SEC Filing Report: Artisan Consumer Goods, Inc. (10-Q/A)
Executive Summary
This report analyzes Artisan Consumer Goods, Inc.’s (ARRT) Form 10-Q/A for the quarter ended September 30, 2024. The filing is an amendment (No. 1) to the original 10-Q, primarily to reflect a review by a new independent registered public accounting firm, Fruci & Associations II, PLLC, following the revocation of the registration of the previous auditor, Yusufali & Associates, LLC. The company continues to struggle with minimal revenue generation, operating losses, and a significant accumulated deficit, raising substantial doubt about its ability to continue as a going concern. The company’s plan of operation hinges on securing additional funding. Given the current financial state and reliance on future financing, a “Sell” recommendation is warranted.
Company Overview
Artisan Consumer Goods, Inc. (ARRT) is a Nevada-based company focused on restarting the “Within / Without Granola” (WWG) brand, acquired in 2021. The company previously had mining exploration operations which were ceased due to lack of funds. The company’s fiscal year ends on June 30. The company’s common stock is traded on the OTC Markets.
Detailed Analysis
Background of the Amendment
The primary driver for this amended filing is the change in the company’s independent registered public accounting firm. The original auditor’s registration was revoked by the Public Company Accounting Oversight Board (PCAOB). This necessitates a re-audit of the financial statements for the years ending June 30, 2024 and 2023, and a review of subsequent interim periods. This change in auditors raises concerns about the reliability of previous financial statements and the potential for future restatements.
Financial Statement Analysis
Balance Sheet
| Account |
September 30, 2024 (Unaudited) |
June 30, 2024 (Audited) |
Change |
| Cash |
$1,263 |
$1,795 |
-$532 |
| Total Assets |
$2,263 |
$2,920 |
-$657 |
| Total Current Liabilities |
$288,543 |
$280,718 |
+$7,825 |
| Accumulated Deficit |
($19,285,853) |
($19,277,161) |
-$8,692 |
| Total Stockholders’ Deficiency |
($286,280) |
($277,798) |
-$8,482 |
* **Liquidity:** The company’s cash position remains extremely weak, decreasing slightly from the previous quarter. The negative working capital indicates a significant liquidity risk.
* **Solvency:** The substantial accumulated deficit and negative stockholders’ equity highlight the company’s insolvency.
* **Assets:** The majority of the assets consist of trademarks, with a minimal amount of cash.
Income Statement
| Account |
Three Months Ended September 30, 2024 (Unaudited) |
Three Months Ended September 30, 2023 (Unaudited) |
Change |
| Revenue |
$0 |
$0 |
$0 |
| Total Operating Expenses |
$12,194 |
$5,935 |
+$6,259 |
| Net Loss |
($8,692) |
($5,935) |
-$2,757 |
| Basic and Diluted Loss per Share |
($0.00) |
($0.00) |
$0 |
* **Revenue:** The company generated no revenue in either of the comparable quarters, indicating a complete lack of sales activity.
* **Expenses:** Operating expenses increased significantly, primarily due to higher professional fees (audit, transfer agent, and accounting). This increase is concerning, especially given the lack of revenue.
* **Profitability:** The company remains deeply unprofitable, with a net loss that has worsened compared to the previous year.
Cash Flow Statement
| Account |
Three Months Ended September 30, 2024 (Unaudited) |
Three Months Ended September 30, 2023 (Unaudited) |
Change |
| Net Cash Used in Operating Activities |
($10,532) |
($1,745) |
-$8,787 |
| Net Cash Provided by Financing Activities |
$10,000 |
$15,000 |
-$5,000 |
| Net Decrease in Cash |
($532) |
$13,255 |
-$13,787 |
* **Operating Activities:** The company continues to burn cash from its operations.
* **Financing Activities:** The company relies entirely on related party advances (loans from the CEO) to stay afloat. This is not a sustainable long-term solution.
Management’s Discussion and Analysis (MD&A)
* **Going Concern:** Management acknowledges the substantial doubt about the company’s ability to continue as a going concern.
* **Plan of Operation:** The company’s plan hinges on restarting the WWG brand and securing at least $100,000 in funding. There is no assurance that this funding will materialize.
* **Critical Accounting Policies:** The MD&A refers to Note 2, which outlines the company’s significant accounting policies.
* **Related Party Transactions:** The company relies heavily on related party loans from its CEO. This raises concerns about potential conflicts of interest and the sustainability of the company’s financing.
* **Internal Controls:** The company admits that its disclosure controls and procedures were not effective as of September 30, 2024. This is a significant red flag.
Risk Factors
The filing highlights several critical risk factors:
* **Going Concern:** The company’s ability to continue as a going concern is highly uncertain.
* **Funding:** The company’s plan of operation depends on securing additional funding, which is not guaranteed.
* **Related Party Transactions:** The reliance on related party loans creates potential conflicts of interest.
* **Internal Controls:** The ineffective disclosure controls and procedures raise concerns about the reliability of the company’s financial reporting.
Uncommon Metrics
* **Lack of Revenue:** The consistent absence of revenue is a major concern.
* **Reliance on Related Party Loans:** The company’s dependence on loans from its CEO is unsustainable.
* **Expired Inventory Write-Off:** The write-off of expired granola inventory in February 2023 indicates challenges in managing inventory and production.
Conclusion and Actionable Insights
Artisan Consumer Goods, Inc. faces significant financial challenges. The company’s lack of revenue, operating losses, negative working capital, and reliance on related party loans raise substantial doubt about its ability to continue as a going concern. The change in auditors and admission of ineffective internal controls further exacerbate these concerns.
**Overall Assessment:** The company’s financial condition is precarious, and its future is highly uncertain.
**Recommendation:** Sell. The risks associated with investing in ARRT outweigh any potential rewards. The company’s reliance on future funding and the lack of a clear path to profitability make it a highly speculative investment.