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 September 30, 2024

Commission File Number: 000-26533

MASTERMIND, INC.

(Exact name of registrant as specified in its charter)

Nevada	82-3807447
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2221 Peachtree Rd. NE, Suite D-134, Atlanta, GA	30309
(Address of principal executive offices)	(Zip Code)

(678) 420-4000

(Registrant’s telephone number, including area code) 

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, 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 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 ☒

As of November 8, 2024, there were 34,505,520 shares of the registrant’s Common Stock outstanding.

Mastermind, Inc.

Table of Contents

Form 10-Q

		Page
Part I	Financial Information
Item 1	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets at September 30, 2024 and December 31, 2023 (Unaudited)	3
	Consolidated Statements of Operations for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	4
	Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2024 and 2023 (Unaudited)	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023 (Unaudited)	6
	Notes to Consolidated Financial Statements (Unaudited)	7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4	Controls and Procedures	15
Part II	Other Information
Item 1	Legal Proceedings	16
Item 1A	Risk Factors	16
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3	Defaults Upon Senior Securities	16
Item 4	Mine Safety Disclosures	16
Item 5	Other Information	16
Item 6	Exhibits	17
Signatures		18

2

Mastermind, Inc.

Consolidated Balance Sheets

(Unaudited)

	September 30,		December  31,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	510,541	$	1,137,010
Accounts receivable		158,164		254,329
Unbilled receivables		2,093,490		1,679,929
Prepaid expenses and other current assets		30,274		29,198
Total Current Assets		2,792,469		3,100,466
Property and equipment, net		28,242		37,898
TOTAL ASSETS	$	2,820,711	$	3,138,364
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	112,949	$	213,120
Unearned revenues		59,955		121,196
Total Current Liabilities		172,904		334,316
Deferred tax liabilities		184,940		223,691
Total Liabilities		357,844		558,007
Stockholders' Equity
Preferred stock: 1,000,000 shares authorized; $0.001 par value; no shares issued and outstanding		-		-
Common stock: 125,000,000 shares authorized; $0.001 par value; 34,505,520 shares issued and outstanding		34,506		34,506
Additional paid in capital		62,865		62,865
Retained earnings		2,365,496		2,482,986
Total Stockholders' Equity		2,462,867		2,580,357
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	2,820,711	$	3,138,364

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

3

Mastermind, Inc.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2024			2023		2024			2023
Revenues	$	267,345		$	1,208,758	$	1,878,272		$	3,665,053
Cost of revenues		222,867			446,843		800,910			1,405,262
Gross profit		44,478			761,915		1,077,362			2,259,791
Operating Expenses:
Management consulting		108,225			220,725		415,925			642,075
Professional fees		22,449			87,485		94,126			153,881
Wages and benefits		141,766			202,068		492,897			593,597
General and administrative		80,508			90,114		252,153			344,304
Total Operating Expenses		352,948			600,392		1,255,101			1,733,857
Income (loss) from operations		(308,470	)		161,523		(177,739	)		525,934
Other Income (Expense)
Interest income		5,432			16,267		21,498			26,839
Loss on disposal of property and equipment		-			-		-			(329	)
Total other income		5,432			16,267		21,498			26,510
Income (loss) before provision (benefit) for income taxes		(303,038	)		177,790		(156,241	)		552,444
Provision (benefit) for income taxes		(79,360	)		48,193		(38,751	)		149,485
Net income (loss)	$	(223,678	)	$	129,597	$	(117,490	)	$	402,959
Basic and diluted income (loss) per common share
Basic	$	(0.01	)	$	0.00	$	(0.00	)	$	0.01
Diluted	$	(0.01	)	$	0.00	$	(0.00	)	$	0.01
Weighted average number of common shares outstanding
Basic		34,505,520			34,505,520		34,505,520			34,505,520
Diluted		34,505,520			34,505,520		34,505,520			34,505,520

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

4

Mastermind, Inc.

Consolidated Statements of Stockholders’ Equity

Three and Nine Months Ended September 30, 2024 and 2023

(Unaudited)

	Common Stock				Additional Paid in		Retained			Total
	Shares		Amount		Capital		Earnings			Equity
Balance - December 31, 2023		34,505,520	$	34,506	$	62,865	$	2,482,986		$	2,580,357
Net income		-		-		-		47,650			47,650
Balance - March 31, 2024		34,505,520		34,506		62,865		2,530,636			2,628,007
Net income		-		-		-		58,538			58,538
Balance - June 30, 2024		34,505,520		34,506		62,865		2,589,174			2,686,545
Net loss		-		-		-		(223,678	)		(223,678	)
Balance - September 30, 2024		34,505,520	$	34,506	$	62,865	$	2,365,496		$	2,462,867

	Common Stock				Additional Paid in		Retained		Total
	Shares		Amount		Capital		Earnings		Equity
Balance - December 31, 2022		34,505,520	$	34,506	$	62,865	$	2,583,305	$	2,680,676
Net income		-		-		-		118,118		118,118
Balance - March 31, 2023		34,505,520		34,506		62,865		2,701,423		2,798,794
Net income		-		-		-		155,244		155,244
Balance - June 30, 2023		34,505,520		34,506		62,865		2,856,667	$	2,954,038
Net income		-		-		-		129,597		129,597
Balance - September 30, 2023		34,505,520	$	34,506	$	62,865	$	2,986,264	$	3,083,635

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

5

Mastermind, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	September 30,
	2024			2023
Cash flows from operating activities:
Net income (loss)	$	(117,490	)	$	402,959
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation		9,656			11,288
Loss on disposal of property and equipment		-			329
Deferred tax		(38,751	)		48,630
Changes in operating assets and liabilities:
Accounts receivable		96,165			(239,201	)
Unbilled receivables		(413,561	)		(492,434	)
Income tax receivable		-			77,477
Prepaid expenses and other current assets		(1,076	)		(80,392	)
Accounts payable and accrued expenses		(100,171	)		199,816
Unearned revenues		(61,241	)		(238,719	)
Net cash used in operating activities		(626,469	)		(310,247	)
Cash flows from investing activities:
Proceeds from sale of equipment		-			1,200
Purchase of property and equipment		-			(8,646	)
Net cash used in investing activities		-			(7,446	)
Net change in cash		(626,469	)		(317,693	)
Cash, beginning of period		1,137,010			1,712,771
Cash, end of period	$	510,541		$	1,395,078
Supplemental Cash Flow Information
Income taxes paid (net of refunded)	$	1,278		$	23,378
Interest paid	$	-		$	-

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

6

Mastermind, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

1. Business

Mastermind, Inc. (the “Company”, “we”, “us”, or the “organization”) is an involvement marketing service agency that designs, creates and develops branding and marketing campaigns, primarily for large corporate clients with well-known brands. We specialize in customer conversion initiatives that we believe facilitate the involvement of more of the “right customers” with the brands of our clients. We focus on converting prospects to customers. Our programs can take on various forms, including creating and managing content marketing, influencer marketing, social marketing/community management, digital issues management communications, promotions, Augmented Reality Marketing, and UX Analytics & Digital Intelligence.

2. Interim Financial Statements and Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information pursuant to Rule 8-03 of Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments (consisting only of normal recurring adjustments), which we consider necessary, for a fair presentation of those financial statements. The results of operations for the three and nine months ended September 30, 2024 and cash flows for the nine months ended September 30, 2024, may not necessarily be indicative of results that may be expected for any succeeding period or for the entire fiscal year. These unaudited consolidated financial statements should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K as of and for the fiscal year ended September 30, 2023 as filed with the Securities and Exchange Commission.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments, which are evaluated on an ongoing basis, and that affect the amounts reported in our unaudited financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and judgments. In particular, significant estimates and judgments include those related to revenue recognition, allowance for doubtful accounts, useful lives and valuation of property and equipment.

There have been no material changes in the Company’s significant accounting policies during the three and nine months ended September 30, 2024, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended September 30, 2023.

Cash and Cash Equivalents

Cash includes cash on hand. Cash equivalents include short-term, highly liquid investments, with a remaining maturity at the date of purchase of three months or less for which the risk of changes in value is considered to be insignificant. We have taken the initiative to protect funds by investing into a money market fund that holds highly liquid short-term investments managed by the bank. As of September 30, 2024 and December 31, 2023, cash and cash equivalents consisted of the following:

	September 30,		December 31,
	2024		2023
Cash	$	107,991	$	60,824
Money market funds		402,550		1,076,186
	$	510,541	$	1,137,010

Periodically, the Company may carry cash balances at financial institutions more than the federally insured limit of $250,000 per institution. The amount in excess of the FDIC insurance as of September 30, 2024, was approximately $153,000. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

Reclassifications

Certain prior period amounts have been reclassified to conform with the current period presentation.

7

Change in Year End

On February 1, 2024, the Board of Directors of Mastermind, Inc. (the “Company”) approved a change in the Company’s fiscal year end from September 30 to December 31, effective for the fiscal year beginning January 1, 2024 and ending December 31, 2024. As a result of the change in fiscal year end, the Company filed on February 16^th, 2024 a Transition Report on Form 10-QT for the period from October 1, 2023 through December 31, 2023. The Company’s 2024 fiscal year will run from January 1, 2024 through December 31, 2024.

 3. Related Party Transactions

On January 3, 2012, we entered into a perpetual license agreement (the “Perpetual License”) with Mastermind Marketing, Inc. (the “Licensor”), which provides for licenses of trademarks, internet domains, and certain intellectual property as defined in the Perpetual License. The Licensor is one of our members and its chief executive officer is also our chief executive officer. The Perpetual License, which may be terminated at any time by either party, is effective January 3, 2012 and provides for aggregate cash payments of $2,100,000 over the calendar years from 2019 through 2039 with no further payments required after December 31, 2039. The Company has recorded amortized expenses related to the license of $27,000 and $81,000 for the three and nine months ended September 30, 2024, respectively and $27,000 and $81,000 for the three and nine months ended September 30, 2023, respectively (Note 5).

During the three and nine months ended September 30, 2024, and 2023, we made payments to our three members pursuant to the terms of our operating agreement, as amended, for services rendered to us. The Company recorded expenses to our three members during the three and nine months ended September 30, 2024, aggregating $157,681 and $572,326, and for the three and nine months ended September 30, 2023, aggregating $280,577 and $821,366, respectively. As of September 30, 2024 and December 31, 2023 we owed $0 to our three majority stockholders.

4. Property and Equipment

Property and equipment consist of the following:

	September 30,			December 31,
	2024			2023
Furniture, fixtures and office equipment	$	93,135		$	93,135
Less: accumulated depreciation		(64,893	)		(55,237	)
Property and equipment, net	$	28,242		$	37,898

Depreciation expense for the three and nine months ended September 30, 2024 were $3,001 and $9,656, respectively and for the three and nine months ended September 30, 2023 were $3,635 and $11,288.

5. Licensing Agreements

On January 3, 2012, we entered into a perpetual license agreement (the “Perpetual License”) with Mastermind Marketing, Inc. (the “Licensor”), which provides for licenses of trademarks, internet domains, and certain intellectual property as defined in the Perpetual License. The Licensor is one of our members and its chief executive officer is also our chief executive officer. The Perpetual License, which may be terminated at any time by either party, is effective January 3, 2012 and provides for aggregate cash payments of $2,100,000 over the calendar years from 2019 through 2039 with no further payments required after December 31, 2039. The Company has recorded amortized expenses related to the license of $27,000 and $81,000 for the three and nine months ended September 30, 2024, respectively, and $27,000 and $81,000 for the three and nine months ended September 30, 2023, respectively.

In consideration for the Perpetual License, we agreed to pay the following fees through calendar year 2039:

Fiscal Years Ending December 31,	Amount
2024	$	60,000
2025		60,000
2026		120,000
2027		120,000
2028		120,000
Thereafter		1,320,000
	$	1,800,000

8

6. Commitments and Contingencies

 Litigation

On February 11, 2022, a Complaint and Demand for Jury Trial (the “Complaint”) was filed by a plaintiff (the “Plaintiff”) in the United States District Court for the Eastern District of Pennsylvania. The Complaint named Mastermind, Inc. (“the Company”) and Daniel Dodson, the Company’s Chief Executive Officer, (the “CEO”). The Company and the CEO are collectively referred to herein as “Defendants”. The Complaint includes alleged breach of contract and alleged breach of implied contract by the Defendants related to the Plaintiff’s allegations that he was entitled to 3,000,000 shares of common stock of the Company from the reverse merger transaction completed on February 14, 2018. The Defendants successfully had the Complaint transferred to the United States District Court for the Northern District of Georgia. 

In September of 2023, the court dismissed in part the breach of contract claims against the CEO and the Company. The alleged breach of implied contract by the Defendants is pending further litigation. The Defendants will contest the complaint and strongly believe they will prevail.

As of March 11, 2024 Mastermind was successful at getting the lawsuit dismissed. On March 8, 2024 Cimino’s attorney filed a stipulation of dismissal with prejudice, and the clerk accepted the stipulation and dismissed and closed the case. The dismissal with prejudice (as opposed to without) would make it extremely difficult, if not impossible for Cimino to revive an action against Mastermind based upon the same facts/transactions.

Other than the above we are not a party to any other legal proceedings, other than ordinary routine litigation incidental to our business, which we believe will not have a material effect on our financial position or results of operations.

 7. Income Taxes

Prior to February 14, 2018, the effective date of the Business Combination, no provision for income taxes was made since we were treated as a partnership for income tax purposes and the income or loss was passed through to our members.

We are required to file federal and state income tax returns in the United States. The preparation of these tax returns requires us to interpret the applicable tax laws and regulations in effect in such jurisdictions, which could affect the amount of tax paid by us. In consultation with our tax advisors, we base our tax returns on interpretations that are believed to be reasonable under the circumstances. We have estimated our provision for income taxes in accordance with the Tax Act and guidance available as of the date of this filing. The tax returns, however, are subject to routine reviews by the various federal and state taxing authorities in the jurisdictions in which we file tax returns. As part of these reviews, a taxing authority may disagree with respect to the income tax positions taken by us (“uncertain tax positions”) and, therefore, may require us to pay additional taxes. As required under applicable accounting rules, we accrue an amount for our estimate of additional income tax liability, including interest and penalties, which we could incur as a result of the ultimate or effective resolution of the uncertain tax positions. We account for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized.

There were no unrecognized material tax benefits at September 30, 2024, and December 31, 2023. Our policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. There were no accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized during the periods presented. We have determined we have no uncertain tax positions.

Tax returns are subject to examination by the federal and state taxing authorities for generally three years after filed. There are no income tax examinations currently in process.

The Company files its income tax returns on the cash basis of accounting utilizing a December 31 tax year end. Deferred tax assets relating to current liabilities result from accounts payable and accrued expenses and unearned revenues which are not currently deductible for tax purposes. Deferred tax liabilities relating to current assets result from accounts receivables, unbilled receivables and prepaid expenses which are not currently recognized as income for tax reporting purposes.

As of September 30, 2024, the Company has $1,098,574 of net operating loss carryforwards on tax basis, which is prepared on cash basis, that are available to offset future taxable income. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

9

8. Stockholders’ Equity

Preferred Stock

As of September 30, 2024, and December 31, 2023, we were authorized to issue a total 1,000,000 shares of preferred stock. There were no shares of Preferred Stock issued or outstanding as of September 30, 2024, and December 31, 2023.

Common Stock

As of September 30, 2024, and December 31, 2023, we were authorized to issue a total of 125,000,000 shares of common stock. As of September 30, 2024, and December 31, 2023, there were 34,505,520 shares of common stock issued and outstanding, respectively.

During the three and nine months ended September 30, 2024 and 2023, the Company did not issue any shares of common stock.

Dividends

During the three and nine months ended September 30, 2024 and 2023, there were no dividends declared or paid.

Common Stock Options

During the three and nine months ended September 30, 2024 and 2023, there were no stock options exercised or issued.

A 2018 Equity Incentive Plan consisting of four million (4,000,000) shares of Common Stock was adopted by written consent of holders of 85% of the voting securities. No options or shares have been issued under this plan as of September 30, 2024, and December 31, 2023.

9. Concentration of Credit Risk and Major Customers

For the three months ended September 30, 2024, two customers represented approximately 52% and 42%, respectively, of our total revenues. For the nine months ended September 30, 2024, three customers represented approximately 46%, 33% and 14%, respectively, of our total revenues.

For the three months ended September 30, 2023, three customers represented approximately 37%, 37% and 24%, respectively, of our total revenues. For the nine months ended September 30, 2023, three customers represented approximately 41%, 34% and 24%, respectively, of our total revenues.

As of September 30, 2024, three customers represented approximately 58%, 33% and 9%, respectively of our outstanding accounts receivable and unbilled receivables.

As of December 31, 2023, three customers represented approximately 64%, 26% and 9%, respectively of our outstanding accounts receivable and unbilled receivables.

10. Subsequent Events

The Company has evaluated subsequent events through the date the financial statements were issued. The Company has determined that there are no such events that warrant disclosure or recognition in the consolidated financial statements presented herein.

10

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

Forward-Looking Statements

This Report on Form 10-Q contains certain statements that are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”). These forward-looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.

The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “should” and similar expressions, as they relate to us, are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected, intended or using other similar expressions.

In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Report on Form 10-Q. For example, we may encounter competitive, technological, financial and business challenges making it more difficult than expected to continue to develop and market our products; the market may not accept our existing and future products; we may not be able to retain our customers; we may be unable to retain existing key management personnel; and there may be other material adverse changes in our operations or business. Certain important factors affecting the forward-looking statements made herein also include, but are not limited to (i) continued downward pricing pressures in our targeted markets, (ii) the continued acquisition of our customers by certain of our competitors, and (iii) continued periods of net losses, which could require us to find additional sources of financing to fund operations, implement our financial and business strategies, meet anticipated capital expenditures and fund research and development costs. In addition, assumptions relating to budgeting, marketing, product development and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause us to alter our marketing, capital expenditure or other budgets, which may in turn affect our financial position and results of operations. For all of these reasons, the reader is cautioned not to place undue reliance on forward-looking statements contained herein, which speak only as of the date hereof. We assume no responsibility to update any forward-looking statements as a result of new information, future events, or otherwise except as required by law. For further information, you are encouraged to review our filings with the Securities and Exchange Commission (“SEC”), including our Current Report on Form 8-K, as filed with the SEC on February 22, 2018, as amended on April 20, 2018, and risk factors as discussed therein under Item 2.01.

Overview

Mastermind, Inc. is a digital marketing agency that plans, executes and analyzes digital marketing initiatives for clients in numerous industries including Fashion, Automotive, Spirits & Beer, Business-to-business, Consumer Electronics, Banking & Financial Services, Consumer Packaged Goods, Food & Beverage, Healthcare, Home Improvement, Restaurants, Retail, Technology, and Communications. Mastermind offers a unique approach to digital and social marketing called Involvement Marketing (IM). IM is aimed at involving more people with each clients’ brand in ways that inspire them to take an action (e.g.- becoming aware of the brand, trying it, purchasing more of it, and/or even becoming an advocate for the brand through social media). Mastermind’s Involvement Marketing initiatives encompass anyone, or combination of tactics including Content Marketing, Digital/Mobile Marketing, Influencer Marketing, Social Marketing & Community Management, Promotion Marketing, Digital/Social Issues Management, UX Analytics & Digital Intelligence, and Augmented Reality Marketing.

Mastermind has assembled a team of highly experienced, cross-functional marketing experts to develop and execute Involvement Marketing initiatives (see key executive bios). These experts have extensive backgrounds in digital/social marketing & media, content development, influencer marketing, promotion, digital contingency communications & PR, research, strategy, creative message development, and analytics. Mastermind has also developed a disciplined approach to Involvement Marketing that ensures the right tactic(s) is employed to best achieve the objective and that it is executed flawlessly. The team is led by our senior executives described in our 10-K as of and for the fiscal year ended September 30, 2023.

Mastermind has worked with some of the most widely recognized brands in in dozens of industries. While the agency does not have a client in every industry currently, its experience provides the confidence of potential major clients to consider hiring Mastermind. Mastermind works with clients on both a project-basis and ongoing services basis. Mastermind is developing innovative marketing technology initiatives with the potential to drive more interest from potential clients in the next few years.

Change in Year End

On February 1, 2024, the Board of Directors of Mastermind, Inc. (the “Company”) approved a change in the Company’s fiscal year end from September 30 to December 31, effective for the fiscal year beginning January 1, 2024 and ending December 31, 2024. As a result of the change in fiscal year end, the Company filed on February 16^th, 2024 a Transition Report on Form 10-QT for the period from October 1, 2023 through December 31, 2023. The Company’s 2024 fiscal year will run from January 1, 2024 through December 31, 2024.

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Critical Accounting Policies and Estimates

Our significant accounting policies are described in Note 2 to the financial statements which are included in our Annual Report on Form 10-K as of and for the fiscal year ended September 30, 2023. Our discussion and analysis of our financial condition and results of operations are based upon these financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. In the past, actual results have not been materially different from our estimates. However, results may differ from these estimates under different assumptions or conditions.

Results of Operations

Three Months Ended September 30, 2024 vs. September 30, 2023

	Three Months Ended
	September 30,
	2024			2023		Change			%
Revenues	$	267,345		$	1,208,758	$	(941,413	)		(77.9	%)
Cost of revenues		222,867			446,843		(223,976	)		(50.1	%)
Gross Profit		44,478			761,915		(717,437	)		(94.2	%)
Operating expenses
Management consulting		108,225			220,725		(112,500	)		(51.0	%)
Professional fees		22,449			87,485		(65,036	)		(74.3	%)
Wages and benefits		141,766			202,068		(60,302	)		(29.8	%)
General and administrative		80,508			90,114		(9,606	)		(10.7	%)
Total operating expenses		352,948			600,392		(247,444	)		(41.2	%)
Income (loss) from operations		(308,470	)		161,523		(469,993	)		(291.0	%)
Other income
Interest income		5,432			16,267		(10,835	)		(66.6	%)
Total other income		5,432			16,267		(10,835	)		(66.6	%)
Income (loss) before provision (benefit) for income taxes	$	(303,038	)	$	177,790	$	(480,828	)		(270.4	%)

Revenues

Revenues for the three months ended September 30, 2024 were $267,345 as compared with $1,208,758 for the comparable prior year period, a decrease of $941,413 or 78%. The decrease is attributable to a delay in the execution of a significant initiative of a major client due to its reorganization and restructuring of the client, as well as the timing of project work being completed, and also the revenue being recognized for direct expenses (media, influencer fees, etc.) attributable to jobs. These fluctuations in work accomplished and revenue being recognized for direct expenses are normal occurrences in our business. During this period, the Company primarily worked on completing current projects while awaiting finalized client workorders and statements of work for upcoming projects of which we have approximately $2.2 million in our backlog. 

Gross Profit

Gross profit for the three months ended September 30, 2024 was $44,478 or 17% of revenues, compared with $761,915 or 63% of revenues, for the comparable prior year period. The decrease in gross profit dollars was due to lower revenues and customer projects in the current period. The decrease in gross margin percentage is primarily a result of the Company having more projects with higher direct expenses in the three months ended September 30, 2024, compared to same period of last year. Outside services as they related to client projects, will fluctuate based on client work being performed. Direct cost includes expenses for media, sponsorship fees, etc. Gross profit will fluctuate from year to year based on the types of work assigned to the Company by its clients.

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Operating Expenses

Total operating expenses for the three months ended September 30, 2024 were $352,948 as compared with $600,392 for the comparable prior year period, a decrease of $247,444 or 41%. The decrease was primarily a result of decreases in management consulting, professional fees, and wages and benefits of $112,500, $65,036 and $60,302, respectively.  The distribution to management decreased by $112,500, which is usually decided based on a combination of the Company’s operation results and performance of the Company’s management group and their respective member companies. The decrease in professional fees (including public company expenses) of $65,036 is primarily related to reduced work regarding legal filings and merger related work. Salaries and wages decreased by $60,302 due to employee turnover.

Income (Loss) from Operations

Loss from operations was $308,470 for the three months ended September 30, 2024 as compared to an income of $161,523 for the comparable prior year period. The decrease in income from operations of $469,993 was primarily related to decreased revenue recognized by $941,413. 

Other Income and Expense, Net

Other income and expense, net for the three months ended September 30, 2024 was an income of $5,432 as compared to an income of $16,267 for the comparable prior year period.  The income was primarily due to interest income.

Income (Loss) Before Provision (Benefit) for Income Taxes

Loss before benefit from income taxes for the three months ended September 30, 2024 was $303,038 as compared to an income of $177,790 for the comparable prior year period. The decrease in income before taxes was primarily due to decreased revenue and gross profit, offset by the decrease in operating expenses. 

Provision (Benefit) for Income Taxes

Benefit from income taxes for the three months ended September 30, 2024 was $79,360 as compared to a provision of $48,193 for the comparable prior year period.  The benefit from income taxes is primarily a result of decreased revenues. Provision (benefit) for income taxes is estimated quarterly applying both federal and state tax rates.

Nine Months Ended September 30, 2024 vs. September 30, 2023

	Nine Months Ended
		September 30,
	2024			2023			Change			%
Revenues	$	1,878,272		$	3,665,053		$	(1,786,781	)		(48.8	%)
Cost of revenues		800,910			1,405,262			(604,352	)		(43.0	%)
Gross Profit		1,077,362			2,259,791			(1,182,429	)		(52.3	%)
Operating expenses
Management consulting		415,925			642,075			(226,150	)		(35.2	%)
Professional fees		94,126			153,881			(59,755	)		(38.8	%)
Wages and benefits		492,897			593,597			(100,700	)		(17.0	%)
General and administrative		252,153			344,304			(92,151	)		(26.8	%)
Total operating expenses		1,255,101			1,733,857			(478,756	)		(27.6	%)
Income (loss) from operations		(177,739	)		525,934			(703,673	)		(133.8	%)
Other income (expense)
Interest income		21,498			26,839			(5,341	)		(19.9	%)
Loss on disposal of property and equipment		-			(329	)		329			(100.0	%)
Total other income (expense)		21,498			26,510			(5,012	)		(18.9	%)
Income (loss) before provision (benefit) for income taxes	$	(156,241	)	$	552,444		$	(708,685	)		(128.3	%)

Revenues

Revenues for the nine months ended September 30, 2024 were $1,878,272 as compared with $3,665,053 for the comparable prior year period, a decrease of $1,786,781 or 49%. The decrease is attributable to a delay in the execution of a significant initiative of a major client due to its reorganization and restructuring of the client, as well as to the timing of project work being completed, and also the revenue being recognized for direct expenses (media, influencer fees, etc.) attributable to jobs. These fluctuations in work accomplished and revenue being recognized for direct expenses are normal occurrences in our business. During this period, the Company primarily worked on completing current projects while awaiting finalized client workorders and statements of work for upcoming projects of which we have approximately $2.2 million in our backlog. 

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Gross Profit

Gross profit for the nine months ended September 30, 2024 was $1,077,362 or 57% of revenues, compared with $2,259,791 or 62% of revenues, for the comparable prior year period. The decrease in gross profit dollars was due to lower revenues and customer projects completing in the current period. The decrease in gross margin percentage is primarily a result of the Company having more projects with higher direct expenses in the nine months ended September 30, 2024, compared to same period of last year. Outside services as they related to client projects, will fluctuate based on client work being performed. Direct cost includes expenses for media, sponsorship fees, etc. Gross profit will fluctuate from year to year based on the types of work assigned to the Company by its clients.

Operating Expenses

Total operating expenses for the nine months ended September 30, 2024 were $1,255,101 as compared with $1,733,857 for the comparable prior year period, a decrease of $478,756 or 27.6%. The decrease was primarily a result of a decrease in management consulting expense of $226,150 and mergers and acquisition expenses of $79,441. Mergers and acquisition expenses for the nine months ended September 30, 2023 included a reclass of expenses from professional fees of $45,177. The distribution to management decreased by $226,150, which is usually decided based on a combination of the Company’s operation results and performance of the Company’s management group and their respective member companies. In addition, professional fees (including public company expenses) decreased by $59,755. Salaries and wages decreased by $100,700 due to employee turnover.

Income (Loss) from Operations

Loss from operations was $177,739 for the nine months ended September 30, 2024 as compared to an income of $525,934 for the comparable prior year period. The decrease in income from operations of $703,673 was primarily related to decreased revenue recognized by $1,786,781. 

Other Income and Expense, Net

Other income and expense, net for the nine months ended September 30, 2024 was an income of $21,498 as compared to an income of $26,510 for the comparable prior year period.  The income was primarily due to interest income, offset by the loss on disposal of property and equipment in the same period last year.

Income (Loss) Before Provision (Benefit) for Income Taxes

Loss before benefit from income taxes for the nine months ended September 30, 2024 was $156,241 as compared to an income of $552,444 for the comparable prior year period. The decrease in income before taxes was primarily due to decreased revenue and gross profit, offset by the decrease in operating expenses. 

Provision (Benefit) for Income Taxes

Benefit from income taxes for the nine months ended September 30, 2024 was $38,751 as compared to a provision of $149,485 for the comparable prior year period.  The benefit from income taxes is primarily a result of decreased revenues. Provision (benefit) for income taxes is estimated quarterly applying both federal and state tax rates.

Liquidity and Capital Resources

	September 30,		December 31,
	2024		2023		Change			%
Cash and cash equivalents	$	510,541	$	1,137,010	$	(626,469	)		(55.1	%)
Current assets	$	2,792,469	$	3,100,466	$	(307,997	)		(9.9	%)
Current liabilities	$	172,904	$	334,316	$	(161,412	)		(48.3	%)
Working capital	$	2,619,565	$	2,766,150	$	(146,585	)		(5.3	%)

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As of September 30, 2024, we had cash and cash equivalents of $510,541, a decrease of $626,469, or 55% when compared with a balance of $1,137,010 as of December 31, 2023.

	Nine Months Ended
	September 30,			September 30,
	2024			2023			Change			%
Cash used in operating activities	$	(626,469	)	$	(310,247	)	$	(316,222	)		101.9	%
Cash used in investing activities	$	-		$	(7,446	)	$	7,446			(100.0	%)
Net Change in Cash During Period	$	(626,469	)	$	(317,693	)	$	(308,776	)		97.2	%

During the nine months ended September 30, 2024, $626,469 was used in operating activities as compared with net cash used in operating activities of $310,247 for the comparable prior year period. Our uses of cash for operating activities have primarily consisted of salaries and wages for our employees; costs incurred in connection with performance on client projects; material, management consulting and professional fees. The sources of our cash flows from operating activities have consisted primarily of payments received from clients in connection with the performance on contractually agreed-upon projects. Net cash flows from operating activities for the current period were a result of the net loss of $117,490, depreciation expense of $9,656, change of deferred tax of $38,751 and changes in current assets and liabilities of $479,884.

During the nine months ended September 30, 2023, $310,247 was used in operating activities, which was a result of the net income of $402,959, depreciation expense of $11,288, loss on disposal of equipment of $329, change of deferred tax of $48,630 and changes in current assets and liabilities of $773,453.

During the nine months ended September 30, 2024 and 2023 we purchased $0 and $8,646 in computer equipment, respectively. During the nine months ended September 30, 2023, the Company also received $1,200 in an insurance payout on equipment.

During the nine months ended September 30, 2024 and 2023, the Company did not have any cash flow activity from financing activities.

The ability to attract additional capital investments for more rapid expansion in the future will depend on many factors, including the availability of credit, rate of revenue growth, ability to acquire new client opportunities, the timing of new service product introductions and enhancements to existing services/products, and the opportunities to acquire complimentary businesses that may be made available to us from time-to-time. We believe that as of September 30, 2024, our cash position and cash flows from our operations will be sufficient to fund our working capital and planned strategic activities, excluding acquisitions, if any, for at least the next twelve months.

Any potential future sale of equity or debt securities may result in dilution to our stockholders, and we cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to us, or at all. If we are required to raise additional financing, but are unable to obtain such financing, we may be required to delay, reduce the scope of, or eliminate one or more aspects of our operations or business development activities.

This Report on Form 10-Q contains certain statements that are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Litigation Reform Act”). These forward-looking statements and other information are based on our beliefs as well as assumptions made by us using information currently available.

Off-Balance Sheet Arrangements

As of September 30, 2024, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of our management, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were not effective as of September 30, 2024, to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our management concluded that, as of September 30, 2024, our internal control over financial reporting was not effective due to (i) insufficient segregation of duties in the finance and accounting functions due to limited personnel; and (ii) inadequate corporate governance policies. In the future, subject to working capital limitations, we intend to take appropriate and reasonable steps to make improvements to remediate these deficiencies.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the fiscal period to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 

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Part II. Other Information

Item1. Legal Proceedings

On February 11, 2022, a Complaint and Demand for Jury Trial (the “Complaint”) was filed by a plaintiff (the “Plaintiff”) in the United States District Court for the Eastern District of Pennsylvania. The Complaint named Mastermind, Inc. (“the Company”) and Daniel Dodson, the Company’s Chief Executive Officer, (the “CEO”). The Company and the CEO are collectively referred to herein as “Defendants”. The Complaint includes alleged breach of contract and alleged breach of implied contract by the Defendants related to the Plaintiff’s allegations that he was entitled to 3,000,000 shares of common stock of the Company from the reverse merger transaction completed on February 14, 2018. The Defendants successfully got the Complaint transferred to the United States District Court for the Northern District of Georgia.

In September of 2023, the court dismissed in part the breach of contract claims against the CEO and the Company. The alleged breach of implied contract by the Defendants is pending further litigation. The Defendants will contest the complaint and strongly believe they will prevail.

As of March 11, 2024 Mastermind was successful at getting the lawsuit dismissed. On March 8, 2024 Cimino’s attorney filed a stipulation of dismissal with prejudice, and the clerk accepted the stipulation and dismissed and closed the case. The dismissal with prejudice (as opposed to without) would make it extremely difficult, if not impossible for Cimino to revive an action against Mastermind based upon the same facts/transactions.

Other than the above, we are not a party to any legal proceedings, other than ordinary routine litigation incidental to our business, which we believe will not have a material effect on our financial position or results of operations.

Item 1A. Risk Factors

Not applicable for smaller reporting companies.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

The following exhibits are filed or furnished with this report:

Exhibit No.	Description
31.1*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive, Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS**	Inline XBRL Instance Document
101.SCH**	Inline XBRL Taxonomy Extension Schema
101.CAL**	Inline XBRL Taxonomy Extension Calculation
101.DEF**	Inline XBRL Taxonomy Extension Definitions
101.LAB**	Inline XBRL Taxonomy Extension Label
101.PRE**	Inline XBRL Taxonomy Extension Presentation
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

___________ 

* Included herewith

** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements 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.

	Mastermind, Inc.
Date: November 8, 2024	By:	/s/ Daniel A. Dodson
		Daniel A. Dodson Chief Executive Officer (Principal Executive, Financial and Accounting Officer)

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