FAL EXPLORATION CORP.

CIK:0001489588|SEC Filings

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jul. 31, 2022	Jul. 31, 2021	Jul. 31, 2022	Jul. 31, 2021
Income Statement [Abstract]
Product Sales, net	$ 619,187	$ 408,821	$ 2,164,248	$ 1,135,872
Cost of Sales	707,346	371,118	2,069,942	951,440
Gross Profit	(88,159)	37,703	94,306	184,432
Operating Expenses:
Compensation and related expenses (includes $374,560 and $24,750 of stock-based compensation for the nine months ended July 31, 2022 and 2021, respectively)	273,348	111,406	1,265,025	277,228
Professional and consulting expenses (includes $2,243,589 and $600,000 of stock-based professional fees for the nine months ended July 31, 2022 and 2021, respectively)	371,451	756,886	3,439,253	1,279,609
Professional and consulting expenses - related party (includes $27,500 of stock-based professional fees for the nine months ended July 31, 2022)	57,500		117,500
Product development expense (includes $370,677 and $0 of stock-based compensation for the nine months ended July 31, 2022 and 2021, respectively)	99,063		370,677
Selling and marketing expenses	368,344	96,732	956,413	307,980
General and administrative expenses	394,032	108,779	1,229,076	262,523
Settlement expense	365,140		365,140
Total Operating Expenses	1,928,878	1,073,803	7,743,084	2,127,340
Loss from Operations	(2,017,037)	(1,036,100)	(7,648,778)	(1,942,908)
Other Income (Expense):
Interest expense, net	(259,085)	(437,186)	(644,571)	(908,528)
Change in fair value of derivative liabilities	(11,553)	81,107	55,855	263,428
Gain on extinguishment of debt		7,075		33,704
Gain on extinguishment of accounts payable		7,679		14,754
Total Other Expense, net	(270,638)	(341,325)	(588,716)	(596,642)
Net Loss	(2,287,675)	(1,377,425)	(8,237,494)	(2,539,550)
Deemed Dividend	(2,578,446)		(2,578,446)
Net Loss Attributable to Common Shareholders	$ (4,866,121)	$ (1,377,425)	$ (10,815,940)	$ (2,539,550)
NET LOSS PER COMMON SHARE:
Basic and diluted (in Dollars per share)	$ (0.12)	$ (0.06)	$ (0.28)	$ (0.12)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted (in Shares)	41,891,630	22,619,862	38,951,375	20,577,274

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Jul. 31, 2022	Jul. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (8,237,494)	$ (2,539,550)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	176,951	10,390
Amortization of intangible assets	674,882
Common stock and warrants issued for stock-based compensation	374,560	24,750
Common stock and warrants issued for professional services – related party	27,500	11,471
Common stock and warrants issued for services and prepaid services	1,573,377	600,000
Common stock issued for commitment fee in interest expense	29,879
Interest expense related to put premium on stock-settled debt	83,058
Common stock and warrants issued for product development	370,677
Common stock issued pursuant to lock-up agreements	670,212
Gain on extinguishment of accounts payable		(7,075)
Gain on extinguishment of debt		(41,241)
Common stock issued for settlement expense	365,140
Amortization of debt discount on convertible notes payable and advances payable	426,495	817,922
Change in fair value of derivative liabilities	(55,855)	(289,351)
Change in operating assets and liabilities:
Inventory	(31,114)	(1,566)
Prepaid expenses and other current assets	(28,341)	(50,406)
Accounts payable	280,791	28,955
Accrued expense and other liabilities	(113,610)	(73,998)
Unredeemed gift cards	69,720	19,836
Net cash used in operating activities	(3,343,172)	(1,489,863)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for acquisition of subsidiary		(60,000)
Purchases of property and equipment	(11,750)	(127,075)
Net cash used by investing activities	(11,750)	(187,075)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, net of issuance costs	1,368,492	866,770
Proceeds from note payable		7,000
Proceeds from convertible notes payable, net of debt discount		1,647,300
Proceeds from convertible note payable - related party, net of debt discount	790,500	100,000
Proceeds from advances payable	322,502	274,040
Payment on stock repurchase agreement	(50,000)
Repayment of convertible notes payable	(998,054)	(652,667)
Repayments of advance payable	(219,233)	(186,654)
Repayment of convertible notes payable - related party	(63,069)
Net cash provided by financing activities	1,151,138	2,055,789
Net change in cash	(2,203,784)	378,851
Cash - beginning of period	2,275,397	57,082
Cash - end of period	71,613	435,933
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest	61,780	55,198
Income taxes
Non-cash investing and financing activities:
Initial amount of ROU asset and related liability		460,987
Reduction of the repurchase obligation pursuant to the Put Option Agreement	113,072	244,906
Common stock and common stock warrants issued as commitment fee in connection with convertible notes payable, recorded as debt discount		494,165
Liabilities to be settled with common stock in connection with convertible notes payable
Fair value of true-up shares in connection with the commitment fee		244,213
Initial derivative liability recorded in connection with convertible notes payable	122,177	419,838
Increase in debt discount for relative fair value of warrants	154,985
Increase in stock repurchase obligation and reduction of additional paid-in capital pursuant to settlement agreement	150,000
Net Assets and Liabilities Assumed in Acquisition:
Prepaid expenses and other assets		241
Inventory		20,763
Operating right-of-use asset		76,136
Computer software		66,198
Customer relationships		43,000
Trademark		505,000
Goodwill		1,749,357
Accounts payable and accrued liabilities		(203,348)
Operating right-of-use liability		(79,054)
Note Payable		(149,900)
Net assets acquired (liabilities assumed)		$ 2,028,393

Consolidated Balance Sheets - USD ($)	Jul. 31, 2022	Oct. 31, 2021
CURRENT ASSETS:
Cash	$ 71,613	$ 2,275,397
Inventory	47,134	16,020
Prepaid expenses and other current assets	108,982	80,641
Total Current Assets	227,729	2,372,058
OTHER ASSETS:
Property and equipment, net	101,527	130,970
Finance lease right-of-use assets, net	130,888	181,015
Operating lease right-of-use assets, net	182,878	268,509
Intangible assets, net	2,550,479	3,225,361
Deposits	10,000	10,000
Goodwill	1,809,357	1,809,357
Total Assets	5,012,858	7,997,270
CURRENT LIABILITIES:
Accounts payable	873,093	568,302
Accrued expenses and other liabilities	169,985	181,037
Liabilities to be settled with common stock		209,688
Convertible notes payable, net of debt discount and put premium	713,916	550,638
Convertible notes payable - related party, net of debt discount		30,172
Notes payable - current portion	17,198	15,361
Advances payable	243,564	101,945
Derivative liabilities	153,206	86,884
Unredeemed gift cards	234,632	164,912
Financing lease liability - current portion	66,926	62,210
Operating lease liabilities - current portion	86,699	101,431
Common stock repurchase obligations	605,203	618,275
Total Current Liabilities	3,164,422	2,690,855
LONG-TERM LIABILITIES:
Financing lease liability - long-term portion	73,935	124,649
Operating lease liability- long-term portion	101,095	166,923
Notes payable - long-term portion	289,702	291,539
Total Long-Term Liabilities	464,732	583,111
Total Liabilities	3,629,154	3,273,966
Commitments and contingency (Note 12)
STOCKHOLDERS’ EQUITY:
Preferred Stock: $0.001 par value; 20,000,000 shares authorized;
Common stock: $0.001 par value; 1,000,000,000 shares authorized; 42,740,581 and 35,152,623 shares issued and outstanding as of July 31, 2022 and October 31, 2021, respectively	42,741	35,152
Additional paid-in capital	31,530,170	25,198,035
Deferred compensation	(237,603)	(1,374,219)
Accumulated deficit	(29,951,604)	(19,135,664)
Total Stockholders’ Equity	1,383,704	4,723,304
Total Liabilities and Stockholders’ Equity	$ 5,012,858	$ 7,997,270