Forward-Looking Statements
This quarterly report contains forward-looking statements and information
relating to us that are based on the beliefs of our management as well as
assumptions made by, and information currently available to, our management.
When used in this report, the words "believe," "anticipate," "expect," "will,"
"estimate," "intend", "plan" and similar expressions, as they relate to us or
our management, are intended to identify forward-looking statements. Although we
believe that the plans, objectives, expectations and prospects reflected in or
suggested by our forward-looking statements are reasonable, those statements
involve risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by these
forward-looking statements, and we can give no assurance that our plans,
objectives, expectations and prospects will be achieved. You should not place
undue certainty on these forward-looking statements, which apply only as of the
date of this report. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or our predictions. The terms "GWSN," "we," "us," "our,"
and the "Company" refer to Gulf West Security Network, Inc., a Nevada
corporation.
Business Overview
Gulf West Security Network, Inc., a Nevada corporation, and its wholly-owned
subsidiaries (formerly known as NuLife Sciences, Inc.), are principally engaged
in the sale, installation, servicing, and monitoring of electronic home and
business security and automation systems in the United States.
The Company's retail division, which includes its wholly-owned subsidiary, LJR
Security Services, Inc., a Louisiana corporation ("LJR"), is actively engaged in
the engineering, design, installation, remote monitoring and after-market
servicing of electronic intrusion alert and fire detection systems for homes and
businesses (the "alarm industry").
The Company's wholesale division, which operates under the name Gulf West
Security Network (or "Gulf West"), is further engaged in the development and
expansion of a proprietary coalition (alliance or network) of
independently-branded life safety and property protection providers, fire alert
and suppression system installers, electronic remote monitoring and video
surveillance specialists, smart home designers, commercial systems integrators,
structured wiring professionals and electrical contractors.
Both Gulf West and LJR are based in Lafayette, Louisiana and were previously
owned by Louis J. ("Lou") Resweber, a long-time veteran of the alarm industry,
who has also previously served as a corporate officer, board member and
executive consultant to a number of NYSE and NASDAQ-listed public companies over
the past 35 years.
Merger
On December 21, 2020, the Company entered into a share purchase agreement with
the sole shareholder and owner of Westech Security and Investigations, Inc.
("Westech"). Pursuant to the terms of the share purchase agreement, the sole
shareholder of Westech will sell all her shares to the Company in exchange for
approximately 66% of the Company's issued and outstanding shares of common stock
(the "Sale"), to become effective at such time as the articles of merger have
been filed. The remaining 34% of the Company's issued and outstanding shares of
common Stock shall consist of presently issued and outstanding shares of common
Stock of the Company and the following to be issued in the form of Company's
Series E Preferred Stock, convertible into one share of Company's common Stock,
and shall consist of: (i) an exchange of all outstanding preferred stock of the
Company, (ii) an exchange of all outstanding loans to the Company which shall
either be satisfied or shall convert to Series E Preferred Stock immediately
following the closing of the sale so that there are no outstanding loans to the
Company at closing of the sale, (iii) a bridge loan of $500,000 previously made
to Westech, which shall convert to Series E Preferred Stock immediately
following the closing of the sale and (iv) an investment of $750,000 into the
Company at closing of the sale. In connection with the additional $1,250,000,
the Company shall issue 1,250,000 shares of Series E Preferred Stock.
Furthermore, subject to the approval of Company's shareholder and subject to
discretion of the Board of Directors of the Company, the Company will change its
name to "Westech Security and Investigation, Inc", increase the number of shares
of authorized preferred stock so it has sufficient amount of preferred stock to
undertake the transactions contemplated by the sale; and undertake a 1-for-187
reverse stock split of its shares of common stock. Subsequent to the period
ended December 31, 2021.
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On August 19, 2022, the Company entered into a Termination Agreement (the
"Termination Agreement") with Westech and Josephine Brown ("Brown"), the sole
shareholder and owner of Westech, to terminate the Share Purchase Agreement,
dated December 21, 2020 (the "Share Purchase Agreement"), by and among the
Company, Westech and Brown. Pursuant to the Termination Agreement, the Company,
Westech and Brown released each other from certain claims related to, or arising
out of, the Share Purchase Agreement.
On August 9, 2018, the Board of Directors of the Company through its
wholly-owned subsidiary NuLife Acquisition Corp., a Louisiana corporation
("NuLife Sub"), approved and executed an agreement of merger and plan of
reorganization (the "Merger Agreement"), to become effective at such time as the
articles of merger had been filed with the Secretary of State of Louisiana (the
"Effective Time"), and after the satisfaction or waiver by the parties thereto
of the conditions set forth in the Merger Agreement. Pursuant to the terms of
the Merger Agreement, NuLife Sub merged with and into LJR, with LJR being the
surviving entity and becoming a wholly-owned subsidiary of the Company, all one
hundred (100) issued and outstanding shares of common stock of LJR held by the
sole stockholder of LJR ("LJR Stockholder") were exchanged into one thousand
(1,000) shares of series D senior convertible preferred stock, par value $0.001
per share (the "Series D Preferred Stock"), of the Company, convertible into
fifty million two hundred thirty-nine thousand five hundred forty-one
(50,239,541) shares of common stock of the Company (the "Merger"). In addition,
the LJR Stockholder received one share of series C super-voting preferred stock
of the Company which granted the holder 50.1% of the votes of the Company at all
times.
Our corporate office is located at 2851 Johnson Street, Unit #194, Lafayette,
LA, 70503 and our telephone number is (337) 210-8790.
Reverse Stock Split
On March 29, 2022, the Company filed an amendment to its Amended and Restated
Articles of Incorporation, effective as of 12:01 am on April 1, 2022, whereby
each 200 currently outstanding share of the Common Stock were combined and
converted into one (1) share of Common Stock (the "Reverse Stock Split").
Following the Reverse Stock Split, the Company had 23,091 shares of Common Stock
outstanding and an additional 499,976,909 shares of Common Stock available for
issuance. In addition, the authorized shares of common stock were increased from
475,000,000 shares to 500,000,000 shares and the authorized shares of preferred
stock were increased from 25,000,000 shares to 50,000,000 shares, of which
635,000 shares of Series A Preferred Stock, one (1) share of Series C Preferred
Stock and 1,000 shares of Series D Preferred Stock are outstanding.
Critical Accounting Policies and Estimates
Use of Estimates
The preparation of the unaudited condensed consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingent liabilities at
the date of the condensed consolidated financial statements and the reported
amounts of expenses during the reporting period. Actual results could differ
from those estimates.
Management makes estimates that affect certain accounts including deferred
income tax assets, accrued expenses, fair value of equity instruments and
reserves for any other commitments or contingencies. Any adjustments applied to
estimates are recognized in the period in which such adjustments are determined.
Recent Accounting Pronouncements
See Note 2 of the accompanying unaudited condensed consolidated financial
statements for a discussion of recently issued accounting standards.
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Results of Operations
Three months ended September 30, 2022 and 2021
We had revenue of $2,072 for the three months ended September 30, 2022, as
compared to $2,646 for the three months ended September 30, 2021, a decrease of
$574 or 21.7%. This decrease in revenue was due to a reduction in revenue from
monitoring and related services between the two periods.
Cost of Revenue
Cost of revenue sold for the three months ended September 30, 2022 was $1,068,
as compared to $969 for the three months ended September 30, 2021, a minimal
increase of $99.
General and Administrative
Our general and administrative expenses for the three months ended September 30,
2022 were $82,586, a minimal decrease of $727, or 0.9%, compared to $83,313 for
the three months ended September 30, 2021.
Loss from discontinued operations
Subsequent to the Merger, management decided to discontinue the activities of
NuLife. As a result, we recorded income of $11,559, primarily due to a change in
the fair value of a derivative liability for the three months ended September
30, 2022.
Net loss
As a result of the foregoing, for the three months ended September 30, 2022, we
recorded a net loss of $73,772 compared to a net loss of $121,893 for the three
months ended September 30, 2021.
Nine months ended September 30, 2022 and 2021
We had revenue of $6,945 for the nine months ended September 30, 2022, as
compared to $7,944 for the nine months ended September 30, 2021, a decrease of
$999 or 12.6%. The decrease in revenue was due to a lesser concentration on new
alarm system sales and installations, with our focus moving more toward alarm
system monitoring and the corresponding recurring monthly revenue (RMR) that is
associated with monitoring services.
Cost of Revenue
Cost of revenue sold for the nine months ended September 30, 2022 was $3,631, as
compared to $2,981 for the nine months ended September 30, 2021, an increase of
$650 or 21.8%.
General and Administrative
Our general and administrative expenses for the nine months ended September 30,
2022 were $283,506, a minimal decrease of $7,968, or 2.7%, compared to $291,474
for the nine months ended September 30, 2021.
Loss from discontinued operations
Subsequent to the Merger, management decided to discontinue the activities of
NuLife. As a result, we recorded income of $90,397 primarily due to a change in
the fair value of a derivative liability for the nine months ended September 30,
2022.
Net loss
As a result of the foregoing, for the nine months ended September 30, 2022, we
recorded a net loss of $137,205 compared to a net loss of 326,922 for the nine
months ended September 30, 2021.
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Liquidity and Capital Resources
At September 30, 2022, the Company had $7,677 cash. The Company has limited
commercial experience and had a net loss from continuing operations of $85,331
for the nine months ended September 30, 2022, and an accumulated deficit of
$3,508,536, and a working capital deficit of $3,146,074 at September 30, 2022.
The Company's condensed consolidated financial statements are prepared using
accounting principles generally accepted in the United States ("U.S. GAAP")
applicable to a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. The Company has not
yet established an ongoing source of revenue sufficient to cover its operating
costs and to allow it to continue as a going concern. The accompanying condensed
consolidated financial statements for the nine months ended September 30, 2022,
have been prepared assuming the Company will continue as a going concern.
We do not believe that we have enough cash on hand to operate our business
during the next 12 months. The Company will require additional financing to fund
its future planned operations, including research and development and
commercialization of its products. To date, the Company has financed its
operation primarily from advances from its affiliates. As of September 30, 2022
and December 31, 2021, the Company has received advances totaling $1,950,193 and
$1,875,436, respectively, from its affiliates. The formal structure and payment
terms of these advances have not yet been determined by the Company and the
third parties. We do not have verbal or formal contracts with our affiliates
obligating them to loan funds to us.
We may seek to raise additional funding that we require in the form of equity
financing from the sale of our common stock. However, we cannot provide
investors with any assurance that we will be able to raise sufficient funding
from the sale of our common stock to fund our operations. We currently do not
have any agreements or arrangements in place for any future financing.
Operating Activities
During the nine months ended September 30, 2022, we used $98,143 of cash in
operating activities primarily as a result of our loss of $137,205 from
operations, offset by net changes in working capital items of operating assets
and liabilities of $186,212.
During the nine months ended September 30, 2021, we used $115,027 of cash in
operating activities primarily as a result of our loss of $326,922 from
operations, offset by net changes in working capital items of operating assets
and liabilities of $180,297.
Financing Activities
During the nine months ended September 30, 2022, financing activities provided
$74,757 in proceeds from a bridge loan and provided $8,026 in advances from
related party.
During the nine months ended September 30, 2021, financing activities provided
$111,500 in proceeds from a bridge loan and used $2,320 in advances from related
party.
Off-Balance Sheet Transactions
At September 30, 2022, the Company did not have any transactions, obligations or
relationships that could be considered off-balance sheet arrangements.
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