UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM
_________________
OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended:
or
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________ to _____________
_________________
| (State or Other Jurisdiction | (Commission | (I.R.S. Employer |
| of Incorporation or Organization) | File Number) | Identification No.) |
(Address of Principal Executive Offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Title
of each class
Common stock, par value of $0.001
_________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act.
Yes ☐
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 the filing requirements for the past 90 days.
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).
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 | ☐ | |||
| ☒ | 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 for 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)
Yes ☐
As
of December 31, 2021, the last day of the registrant’s most recently completed second fiscal quarter, the aggregate market value
of the Common Stock held by non-affiliates of the registrant was approximately $
As of September 30, 2022, there were shares of common stock outstanding.
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| PART I | |
| Item 1. Business | 3 |
| Item 1A. Risk Factors | 5 |
| Item 1B. Unresolved Staff Comments | 5 |
| Item 2. Properties | 5 |
| Item 3. Legal Proceedings | 5 |
| Item 4. Mine Safety Disclosures | 5 |
| PART II | |
| Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 6 |
| Item 6. Selected Financial Data | 7 |
| Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 7 |
| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | 10 |
| Item 8. Financial Statements and Supplementary Data | 10 |
| Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 10 |
| Item 9A. Controls and Procedures | 10 |
| Item 9B. Other Information | 10 |
| PART III | |
| Item 10. Directors, Executive Officers and Corporate Governance | 11 |
| Item 11. Executive Compensation | 13 |
| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 14 |
| Item 13. Certain Relationships and Related Transactions, and Director Independence | 14 |
| Item 14. Principal Accounting Fees and Services | 14 |
| PART IV | |
| Item 15. Exhibits, Financial Statement Schedules | 15 |
| 2 |
Forward-Looking Information
Statements in this report may be “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this report, including the risks described under “Risk Factors” and any risks described in any other filings we make with the SEC. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this report.
Management’s discussion and analysis of financial condition and results of operations are based upon our 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. On an on-going basis, we evaluate these estimates, including those related to useful lives of real estate assets, cost reimbursement income, bad debts, impairment, net lease intangibles, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed 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. There can be no assurance that actual results will not differ from those estimates.
PART 1
ITEM 1. BUSINESS
We were incorporated on December 9, 2014 in the state of Florida. On February 17, 2021, we filed Articles of Continuance with the Secretary of State for the state of Wyoming. Accordingly, we transferred our state of formation from Florida to Wyoming and became a Wyoming entity and are now subject to the provisions of the Wyoming Business Corporation Act.
We are in the health-tech wearable performance business. We have acquired the ownership and rights to certain late developmental stage products, including the WarmUp product line which is comprised of the J4 Sport, J4 X and J4 Fitbelt. These products are wearable back compression devices, used to relax, warmup, loosen, or relax stiff & sore muscles. The therapeutic application of heat causes a change in temperature of the soft tissues which decreases joint stiffness and relieves inflammation.
We have recently successfully completed our first acquisition of “Sustainable Origins” which is an eco-friendly ESG company, that converts used cooking oil to reusable biodiesel. This acquisition is part of our ongoing strategic plan for future revenue and expansion. While our primary focus will always be revolving around the innovation of wearable technology, these projects will take time to market. We want to align ourselves with like-minded Entrepreneurs that will mesh well with our team and collective interest. Having the ability to acquire companies current operations to generate steady revenue streams, will also help aid in financing the production of “WarmUp” and other products we will develop.
Products and Services
As at June 30, 2022, we have developed the WarmUp series product line designed as WarmUp. It is a cutting edge, innovative, wearable back compression device, used to relax, WarmUp, loosen, or relax stiff & sore muscles. The therapeutic application of heat causes a change in temperature of the soft tissues which decreases joint stiffness and relieves inflammation. When combined with the strategic placement of our medical grade support ribs & ergonomic design, WarmUp’s Thermal Therapy is unmatched. Warmup was originally designed to help aid marquee Pro Athletes perform at their best. However, the “WarmUp Series” will be for everyone. Ideal for a chilly day on the links, Ski/Snowboarding, Hunter/Fishers, Outdoor work force, Medical, Military, & everything in between!
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The product line utilizes a low-cost technology that has multi-functional use servicing all kinds of people, ranging from marquee pro athletes. WarmUp is a low cost, yet highly efficient, multi-use heating technology. WarmUp uses next gen, carbon micro fibers combined with powerful, safe rechargeable Lithium Batteries.
The cutting-edge, technical, innovative, and wearable back compression devices are used to warmup, loosen, or relax stiff and sore muscles. Our technology is designed to maximize the benefits of strategically applying heat to your target areas of pain, providing fast relief.
Our WarmUp product line currently consists of the following three products:
J4 Core
The Original. Sleek ergonomic design that you can wear while playing, recovering, or performing daily activities at work, home or on the road.
J4 Sport
1 of 1 Dual Zone Patent Pending Heating Tech. Undergoing Class 1 Medical Device Evaluation From FDA.
Ideal for patients with Chronic Back Pain Conditions such as Arthritis, Osteoporosis, Fibromyalgia, & Ligament strains.
J4 X
Fitbelt
is an innovative, high intensity, core toning wearable. Powered by a new EMS nano tech unfamiliar to all current products on the market.
FitBelt has dual functionality, so the user can choose to target both the abdominal and lower back muscles or just one of the muscle
groups.
Built-in LED interface with pre-programed settings that targets specific muscle types by adjusting
the frequencies, which can all be controlled via Bluetooth through your phone.
Whether looking for a tool to boost your fitness and strength or recover from an injury quickly,
electric muscle stimulation (EMS) can help you achieve your goal.
Sales & Marketing
As at June 30, 2022, we are actively working with current and former professional athletes who are not only using the product, but investing its future success. It is no secret that athlete endorsement is both tried and tested marketing strategy to appeal to the masses. Our athlete ambassadors and investors will actively leverage their social media profiles to promote the product Online. With tens of millions combined followers between them, the opportunities for exponential growth are pronounced.
Customers
As at June 30, 2022 we are in developmental stages and do not have any customers. However, our subsidiary Sustainable Origins has approximately 25 customers.
Competition
We face competition in the health-tech wearable performance business markets. Most of our competitors are larger and have greater financial resources. We compete on the basis of price, technological expertise, manufacturing know-how and the quality of our products.
Some of our closest competitors are as follows: Venom by Hyperice, Powerdot 2.0, Comped Waist Trainer and SlenderTone Waist Trainer.
We face direct competition from companies with far greater financial, technological, manufacturing and personnel resources. Competition is primarily based on product quality, service, timely delivery, and price.
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Research and Development; Intellectual Property
As at June 30, 2022, we are developing proprietary technologies that will give us an edge in competing with its competitors. We are in the process of filing patents to protect our IP. We will file utility, design, full spectrum patents on the created IP. We will also register eligible products as Medical Devices so patients with chronic pain can get the product free through insurance. We have engaged a patent attorney and are in the process of filing a provisional patent on our second generation line of WarmUp products.
Suppliers
As at June 30, 2022, we currently have developed beta samples in China that have patentable IP.
Employees
As at June 30, 2022, we had 7 employees and our wholly-owned subsidiary Sustainable Origins had 2 employees.
Foreign and Domestic Operations and Export Sales
As at June 30, 2022, we had no operations or any significant sales in any foreign country.
Government Regulation
Our operations are subject to certain foreign, federal, state and local regulatory requirements relating to, among others, environmental, waste management, labor and health and safety matters. As at June 30, 2022, management believes that our business is operated in material compliance with all such regulations.
ITEM 1A. RISK FACTORS
Not required for smaller reporting companies.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2. PROPERTIES
As of June 30, 2022, our office was located 406 9th Avenue, Suite 210, San Diego, California 92101. Our current office is approximately 2,365 square feet and we currently pay rent in the amount of $5,913 per month. We believe this space is adequate for our current needs.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
MARKET INFORMATION
Our common stock is not traded on any exchange. Our common stock is quoted on the OTC Markets, under the trading symbol “FORZ”. The market for our stock is highly volatile. We cannot assure you that there will be a market in the future for our common stock. OTC Markets securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, they are securities transactions are conducted through a telephone and computer network connecting dealers in stocks.
Our common stock became eligible for trading on the OTC Markets on June 19, 2017, although it did not start trading until October 17, 2019. We executed a 10 for 1 forward split of our common stock that went effective June 17, 2022. The following table shows the high and low prices of our common shares on the OTC Markets or each quarter within the two most recent fiscal years. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions:
| Fiscal Year Ending June 2022 | HIGH | LOW | |||||||
| Quarter Ending September 30, 2021 | $ | 0.90 | $ | 0.1631 | |||||
| Quarter Ending December 31, 2021 | $ | 0.33 | $ | 0.05 | |||||
| Quarter Ending March 31, 2022 | $ | 0.12 | $ | 0.025 | |||||
| Quarter Ending June 30, 2022 | $ | 0.037 | $ | 0.0081 | |||||
| Fiscal Year Ending June 2021 | HIGH | LOW | |||||||
| Quarter Ending September 30, 2020 | $ | 0.035 | $ | 0.003 | |||||
| Quarter Ending December 31, 2020 | $ | 0.05 | $ | 0.003 | |||||
| Quarter Ending March 31, 2021 | $ | 0.70 | $ | 0.014 | |||||
| Quarter Ending June 30, 2021 | $ | 4.82 | $ | 0.11 | |||||
HOLDERS
The approximate number of registered stockholders of record as of June 30, 2022 is 20. The number of stockholders of record does not include beneficial owners of our common stock, whose shares are held in the names of various dealers, clearing agencies, banks, brokers and other fiduciaries.
DIVIDEND POLICY
We have never paid any cash dividends on our common stock. We anticipate that we will retain funds and future earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements and other factors that our board of directors deems relevant. In addition, the terms of any future debt or credit financings may preclude us from paying dividends.
RECENT SALES OF UNREGISTERED SECURITIES
None.
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PENNY STOCK REGULATION
Shares of our common stock is subject to rules adopted the SEC that regulate broker-dealer practices in connection with transactions in “penny stocks.” Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in those securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the SEC, which contains the following:
| • | a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; |
| • | a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of securities’ laws; |
| • | a brief, clear, narrative description of a dealer market, including “bid” and “ask” prices for penny stocks and the significance of the spread between the “bid” and “ask” price; |
| • | a toll-free telephone number for inquiries on disciplinary actions; |
| • | definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and |
| • | such other information and is in such form (including language, type, size and format), as the SEC shall require by rule or regulation. |
Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:
| • | the bid and offer quotations for the penny stock; |
| • | the compensation of the broker-dealer and its salesperson in the transaction; |
| • | the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and |
| • | monthly account statements showing the market value of each penny stock held in the customer’s account. |
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Holders of shares of our common stock may have difficulty selling those shares because our common stock will probably be subject to the penny stock rules.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this report, particularly those under "Risk Factors.” Dollars in tabular format are presented in thousands, except per share data, or otherwise indicated.
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Overview
We were incorporated on December 9, 2014 in the state of Florida. On February 17, 2021, we filed Articles of Continuance with the Secretary of State for the state of Wyoming. Accordingly, we transferred our state of formation from Florida to Wyoming and became a Wyoming entity and are now subject to the provisions of the Wyoming Business Corporation Act.
We are in the health-tech wearable performance business. We have acquired the ownership and rights to certain late developmental stage products, including the WarmUp product line which is comprised of the J4 Sport, J4 X and J4 Fitbelt. These products are wearable back compression devices, used to relax, warmup, loosen, or relax stiff & sore muscles. The therapeutic application of heat causes a change in temperature of the soft tissues which decreases joint stiffness and relieves inflammation.
We have recently successfully completed our first acquisition of “Sustainable Origins” which is an eco-friendly ESG company, that converts used cooking oil to reusable biodiesel. This acquisition is part of our ongoing strategic plan for future revenue and expansion. While our primary focus will always be revolving around the innovation of wearable technology, these projects will take time to market. We want to align ourselves with like-minded Entrepreneurs that will mesh well with our team and collective interest. Having the ability to acquire companies current operations to generate steady revenue streams, will also help aid in financing the production of “WarmUp” and other products we will develop.
Results of Operation for the Year Ended June 30, 2022 Compared to the Year Ended June 30, 2021
Revenues and Cost of Revenue
We earned gross revenue of $25,871 during the year ended June 30, 2022, compared to $nil for the same period in 2021. Our cost of revenue was $2,792 during the year ended June 30, 2022, compared to $nil for the same period in 2021
Operating Expenses from Continuing Operations
Operating expenses from continuing operations for the year ended June 30, 2022 consisted of general and administrative expenses of $152,315 (2021 - $60,165); advertising and marketing expenses of $111,527 (2021 - $nil); compensation expense of $319,857 (2021 - $nil); professional fees of $270,318 (2021 - $nil); and, stock based compensation of $1,068,731 (2021 - $nil).
Net Loss from Continuing Operations
Our net loss from continuing operations for the years ended June 30, 2022 was $2,700,508 compared to $3,143,140 for the year ended June 30, 2021. The large increase in our net loss in mainly due an increase in operating expenses due to our increased business activities.
Liquidity and Capital Resources
As reflected in the accompanying financial statements, we had an accumulated deficit of $6,195,238 at June 30, 2022, and had a net loss from continuing operations of $2,700,508 for year ended June 30, 2022.
For the year ended June 30, 2022, we used net cash of $712,145 in operating activities, compared to received net cash of $66,297 for the year ended June 30, 2021.
Net cash used in investing activities for the year ended June 30, 2022 and 2021 was $75,612 and $110,117, respectively, for the purchase of property and equipment.
Net cash received from financing activities for the year ended June 30, 2022 was $1,069,994 compared to $57,497 provided by financing activities in the prior period.
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Critical Accounting Estimates and Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note 2 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.
We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled. Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Recently Issued Accounting Standards
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required to be included in this report appear as indexed in the appendix to this report beginning on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, management concluded that our disclosure controls and procedures were not effective as of June 30, 2022 to cause the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC, and that such information is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control Over Financial Reporting
This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.
Changes in Internal Control Over Financial Reporting
There were no significant changes in our internal control over financial reporting during the year ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
All directors and officers are appointed by our board of directors and serve at the discretion of the board, subject to applicable employment agreements. The following table sets forth information regarding our executive officers and the members of our board of directors.
| Name | Age | Position | ||||
| Johnny Forzani | 34 | President, CEO, Treasurer, CFO, Secretary and Director | ||||
| Tom Forzani | 71 | Director | ||||
| Geoff Stanbury | 71 | Director | ||||
Johnny Forzani, is a former Professional Football Player and is an Entrepreneur and Inventor. Mr. Forzani played Division 1 NCAA Football at Washington State University, where he set an NCAA record for the longest touchdown reception. During his professional football career, playing with his hometown Calgary Stampeders, Mr. Forzani started creating his first invention. In 2017, Mr. Forzani’s founded, G-Tech Apparel USA Inc. and G-Tech Apparel Canada Inc. and was issued a Utility & Design Patent from the USPTO, for G-Tech’s Battery Powered Thermal Handwarmer.
Mr. Forzani has been the founder of G-Tech Apparel USA Inc. and G-Tech Apparel Canada Inc since 2014. From, 2014 to 2021, Mr. Forzani acted as CEO and CTO of both companies. He has been our President, CEO, Treasurer, CFO, Secretary and a Director since January 21, 2022.
Tom Forzani, is a one of three brothers to play for the Calgary Stampeders of the CFL. Described as one of the best wide receivers to ever play at Utah State, Mr. Forzani earned honorable mention All-America honors from The Associated Press as a senior in 1972 as he led the nation with receptions, while adding 1,169 receiving yards to set then-single-season school records in both categories.
Following his Utah State career, Mr. Forzani played professionally for the Calgary Stampeders from 1972-83 and was a five-time CFL All-Star. He finished his CFL career ranking second all-time in Stampeders history in receptions (553), receiving yards (8,825) and receiving touchdowns (62). Mr. Forzani was named to Utah State's All-Century Football Team in 1993.
Mr. Forzani began his business career towards the end of his football career, earning his realtors license in 1979. Mr. Forzani started Kelvion Properties in 1990, which specialized in most aspects of the Real Estate business including Land Purchase, Land Zoning, House Building, Land Sub Division, Mortgage Loaning and Renovations.
In 1974, Mr. Forzani was one of the Original Founders and Owners of Forzani Locker Room which became the Canadian publicly traded company The Forzani Group in 1993. The Forzani Group went from one store in 1974, to a retail empire encompassing more than 500 retail locations and over 13,000 employees. In 2011, The Forzani Group sold to Canadian conglomerate Canadian Tire Corporation for $800,000,000 (Canadian Dollars). Tom Forzani has been a Director since January 21, 2022.
Geoff Stanbury, was born and raised in South West England and immigrated to North America at 19. In 1981 shortly after settling in Alberta, Mr. Stanbury founded his company Good Earth Environs which specializes in Land, Snow, and Erosion management. Good Earth has maintained contracts with some of Alberta’s largest Residential companies including Brookfeild RP, for over 20 years.
Today, Mr. Stanbury is a seasoned Investor with a portfolio ranging in both the private and public sector. Mr. Stanbury is passionate about entrepreneurship and innovation. He looks forward to providing veteran leadership to the board, assisting in the best way possible, on the path to success. Mr. Stanbury has been a Director since January 21, 2022.
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Involvement in Certain Legal Proceedings
To our knowledge, during the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has:
| • | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); |
| • | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
| • | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; |
| • | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; |
| • | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
| • | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Board Committees
As at June 30, 2022, the Company did not currently maintain a board of directors that is composed of a majority of “independent” directors. The Company does not expect to initially appoint an audit committee, nominating committee and/or compensation committee, or to adopt charters relative to each such committees.
Code of Business Conduct and Ethics
We have not adopted a Code of Business Conduct and Ethics.
Limitation of Directors Liability and Indemnification
We do not have director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to us, including matters arising under the Securities Act, although we intend to acquire such insurance. Florida law and our bylaws provide that we will indemnify our directors and officers who, by reason of the fact that he or she is one of our officers or directors, is involved in a legal proceeding of any nature.
There is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification will be required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for such indemnification.
| 12 |
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table presents information regarding the total compensation awarded to, earned by, or paid to our chief executive officer and the most highly-compensated executive officers (other than the chief executive officer) who were serving as executive officers as of June 30, 2022 for services rendered in all capacities to us for the fiscal years ended June 30, 2022, 2021 and 2019.
| Name and Principal Position | Year | Salary
($) |
Bonus
($) |
Option
Awards ($) |
Non-equity
incentive plan compensation ($) |
Change
in pension value and nonqualified deferred compensation earnings ($) |
All Other
Compensation ($) |
Total
($) | ||||||||||||||||||||||||
| Johnny Forzani | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
| CEO, CFO, Director | 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
| Tom Forzani | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
| Director | 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
| Geoff Stanbury | 2022 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
| Director | 2021 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
Employment and Consulting Agreements
None
Outstanding Equity Awards at Fiscal Year-End Table
The following table summarizes, for each of the named executive officers, the number of shares of common stock underlying outstanding stock options held as of June 30, 2022.
| Option Awards | ||||||||||||
| Name | Number
of securities underlying unexercised options (#) exercisable |
Number
of securities underlying unexercised options (#) unexercisable |
Option
exercise price ($) 1 |
Option
expiration date | ||||||||
| Johnny Forzani | 600,000 | 0 | $ | 0.05 | August 3, 2023 | |||||||
| Tom Forzani | 250,000 | 0 | $ | 0.05 | August 3, 2023 | |||||||
| Geoff Stanbury | 150,000 | 0 | $ | 0.05 | August 3, 2023 | |||||||
| 13 |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth the number of shares of common stock beneficially owned as of June 30, 2022 by:
| • | each of our stockholders who is known by us to beneficially own 5% or more of our common stock; |
| • | each of our executive officers; |
| • | each of our directors; and |
| • | all of our directors and current executive officers as a group. |
Beneficial ownership is determined based on the rules and regulations of the Commission. A person has beneficial ownership of shares if such individual has the power to vote and/or dispose of shares. This power may be sole or shared and direct or indirect. Applicable percentage ownership in the following table is based on the total of 220,009,575 shares of common stock outstanding as of June 30, 2022. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock that are subject to options or warrants held by that person and exercisable as of, or within 60 days of, June 30, 2022. These shares, however, are not counted as outstanding for the purposes of computing the percentage ownership of any other person(s). Except as may be indicated in the footnotes to this table and pursuant to applicable community property laws, each person named in the table has sole voting and dispositive power with respect to the shares of common stock set forth opposite that person’s name. Unless indicated below, the address of each individual listed below is c/o Forza Innovations, Inc. 30 Forzani Way NW, Calgary, Alberta T3Z 1L5.
| Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned | ||||||
| Johnny Forzani | 170,600,000 | 77.5 | % | |||||
| Tom Forzani | 250,000 | (1) | ||||||
| Geoff Stanbury | 150,000 | (1) | ||||||
| All Officers and Directors | 170,950,000 | 77.7 | % | |||||
(1) less than 1%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
None.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
BF Borgers CPA PC served as our independent registered public accounting firm for the 2022 fiscal year and Michael Gillespie & Associates, PLLC served as our independent registered public accounting firm for the 2021 fiscal year. The following table shows the fees that were billed for the audit and other services provided by these firms for 2022 and 2021 fiscal years.
| 2022 | 2021 | |||||
| Audit Fees | $ | *** | $ | 21,200 | ||
| Audit-Related Fees | $ | -0- | $ | -0- | ||
| Tax Fees | $ | -0- | $ | -0- | ||
| All Other Fees | $ | -0- | $ | -0- | ||
| Total | $ | *** | $ | 21,200 | ||
| 14 |
Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
Audit-Related Fees — This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting.
Tax Fees — This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.
All Other Fees — This category consists of fees for other miscellaneous items.
Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting.
| 15 |
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements.
The response to this portion of Item 15 is set forth under Item 8 hereof.
(a)(2) Financial Statement Schedules.
All schedules have been omitted because they are not required or because the required information is given in the Financial Statements or Notes thereto.
(a)(3) Exhibits.
The exhibits listed below are filed as part of this Annual Report on Form 10-K.
| Exhibit No. | Description |
| 3.1 | Articles of Incorporation of the Registrant (1) |
| 3.2 | Articles of Amendment (1) |
| 3.3 | Bylaws of the Registrant (1) |
| 10.1 | Form of Share Lock Up Period (1) |
| 23.1 | Consent of PCAOB registered Audit Firm |
| 31.1* | Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934 |
| 32.1* | Certification by the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934 |
| 101.INS* | XBRL Instance Document |
| 101.SCH* | XBRL Taxonomy Extension Schema |
| 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase |
| 101.DEF* | XBRL Taxonomy Extension Definition Linkbase |
| 101.LAB* | XBRL Taxonomy Extension Label Linkbase |
| 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase |
* Filed herewith
(1) Incorporated by reference from Form S-1 filed on August 31, 2016 and as amended until December 23, 2016.
(2) Incorporated by reference from Form 8-K filed on November 20, 2016.
(3) Incorporated by reference from Form 8-K filed on November 22, 2016.
| 16 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
| Forza Innovations, Inc. | ||
| Date: October 13, 2022 | By: | /s/ Johnny Forzani |
| Johnny Forzani | ||
| President, Chief Financial Officer, Treasurer, Chief Financial Officer, Secretary | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date |
| /s/ Johnny Forzani | President, Chief Financial Officer, Treasurer, Chief Financial Officer, Secretary, Director | October 13, 2022 |
| Johnny Forzani | ||
| /s/ Tom Forzani | Director | October 13, 2022 |
| Tom Forzani | ||
| /s/ Geoff Stanbury | Director | October 13, 2022 |
| Geoff Stanbury |
| 17 |
FORZA INNOVATIONS INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| Report of Independent Registered Public Accounting Firm | F-2 |
| Consolidated Balance Sheets as of June 30, 2022 and 2021 | F-3 |
| Consolidated Statements of Operations for the years ended June 30, 2022 and 2021 | F-4 |
| Consolidated Statements of Stockholders’ Equity (Deficit) for the year ended June 30, 2022 and 2021 | F-5 |
| Consolidated Statements of Cash Flows for years ended June 30, 2022 and 2021 | F-6 |
| Notes to the Consolidated Financial Statements | F-7 |
| F-1 |
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Forza Innovations Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Forza Innovations Inc. as of June 30, 2022 and 2021, the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
Critical audit matters are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.
We determined that there are no critical audit matters.
/S/ BF Borgers CPA PC
We have served as the Company's auditor since 2021
October 13, 2022
| F-2 |
FORZA INNOVATIONS INC.
CONSOLIDATED BALANCE SHEETS
| June 30, 2022 | June 30, 2021 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid | ||||||||
| Total current assets | ||||||||
| Machinery and equipment, net | ||||||||
| Website, net | ||||||||
| Other assets | ||||||||
| Total other assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Accrued interest | ||||||||
| Convertible notes payable, net of discount of $ | ||||||||
| Derivative liability | ||||||||
| Loan payable | ||||||||
| Due to related party | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders' equity (deficit): | ||||||||
| Class B Preferred stock, $ par value, shares authorized, issued and outstanding | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding, respectively | ||||||||
| Common stock to be issued | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
FORZA INNOVATIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| For the Years Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Revenue | $ | $ | ||||||
| Cost of revenue | ||||||||
| Gross margin | ||||||||
| Operating Expenses: | ||||||||
| General & administrative expenses | ||||||||
| Advertising and marketing | ||||||||
| Compensation expense | ||||||||
| Professional fees | ||||||||
| Stock based compensation | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other expense: | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Loss on issuance of convertible debt | ( | ) | ||||||
| Change in fair value of derivatives | ||||||||
| Debt discount amortization | ( | ) | ( | ) | ||||
| Early payment penalties | ( | ) | ||||||
| Loss on asset impairment | ( | ) | ||||||
| Impairment expense | ( | ) | ||||||
| Loss on asset acquisition – related party | ( | ) | ||||||
| Loss on disposition of assets and liabilities | ( | ) | ||||||
| Total other expense | ( | ) | ( | ) | ||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss from continuing operations | ( | ) | ( | ) | ||||
| Net income from discontinued operations | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per common share, basic & diluted from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Net income per common share, basic & diluted from discontinued operations | $ | $ | ||||||
| Net loss per common Share, basic & diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted common shares outstanding, basic & diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
FORZA INNOVATIONS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 2022 AND 2021
| Common Shares | Common Stock | Preferred Shares | Preferred Stock | Paid in Capital | Common stock to be Issued | Accumulated Deficit | Total | |||||||||||||||||||||||||
| Balance, June 30, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Stock issued for asset acquisition | — | |||||||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, June 30, 2021 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Shares issued for conversion of debt | — | |||||||||||||||||||||||||||||||
| Options exercised – related party | — | |||||||||||||||||||||||||||||||
| Fair value of options granted | — | — | ||||||||||||||||||||||||||||||
| Shares issued for acquisition | — | — | ||||||||||||||||||||||||||||||
| Shares issued for cash | — | |||||||||||||||||||||||||||||||
| Shares granted for services | — | |||||||||||||||||||||||||||||||
| Shares granted for financing costs | — | |||||||||||||||||||||||||||||||
| Fair value of warrants granted | — | — | ||||||||||||||||||||||||||||||
| Shares cancelled – related party | ( | ) | ( | ) | — | |||||||||||||||||||||||||||
| Net loss | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
FORZA INNOVATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Years Ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Income from discontinued operations | ||||||||
| Depreciation and amortization | ||||||||
| Debt discount amortization | ||||||||
| Loss on issuance of convertible debt | ||||||||
| Change in fair value of derivatives | ( | ) | ||||||
| Common stock issued for services | ||||||||
| Other stock-based compensation | ||||||||
| Loss on asset acquisition – related party | ||||||||
| Loss on asset impairment | ||||||||
| Loss on disposition of assets and liabilities | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaids | ( | ) | ||||||
| Other assets | ( | ) | ||||||
| Accounts payable | ||||||||
| Accrued interest | ||||||||
| Operating cash flow from discontinued operations | ||||||||
| Net cash (used) provided by operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Investing cash flow from discontinued operations | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Advances from related party | ||||||||
| Repayment of related party loans | ( | ) | ||||||
| Proceeds from convertible debt | ||||||||
| Repayment of convertible debt | ( | ) | ||||||
| Proceeds from sale of common stock | ||||||||
| Proceeds from the exercise of options | ||||||||
| Financing cash flow from discontinued operations | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ||||||||
| Cash, beginning of year | ||||||||
| Cash, end of year | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
| Supplemental non-cash disclosure: | ||||||||
| Common stock issued for conversion of debt | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-6 |
FORZA INNOVATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2022
NOTE 1 - NATURE OF OPERATIONS
Forza Innovations Inc. (the “Company”) was incorporated on December 9, 2014, under the laws of the State of Florida. The Company was a diversified multi-industry manufacturer of complex metal components and products. We serve all general industrial markets such as Aerospace, Automotive, Commercial, Food Processing, Industrial, Maritime, Medical, Railroad, Oil and Gas, Packaging, Telecom, Textiles, Robotics, Space Travel, Transportation and many more. We are a vertically integrated precision CNC manufacturing and fabrication company with core emphasis on product design, engineering and precision manufacturing of complex components and products.
On February 5, 2018, the Company formed Genesys Industries, LLC as a wholly owned subsidiary in the state of Missouri.
On January 21, 2021, Shefali Vibhakar, President of the Company closed a Share Purchase Agreement (the “Agreement”) that she entered into with Johnny Forzani to sell all of her common shares and preferred shares to Johnny Forzani for cash consideration of $.
Further,
as part of the Agreement, Ms. Vibhakar agrees to spin out all of the Company’s assets (except for certain machinery valued at $
On
January 21, 2021, a change in control of the Company occurred pursuant to the Agreement. Mr. Forzani now has voting control over
On January 21, 2021, the Company received the resignation of Shefali Vibhakar as the Company’s President, Chief Executive Officer, Treasurer, Chief Financial Officer, Secretary and Director and appointed Johnny Forzani as its President, Chief Executive Officer, Treasurer, Chief Financial Officer and Secretary.
Effective January 21, 2021, the Company’s new address is 30 Forzani Way NW, Calgary, Alberta, Canada T3Z 1L5.
On February 17, 2021, the Company filed Articles of Continuance with the Secretary of State for the state of Wyoming. Accordingly, the Company transferred its state of formation from Florida to Wyoming and became a Wyoming entity.
On February 18, 2021, the Company filed a Certificate of Dissolution with the Secretary of State for the State of Florida, effectively dissolving the Company's existence in Florida.
As of June 30, 2021, Forza Innovations has moved out of the precision CNC manufacturing and fabrication business and has moved into the health-tech wearable performance business. The Company has acquired the ownership and rights to certain late developmental stage products, including the J4 Sport, J4 X and J4 Fitbelt. These products are wearable back compression devices, used to relax, warmup, loosen, or relax stiff & sore muscles. The therapeutic application of heat causes a change in temperature of the soft tissues which decreases joint stiffness and relieves inflammation.
On
March 1, 2022, the Company entered into a Share Exchange Agreement (the “Agreement”) with Sustainable Origins Inc. (“Sustainable”),
whereby the Company acquired 100% of the shares of Sustainable in exchange for shares of the Company’s common
stock and a cash payment of $ and the payment of certain initial expenses, thereby making Sustainable a wholly-owned subsidiary
of the Company. Sustainable is in the business of used cooking oil recycling and has recently entered into an asset purchase agreement
with Oil Industries, Inc. of North Carolina to acquire certain assets related to the used cooking oil business. The Company valued the
shares of common stock at $, the closing stock price on the effective date of the agreement, for a valuation of $
| F-7 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment. Actual results could differ from those estimates.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.`
Cash Equivalents
The
Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There
were
Principles of Consolidation
The accompanying consolidated financial statements for year ended June 30, 2022, include the accounts of the Company and its wholly owned subsidiary, Sustainable Origins. All material inter-company transactions have been eliminated in consolidation.
Property, Plant and Equipment
Property and equipment are carried at the lower of cost or net realizable value. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations.
Reclassifications
Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the year ended June 30, 2022.
Derivative Financial Instruments
The Company evaluates its convertible notes to determine if such instruments have derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period.
| F-8 |
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable amates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.
The following table classifies the Company’s asset measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2022:
| Description | Level 1 | Level 2 | Level 3 | ||||||||||
| Derivative | $ | $ | $ | ||||||||||
| Total | $ | $ | $ | ||||||||||
Income Taxes
Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards. 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 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 against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Company’s control, it is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred taxes could change in the near term.
Tax
benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The
amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement.
A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that
do not meet these recognition and measurement standards. As of June 30, 2022, and 2021,
Under ASC 260 “Earnings Per Share,” the Company presents basic and diluted earnings (loss) per-share (“EPS”) amounts on the face of the statements of operations. Basic EPS computed by dividing income (loss) available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period that they were outstanding. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. There were potentially dilutive securities outstanding at June 30, 2022, and 2021. Accordingly, basic and diluted earnings (loss) per share is the same for both years.
| F-9 |
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. For convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital, the embedded conversion features no longer are separated from the host contract. ASU 2020-06 also removes certain conditions that should be considered in the derivatives scope exception evaluation under Subtopic 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, and clarify the scope and certain requirements under Subtopic 815-40. In addition, ASU 2020-06 improves the guidance related to the disclosures and earnings-per-share (EPS) for convertible instruments and contract in entity’s own equity. ASU 2020-06 is effective for public business entities that meet the definition of a Securities and Exchange Commission (SEC) filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company has chosen the early adoption of ASU 2020-06. The Company’s convertible notes payable are convertible at a fixed conversion price, which at the time of issuance was higher than the market price of the Company’s common stock, as such there was neither a derivative nor a beneficial conversion feature to account for.
The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations
NOTE 3 - GOING CONCERN
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As of June 30,
2022, the Company has an accumulated deficit of $
While the Company is successfully executing its growth strategy, its cash position may not still be sufficient to support the Company’s daily operations without additional financing. While the Company believes in the viability of its strategy to produce sales volume and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.
NOTE 4 – MACHINERY AND EQUIPMENT
Long lived assets, including property and equipment and certain intangible assets to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets and certain identifiable intangibles to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Property and Equipment and intangible assets are first recorded at cost. Depreciation and/or amortization is computed using the straight-line method over the estimated useful lives of the various classes of assets between three and five years. Leasehold improvements are being depreciated over ten years, and the building over twenty years.
| F-10 |
Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
Property and equipment stated at cost, less accumulated depreciation for continuing operations consisted of the following:
| June 30, 2022 | June 30, 2021 | |||||||
| Machinery and Equipment | $ | $ | ||||||
| Office Equipment | ||||||||
| Vehicles | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation expense
Depreciation
expense for the years ended June 30, 2022 and 2021 was $
Our capitalized software cost, less accumulated amortization consisted of the following:
| June 30, 2022 | June 30, 2021 | |||||||
| Software | $ | $ | ||||||
| Less: accumulated depreciation | ( | ) | ||||||
| Software, net | $ | $ | ||||||
During
the fourth quarter the Company determined that the software was no longer being used and chose to write off the asset and the associated
accumulated amortization for a loss of $$
Amortization expense
Amortization
expense for the years ended June 30, 2022 and 2021 was $
NOTE 5 – CONVERTIBLE NOTES PAYABLE
On
January 2, 2020, the Company executed a 10% convertible promissory note in which it agreed to borrow up to $
During the year ended June 30, 2022, the Company issued, paid and or converted the following new convertible promissory notes.
| F-11 |
| Note Holder | Date | Maturity Date | Interest Rate | Loan Amount | Conversions/Payments | Balance June 30, 2022 | ||||||||||||||||
| Power Up Lending Group Ltd (1) | % | $ | $ | ( | ) | $ | ||||||||||||||||
| Fast Capital LLC (2) | % | $ | $ | ( | ) | $ | ||||||||||||||||
| Sixth Street Lending LLC (3) | % | $ | $ | ( | ) | $ | ||||||||||||||||
| Coventry Enterprises, LLC (4) | % | $ | $ | ( | ) | $ | ||||||||||||||||
| ONE44 Capital LLC (5) | % | $ | $ | $ | ||||||||||||||||||
| Mast Hill Fund, L.P. (6) | % | $ | $ | $ | ||||||||||||||||||
| Sixth Street Lending LLC (7) | % | $ | $ | $ | ||||||||||||||||||
| ONE44 Capital LLC (5) | % | $ | $ | $ | ||||||||||||||||||
| Sixth Street Lending LLC (7) | % | $ | $ | $ | ||||||||||||||||||
| 1800 Diagonal Lending LLC (7) | % | $ | $ | $ | ||||||||||||||||||
| Coventry Enterprises, LLC (4) | % | $ | $ | $ | ||||||||||||||||||
| Total | $ | $ | ( | ) | $ | |||||||||||||||||
| Less debt discount | $ | ( | ) | |||||||||||||||||||
| $ | ||||||||||||||||||||||
Conversion Terms
| (1) |
| (2) |
| (3) |
| (4) |
| (5) |
| (6) |
| (7) |
Total
accrued interest on the above convertible notes as of June 30, 2022, is $
A summary of the activity of the derivative liability for the notes above is as follows:
| Balance at June 30, 2021 | ||||
| Increase to derivative due to new issuances | ||||
| Decrease to derivative due to conversion/payments | ( | ) | ||
| Derivative gain due to mark to market adjustment | ( | ) | ||
| Balance at June 30, 2022 | $ |
A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy as of June 30, 2022, is as follows:
| Inputs | June 30, 2022 | Initial Valuation | ||||||
| Stock price | $ | $ – | ||||||
| Conversion price | $ | $ | ||||||
| Volatility (annual) | % – % | % - % | ||||||
| Risk-free rate | % - % | % - % | ||||||
| Dividend rate | ||||||||
| Years to maturity | ||||||||
| F-12 |
NOTE 6 - NOTE PAYABLE
On
November 5, 2017, to fund its working capital requirements the Company obtained a Special Line of Credit (“LOC”) also
recognized as a Blanket Secured Promissory Note for the total draw down amount of up to $
C bears interest at
NOTE 7 – COMMON STOCK
On February 19, 2021, the Company filed a Definitive 14C in order to ratify the written consent received from one shareholder, holding 96.1% of our voting power to: (1) to amend the Company’s Articles of Incorporation, as amended (the “Articles”) to change our corporate name from Genesys Industries, Inc. to Forza Innovations Inc. (the “Name Change”); (2) to amend the Articles to increase the number of authorized shares of Class A Common Stock we may issue from to (the “Share Increase”); and, (3) to increase the number of the Company's total issued and outstanding shares of Class A Common Stock by conducting a forward stock split at the rate of 10 shares every 1 share currently issued and outstanding (the “Forward Split”). All shares through these financial statements have been retroactively adjusted to reflect the forward split.
On
October 20, 2021, the Company entered into a $
Subject to the terms and conditions of the Investment Agreement, from time to time, the Company may, in its sole discretion, deliver a Put Notice to Tangiers which states the number of shares that the Company intends to sell to Tangiers on a closing date. The maximum amount of shares of Common Stock that the Company shall be entitled to put to Tangiers per any applicable Put Notice shall be an amount of shares up to or equal to 100% of the average of the daily trading volume of the Common Stock for the 10 consecutive Trading Days immediately prior to the applicable Put Notice Date (the “Put Amount”). The Put Amount has to be at least $5,000 and cannot exceed $300,000, as calculated by multiplying the Put Amount by the average daily VWAP for the 10 consecutive Trading Days immediately prior to the applicable Put Notice Date. The Purchase Price of the shares of our common stock that we may sell to Tangiers will be 80% of the lowest trading price of the Common Stock during the Pricing Period applicable to the Put Notice.
The
Company issued Tangiers
During
the year ended June 30, 2022, Tangiers converted $
During
the year ended June 30, 2022, Front Row Seating Inc. converted $
| F-13 |
On
January 5, 2022, the Company entered into a securities purchase agreement with Coventry Enterprises, LLC (“Coventry”). Pursuant
to the terms of the agreement, the Company issued shares of common stock to Coventry. The shares were valued at $, the closing
stock price on the date of grant, for total non-cash expense of $
On
January 20, 2022, the Company entered into a securities purchase agreement with Mast Hill Fund, L.P., (“Mast Hill”). Pursuant
to the terms of the agreement, the Company issued shares of common stock to Mast Hill for a commitment fee. The shares were
valued at $, the closing stock price on the date of grant, for total non-cash expense of $
During
the fourth quarter Mast Hill purchased shares of common stock for total cash payment of $
During
the fourth quarter Fast Capital. LLC converted $
The
Company entered into a Marketing Services Agreement dated as of April 14, 2022 (the “Agreement”) with North Equities Corp.
(“North Equities”) to provide marketing services to the Company. Pursuant to the terms of the Agreement, the Company issued
shares of common stock to North Equities. The shares were valued at $, the closing stock price on the date of grant, for
total non-cash expense of $
NOTE 8 – PREFERRED STOCK
Preferred stock includes shares of authorized at a par value of $. Preferred stock includes shares of Class B authorized at a par value of $. The Preferred Stock constitutes a convertible stock in which (1) one Preferred Share is convertible into (5) five Common Shares. The Preferred Stockholders are entitled to vote on any matters on which the common stockholders are entitled to vote.
NOTE 9 - RELATED PARTY TRANSACTIONS
On
January 21, 2021, the Company entered into an acquisition agreement with Mr. Forzani to acquire all of the ownership and the rights to
certain late developmental stage products, including the J4 Sport, J4 X and J4 Fitbelt in exchange for the issuance of common
shares. The shares were valued at $, the closing stock price on the date of the agreement, for a total value of $
During
the year ended June 30, 2021, Mr. Forzani advanced the Company $
On
August 23, 2021, Mr. Forzani exercised of his options for $
On
October 26, 2021, Geoff Stanbury exercised of his options for $
On June 8, 2022, Mr. Forzani agreed to cancel and return to treasury shares of common stock issued in his name. The shares were cancelled in order to allow for enough shares to reserve pursuant to the terms of a the Promissory Note with Coventry Enterprises, LLC dated June 3, 2022.
NOTE 10– STOCK OPTIONS
On August 3, 2021, the Company granted options to Johnny Forzani, CEO, options to Geoff Stanbury, director, and options to Tom Forzani, Director. The options were issued pursuant the Company’s 2021 Equity Award Plan. The options are exercisable at $, are immediately vested and expire in two years.
The aggregate fair value of the options, totaled $ based on the Black Scholes Merton pricing model using the following estimates: exercise price of $, % risk free rate, % volatility and expected life of the options of years.
| F-14 |
A summary of the status of the Company’s outstanding stock options and changes during the year ended June 30, 2022 is presented below:
| Stock Options | Options | Weighted Average Exercise Price | Aggregate Intrinsic Value | |||||||||
| Options outstanding at June 30, 2021 | $ | — | ||||||||||
| Granted | — | |||||||||||
| Exercised | ( | $ | ||||||||||
| Expired | $ | |||||||||||
| Options outstanding at June 30, 2022 | $ | |||||||||||
| Options exercisable at June 30, 2022 | $ | $ | — | |||||||||
NOTE 11 – WARRANTS
On
January 5, 2022, the Company issued warrants to purchase up to
On
January 20, 2022, the Company issued warrants to purchase up to
The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that would require a liability classification and are therefore considered equity.
The Black Scholes pricing model was used to estimate the fair value of the warrants issued with the following inputs:
| Number of Warrants | $ | $ | $ | |||||||||
| Share price | $ | $ | $ | |||||||||
| Exercise Price | $ | $ | $ | |||||||||
| Term | ||||||||||||
| Volatility | % | % | % | |||||||||
| Risk Free Interest Rate | ||||||||||||
| Dividend rate | ||||||||||||
| Intrinsic value | $ | $ | $ |
A summary of the status of the Company’s outstanding stock options and changes during the year ended June 30, 2022 is presented below:
| Warrants | Warrants | Weighted Average Exercise Price | Aggregate Intrinsic Value | ||||||||||
| Warrants outstanding at June 30, 2021 | $ | ||||||||||||
| Granted | $ | ||||||||||||
| Exercised | $ | ||||||||||||
| Expired | $ | ||||||||||||
| Warrants outstanding at June 30, 2022 | $ | ||||||||||||
| Warrants exercisable at June 30, 2022 | $ | $ | |||||||||||
| F-15 |
NOTE 12 – INCOME TAXES
Deferred
taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating
loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of
the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment. The U.S. federal income tax rate of
Net deferred tax assets consist of the following components as of June 30:
| 2022 | 2021 | |||||||
| Deferred Tax Assets: | ||||||||
| NOL Carryover | $ | $ | ||||||
| Deferred tax liabilities: | ||||||||
| Less valuation allowance | ( | ) | $ | ( | ) | |||
| Net deferred tax assets | $ | $ | ||||||
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the period ended June 30, due to the following:
| 2022 | 2021 | |||||||
| Federal income tax benefit attributable to: | ||||||||
| Current operations | $ | ( | ) | $ | ( | ) | ||
| Less: Valuation allowance | ||||||||
| Net provision for Federal income taxes | $ | $ | ||||||
At
June 30, 2022, the Company had net operating loss carry forwards of approximately $
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
NOTE 13 – DISCONTINUED OPERATIONS
On January 21, 2021, Shefali Vibhakar, President of the Company closed a Share Purchase Agreement (the “Agreement”) that she entered into with Johnny Forzani to sell all of her common shares and preferred shares to Johnny Forzani for cash consideration of $.
Further,
as part of the Agreement, Ms. Vibhakar agrees to spin out all of the Company’s assets (except for certain machinery valued at $
| F-16 |
In accordance with the provisions of ASC 205-20, Presentation of Financial Statements, we have separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets. The income and expenses have been reflected as discontinued operations in the consolidated Statements of Operations for the year ended June 30, 2021, and consist of the following:
| For the Year Ended June 30, 2021 | ||||
| Revenue | $ | |||
| Cost of revenue | ||||
| Gross Margin | ||||
| Operating Expenses: | ||||
| Payroll expense | ||||
| General & administrative expenses | ||||
| Total operating expenses | ||||
| Income from operations | ||||
| Total other expense | ( | ) | ||
| Net income from discontinued operations | $ | |||
NOTE 14 - SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it has no material subsequent events to disclose in these consolidated financial statements other than the following.
Effective July 25, 2022, the Company reissued the shares of common stock that were previously cancelled by its Mr. Forzani. The cancellation was reported on a Form 8-K filed June 15, 2022 (the “Previous 8-K”). Mr. Forzani temporarily cancelled his shares in order for the Company to complete the financing reported on the Previous 8-K.
On September 7, 2022, the Company filed with the Secretary of State of the State of Wyoming, an Articles of Amendment (the “Amendment”) designating the terms, preferences and rights of the shares of the Company's previously authorized Class B Preferred Stock. Each share of Class B Preferred Stock entitles the holder thereof to ten thousand votes per share on all matters to be voted on by the holders of the Company’s common stock and is convertible into shares of the Company's common stock at the same rate. With respect to rights on liquidation, dissolution or winding up, shares of Class B Preferred Stock rank on parity with the Company's common stock.
On
September 23, 2022, the Company, closed a Securities Purchase Agreement (the “Purchase Agreement”) with Mast Hill Fund, L.P.,
a Delaware limited partnership (“Mast Hill”), dated as of September 19, 2022, pursuant to which the Company issued Mast Hill
a convertible promissory note in the principal amount of $
| F-17 |