UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Mark One

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February 28, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File No. 333-234487

NOWTRANSIT INC.

(Exact name of registrant as specified in its charter)

2825 East Cottonwood Parkway

Suite 500 - #5130

Salt Lake City, UT 84121

(Address of principal executive offices)

Registrant’s telephone number, including area code: (801) 810-6209

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: Common stock, par value $0.0001

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 definition of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the practicable date:

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

While the information presented in the accompanying financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. These financial statements should be read in conjunction with the Company's August 31, 2022 audited financial statements and notes thereto. Operating results for the three months ended February 28, 2023 are not necessarily indicative of the results that can be expected for the year ending August 31, 2023.

NOWTRANSIT INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes, which are an integral part of these unaudited financial statements.

NOWTRANSIT INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes, which are an integral part of these unaudited financial statements.

NOWTRANSIT INC

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE SIX MONTHS ENDED

FEBRUARY 28, 2023 & 2022

(Unaudited)

See accompanying notes, which are an integral part of these unaudited financial statements.

NOWTRANSIT INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying notes, which are an integral part of these unaudited financial statements.

NOWTRANSIT INC.

NOTES TO THE FINANCIAL STATEMENTS

SIX MONTHS ENDED FEBRUARY, 2023 AND 2022

(Unaudited)

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

Cautionary Note Regarding Forward Looking Statements

This Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our discussions and the anticipated terms of a potential reverse merger pursuant to which we would acquire an operating business, our business plan and our liquidity needs. All statements other than statements of historical facts contained in this Report, including statements regarding our future financial position, liquidity, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “could,” “target,” “potential,” “is likely,” “will,” “expect” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs.

The results anticipated by any or all of these forward-looking statements might not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include those described elsewhere in this Report and in our Annual Report on Form 10-K for the fiscal year ended August 31, 2022 under “Item 1A. – Risk Factors.” We undertake no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events or otherwise.

Overview

We have no operations since inception other than the expenditures related to running the Company, and we have not generated any revenue since inception. Our goal is to finalize a share exchange agreement with an early-stage nutraceutical company (the “Target”) and consummate the acquisition.

Plan of Operation

On February 13, 2023, Nowtransit Inc, a Nevada corporation. (the “Company”) entered into a Share Exchange Agreement (the “Exchange Agreement”) with Best Labs, Inc., a Nevada corporation (“Best”) and the shareholders of Best signatory thereto who collectively own 9,588,000 shares of Best common stock, or 100% of the outstanding shares of Best common stock. The transaction consummated on March 10, 2023 (the “Closing”).

Upon the Closing, the Company issued the Best shareholders signatory 34,371,100 shares of the Company’s common stock, representing approximately 85.39% of the shares of the Company’s common stock to be outstanding, in exchange for all of the shares of Best common stock held by such Best shareholders (the “Exchange”).

The information contained in Item 2.01 of the Current Report on Form 8-K is incorporated herein by reference. The Exchange was exempt from registration under the Securities Act of 1933 pursuant to Rule 506(b) of Regulation D promulgated thereunder as a transaction not involving a public offering. The information set forth or referenced in Items 2.01, 3.02, 5.02, 5.03, 5.06 of the Current Report on Form 8-K filed on March 16, 2023 is incorporated herein by reference

As a result of the Closing of the Exchange Agreement, the Company ceased being a shell company, as that term is defined by Rule 12b-2 under the Securities Exchange Act of 1934. The information set forth or referenced in Item 1.01 of the Current Report on Form 8-K filed on February 17, 2023 is incorporated herein by reference

During the next 12 month period, the Company will continue to develop, market and sell clinically-tested, affordably priced products to naturally battle the onslaught of bacteria and viruses through online sales and in various other distribution channels. Presently, the Company has developed and is marketing Be On-Guard Mouth Spray, Be On-Guard Nasal Spray, EZ Safer Surface Cleaner, Be On-Guard.Brain Fog Support and ADHD 365 maximum strength brain support.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Management’s discussion and analysis and results of operations are based upon our accompanying financial statements for the six months ended February 28, 2023 and 2022, which have been prepared in conformity with U.S. generally accepted accounting principles, or U.S. GAAP, and which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Note 3. Summary of Significant Accounting Policies, to the financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, describes the significant accounting policies and methods used in the preparation of the Company’s financial statements. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. These estimates are the basis for our judgments about the carrying values of assets and liabilities, which in turn may impact our reported revenue and expenses. Our actual results could differ significantly from these estimates under different assumptions or conditions.

Results Of Operations

THREE MONTHS ENDED FEBRUARY 28, 2023 COMPARED TO FEBRUARY 28, 2022

Our net loss for the three months ended February 28, 2023 was $19,985, compared to a net loss of $17,527 during the three months ended February 28, 2022. The Company has not generated revenue during the three months ended February 28, 2023 and 2022, respectively. Expenses incurred in creating the net loss were general administrative expenses of $20,011 during the three months ended February 28, 2023, compared to $26,240 during the three months ended February 28, 2022.

SIX MONTHS ENDED FEBRUARY 28, 2023 COMPARED TO FEBRUARY 28, 2022

Our net loss for the six months ended February 28, 2023 was $48,902, compared to a net loss of $31,616 during the six months ended February 28, 2022. The Company has not generated any revenue in either period. The increase in net loss was due to an increase in general administrative expenses including professional fees in connection with the preparation of SEC reports and our ongoing search for a business to acquire and costs related to negotiations and due diligence in connection therewith. Expenses incurred were general administrative expenses of $48,902, during the six months ended February 28, 2023, compared to $31,616 during the six months ended February 28, 2022.

LIQUIDITY AND CAPITAL RESOURCES

As of February 28, 2023, our total assets were $8,793, consisting of cash.

Cash Flows from Operating Activities

We have not generated positive cash flows from operating activities since inception. For the six months ended February 28, 2023, net cash flows used in operating activities was $47,460, consisting of our net loss of $48,902 and an increase of $1,442 in accounts payable and accrued liabilities. Cash flows used in operating activities for the six months ended February 28, 2022 was $30,928, consisting of our net loss of $31,616 and a increases of $4,279 in prepaid expenses and an increase of $5,122 in accounts payable and $8,713 decrease in gain on forgiveness of debt.

Cash Flows from Investing Activities

We have not engaged in any investing activities since our inception.

Cash Flows from Financing Activities

For the six months ended February 28, 2023 and 2022, net cash flows provided by financing activities was $40,000 and $100,000, respectively, consisting of gross proceeds from the sale of Series A Convertible Preferred Stock (the “Series A”) for cash as described in the following paragraphs.

On November 22, 2022, the Company entered into a Stock Purchase Agreement with an accredited investor pursuant to which the Company sold to the purchaser 40,000 shares of the Series A at a purchase price of $1.00 per share (the “Offering”). The Company received $40,000 in gross proceeds from the Offering.

On November 3, 2021, the Company entered into a Stock Purchase Agreement with an accredited investor pursuant to which the Company sold to the purchaser 100,000 shares of the Company’s Series A at a purchase price of $1.00 per share. The Company received $100,000 in gross proceeds from the Offering. Each share of the Series A is convertible into three shares of the Company’s common stock.

PLAN OF OPERATION AND FUNDING

The Nowtransit management team plans to focus on gaining traction for its mental health and general wellness products. The primary focus will initially be on our mental and wellness products. Best 365 Labs, Inc has filed for a provisional patent on its mental wellness, natural products which is an additional reason we plan to focus and grow this sector of the products. With the Global Mental Health Marketplace currently valued at $383.31 billion annually and with 41 million people holding a prescription for Adderall that the market conditions are idea for us to offer our natural substitute product options (which are also unique). Management believes with adequate advertising and marketing funds that substantial clients could be acquired in these categories

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Going Concern

There is no historical financial information about us upon which to base an evaluation of our performance. We have no operations, cumulative losses, and have not generated any revenues. We cannot guarantee we will be successful in acquiring an operating business or commencing material business operations. Our business is subject to risks inherent in the search for and establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

There can be no assurance that future financing will be available to us on acceptable terms or at all. If financing is not available on satisfactory terms as and when needed, we may be unable to commence, develop or expand our operations. Equity financing could result in additional dilution to existing stockholders.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of February 28, 2023 (the “Evaluation Date”), the Company’s management evaluated, with participation of its principal executive officer, the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, the Company’s principal executive officer concluded that the Company’s disclosure controls and procedures were ineffective as of February 28, 2023.

Management assessed the effectiveness of its internal control over financial reporting as of the Evaluation Date based on criteria for effective internal control over financial reporting described in Internal Control—Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. The material weaknesses identified during management’s assessment were (i) a lack of sufficient internal accounting resources; (ii) a lack of segregation of duties to ensure adequate review of financial statement preparation, (iii) lack of an independent board of directors or audit committee, and (iv) lack of written documentation of our internal control policies and procedures. In light of these material weaknesses, management has concluded that we did not maintain effective internal control over financial reporting at the Evaluation Date. We plan to rectify these weaknesses by establishing written policies and procedures for our internal control of financial reporting and hiring additional accounting personnel at such time as we raise sufficient capital to do so. There were no changes in controls during the quarter ended February 28, 2023.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.

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

On November 22, 2022, the Company entered into a Stock Purchase Agreement with an accredited investor pursuant to which the Company sold to the purchaser 40,000 shares of the Series A at a purchase price of $1.00 per share (the “Offering”). The Company received $40,000 in gross proceeds from the Offering. Each share of the Series A is convertible into three shares of the Company’s common stock at the holder’s discretion. The offer and sale of the Series A was not registered under the Securities Act of 1933 and was exempt from registration pursuant to Section 4(a)(2) thereof and Rule 506(b) promulgated thereunder.

On November 23, 2021, the Company entered into a Stock Purchase Agreement with an accredited investor pursuant to which the Company sold to the purchaser 100,000 shares of the Series A at a purchase price of $1.00 per share (the “Offering”). The Company received $100,000 in gross proceeds from the Offering. Each share of the Series A is convertible into three shares of the Company’s common stock at the holder’s discretion. The offer and sale of the Series A was not registered under the Securities Act of 1933 and was exempt from registration pursuant to Section 4(a)(2) thereof and Rule 506(b) promulgated thereunder.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

* Certain schedules, appendices and exhibits have been omitted in accordance with Item 601 of Regulation S-K. A copy of any omitted schedule, appendix and/or exhibit will be furnished supplementally to the Staff of the Securities and Exchange Commission upon request.

**This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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