	55,353		~~55,353~~		-		-
Noteholder F	8/15/2022	~~8/15/2022~~		2/15/2024		~~2/15/2024~~		6.667	%	~~6.667~~	%	288,720		~~288,720~~		-		-
Noteholder D	8/15/2022	~~8/15/2022~~		2/15/2024		~~2/15/2024~~		6.667	%	~~6.667~~	%	1,263,164		~~1,263,164~~		-		-
Noteholder I	6/17/2020	~~6/17/2020~~		6/17/2050		~~6/17/2050~~		4	%	4	%	160,000		~~160,000~~		-		-
Noteholder J	8/15/2022	~~8/15/2022~~		2/15/2024		~~2/15/2024~~		6.667	%	~~6.667~~	%	640,239		~~640,239~~		-		-
Noteholder K	8/28/2021	~~8/28/2021~~		9/1/2022		9/1/2022*		15	%	15	%	50,000		~~50,000~~		-		-
Noteholder K	10/6/2021	~~10/6/2021~~		10/6/2022		10/6/2022**		15	%	15	%	66,980		~~66,980~~		-		-
Noteholder L	7/12/2022	~~7/12/2022~~		-		-		10	%	10	%	24,500		~~24,500~~		-		-
Noteholder M	7/12/2022	~~7/12/2022~~		-		-		10	%	10	%	25,000		~~25,000~~		-		-
Noteholder M	7/25/2022	~~7/25/2022~~		-		-		5	%	5	%	30,000		~~30,000~~		-		-
Noteholder N	7/28/2022	~~7/28/2022~~		-		-		10	%	10	%	50,000		~~50,000~~		-		-
Noteholder O	8/31/2022	~~8/31/2022~~		8/31/2031		~~8/31/2031~~		3.15	%	~~3.15~~	%	8,000,000		~~8,000,000~~		7,925,926		~~7,925,926~~
											$	17,141,807	$	~~17,141,807~~	$	7,930,217	$	~~7,930,217~~

~~F-11~~* In default at September 30, 2022

~~The~~At ~~Company’s~~June ~~notes~~30, ~~payable~~2023 asand ofSeptember ~~March 31~~30, ~~2023~~2022, ~~are~~accrued ~~summarized~~interest asrelated ~~follows:~~to notes payable totaled $873,905 and $191,437, respectively.

								Balances - March 31, 2023
Noteholder	Origination		Maturity		Interest			Principal		Discount
Noteholder A1		8/15/2022		2/15/2024		6.667	%	$	492,090	$	-
Noteholder A1		1/31/2023		3/7/2023*		2	%		49,913		-
Noteholder A2		8/15/2022		2/15/2024		6.667	%		1,363,589		-
Noteholder A3		8/15/2022		2/15/2024		6.667	%		2,126,541		-
Noteholder B		9/2/2021		9/2/2022*		12	%		100,000		-
Noteholder B		10/7/2021		10/7/2022*		15	%		50,000		-
Noteholder C		4/1/2022		4/1/2023**		10	%		85,594		-
Noteholder C		8/15/2022		2/15/2024		6.667	%		1,762,881		-
Noteholder C		1/31/2023		6/7/2023		8	%		27,587		-
Noteholder G		6/20/2017		8/5/2017*		18	%		55,353		-
Noteholder F		8/15/2022		2/15/2024		6.667	%		267,120		-
Noteholder D		8/15/2022		2/15/2024		6.667	%		1,173,164		-
Noteholder I		6/17/2020		6/17/2050		4	%		157,076		-
Noteholder J		8/15/2022		2/15/2024		6.667	%		583,989		-
Noteholder K		8/28/2021		9/1/2022*		15	%		50,000		-
Noteholder K		10/6/2021		10/6/2022*		15	%		66,980		-
Noteholder L		7/12/2022		-		10	%		24,500		-
Noteholder M		7/12/2022		-		10	%		25,000		-
Noteholder M		7/25/2022		-		5	%		30,000		-
Noteholder N		7/28/2022		-		10	%		50,000		-
Noteholder O		8/31/2022		8/31/2031		3.15	%		8,000,000		7,481,482
								$	16,541,377	$	7,481,482

* In default at March 31, 2023

** In default subsequent to March 31, 2023

Convertible notes payable

The Company’s convertible notes payable as of ~~March~~June 3130, 2023, are summarized as follows:

Noteholder	Origination		Maturity		Interest			Conversion			Principal		Discount
Noteholder C		8/23/2022		8/23/2023		12	%	$	0.0245	/share		1,451,087		429,510
Noteholder D		8/23/2022		8/23/2023		12	%	$	0.0245	/share		722,826		202,344
Noteholder E		11/4/2020		5/4/2021*		15	%	$	0.059	/share		100,000		-
											$	2,273,913	$	631,854

Schedule of Convertible Notes Payable

* In default at March 31, 2023

Noteholder	Origination		Maturity			Interest			Conversion		Principal		Discount
Noteholder C		8/23/2022		8/23/2023	**		12	%	$	0.0245/share		1,451,087		143,166
Noteholder D		8/23/2022		8/23/2023	**		12	%	$	0.0245/share		722,826		67,446
Noteholder E		11/4/2020		5/4/2021	*		15	%	$	0.059/share		100,000		-
											$	2,273,913	$	210,612

In default at June 30, 2023

In default subsequent to June 30, 2023

F-13

The Company’s convertible notes payable as of September 30, 2022, are summarized as follows:

Noteholder	Origination		Maturity			Interest			Conversion			Principal		Discount
Noteholder C		8/23/2022		8/23/2023			12	%	$	0.0245/share	~~/share~~		1,451,087		1,002,198
Noteholder D		8/23/2022		8/23/2023			12	%	$	0.0245/share	~~/share~~		722,826		472,140
Noteholder E		11/4/2020		5/4/2021	*		15	%	$	0.059/share	~~/share~~		100,000		-
												$	2,273,913	$	1,474,338

~~F-12~~* In default at September 30, 2023

~~Line~~At ofJune ~~credit~~30, 2023 and September 30, 2022, accrued interest related to convertible notes payable totaled $165,445 and $46,266, respectively.

On March 14, 2023, the Company entered into an 8% inventory financing facility for the purchase of inventory. $500,000 is due on June 11, 2023, with the remaining balance and accrued interest due at maturity on July 11, 2023. At March 31, 2023, the outstanding balance totaled $1,000,000.

Future maturities

Future maturities of the Company’s debt as of ~~March~~June 3130, 2023, are as follows:

September 30, 2023	$	7,301,646
September 30, 2024		4,360,144
September 30, 2025		3,400
September 30, 2026		3,500
September 30, 2027		3,600
Thereafter		8,143,000
	$	19,815,290


September 30, 2023	$	7,354,059
September 30, 2024		4,582,366
September 30, 2025		3,400
September 30, 2026		3,500
September 30, 2027		3,600
Thereafter		8,005,807
Long term debt	$	19,952,732

6. Payroll and Payroll Taxes Payable

The Company’s payroll and payroll taxes payable consisted of the following at the respective balance sheet dates:

	March 31,		September 30,
	2023		2022
Accrued payroll - Officer	$	-	$	-
Accrued payroll - Employee		128,105		128,105
Accrued payroll taxes		816,502		787,125
	$	944,607	$	915,230

Schedule of Payroll and Taxes Payable

	June 30,		September 30,
	2023		2022
Accrued payroll - Officer	$	-	$	-
Accrued payroll - Employee		128,105		128,105
Accrued payroll taxes		810,163		787,125
Total	$	938,268	$	915,230

7. Stockholders’ Deficit

~~During~~On ~~the~~January ~~period ended March 31~~25, ~~2023~~2021, the Company ~~issued~~amended its articles of incorporation to increase its authorized shares to 1,000,000,000 shares ofand ~~common~~10,000,000 shares ~~stock~~of inthe ~~connection~~Company’s ~~with~~common astock ~~settlement~~and ~~agreement~~preferred stock, ~~as detailed in Note 8~~respectively.

~~During~~The ~~the~~Company’s ~~period~~common ~~ended~~stock ~~March~~shares 31have equal voting rights, are non-assessable and have one vote per share. As of June 30, 2023 and September 30, 2022, the Company’s issued ~~1,719,100~~and ~~shares~~outstanding of common stock astotaled ~~payment~~506,357,952 ~~for~~and ~~accounts payable totaling $84~~501,~~000~~376,264, respectively.

The Company’s Series A Preferred Stock shares have voting rights in the ratio of 25 votes to 1 share held. As of June 30, 2023 and September 30, 2022, the Company’s issued and outstanding Series A Preferred Stock totaled 1,824,000, respectively.

The Company’s Series H Preferred Stock shares have voting rights equal to the aggregate of all other voting rights plus 1 and each share is convertible into 10 shares of the Company’s common stock. As of June 30, 2023 and September 30, 2022, the Company’s issued and outstanding Series H Preferred Stock totaled 4,878,049, respectively.

F-14

The Company’s Series Z Preferred Stock shares have voting rights equal to the aggregate of all other voting rights plus 1 and each share is convertible into 100 shares of the Company’s common stock. Additionally, the Series Z Preferred Stock carries a cumulative dividend at 4.56% of the stated value, is to be paid in kind with common stock, and is payable only at the time the shares are converted to common stock. The Series Z Preferred Stock was retired by the Company during August 2022.

Warrants

A summary of the status of the Company’s warrant grants as of ~~March~~June 3130, 2023, and the changes during the ~~period~~nine months then ended is ~~presented~~ presented below:

					Weighted-Average
			Weighted-Average		Remaining
	Warrants		Exercise Price		Contractual Life
Outstanding at September 30, 2022		88,918,645	$	0.03		4.9 years
Outstanding at March 31, 2023		88,918,645	$	0.03		4.6 years
Exercisable at March 31, 2023		88,918,645	$	0.03		4.6 years

Schedule of Warrants

F-13

					Weighted-Average
			Weighted-Average		Remaining
	Warrants		Exercise Price		Contractual Life
Outstanding and Exercisable at September 30, 2022		88,918,645	$	0.03	4.9 years
Outstanding and Exercisable at June 30, 2023		88,918,645	$	0.03	4.2 years

Options

~~During~~A ~~the~~summary ~~year ended September 30, 2022, the Company estimated the fair value~~ of ~~warrants issued based on assumptions used in~~ the ~~Cox-Ross-Rubinstein binomial~~status ~~pricing model using the following inputs: the price~~ of the Company’s ~~common~~option ~~stock~~grants ofas ~~$0.0398; risk-free interest rates~~ of ~~3.29%;~~June ~~expected~~30, ~~volatility~~2023 ofand the ~~Company’s~~changes ~~common~~during ~~stock~~the ofnine ~~462%;~~months ~~exercise~~then ~~price~~ended ofis ~~$0.01; and terms of approximately one year.~~presented below:

~~During August~~ Summary ~~2022, the Company issued options for the purchase~~ of ~~22,500,000~~Stock ~~shares~~Option ~~of common stock in connection with a convertible note payable (Note 5). The options expire after one year and have an exercise price of $0.01.~~Grants

A summary of the status of the Company’s option grants as of March 31, 2023 and the changes during the period then ended is presented below:

					Weighted-Average
			Weighted-Average		Remaining
	Options		Exercise Price		Contractual Life
Outstanding and Exercisable at September 30, 2022		22,500,000	$	0.01	0.9 years
Outstanding and Exercisable at June 30, 2023		22,500,000	$	0.01	0.2 years

					Weighted-Average
			Weighted-Average		Remaining
	Options		Exercise Price		Contractual Life
Outstanding at September 30, 2022		22,500,000	$	0.01		0.9 years
Outstanding at March 31, 2023		22,500,000	$	0.01		0.6 years
Exercisable at March 31, 2023		22,500,000	$	0.01		0.6 years

8. Commitments and Contingencies

Settlement

During October 2022, the Company settled a dispute with the Company’s former Chief Medical Officer. As part of the settlement, the Company paid compensation totaling $109,000, which consisted of $25,000 in cash and 1,000,000 shares of common stock. ~~The Company recorded the settlement in accrued expenses at September 30, 2022. During November 2023, the 1,000,000 shares of common stock were issued.~~

Serious Promotions, Inc.

In June 2022, Serious Promotions, Inc. filed a Petition before the American Arbitration Association seeking monetary damages against Khode, LLC. Serious Promotions alleges that Khode failed to make certain payments of fees related to the Endorsement and License Agreement entered into by Serious Promotions and its president Khaled Mohamed Khaled (p/k/a DJ Khaled). Serious Promotions seeks $6,250,000 in damages.

In July 2022, Khode, joined as a party by the Company, filed counterclaims against Serious Promotions, Khaled and Impact Brokers for breach of the Endorsement and License Agreement and related violations of legal duties, seeking damages in an amount no less than $100,000,000.

Although this arbitration is in its early stages, the Company is confident in its position, will vigorously defend its position, and prosecute its counterclaims, and ultimately expects rulings in its favor.

Contracts and commitments

During October 2020, the Company entered into a five-year endorsement contract with an American DJ, record executive and producer, and media personality. Pursuant to the endorsement contract, the Company is to make quarterly payments totaling $5,000,000 by July 1, 2025. During the year ended September 30, 2021, the Company paid $~~750~~1,000,000 under this contract. The agreement was terminated during the year ended September 30, 2022. The Company is involved in litigation related to this agreement, as detailed above.

9. Related Party Transactions

~~Todd~~Black ~~Davis,~~Mountain ~~CEO, employment agreement~~Botanical

During ~~April 2005,~~ the ~~Company~~period ~~entered~~ended ~~into~~June an30, ~~employment agreement with Todd Davis providing for an annual salary of $156~~2023,~~000.~~ ~~The~~Black ~~Company’s accrued~~Mountain ~~payroll~~Botanical ~~and payroll taxes payable~~ (~~Note 6~~BMB), ~~includes~~an ~~amounts~~entity ~~owed~~owned ~~pursuant~~by to the ~~employment~~wife ~~agreement which are unpaid as~~ of ~~the~~ ~~balance sheet dates~~Mr. ~~This arrangement was modified effective on or about September 1~~Davis, ~~2023,~~received ~~with compensation modified to~~ $~~120~~22,000 for procurement, ~~per~~payment ~~year~~and pricing services.

~~Rayne~~10. ~~Forecast~~Subsequent ~~Inc. consulting agreement~~Events

~~Rayne Forecast,~~During ~~Inc.~~July ~~(RFI)~~2023, ~~an entity owned by~~ the ~~CEO, is a party with the~~ Company toamended aits ~~Consulting~~March ~~Agreement, pursuant to which the CEO, through~~2023 ~~RFI,~~line ~~provides~~of ~~certain~~credit ~~services to the Company in connection with his role as the Company’s CEO and is compensated, through RFI, for certain services rendered to the Company~~agreement. ~~Pursuant~~At to the ~~terms~~time of ~~the Consulting Agreement~~amendment, ~~as amended,~~ the ~~Company~~loan ~~shall~~balance ~~pay~~was ~~to the~~approximately ~~CEO a minimum fee of~~ $50997,000 ~~up to a maximum fee of $500,000 for the CEO’s reasonable services in any merger or acquisition involving the Company~~. ~~The~~As ~~agreement~~part ~~provides that any such fees are not “finder’s fees” and are not to be calculated on the basis~~ of ~~any percentage of~~ the ~~amount~~amendment, ~~of any financing or~~ the ~~deemed~~line ~~monetary value~~ of ~~any merger or acquisition transaction.~~ ~~The~~credit ~~fees~~was ~~may~~converted beinto ~~paid~~a innote ~~Company~~payable ~~stock~~agreement orbearing ~~cash~~interest ~~depending,~~at ~~among~~8.99% ~~other~~until ~~items,~~maturity on ~~the~~January ~~cash~~11, ~~availability of the Company~~2024.

10During September 2023, the Company entered into two promissory note agreements totaling $185,000. The notes, which mature in September 2024, ~~Significant~~bear ~~Customers~~interest at 18% and require monthly interest payments.

~~At March 31, 2023 and September 30, 2022, the Company had no significant revenue or accounts receivable concentrations.~~F-15

F-14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the three months and ~~six~~nine months ended ~~March~~June 3130, 2023, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (hereafter referred to as “MD&A”) should be read in conjunction with the condensed consolidated financial statements, including the related notes, appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for our fiscal year ended September 30, 2022 (the “Form 10-K”).

Note about Forward-Looking Statements

This Quarterly Report on Form 10-Q includes statements that constitute “forward-looking statements.” These forward-looking statements are often characterized by the terms “may,” “believes,” “projects,” “intends,” “plans,” “expects,” or “anticipates,” and do not reflect historical facts.

Specific forward-looking statements contained in this portion of the Quarterly Report include, but are not limited to: (i) statements that are based on current projections and expectations about the markets in which we operate, (ii) statements about current projections and expectations of general economic conditions, (iii) statements about specific industry projections and expectations of economic activity, (iv) statements relating to our future operations, prospects, results, and performance, and (v) statements that the cash on hand and additional cash generated from operations together with potential sources of cash through issuance of debt or equity will provide the Company with sufficient liquidity for the next 12 months.

Forward-looking statements involve risks, uncertainties, and other factors, which may cause our actual results, performance, or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results, future performance and capital requirements and cause them to materially differ from those contained in the forward-looking statements include those identified in our Registration Statement on Form 10 under Item 1A “Risk Factors”, as well as other factors that we are currently unable to identify or quantify, but that may exist in the future.

In addition, the foregoing factors may generally affect our business, results of operations and financial position. Forward-looking statements speak only as of the date the statements were made. We do not undertake and specifically decline any obligation to update any forward-looking statements. Any information contained on our website: www.endexx.com or any other websites referenced in this Quarterly Report are not part of this Quarterly Report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and related notes thereto included elsewhere in this report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements based upon current expectations that involve risks, uncertainties, and assumptions, such as our plans, objectives, expectations, and intentions. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic, and competitive uncertainties, and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclose any obligation to update forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those discussed under “Forward-Looking Statements,” “Item 1. Overview,” and “Item 1A. Risk Factors” sections in this Report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Overview

Endexx® is a Consumer Products (CPG) company specializing in plant-based formulations and innovative delivery systems, focused on creating “Better Products for a Better You”©. Our focus is on developing the most innovative and effective products using all-natural plant-based ingredients. Our companies, CBD Unlimited™ and Hyla™, harness the power of plants and deliver clean ingredient formulations with innovative technology systems.

Through CBD Unlimited, we develop hemp-derived, cannabidiol-based products, each formulated to address key segments of the health and wellness market. Through our subsidiaries, we make available for sale high-end, full-spectrum hemp-derived oils, extracts, topicals, and pet products, all with the shared purpose of supporting the potential of relief of pain and inflammation for humans and pets, through our e-commerce site www.cbdunlimited.com, as well as other online and in-store retailers. Through Hyla, we produce and sell organic, plant-based, all-natural, zero-nicotine, tobacco-free vape products under the Hyla brand. Each “HYLA device” contains a natural guarana extract that is blended with proprietary botanical formulas. Hyla launched its products in October 2021 and its initial inventory (140,000 devices) was sold out the following month. Hyla’s products bear the Underwriters Laboratories global safety certification and are CE approved. All of Hyla’s products are available on its e-commerce site: www.tryhyla.com.

The Company was incorporated in the State of Nevada on September 5, 1997 as Micron Solutions in order to complete a merger with Shillelagh. In November 1997, Shillelagh merged with and into Micron Solutions, with Micron Solutions as the surviving entity. In 2002, Micron Solutions entered into the Exchange Agreement with PanaMed, Inc., and all of its shareholders, pursuant to which PanaMed, Inc. became the Company’s wholly-owned subsidiary. In connection with the Exchange Agreement, Micron also changed its name to PanaMed Corporation.

In June 2005, we filed a Certificate of Amendment to Articles of Incorporation with the Secretary of State of the State of Nevada to change our name to Endexx Corporation. At that time, we adopted our current trading symbol, “EDXC.” In September 2005, PanaMed Corporation acquired VBB, an SaaS provider, through a merger, whereby VBB merged with and into us, and we were the surviving entity. Subsequently, we operated as a diversified technology and SaaS and compliance and tracking systems company, until we shifted our focus to the hemp-derived product industry in August 2014. In October 2018, we changed our name to CBD Unlimited, Inc., and in May 2020, we changed our name back to Endexx Corporation, with CBD Unlimited, Inc., becoming our wholly-owned subsidiary. On January 25, 2021, we filed our Amended and Restated Articles of Incorporation.

Results of Operations

Three Months Ended ~~March~~June 3130, 2023 Compared to Three Months Ended ~~March~~June 3130, 2022

Revenues

Revenues for the three months ended ~~March~~June 3130, 2023 were $2118,~~457~~599,~~354,~~ as compared to $~~254~~418,~~686~~151 for the three months ended ~~March~~June 3130, 2022, a $2299,~~202,668~~552 (~~865~~72%) ~~increase~~decrease. The ~~increase~~decrease in revenue is attributable to ~~additional~~the ~~revenues~~delay ~~realized~~in ~~from~~a ~~Hyla~~large wholesale order, which was ~~the~~delayed ~~subject~~due ofto ~~the~~new ~~transactions~~compliance ~~contemplated~~regulations byto ~~our~~ship ~~Control Acquisition Agreement, that closed effective August 29, 2022 (~~the ~~“Hyla~~product ~~Transaction”)~~to Italy. ~~The~~We ~~increases in~~expect revenues ~~are~~to ~~also~~continue ~~partly attributable~~ to ~~improved~~increase ~~supply-chain,~~in ~~increased~~the ~~consumer~~fourth ~~spending~~quarter ~~and~~as ~~increased~~Hyla ~~marketing~~is ~~efforts~~able into ~~promoting~~recognize ~~the~~these ~~Company’s products~~revenues.

We expect an increase in commercial revenue over the next 12 months as our business model is implemented and expanded and our commercial and retail accounts continue to grow and expand the products being sold in each of their retail locations. Additionally, we will continue to focus on the development of both current and new products while continuing to commercialize existing products lines.

Gross Profit ~~(Loss)~~

Gross profit ~~(loss)~~ for the three months ended ~~March~~June 3130, 2023 was a profit of $~~586~~4,~~512~~127, as compared to a gross profit of $~~175~~206,~~530~~792 for the three ~~months~~ months ended ~~March~~June 3130, 2022. This ~~$410,782~~decrease ~~(234%) improvement in~~ gross profit for this period was attributable to the ~~closing~~decrease ofin ~~the Hyla~~revenues ~~Transaction~~detailed above. The Company expects improved gross ~~profit~~profits ~~was~~in the coming quarters further enhanced by improvements in production costs and decreases in inventory ~~impairment~~ impairment between the periods.

Operating Expenses

Operating expenses for the three months ended ~~March~~June 3130, 2023, were $~~726~~754,~~673~~334, as compared to $~~751~~839,~~677~~785 for the three months ended ~~March~~June 3130, 2022, a a decrease of $2585,~~004~~451. ~~The~~This decrease in operating expenses over the prior period can be attributed to ~~lower~~increased advertising ~~and~~expenses ~~promotional~~and ~~expenses,~~general ~~professional~~and ~~fees,~~administrative ~~payroll fees~~expenses, ~~and~~related ~~research~~to ~~and~~the ~~development~~Hyla ~~expenses~~Transaction, ~~partially~~ offset by ~~increased~~lower ~~general~~payroll expenses and ~~administrative expenses~~professional fees.

We expect that operating expenses will remain consistent or increase over the next 12 months as our long-term growth strategy will require ~~significant~~ significant changes in personnel and facilities, offset increased research and development expenses to ensure that products nearing commercialization are brought to market as quickly and as effectively. We cannot provide any assurances that our strategy will be effective.

Other (Income) and Expenses

Other expenses for the three months ended ~~March~~June 3130, 2023 were $1,~~108~~271,~~784~~335, as compared to other expenses of $210,~~203~~578,~~144~~346 for the three months ~~ended~~ ~~March~~ended 31June 30, 2022, a $19,~~094~~307,~~360~~011 ~~decrease~~improvement. The ~~decrease~~improvement in other expenses resulted from significant ~~loss~~decrease ~~from~~in the change in fair value of derivative liability offset by ~~significant gain from settlement of derivative liability,~~ increases in financing costs and discount amortization, ~~interest expenses,~~ and ~~default~~increases ~~penalties,~~in ~~and~~interest ~~significant gains on settlement of liabilities and disposition of assets~~expenses.

Derivative liabilities are associated with loans that are convertible or have variable pricing on the equivalent shares of Common Stock. At the end of each period, these derivative liabilities are valued, and the net change is recorded as a gain or loss in other ~~expense~~expenses and income.

Loss from Operations and Total Net Loss

Loss from operations for the three months ended ~~March~~June 3130, 2023 was $~~140~~750,~~161~~207, as compared to loss from operations of $~~575~~632,~~947~~993 for the three months ended ~~March~~June 3130, 2022, an ~~improvement~~increase in net loss from operations of $~~435~~117,~~789~~214. The ~~improvement~~increase in loss from operations was the ~~result~~ result of anthe ~~increase~~decrease in gross revenues, ~~lower~~partially ~~costs of revenues and minimal inventory impairment, that was~~ offset by ~~marginally~~reduced ~~higher~~ operating expenses.

5Total net loss for the three months ended June 30, 2023 was $2,021,542, including $182,531 loss attributable to non-controlling interest and $1,839,011 net loss directly attributable to the Company. This compares to a total net loss of $11,211,339 for the three months ended June 30, 2022, fully attributable to the Company. This improvement of $9,372,328 in total net loss attributable to the Company is primarily attributable to reduced losses resulting from changes in the fair value of derivative liabilities.

~~Total~~At ~~net loss for~~ the ~~three~~end ~~months~~of ~~ended~~each ~~March 31~~period, ~~2023~~derivative ~~was~~liabilities ~~$1,248,945,~~are ~~as compared to a total net loss of $2~~valued,~~779,091~~ ~~for~~and the ~~three months ended March 31, 2022, an improvement of $1,530,146 in total~~ net ~~loss,~~change ~~primarily~~is recorded as a ~~result~~gain ofor ~~lower~~loss ~~losses~~in ~~attributable~~other toexpenses ~~derivative liabilities~~and income.

AtWe do not expect to realize net income in the ~~end~~near term as anticipated operational expenses are expected to increase as a result of ~~each~~increased research ~~period~~and development expenses, ~~derivative~~consulting ~~liabilities~~fees, ~~are~~payroll ~~valued~~expenses, and ~~the~~administrative ~~net~~costs ~~change~~as isstaffing ~~recorded~~increases. asDespite amanagement’s focus ~~gain~~on orensuring operating efficiencies, we expect to continue to operate at a loss through fiscal 2023 only in ~~other~~part ~~expense~~due ~~and~~to ~~income~~the COVID-19 pandemic.

WeNine doMonths ~~not~~Ended ~~expect~~June ~~to realize net income in the near term as anticipated operational expenses are expected to increase as a result of increased research and development expenses~~30, ~~consulting~~2023 ~~fees,~~Compared ~~payroll expenses, and administrative costs as staffing increases. Despite management’s focus on ensuring operating efficiencies, we expect~~ to ~~continue~~Nine toMonths ~~operate~~Ended atJune ~~a loss through fiscal 2022 only in part due to the COVID-19 pandemic. Nevertheless~~30, we expect that, during our current fiscal year, the adverse impact of COVID-19 on our business will slowly abate, as the positivity rate in tests for COVID-19 continues to decrease along with the new infection and mortality rates and the number of people becoming vaccinated continues to increase.2022

Six Months Ended March 31, 2023 Compared to Six Months Ended March 31, 2022

Revenues

Revenues for the ~~six~~nine months ended ~~March~~June 3130, 2023 were $23,~~949~~444,~~063~~686, as compared to $~~529~~947,~~277~~428 for the ~~six~~nine months ended ~~March~~June 3130, 2022, a $2,~~419~~497,~~277~~258 (~~457~~264%) increase. The increase in revenue is attributable to additional revenues realized from Hyla, aswhich awas ~~result~~the subject of the ~~closing~~transactions contemplated ofby our Control Acquisition Agreement, that closed effective August 29, 2022 (the “Hyla Transaction”). The increases in revenues are also partly attributable to improved supply-chain, increased consumer spending and increased marketing efforts in promoting the Company’s products.

Gross Profit ~~(Loss)~~

Gross profit ~~(loss)~~ for the ~~six~~nine months ended ~~March~~June 3130, 2023 was a profit of $~~725~~532,~~450~~185, as compared to a gross profit of $~~191~~398,~~985~~777 for the ~~six months~~nine months ended ~~March~~June 3130, 2022. This $~~533~~133,~~456~~408 ~~(278%)~~ improvement in gross profit for this period was attributable to the closing of the Hyla Transaction. The improved gross profit was further enhanced by improvements in production costs and decreases in inventory impairment between the periods.

Operating Expenses

Operating expenses for the ~~six~~nine months ended ~~March~~June 3130, 2023, were $2,~~056~~895,~~543~~758, as compared to $23,~~191~~031,~~877~~662 for the ~~six~~nine months ended ~~March~~June 3130, 2022, a decrease of $135,~~334~~904. ~~The~~This ~~decrease~~improvement in operating expenses over the prior period can be attributed to lower advertising and promotional expenses, professional fees, payroll fees, and research and development expenses, partially offset by ~~increased~~higher general and administrative expenses.

Other (Income) and Expenses

Other expenses for the ~~six~~nine months ended ~~March~~June 3130, 2023 ~~was~~were $~~942~~2,~~624~~242,647, as compared to other expenses of $213,~~426~~004,~~407~~753 for the ~~six~~nine months ended June ~~March 31~~30, 2022, a $110,~~483~~762,~~783~~106 ~~decrease~~improvement. The ~~decrease~~improvement in other expenses resulted from significant ~~loss~~decrease ~~from~~in the change in fair value of derivative liability ~~offset by~~and ~~significant~~default ~~gain~~penalties ~~from~~offset ~~settlement~~by ~~of derivative liability,~~ increases in financing costs and discount amortization, ~~interest~~increases in interest expenses, ~~and~~ ~~default~~in ~~penalties,~~addition ~~and~~to ~~significant~~ gains on ~~settlement~~settlements of liabilities and gains on disposition of assets in the prior period.

6Derivative liabilities are associated with loans that are convertible or have variable pricing on the equivalent shares of Common Stock. At the end of each period, these derivative liabilities are valued, and the net change is recorded as a gain or loss in other expenses and income.

Loss from Operations and Total Net Loss

Loss from operations for the ~~six~~nine months ended ~~March~~June 3130, 2023 ~~were~~was $12,~~331~~363,~~093~~573, as compared to loss from operations of $12,~~999~~632,~~892~~885 for the ~~six~~nine months ended ~~March~~June 3130, 2022, an improvement in net loss from operations of $~~668~~269,~~799~~312. The improvement in loss from operations was the ~~result~~ result of an increase in gross revenues, ~~lower~~resulting ~~costs~~from ofthe ~~revenues~~Hyla Transaction, and ~~minimal~~proportionately ~~inventory~~lower ~~impairment,~~costs ~~that~~of ~~was~~revenues ~~offset~~and byreduced ~~marginally higher~~ operating expenses.

Total net loss for the ~~six~~nine months ended ~~March~~June 3130, 2023 was $24,~~273~~606,~~717~~220, asincluding ~~compared~~$742,400 net loss attributable to non-controlling interest and $3,863,820 net loss directly attributable to the Company. This compares to a total net loss of $415,~~426~~637,~~299~~638 for the ~~six~~nine months ended ~~March~~June 3130, 2022, anfully attributable to the Company. This improvement of $211,~~152~~773,~~299~~818 in total net loss, attributable to the Company is primarily attributable asto athe ~~result~~change in fair value of ~~lower~~derivative ~~losses~~liability ~~attributable~~in addition to ~~derivative~~improved ~~liabilities~~revenues realized from the Hyla Transaction, lower operating expenses and improved other expenses.

At the end of each period, derivative liabilities are valued, and the net change is recorded as a gain or loss in other expense and income.

We do not expect to realize net income in the near term as anticipated operational expenses are expected to increase as a result of increased research and development expenses, consulting fees, payroll expenses, and administrative costs as staffing increases. Despite management’s focus on ensuring operating efficiencies, we expect to continue to operate at a loss through fiscal ~~2022~~2023 only in part due to the COVID-19 pandemic. Nevertheless, we expect that, during our current fiscal year, the adverse impact of COVID-19 on our business will slowly abate, as the positivity rate in tests for COVID-19 continues to decrease along with the new infection and mortality rates and the number of people becoming vaccinated continues to increase.

~~Liquidity and Capital Resources – Six months ended March 31, 2023~~7

Liquidity and Capital Resources – Nine months ended June 30, 2023

Going Concern

We have incurred operating losses since inception and have negative cash flow from operations. As of ~~March~~June 3130, 2023, we had a stockholders’ deficit of $1314,~~841~~920,~~639~~833, a working capital deficit of $1723,~~384~~057,~~549~~676, an accumulated deficit of $4648,~~208~~262,~~070~~132 and incurred a net loss of $14,~~248~~606,~~865~~220 in the ~~three~~nine months ended ~~March~~June 3130, 2023. Additionally, we utilized $~~840~~1,~~272~~107,839 in cash for operations and utilized $0 in cash for investing activities during the ~~six~~nine months ended ~~March~~June 3130, 2023, while we received $~~338~~474,~~308~~790 in cash from financing activities. As a result, our continuation as a going concern is dependent on our ability to obtain additional financing until we can generate sufficient cash flow from operations to meet our obligations. We intend to continue to seek additional debt or equity financing to continue our operations, but there can be no assurance that such financing will be available on terms acceptable to us, if at all.

Our consolidated financial statements have been prepared on a going concern basis, which implies we may not continue to meet our obligations and continue our operations for the next fiscal year. The continuation of our Company as a going concern is dependent upon our ability to obtain necessary debt or equity financing to continue operations until we begin generating positive cash flow.

As of ~~March~~June 3130, 2023, we had a cash position of $~~154~~23,~~812~~727. We estimate our operating expenses for the near- and mid-term may continue to ~~exceed~~ exceed the revenues that we may generate, and we may need to raise capital through either debt or equity offerings to continue operations. We We are in the early stages of our business. We are required to fund growth from financing activities, and we intend to rely on a combination of equity and debt financings. Due to market conditions and the early stage of our operations, there is considerable risk that we will not be able to raise such financings at all, or on terms that are not overly dilutive to our existing stockholders. We can offer no assurance that we will be able to raise such funds. If we are unable to raise the funds we require for all of our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer, and we may be forced to reduce or discontinue operations.

There is no assurance that we will ever be profitable or that debt or equity financing will be available to us in the amounts, on terms, and at times deemed acceptable to us, if at all. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, would increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business, as planned, and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.

Cash Flow – Operating Activities

For the ~~six~~nine months ended ~~March~~June 3130, 2023, our cash used in operating activities amounted to an outflow of $~~840~~1,~~272~~107,839, compared to cash used during the ~~six~~nine months ended ~~March~~June 3130, 2022 of $1,~~120~~227,~~620~~283. The $~~280~~119,~~348~~444 ~~decrease~~improvement in cash used in our operating activities is due to increased revenues, changes in the fair value of derivative liabilities, decreases in ~~inventory~~pre-paid ~~impairment~~expenses and ~~loss~~decreases ~~from~~in ~~settlement liabilities~~stock-based compensation.

Cash Flow – Financing Activities

For the ~~six~~nine months ended ~~March~~June 3130, 2023, our cash provided by financing activities amounted to $~~338~~474,~~308~~790, which includes $~~0 in proceeds received from the sale of our Common Stock~~537, ~~$0 in proceeds from the issuance of convertible notes, $227,~~500 in proceeds from the issuance of notes payable, and $1,000,000 in proceeds from alines ~~line~~ of credit, offset by $~~827~~992,~~930~~710 ~~repayment~~repayments of notes payable and $6170,~~262~~000 ~~paid~~repayments asof ~~distribution to~~lines ~~non-controlling~~of ~~interest~~credit.

For the six months ended March 31, 2022, our cash provided by financing activities amounted to $1,116,833, which includes $0 in proceeds received from the sale of our Common Stock, $999,853 in proceeds from the issuance of convertible notes, and $116,980 in proceeds from the issuance of notes payable.8

For the nine months ended June 30, 2022, our cash provided by financing activities amounted to $1,203,476, which includes $999,853 in proceeds from the issuance of convertible notes, and $203,623 in proceeds from the issuance of notes payable.

Cash Flow – Investing Activities

Net cash used in investing activities in the ~~six~~nine months ended ~~March~~June 3130, 2023 and ~~2021~~2022 was $0 and $9,500, respectively.

Accounts Receivable and Allowance for Doubtful Account Receivable

Accounts receivable are recorded at net realizable value. We determine provisions for uncollectible accounts, sales returns, and claims based upon factors including the credit risk and activity of specific distributors and resellers, historical trends, and other information. If we become aware of a specific distributor’s or reseller’s inability to meet its financial obligations, bad debt charges are recorded based on an overall assessment of past due accounts receivable outstanding. In the opinion of management, a provision was deemed necessary for uncollectible accounts.

Inventory

The cost of inventory using the standard cost method, which approximates actual cost based on a first-in, first-out method. Our inventories are valued at the lower of cost or net realizable value. Our inventory consists almost entirely of finished and unfinished goods, and freight, which include vapes, CBD creams, oils, capsules, and sprays. We periodically evaluate and adjust inventories for obsolescence. In the opinion of management, no provision for obsolescence is deemed necessary. The shelf life of all beverage inventory is two years. As of ~~March~~June 3130, 2023, we had ~~approximately~~ $~~644~~586,~~971~~933 of product in inventory, which was ana decrease of ~~approximately~~ $~~132~~190,~~941~~979, compared to ~~approximately~~ $777,912 at September 30, 2022. We expect the balance of inventory to ~~increase~~remain inconsistent ~~direct~~as ~~relation~~most toof ~~the~~our ~~increase~~new ~~in sales~~revenues ~~that~~are wedrop-shipped ~~expect~~to wholesale customers.

Goodwill and Intangible Assets

Goodwill arises from business combinations and is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exists that indicate that a goodwill impairment test should be performed. We have selected December 31 as the date to perform the annual impairment test.

Intangible assets represent both indefinite lived and definite lived assets. Trademarks are deemed to have definite useful lives of ten years, are amortized, and are tested annually for impairment. Intangible assets are reported on the balance sheet at cost less accumulated amortization. We have selected December 31 as the date to perform the annual impairment test.

Stock-Based Compensation

FASB’s ASC Topic 718, Stock Compensation (formerly, FASB Statement 123R), prescribes accounting and reporting standards for all stock-based payment transactions in which employee and non-employee services are acquired. We measure the cost of employee and non-employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award. Fair value for restricted stock awards is valued using the closing price of our Common Stock on the date of grant. For the ~~six~~nine months ended ~~March~~June 3130, 2023 and 2022, we recognized stock-based compensation expense of ~~approximately~~ $055,000, and $~~300~~455,~~000~~800 respectively.

Off Balance Sheet Arrangements

As of ~~March~~June 3130, 2023 and onJune ~~March 31~~30, 2022, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, ~~capital~~ capital expenditures, or capital resources that is material to stockholders.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. We base our estimates on historical experiences and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions and conditions. We continue to monitor significant estimates made during the preparation of our financial statements. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

As a Smaller Reporting Company, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure control and Procedures. We carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of ~~March~~June 3130, 2023, the period covered in this Report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There were no changes in the Company’s internal control over financial reporting during the quarter ended ~~March~~June 3130, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Inherent Limitations on the Effectiveness of Controls

Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.

These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

In June 2022, Serious Promotions, Inc. filed a Petition before the American Arbitration Association seeking monetary damages against Khode, LLC, a joint venture entered into by Serious Promotions and us. Serious Promotions alleges that Khode failed to make certain payments of fees related to the Endorsement and License Agreement entered into by Serious Promotions and its president Khaled Mohamed Khaled (p/k/a DJ Khaled). Serious Promotions seeks $6,250,000 in damages.

In July 2022, Khode, joined as a party by us, filed counterclaims against Serious Promotions, Khaled and Impact Brokers for breach of the Endorsement and License Agreement and related violations of legal duties, seeking damages in an amount no less than $100,000,000.

Although this arbitration is in its early stages, we are confident in our position, will vigorously defend our position, and prosecute our counterclaims, and ultimately expect a ruling in our favor.

We know of no other material proceedings in which any of our directors, officers, or affiliates, or any registered or beneficial stockholder is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries, including, but not limited to:

	(a)	any petition under the federal bankruptcy laws or any state insolvency laws filed by or against, or an appointment of a receiver, fiscal agent, or similar officer by a court for the business or property of such person, or any partnership in which such person was a general partner at or within two years before the time of such filing, or any corporation or business association of which such person was an executive officer at or within two years before the time of such filing;

	(b)	any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

	(c)	being subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining such person from, or otherwise limiting, the following activities: (i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association, or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; engaging in any type of business practice; or (ii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;

10(d) being the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending, or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (c)(i) above, or to be associated with persons engaged in any such activity; (e) being found by a court of competent jurisdiction (in a civil action), the Commission to have violated a federal or state securities or commodities law, and the judgment in such civil action or finding by the Commission has not been reversed, suspended, or vacated; (f) being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated; (g) being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended, or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

(d) being the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending, or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (c)(i) above, or to be associated with persons engaged in any such activity; (e) being found by a court of competent jurisdiction (in a civil action), the Commission to have violated a federal or state securities or commodities law, and the judgment in such civil action or finding by the Commission has not been reversed, suspended, or vacated; (f) being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated; (g) being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended, or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (h) being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity, or organization that has disciplinary authority over its members or persons associated with a member.11

(h)

being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity, or organization that has disciplinary authority over its members or persons associated with a member.

Item 1A. Risk Factors

We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

We issued the following promissory note convertible into shares of our Common Stock in the ~~three~~nine months ended ~~March~~June 3130, 2023:

None.

We granted the following warrants exercisable for shares of our Common Stock in the nine months ended June 30, 2023:

None.

We granted the following shares of Common Stock as payment for services rendered to the Company in the nine months ended June 30, 2023:

In November 2022, the Company issued 1,719,100 shares of common stock as payment for a September 2022 invoice for consulting services totaling $103,000.

In March 2023, the Company issued 1,200,000 shares of common stock for consulting services totaling $55,000.

Date	Shares		Expense
11/15/2022		1,719,100	$	106,584
1/17/2023		1,200,000	$	55,000

We issued the following shares of Common Stock as part of settlement agreements in the nine months ended June 30, 2023:

In November 2022, we issued to two persons an aggregate of 1,000,000 shares of common stock valued at $60,000 in connection with a settlement agreement. We issued the shares in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act (in that the shares of common stock were issued by us in a transaction not involving any public offering).

During October 2021, the Company agreed to extend the maturity date of a May 2021 note agreement with one of its noteholders and, in connection with the extension, the Company issued 2,562,500 shares of common stock valued at $135,813. We issued the shares in reliance on the exemption from registration pursuant to Section 4(a)(2) of the Securities Act (in that the shares of common stock were issued by us in a transaction not involving any public offering).

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

N/A

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are filed with or incorporated by reference into this Quarterly Report.

Exhibit No.		Description
2.1**		Share Exchange Agreement by and among PanaMed, Inc and the Registrant, dated February 22, 2002
2.2 **		Share Exchange Agreement by and among PhytoLabs, LLC and the Registrant, dated March 1, 2017
2.3a**		Common Stock Share Exchange Agreement between Go Green Global Inc and the Registrant dated May 1, 2018
2.3b**		First Amended Common Stock Share Exchange Agreement by and among Go Green Global, Inc. and the Registrant, dated July 10, 2018
3.1**		Articles of Incorporation of the Registrant filed with the Secretary of State of the State of Nevada on September 5, 1997
3.1a**		Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of the State of Nevada on March 1, 2002
3.1b**		Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of the State of the State of Nevada on June 22, 2005
3.1c**		Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of the State of Nevada on October 25, 2018
3.1d**		Certificate of Amendment to the Articles of Incorporation filed with the Secretary of State of the State of Nevada on May 3, 2020
3.1e**		Amended and Restated Articles of Incorporation filed with the Secretary of State of the State of Nevada on January 25, 2021
3.2**		Amended and Restated Bylaws of the Registrant, dated January 25, 2021
3.3**		Certificate of Designation of Series Z Preferred filed with the Secretary of State of the State of Nevada, ~~Dated~~dated January 1, 2021
3.3a>		Certificate of Withdrawal of Certificate of Designation for the Series Z Convertible Preferred Stock filed with the Secretary of State for the State of Nevada on September 6, 2022
3.4>		Certificate of Designation of Rights, Privileges, Preferences, and Limitations of Series H Convertible Preferred Stock of the registrant filed with the Secretary of State of the State of Nevada on August 25, 2022
4.1**		Amended Common Stock Purchase Warrant of the Registrant, dated February 1, 2019
4.2**		Amended Common Stock Purchase Warrant of the Registrant, dated June 5, 2019
4.3**		Amended Common Stock Purchase Warrant of the Registrant, dated July 7, 2019
4.4**		Amended Common Stock Purchase Warrant of the Registrant, dated August 1, 2019
4.5**		Amended Common Stock Purchase Warrant of the Registrant, dated August 12, 2019
4.6**		Amended Common Stock Purchase Warrant of the Registrant, dated September 15, 2019
4.7**		Amended Common Stock Purchase Warrant of the Registrant, dated October 5, 2019
4.8**		Amended Common Stock Purchase Warrant of the Registrant, dated February 5, 2020
4.8a^		Warrant Modification and Clarification Agreement between the Registrant and the holder of eight Common Stock Purchase Warrants, dated March 31, 2021
4.9#		Common Stock Purchase Warrant granted by the Registrant, dated May 10, 2010 (2,500,000 shares)
4.10#		Common Stock Purchase Warrant granted by the Registrant, dated May 10, 2010 (5,185,185 shares)
4.11>		Form of Warrant of the registrant granted to two separate investors, effective as of August 31, 2022
10.2**		Stock Purchase Agreement by and between CBD Life Brands, Inc. and the Registrant, dated March 1, 2020

4.9#		Common Stock Purchase Warrant granted by the Registrant, dated May 10, 2010 (2,500,000 shares)
4.10#		Common Stock Purchase Warrant granted by the Registrant, dated May 10, 2010 (5,185,185 shares)
10.1**		Stock Purchase Agreement by and among Kush Inc and the Registrant, dated February 1, 2020
10.2**		Stock Purchase Agreement by and between CBD Life Brands, Inc. and the Registrant, dated March 1, 2020
10.3a**		Operating Agreement by and between Khode, LLC and the Registrant, dated October 1, 2020
10.3b**		Endorsement Agreement by and among Khode, LLC and the Registrant
10.4**		Stock Purchase Agreement by and among Retail Pro Associates, Inc. and the Registrant, dated April 25, 2020
10.5**		Sale and Distribution Agreement by and among CBD Health Solutions and the Registrant, dated January 28,2019
10.6**		Distribution Agreement by and among Gold Coast and the Registrant, dated February 17, 2019
10.7**		Sales Representative Agreement by and among Impulse Health and the Registrant, dated December 15, 2017
10.8**		3PL Agreement by and among Virtual Supply and the Registrant, dated August 7, 2019
10.9**		Electronics Payment Agreement by and among Walgreens, Inc and the Registrant dated February 5, 2019
10.10**		Employment Contract – Todd Davis, dated April 5, 2005
10.11**		Consulting Agreement between Rayne Forecast Inc and the Registrant, dated September 1, 2001
10.11a**		Amended Consulting Agreement between Rayne Forecast Inc and the Registrant, dated October 1, 2009
10.12^		Securities Purchase Agreement between the Registrant and an investor, dated October 11, 2019
10.13^		Security Agreement between the Registrant and an investor, dated October 11, 2019
10.14^		Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $750,000, dated October 19, 2019
10.15^		Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $700,000, dated November 1, 2019
10.16^		Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $550,000, dated January 16, 2020
10.17^		Update Agreement between the Registrant and an investor in respect of the Senior Secured Convertible Promissory Notes dated October 10, 2019, November 1, 2019, and January 16, 2020
10.18^		Convertible Note Purchase Agreement between the Registrant and an institutional investor, dated January 22, 2021
10.19^		Security Agreement between the Registrant and an institutional investor, dated January 22, 2021

10.20^		Intellectual Property Security Agreement between the Registrant and an institutional investor, dated January 22, 2021
10.3a**		Operating Agreement by and between Khode, LLC and the Registrant, dated October 1, 2020
10.21^		Registration Rights Agreement between the Registrant and an institutional investor, dated January 22, 2021
10.3b**		Endorsement Agreement by and among Khode, LLC and the Registrant
10.22^		Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $1,250,000, dated January 22, 2021
10.4**		Stock Purchase Agreement by and among Retail Pro Associates, Inc. and the Registrant, dated April 25, 2020
10.23^		Common Stock Purchase Warrant of the Registrant exercisable for up to 10,416,667 shares of the Registrant’s common stock, granted on January 22, 2021
10.5**		Sale and Distribution Agreement by and among CBD Health Solutions and the Registrant, dated January 28,2019
10.24^		Percentage Payment Agreement between the Registrant and a third party, dated January 22, 2021
10.6**		Distribution Agreement by and among Gold Coast and the Registrant, dated February 17, 2019
10.25^		Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $300,000, dated March 5, 2021
10.7**		Sales Representative Agreement by and among Impulse Health and the Registrant, dated December 15, 2017
10.26^		Common Stock Purchase Warrant of the Registrant exercisable for up to 3,111,111 shares of the Registrant’s common stock, granted on March 5, 2021
10.27#		Securities Purchase Agreement of the Registrant, dated May 10, 2021 ($386,400)
10.28#		Promissory Note of the Registrant, dated May 10, 2021 ($386,400)
10.29#		Securities Purchase Agreement of the Registrant, dated May 10, 2021 ($750,000)
10.30#		Promissory Note of the Registrant, dated May 10, 2021 ($250,000)
10.31#		Registration Rights Agreement, dated May 10, 2021
10.32@		Exchange Agreement between Rayne Forecast, Inc., and the Registrant, effective as of September 30, 2021
10.33@		Exchange Agreement between Todd Davis and the Registrant, effective as of September 30, 2021
11.1**		Audit Committee Charter
11.2**		Compensation Committee Charter
11.3**		Corporate Governance and Nominating Committee Charter
21.1**		List of Subsidiaries
31.1*		Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

10.8**		3PL Agreement by and among Virtual Supply and the Registrant, dated August 7, 2019

10.9**		Electronics Payment Agreement by and among Walgreens, Inc and the Registrant dated February 5, 2019

10.10**		Employment Contract – Todd Davis, dated April 5, 2005

10.11**		Consulting Agreement between Rayne Forecast Inc and the Registrant, dated September 1, 2001

10.11a**		Amended Consulting Agreement between Rayne Forecast Inc and the Registrant, dated October 1, 2009

10.12^		Securities Purchase Agreement between the Registrant and an investor, dated October 11, 2019

10.13^		Security Agreement between the Registrant and an investor, dated October 11, 2019

10.14^		Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $750,000, dated October 19, 2019

10.15^		Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $700,000, dated November 1, 2019

10.16^		Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $550,000, dated January 16, 2020

10.17^		Update Agreement between the Registrant and an investor in respect of the Senior Secured Convertible Promissory Notes, dated October 10, 2019, November 1, 2019, and January 16, 2020

10.18^		Convertible Note Purchase Agreement between the Registrant and an institutional investor, dated January 22, 2021

10.19^		Security Agreement between the Registrant and an institutional investor, dated January 22, 2021

10.20^		Intellectual Property Security Agreement between the Registrant and an institutional investor, dated January 22, 2021

10.21^		Registration Rights Agreement between the Registrant and an institutional investor, dated January 22, 2021

10.22^		Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $1,250,000, dated January 22, 2021

10.23^		Common Stock Purchase Warrant of the Registrant exercisable for up to 10,416,667 shares of the Registrant’s common stock, granted on January 22, 2021

10.24^		Percentage Payment Agreement between the Registrant and a third party, dated January 22, 2021

10.25^		Senior Secured Convertible Promissory Note of the Registrant in the principal amount of $300,000, dated March 5, 2021

10.26^		Common Stock Purchase Warrant of the Registrant exercisable for up to 3,111,111 shares of the Registrant’s common stock, granted on March 5, 2021

10.27#		Securities Purchase Agreement of the Registrant, dated May 10, 2021 ($386,400)

10.28#		Promissory Note of the Registrant, dated May 10, 2021 ($386,400)

10.29#		Securities Purchase Agreement of the Registrant, dated May 10, 2021 ($750,000)

x. 101.INS		Inline XBRL Instance Document
10.30#		Promissory Note of the Registrant, dated May 10, 2021 ($250,000)
Ex. 101.SCH		Inline XBRL Taxonomy Extension Schema Document
10.31#		Registration Rights Agreement, dated May 10, 2021
Ex. 101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
10.32@		Exchange Agreement between Rayne Forecast, Inc., and the Registrant, effective as of September 30, 2021
Ex. 101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
10.33@		Exchange Agreement between Todd Davis and the Registrant, effective as of September 30, 2021
Ex. 101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
10.34		[reserved]
Ex. 101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
10.35>		Form of Control Acquisition Agreement among the registrant, EH Sub Inc., and HYLA UK Holdco Limited, effective as of August 31, 2022
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)
10.36>		Form of Self-Financing Promissory Note of the registrant issued to HYLA UK Holdco Limited, effective as of August 31, 2022
10.37>		Form of Intercompany Services Agreement between the registrant and Hyla US Holdco Limited, effective as of August 31, 2022
10.38>		Form of Promissory Note of HYLA US Holdco Limited issued to the registrant, effective as of August 31, 2022
10.39>		Form of Note Purchase Agreement among the registrant and two separate investors, effective as of August 31, 2022
10.40>		Form of Convertible Senior Note of the registrant sold and issued to two separate investors, effective as of August 31, 2022
10.41>		Form of Registration Rights Agreement between the registrant and two separate investors, effective as of August 31, 2022
10.42>		Form of Security Agreement of the registrant in favor of two separate investors, effective as of August 31, 2022
10.43>		Form of IP Security Agreement of the registrant in favor of two separate investors, effective as of August 31, 2022
10.44>		Form of Settlement, Lock-Up, and Leak-Out Agreement between the registrant and seven separate investors, effective August 31, 2022
10.45>		Form of Promissory Note of the registrant issued to seven separate investors, effective August 31, 2022
10.46>		Form of Contribution and Exchange Agreement among the registrant, CBD Unlimited, Inc., Todd Allen Davis, and Rayne Forecast Inc., effective August 31
10.47>		Form of Escrow Agreement among the registrant, Todd Allen Davis, Rayne Forecast Inc., and the escrow agent, effective August 31, 2022
10.48>		Form of Executive Agreement between the registrant and Todd Allen Davis, effective August 31, 2022
10.49		Form of Stockholders Agreement among the registrant, Todd Allen Davis, Rayne Forecast Inc., and CBD Unlimited, Inc., effective as of August 31, 2022 (to be filed by amendment)
10.50>		Employment Agreement between Hyla US Holdco Limited and Nick Mehdi, dated June 14, 2021
10.51<		Master Distributor Agreement between Southern Glazer’s Wine and Spirits, LLC, and the Registrant, dated March 27, 2020
10.52<		Sales Representative Agreement between Impulse Health LLC and the Registrant, dated April 1, 2020
10.53<		Brand Consulting Agreement between Beauty Strategy Group, LLC and the Registrant, dated April 21, 2021
10.54<		Master Service Agreement between Impact Brokers, LLC, and Khode LLC, dated October 9, 2020
11.1**		Audit Committee Charter
11.2**		Compensation Committee Charter
11.3**		Corporate Governance and Nominating Committee Charter

*- Filed herewith.15

31.1*		Certification of the President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of the President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*- Filed Herewith.

** - Filed as exhibits with equivalent exhibit numbers to our Registration Statement on Form 10, filed with the Commission on March 4, 2021, each of which is incorporated herein by reference thereto.

^ - Filed as exhibits with equivalent exhibit numbers to our Pre-Effective Amendment No. 1 to our Registration Statement on Form 10, filed with the Commission on April 8, 2021, each of which is incorporated herein by reference thereto.

# - Filed as exhibits with equivalent exhibit numbers to our Quarterly Report on Form 10-Q for our fiscal quarter ended March 31, ~~2022~~2021, filed with the Commission on May 2324, ~~2022~~2021, each of which is incorporated herein by reference thereto.

@> - Filed as exhibits with equivalent exhibit numbers to our ~~Annual~~Current Report on Form 108-K ~~for our fiscal year ended September 30~~, ~~2022,~~ filed with the Commission on ~~March~~September 317, ~~2023~~2022, each of which is incorporated herein by reference thereto.

15<- Filed as exhibits 10.27, 10.28, 10.29, and 10.30, respectively, to our Post-Effective Amendment No. 1 to our Registration Statement on Form 10, filed with the Commission on July 1, 2021, each of which is incorporated herein by reference thereto.

@- Filed as exhibits with equivalent exhibit numbers to our Annual Report on Form 10-K for our fiscal year ended September 30, 2022, filed with the Commission on August 7, 2023, each of which is incorporated herein by reference thereto.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ENDEXX Corporation

May 22, 2023	By:	/s/ Todd Davis
September 22, 2023	By:	/s/ Todd Davis
		Todd Davis
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Todd Davis		Dated: ~~May~~September 22, 2023
Todd Davis
President, Chief Executive Officer,
Secretary and Chairman and Director
/s/ Steven M Plumb		Dated: ~~May~~September 22, 2023
Steven M Plumb
Director Chief Financial Officer
Chief Financial Officer
/s/ Nick Mehdi		Dated: ~~May~~September 22, 2023
Nick Mehdi Director
Nick Mehdi
/s/ Irving Minnaker		Dated: May 22, 2023
Director
Irving Minnaker Director
/s/ Irving Minnaker		Dated: September 22, 2023
/s/ Dustin Sullivan		Dated: May 22, 2023
Irving Minnaker
Dustin Sullivan Director
Director
/s/ Dustin Sullivan		Dated: September 22, 2023
Dustin Sullivan
Director

1617

Filing Compare · Endexx Corp