UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-K
_________________
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: June 30, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________ to _____________
FORZA INNOVATIONS, INC.
_________________
| Wyoming | 000-56131 | 30-0852686 |
| (State or Other Jurisdiction | (Commission | (I.R.S. Employer |
| of Incorporation or Organization) | File Number) | Identification No.) |
406 9th Avenue, Suite 210, San Diego, California 92101
(Address of Principal Executive Offices) (Zip Code)
(619) 324-7388
(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 ☐ No ☒
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 ☐ No ☒
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.
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 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 ☐ No ☒
As of December 30, 2022, 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 $815,939.29 based on the closing price of $0.0005 of the registrant’s common stock. The calculation excludes shares of the registrant’s common stock held by current executive officers, directors and stockholders that the registrant has concluded are affiliates of the registrant. This determination of affiliate status is not a determination for other purposes.
As of September 30, 2023, there were 1,901,878,583 shares of common stock outstanding.
| 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 |
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, 2022, 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 also 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 of June 30, 2023, 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!
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 of June 30, 2023, 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 of June 30, 2023 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.
Research and Development; Intellectual Property
As of June 30, 2023, 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 of June 30, 2023, we currently have developed beta samples in China that have patentable IP.
Employees
As of June 30, 2023, we had 1 employee and our wholly-owned subsidiary Sustainable Origins had 1 employee.
Foreign and Domestic Operations and Export Sales
As of June 30, 2023, 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 of June 30, 2023, 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, 2023, our address was located 406 9th Avenue, Suite 210, San Diego, California 92101. We believe this space is adequate for our current needs.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable
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 2023 | | HIGH | | LOW |
| | Quarter Ending September 30, 2022 | | | $ | 0.0189 | | | $ | 0.0016 | |
| | Quarter Ending December 31, 2022 | | | $ | 0.0034 | | | $ | 0.0004 | |
| | Quarter Ending March 31, 2023 | | | $ | 0.0007 | | | $ | 0.0001 | |
| | Quarter Ending June 30, 2023 | | | $ | 0.003 | | | $ | 0.00001 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | Fiscal Year Ending June 2022 | | | | HIGH | | | | LOW | |
| | Quarter Ending September 30, 2020 | | | $ | 0.90 | | | $ | 0.1631 | |
| | Quarter Ending December 31, 2020 | | | $ | 0.33 | | | $ | 0.05 | |
| | Quarter Ending March 31, 2022 | | | $ | 0.12 | | | $ | 0.025 | |
| | Quarter Ending June 30, 2022 | | | $ | 0.037 | | | $ | 0.0081 | |
HOLDERS
The approximate number of registered stockholders of record as of June 30, 2023 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.
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.
Overview
We were incorporated on December 9, 2014 in the state of Florida. On February 17, 2022, 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 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, 2023 Compared to the Year Ended June 30, 2022
Revenues and Cost of Revenue
We earned gross revenue of $114,596 during the year ended June 30, 2023, compared to $25,871 for the same period in 2022. Our cost of revenue was $26,897 during the year ended June 30, 2023, compared to $2,792 for the same period in 2022
Operating Expenses from Continuing Operations
Operating expenses from continuing operations for the year ended June 30, 2023 consisted of general and administrative expenses of $299,117 (2022 - $152,315); advertising and marketing expenses of $31,405 (2022 - $111,527); compensation expense of $475,110 (2022 - $319,857); professional fees of $208,725 (2022 - $270,318); and, stock based compensation of $nil (2022 - $1,068,731).
Net Loss from Continuing Operations
Our net loss from continuing operations for the years ended June 30, 2023 was $926,658 compared to $1,899,669 for the year ended June 30, 2022. The decrease in our net loss in mainly due a decrease in operating expenses.
Liquidity and Capital Resources
As reflected in the accompanying financial statements, we had an accumulated deficit of $10,950,944 at June 30, 2023, and had a net loss from continuing operations of $4,755,706 for year ended June 30, 2023.
For the year ended June 30, 2023, we used net cash of $763,535 in operating activities, compared to using net cash of $712,145 for the year ended June 30, 2022.
Net cash used in investing activities for the year ended June 30, 2023 and 2022 was $128,559 and $75,612, respectively, for the purchase of property and equipment.
Net cash received from financing activities for the year ended June 30, 2023 was $596,180 compared to $1,069,994 provided by financing activities in the prior period.
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.
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, 2023 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, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None
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 | | | 35 | | | President, CEO, Treasurer, CFO, Secretary and Director |
| Tom Forzani | | | 72 | | | Director |
| Geoff Stanbury | | | 72 | | | 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 2022, 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, 2023.
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, 2023.
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, 2023.
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 of June 30, 2023, 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.
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, 2023 for services rendered in all capacities to us for the fiscal years ended June 30, 2023, 2022 and 2021.
| 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 | | | 2023 | | | | 106,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 106,000 | |
| CEO, CFO, Director | | | 2022 | | | | 159,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 159,000 | |
| Tom Forzani | | | 2023 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| Director | | | 2022 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| Geoff Stanbury | | | 2023 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| Director | | | 2022 | | | | 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, 2023.
| | | | 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 |
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, 2023 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, 2023. 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, 2023. 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 2023 fiscal year and Michael Gillespie & Associates, PLLC served as our independent registered public accounting firm for the 2022 fiscal year. The following table shows the fees that were billed for the audit and other services provided by these firms for 2023 and 2022 fiscal years.
| | | 2023 | | 2022 |
| Audit Fees | | $ | 38,500 | | | $ | 36,600 | |
| Audit-Related Fees | | $ | -0- | | | $ | -0- | |
| Tax Fees | | $ | -0- | | | $ | -0- | |
| All Other Fees | | $ | -0- | | | $ | -0- | |
| Total | | $ | 38,500 | | | $ | 36,600 | |
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.
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.
* 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.
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: January 17, 2024 | 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 | January 17, 2024 |
| Johnny Forzani |
| | | |
| /s/ Tom Forzani | Director | January 17, 2024 |
| Tom Forzani | | |
| | | |
| /s/ Geoff Stanbury | Director | January 17, 2024 |
| Geoff Stanbury | | |
FORZA INNOVATIONS INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| Report of Independent Registered Public Accounting Firm | F-2 |
| Consolidated Balance Sheets as of June 30, 2023 and 2022 | F-3 |
| Consolidated Statements of Operations for the years ended June 30, 2023 and 2022 | F-4 |
| Consolidated Statements of Stockholders’ Equity (Deficit) for the year ended June 30, 2023 and 2022 | F-5 |
| Consolidated Statements of Cash Flows for years ended June 30, 2023 and 2022 | F-6 |
| Notes to the Consolidated Financial Statements | F-7 |
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, 2023 and 2022, 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, 2023 and 2022, 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
BF Borgers CPA PC (PCAOB ID 5041)
We have served as the Company's auditor since 2021
Lakewood, CO
January 17, 2024
FORZA INNOVATIONS INC.
CONSOLIDATED BALANCE SHEETS
| | | | | | | | | |
| | | | June 30, 2023 | | | | June 30, 2022 | |
| ASSETS | | | | | | | | |
| Current assets: | | | | | | | | |
| Cash | | $ | — | | | $ | 295,914 | |
| Prepaid | | | — | | | | 5,130 | |
| Notes receivable, net of allowance of $46,987 and $0, respectively | | | — | | | | — | |
| Total current assets | | | — | | | | 301,044 | |
| Machinery and equipment, net | | | 91,404 | | | | 155,599 | |
| Deposit | | | — | | | | 5,913 | |
| Total long term assets | | | 91,404 | | | | 161,512 | |
| Total Assets | | $ | 91,404 | | | $ | 462,556 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable and accrued liabilities | | $ | 110,792 | | | $ | 49,972 | |
| Accrued interest | | | 284,092 | | | | 129,564 | |
| Convertible notes payable, net of discount of $256,653 and $424,889, respectively | | | 1,787,069 | | | | 905,111 | |
| Derivative liability | | | 2,475,446 | | | | 662,982 | |
| Loan payable | | | 22,729 | | | | 22,729 | |
| Due to related party | | | 19,306 | | | | 19,406 | |
| Total current liabilities | | | 4,699,434 | | | | 1,789,764 | |
| Total liabilities | | | 4,699,434 | | | | 1,789,764 | |
| | | | | | | | | |
| Commitments and contingencies | | | | | | | | |
| | | | | | | | | |
| Stockholders' equity (deficit): | | | | | | | | |
| Class B Preferred stock, $0.001 par value, 25,000,000 shares authorized, 10,000,000 issued and outstanding | | | 10,000 | | | | 10,000 | |
| Common stock, $0.001 par value, 100,000,000,000 shares authorized; 1,421,744,158 and 220,009,575 shares issued and outstanding, respectively | | | 1,421,744 | | | | 220,009 | |
| Common stock to be issued | | | 26,531 | | | | 26,231 | |
| Additional paid-in capital | | | 4,884,639 | | | | 4,611,790 | |
| Accumulated deficit | | | (10,950,944 | ) | | | (6,195,238 | ) |
| Total stockholders' deficit | | | (4,608,030 | ) | | | (1,327,208 | ) |
| Total Liabilities and Stockholders' Deficit | | $ | 91,404 | | | $ | 462,556 | |
The accompanying notes are an integral part of these consolidated financial statements.
FORZA INNOVATIONS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| | | | | | | | | |
| | | For the Years Ended June 30, |
| | | 2023 | | 2022 |
| Revenue | | $ | 114,596 | | | $ | 25,871 | |
| Cost of revenue | | | 26,897 | | | | 2,792 | |
| Gross margin | | | 87,699 | | | | 23,079 | |
| | | | | | | | | |
| Operating Expenses: | | | | | | | | |
| General & administrative expenses | | | 299,117 | | | | 152,315 | |
| Advertising and marketing | | | 31,405 | | | | 111,527 | |
| Compensation expense | | | 475,110 | | | | 319,857 | |
| Professional fees | | | 208,725 | | | | 270,318 | |
| Stock based compensation | | | — | | | | 1,068,731 | |
| Total operating expenses | | | 1,014,357 | | | | 1,922,748 | |
| Loss from operations | | | (926,658 | ) | | | (1,899,669 | ) |
| | | | | | | | | |
| Other income (expense): | | | | | | | | |
| Interest revenue | | | 737 | | | | — | |
| Interest expense | | | (234,219 | ) | | | (150,351 | ) |
| Loss on issuance of convertible debt | | | (165,729 | ) | | | (1,165,877 | ) |
| Loss on conversion of debt | | | (212,590 | ) | | | — | |
| Change in fair value of derivatives | | | (1,383,120 | ) | | | 967,422 | |
| Debt discount amortization | | | (1,389,565 | ) | | | (377,426 | ) |
| Early payment penalty | | | (12,150 | ) | | | (41,057 | ) |
| Penalty expense for convertible debt | | | (346,000 | ) | | | — | |
| Loss on disposal of assets | | | (86,412 | ) | | | (10,750 | ) |
| Impairment expense | | | — | | | | (22,800 | ) |
| Total other expense | | | (3,829,048 | ) | | | (800,839 | ) |
| | | | | | | | | |
| Loss before income taxes | | | (4,755,706 | ) | | | (2,700,508 | ) |
| Provision for income taxes | | | — | | | | — | |
| Net Loss | | $ | (4,755,706 | ) | | $ | (2,700,508 | ) |
| Net loss per common share, basic & diluted | | $ | (0.01 | ) | | $ | (0.01 | ) |
| Weighted common shares outstanding, basic & diluted | | | 770,884,033 | | | | 286,360,095 | |
The accompanying notes are an integral part of these consolidated financial statements.
FORZA INNOVATIONS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 2022 AND 2023
| | | | | | | | | | | | | | | | | |
| | | Common Shares | | Common Stock | | Preferred
Shares | | Preferred Stock | | Paid in Capital | | Common stock to be Issued | | Accumulated Deficit | | Total |
| Balance, June 30, 2021 | | | 281,000,000 | | | $ | 281,000 | | | | 10,000,000 | | | $ | 10,000 | | | $ | 2,921,000 | | | $ | — | | | $ | (3,494,730 | ) | | $ | (282,730 | ) |
| Shares issued for conversion of debt | | | 26,608,313 | | | | 26,608 | | | | — | | | | — | | | | 332,244 | | | | — | | | | — | | | | 358,852 | |
| Options exercised – related party | | | 500,000 | | | | 500 | | | | — | | | | — | | | | 23,543 | | | | — | | | | — | | | | 24,043 | |
| Fair value of options granted for compensation – related party | | | — | | | | — | | | | — | | | | — | | | | 854,550 | | | | — | | | | — | | | | 854,550 | |
| Shares issued for acquisition | | | — | | | | — | | | | — | | | | — | | | | — | | | | 22,800 | | | | — | | | | 22,800 | |
| Shares issued for cash | | | 5,000,000 | | | | 5,000 | | | | — | | | | — | | | | 31,005 | | | | — | | | | — | | | | 36,005 | |
| Shares granted for services | | | 1,201,262 | | | | 1,201 | | | | — | | | | — | | | | 34,837 | | | | — | | | | — | | | | 36,038 | |
| Shares granted for financing costs | | | 5,700,000 | | | | 5,700 | | | | — | | | | — | | | | 205,050 | | | | 3,431 | | | | — | | | | 214,181 | |
| Fair value of warrants granted with debt issuance | | | — | | | | — | | | | — | | | | — | | | | 109,561 | | | | — | | | | — | | | | 109,561 | |
| Shares cancelled – related party | | | (100,000,000 | ) | | | (100,000 | ) | | | — | | | | — | | | | 100,000 | | | | — | | | | — | | | | — | |
| Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2,700,508 | ) | | | (2,700,508 | ) |
| Balance, June 30, 2022 | | | 220,009,575 | | | | 220,009 | | | | 10,000,000 | | | | 10,000 | | | | 4,611,790 | | | | 26,231 | | | | (6,195,238 | ) | | | (1,327,208 | ) |
| Shares issued for conversion of debt | | | 1,101,734,583 | | | | 1,101,735 | | | | — | | | | — | | | | (50,661 | ) | | | — | | | | — | | | | 1,051,074 | |
| Fair value with debt issuance of warrants granted | | | — | | | | — | | | | — | | | | — | | | | 423,510 | | | | — | | | | — | | | | 423,510 | |
| Shares issues – related party | | | 100,000,000 | | | | 100,000 | | | | — | | | | — | | | | (100,000 | ) | | | — | | | | — | | | | — | |
| Shares issues – commitment fee | | | — | | | | — | | | | — | | | | — | | | | — | | | | 300 | | | | — | | | | 300 | |
| Net loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (4,755,706 | ) | | | (4,755,706 | ) |
| Balance, June 30, 2023 | | | 1,421,744,158 | | | $ | 1,421,744 | | | | 10,000,000 | | | $ | 10,000 | | | $ | 4,884,639 | | | $ | 26,531 | | | $ | (10,950,944 | ) | | $ | (4,608,030 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
FORZA INNOVATIONS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | |
| | | For the Years Ended June 30, |
| | | 2023 | | 2022 |
| Cash flows from operating activities: | | | | | | | | |
| Net Loss | | $ | (4,755,706 | ) | | $ | (2,700,508 | ) |
| Adjustments to reconcile net loss to net cash used by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 60,091 | | | | 36,021 | |
| Debt discount amortization | | | 1,389,564 | | | | 377,426 | |
| Loss on issuance of convertible debt | | | 165,729 | | | | 1,165,877 | |
| Change in fair value of derivatives | | | 1,383,120 | | | | (967,422 | ) |
| Loss on conversion of debt | | | 212,590 | | | | — | |
| Penalty expense for convertible debt | | | 346,000 | | | | — | |
| Common stock issued for services | | | 300 | | | | 250,219 | |
| Fair value of options granted for compensation – related party | | | — | | | | 854,550 | |
| Fair value of warrants granted with debt issuance | | | | | | | 110,361 | |
| Bad debt expense | | | 46,987 | | | | — | |
| Loss on disposal of assets | | | 86,412 | | | | 10,750 | |
| Loss on disposition of assets and liabilities | | | — | | | | 22,800 | |
| Changes in operating assets and liabilities: | | | | | | | | |
| Prepaids | | | 5,130 | | | | (5,130 | ) |
| Other assets | | | 5,913 | | | | (5,913 | ) |
| Accounts payable and accrued liabilities | | | 60,819 | | | | 11,218 | |
| Accrued interest | | | 229,516 | | | | 127,606 | |
| Net cash used by operating activities | | | (763,535 | ) | | | (712,145 | ) |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Purchase of property and equipment | | | (82,309 | ) | | | (75,612 | ) |
| Loans receivable | | | (46,250 | ) | | | — | |
| Net cash used by investing activities | | | (128,559 | ) | | | (75,612 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Advances from related party | | | — | | | | 27,088 | |
| Repayment of related party loans | | | (100 | ) | | | (62,516 | ) |
| Proceeds from convertible debt | | | 876,280 | | | | 1,410,374 | |
| Repayment of convertible debt | | | (280,000 | ) | | | (365,000 | ) |
| Proceeds from sale of common stock | | | — | | | | 36,005 | |
| Proceeds from the exercise of options | | | — | | | | 24,043 | |
| Net cash provided by financing activities | | | 596,180 | | | | 1,069,994 | |
| | | | | | | | | |
| Net change in cash | | | (295,914 | ) | | | 282,237 | |
| | | | | | | | | |
| Cash, beginning of year | | | 295,914 | | | | 13,677 | |
| Cash, end of year | | $ | — | | | $ | 295,914 | |
| | | | | | | | | |
| 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 | | $ | 461,050 | | | $ | 340,691 | |
The accompanying notes are an integral part of these consolidated financial statements.
FORZA INNOVATIONS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
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 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 600,000 shares of the Company’s common stock and a cash payment of $17,000 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 $0.038, the closing stock price on the effective date of the agreement, for a valuation of $22,800. At the time of acquisition Sustainable had no operations. As such the Company fully impaired the $22,800. As of June 30, 2023, the shares have not yet been issued to Sustainable.
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 no cash equivalents as of June 30, 2023 and 2022.
Principles of Consolidation
The accompanying consolidated financial statements for the years ended June 30, 2023 and 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.
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.
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, 2023 and 2022:
| Schedule of fair value hierarchy | | | | | | | | | | | | | |
| June 30, 2023 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| Description | | Level 1 | | Level 2 | | Level 3 |
| Derivative | | | $ | — | | | $ | — | | | $ | 2,475,446 | |
| Total | | | $ | — | | | $ | — | | | $ | 2,475,446 | |
| | | | | | | | | | | | | | |
| June 30, 2022 | | | | | | | | | | | | | |
| Derivative | | | $ | — | | | $ | — | | | $ | 662,982 | |
| Total | | | $ | — | | | $ | — | | | $ | 662,982 | |
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, 2023, and 2022, no liability for unrecognized tax benefits was required to be reported.
Revenue Recognition
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:
| • | | Identification of a contract with a customer; |
| • | | Identification of the performance obligations in the contract; |
| • | | Determination of the transaction price; |
| • | | Allocation of the transaction price to the performance obligations in the contract; and |
| • | | Recognition of revenue when or as the performance obligations are satisfied. |
Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Shipping and handling activities associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment activity and recognized as revenue at the point in time at which control of the goods transfers to the customer. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.
Basic and Diluted Loss Per Share
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. As of June 30, 2023, there are warrants to purchase up to 951,950,000 shares of common stock, options to purchase up to 1,000,000 shares of common stock and approximately 14,000,000,000 (14 Bil) dilutive shares of common stock from convertible notes payable. As of June 30, 2022, there are warrants to purchase up to 1,90,000 shares of common stock, options to purchase up to 1,000,000 shares of common stock and approximately 106,000,000 dilutive shares of common stock from convertible notes payable. As of June 30, 2023 and 2022, the Company’s diluted loss per share is the same as the basic loss per share, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss.
Recent Accounting Pronouncements
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, 2023, the Company has limited revenue and an accumulated deficit of $10,950,944.
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 – LOANS RECEIVABLE
On October 4, 2022, the Company entered into a Secured Loan Agreement with Team Moving Forward Recovery Group LLC (“Team”), whereby the Company loaned $15,000 to Team. The loan was to be repaid by December 3, 2022. The loan bears interest at 3% and is currently in default. The Company has established a reserve account to fully reserve for this receivable; therefore, the receivable is presented on the balance sheet at $0.
On January 23, 2023, the Company entered into a Secured Loan Agreement with Denver Dumpster LLC (“Denver”), whereby the Company had loaned $31,250 to Denver. The loan was to be repaid by April 30, 2023, unless an agreement to acquire Denver was entered into, which did not occur. The loan bears interest at 3% and is currently in default. The Company has established a reserve account to fully reserve for this receivable; therefore, the receivable is presented on the balance sheet at $0.
NOTE 5 – MACHINERY AND EQUIPMENT
Long lived assets, including property and equipment 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 are first recorded at cost. Depreciation 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.
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.
During the year ended June 30, 2023, the Company wrote of certain property and equipment no longer in use, resulting in a loss on disposal of $86,412.
Property and equipment stated at cost, less accumulated depreciation for continuing operations consisted of the following:
| Property, Plant & Equipment | | | | | | | | |
| | | June 30, 2023 | | June 30, 2022 |
| Machinery and Equipment | | $ | 88,387 | | | $ | 150,483 | |
| Office Equipment | | | 3,097 | | | | 3,097 | |
| Vehicles | | | 38,122 | | | | 41,720 | |
| Less: accumulated depreciation | | | (38,202 | ) | | | (39,701 | ) |
| Property and equipment, net | | $ | 91,404 | | | $ | 155,599 | |
Depreciation expense
Depreciation expense for the years ended June 30, 2023 and 2022 was $60,091 and $36,021, respectively.
NOTE 6 – CONVERTIBLE NOTES PAYABLE
During the year ended June 30, 2023, the Company issued, paid and or converted the following new convertible promissory notes.
| Schedule of convertible promissory notes | | | | | | | | | | | | | | |
| Note Holder | | Date | | Maturity Date | | Interest Rate | | Balance
June 30, 2022 | | Additions | | Conversions | | Balance
June 30, 2023 |
| Fast Capital LLC (1) | | 10/26/2021 | | 10/26/2022 | | | 10 | % | | $ | 30,000 | | | $ | — | | | $ | (30,000 | ) | | $ | — | |
| ONE44 Capital LLC (3) | | 1/13/2022 | | 1/13/2023 | | | 10 | % | | $ | 160,000 | | | $ | — | | | $ | (37,600 | ) | | $ | 122,400 | |
| Mast Hill Fund, L.P. (4) | | 1/20/2022 | | 1/20/2023 | | | 12 | % | | $ | 350,000 | | | $ | 250,000 | | | $ | (297,688 | ) | | $ | 302,312 | |
| Sixth Street Lending LLC (5) | | 2/1/2022 | | 2/1/2023 | | | 10 | % | | $ | 80,000 | | | $ | — | | | $ | (80,000 | ) | | $ | — | |
| ONE44 Capital LLC (3) | | 3/22/2022 | | 3/22/2023 | | | 10 | % | | $ | 120,000 | | | $ | — | | | $ | — | | | $ | 120,000 | |
| Sixth Street Lending LLC (5) | | 4/13/2022 | | 4/13/2023 | | | 10 | % | | $ | 55,000 | | | $ | — | | | $ | (55,000 | ) | | $ | — | |
| 1800 Diagonal Lending LLC (5) | | 5/23/2022 | | 5/23/2023 | | | 10 | % | | $ | 55,000 | | | $ | — | | | $ | (55,000 | ) | | $ | — | |
| Coventry Enterprises, LLC (2) | | 6/3/2022 | | 6/3/2023 | | | 10 | % | | $ | 480,000 | | | $ | 96,000 | | | $ | — | | | $ | 576,000 | |
| 1800 Diagonal Lending LLC (5) | | 7/26/2022 | | 7/26/2023 | | | 10 | % | | $ | — | | | $ | 59,250 | | | $ | (10,550 | ) | | $ | 48,700 | |
| Mast Hill Fund, L.P. (6) | | 9/19/2022 | | 9/19/2023 | | | 12 | % | | $ | — | | | $ | 290,000 | | | $ | — | | | $ | 290,000 | |
| 1800 Diagonal Lending LLC (5) | | 11/11/2022 | | 11/11/2023 | | | 10 | % | | $ | — | | | $ | 44,250 | | | $ | — | | | $ | 44,250 | |
| Mast Hill Fund, L.P. (7) | | 12/16/2022 | | 12/16/2022 | | | 12 | % | | $ | — | | | $ | 233,000 | | | $ | (100,000 | ) | | $ | 133,000 | |
| Mast Hill Fund, L.P. (8) | | 1/13/2023 | | 12/16/2022 | | | 12 | % | | $ | — | | | $ | 347,060 | | | $ | — | | | $ | 347,060 | |
| Coventry Enterprises, LLC (9) | | 5/12/2023 | | 5/12/2024 | | | 10 | % | | $ | — | | | $ | 60,000 | | | $ | — | | | $ | 60,000 | |
| | | | | | | | Total | | | $ | 1,330,000 | | | $ | 1,379,560 | | | $ | (665,838 | ) | | $ | 2,043,722 | |
| | | Less debt discount | | | | | | $ | (424,889 | ) | | | | | | | | | | $ | (256,653 | ) |
| | | Convertible notes payable, net | | | | | | $ | 905,111 | | | | | | | | | | | $ | 1,787,069 | |
Conversion Terms
| (1) | 61% of the lowest trading price for 15 days, including conversion date. |
| (2) | Convertible only upon an event of default. 90% of the lowest trading price for 10 days prior to conversion date. |
| (3) | 60% of the lowest trading price for 20 days, including conversion date. |
| (4) | Convertible only upon an event of default. Conversion would then be $0.10. |
| (5) | 61% of the lowest trading price for 15 days prior to conversion date. |
| (6) | Convertible at $0.0015 |
| (7) | Convertible at $0.0007 |
| (8) | Convertible at $0.0003 |
| (9) | Monthly payments of $9,428.57. Convertible only upon an event of default. Conversion would then be 90% of the lowest trade during the 30 days prior to conversion. |
Total accrued interest on the above convertible notes as of June 30, 2023, is $180,685.
A summary of the activity of the derivative liability for the notes above is as follows:
| Schedule of derivative liability | | | | |
| Balance at June 30, 2021 | | | — | |
| Increase to derivative due to new issuances | | | 1,648,566 | |
| Decrease to derivative due to conversion/payments | | | (18,162 | ) |
| Derivative gain due to mark to market adjustment | | | (967,422 | ) |
| Balance at June 30, 2022 | | $ | 662,982 | |
| Increase to derivative due to new issuances | | | 806,026 | |
| Decrease to derivative due to conversions | | | (376,682 | ) |
| Derivative loss due to mark to market adjustment | | | 1,383,120 | |
| Balance at June 30, 2023 | | $ | 2,475,446 | |
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:
| Schedule of fair value hierarchy | | | | | | | | |
| Inputs | | June 30, 2023 | | Initial
Valuation |
| Stock price | | $ | 0.0002 | | | | $0.0014 – 0.0086 | |
| Conversion price | | $ | .0001 | | | | $0.0006 - 0.0049 | |
| Volatility (annual) | | | 510.66% – 521.39% | | | | 210.52% - 237.49% | |
| Risk-free rate | | | 5.43% | | | | 2.51% - 4.59 % | |
| Dividend rate | | | — | | | | — | |
| Years to maturity | | | .25 – .37 | | | | 1 | |
NOTE 7 - 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 $500,000, from Twiga Capital Partners, LLC (“TCP”), an entity controlled by the Company’s former sole officer and largest stockholder, Shefali Vibhakar. This Note is secured by all of the assets of the Company in accordance with the Security Agreement by and between the Company and the Holder dated as of November 5, 2017. The LO
LOC bears interest at 5% per annum and is due on demand. On January 21, 2021, TCP assigned all of its rights, title and interest in the debt to Front Row Seating Inc. On September 28, 2021, $100,000 of the note was converted into 10,000,000 shares of common stock. As of June 30, 2023 and June 30, 2022, the Company owed $22,729 and $22,729 of principal and $20,940 and $19,796 of accrued interest, respectively.
NOTE 8 – COMMON STOCK
On October 20, 2021, the Company issued Tangiers Global, LLC (“Tangiers”)25,000 shares of its Common Stock as a commitment fee for a financing agreement that the Company will no longer be utilizng. The shares were valued at $0.1373, the closing price on the date of grant for total non-cash expense of $3,431. As of June 30, 2022, the shares have not yet been issued by the transfer agent and are disclosed as common stock to be issued.
During the year ended June 30, 2022, Tangiers converted $205,691 of principal and interest into 11,608,313 shares of common stock, converting the Note in full.
During the year ended June 30, 2022, Front Row Seating Inc. converted $100,000 of principal into 10,000,000 shares of common stock (see Note 6).
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 200,000 shares of common stock to Coventry. The shares were valued at $0.085, the closing stock price on the date of grant, for total non-cash expense of $17,000.
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 2,500,000 shares of common stock to Mast Hill for a commitment fee. The shares were valued at $0.0589, the closing stock price on the date of grant, for total non-cash expense of $147,250.
During the year ended June 30, 2022, Mast Hill purchased 5,000,000 shares of common stock for total cash payment of $36,005.
During the year ended June 30, 2022, Fast Capital. LLC converted $35,000 of their note payable into 5,000,000 shares of common stock.
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 1,201,262 shares of common stock to North Equities. The shares were valued at $0.03, the closing stock price on the date of grant, for total non-cash expense of $36,038.
During Q1 FY 2023, Fast Capital LLC converted $30,000 and $4,550 of principal and interest, respectively, into 11,328,868 shares of common stock.
During the first quarter, One44 Capital LLC converted $15,000 and $744 of principal and interest, respectively, into 5,247,947 shares of common stock.
During Q1 FY 2023, 1800 Diagonal Lending converted $80,000 and $4,626 of principal and interest, respectively, into 34,739,138 shares of common stock.
During Q1 FY 2023, Mast Hill Fund, L.P converted $2,040 and $42,200 of principal and interest, respectively, into 23,400,000 shares of common stock. The Company recognized a loss on conversion of debt of $20,840.
During Q2 FY 2023, 1800 Diagonal Lending converted $110,000 and $5,500 of principal and interest, respectively, into 186,262,331 shares of common stock.
During Q2 FY 2023, Mast Hill Fund, L.P converted $121,607 of principal, into 210,500,000 shares of common stock. The Company recognized a loss on conversion of debt of $113,263.
During Q3 FY 2023, 1800 Diagonal Lending converted $10,550 of principal, into 87,916,334 shares of common stock.
During Q3 FY 2023, Mast Hill Fund, L.P converted $24,041 and $3,937 of principal and interest, respectively, into 182,700,000 shares of common stock. The Company recognized a loss on conversion of debt of $32,718.
During Q3 FY 2023, One44 Capital LLC converted $19,300 and $2,193 of principal and interest, respectively, into 179,112,333 shares of common stock.
During Q4 FY 2023, One44 Capital LLC converted $3,300 and $411 of principal and interest, respectively, into 61,856,167 shares of common stock.
During Q4 FY 2023, Mast Hill Fund, L.P converted $15,600 of interest into 130,000,000 shares of common stock. The Company recognized a loss on conversion of debt of $3,590.
NOTE 9 – PREFERRED STOCK
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 25,000,000 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.
NOTE 10 - RELATED PARTY TRANSACTIONS
On August 23, 2021, Mr. Forzani exercised 400,000 of his options for $20,000.
On October 26, 2021, Geoff Stanbury exercised 100,000 of his options for $4,043.
On June 8, 2022, Mr. Forzani agreed to cancel and return to treasury 100,000,000 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 11– STOCK OPTIONS
On August 3, 2021, the Company granted 1,000,000 options to Johnny Forzani, CEO, 250,000 options to Geoff Stanbury, director, and 250,000 options to Tom Forzani, Director. The options were issued pursuant the Company’s 2021 Equity Award Plan. The options are exercisable at $0.05, are immediately vested and expire in two years. On July 25, 2022, the Company reissued the 100,000,000 shares of common stock that were previously cancelled by Mr. Forzani. There was no impact to the Company’s Statement of Operations for either the cancellation or the re-issuance of the shares.
Mr. Forzani has advanced the Company funds for general operating expenses, the advances are non-interest bearing and due on demand. As of June 30, 2023 and 2022, the Company owes Mr. Forzani $19,306 and $19,406, respectively.
A summary of the status of the Company’s outstanding stock options and changes during the period is presented below:
| Schedule of Stock Options Outstanding | | | | | | | | | | | | |
| Stock Options | | Options | | Weighted Average
Exercise
Price | | Aggregate
Intrinsic
Value |
| Options outstanding at June 30, 2021 | | | — | | | $ | — | | | | — | |
| Granted | | | 1,500,000 | | | | 0.05 | | | | — | |
| Exercised | | | (500,000 | ) | | $ | — | | | | — | |
| Expired | | | — | | | $ | — | | | | — | |
| Options outstanding at June 30, 2022 | | | 1,000,000 | | | $ | 0.05 | | | | — | |
| Granted | | | — | | | $ | — | | | | — | |
| Exercised | | | — | | | $ | — | | | | — | |
| Expired | | | — | | | $ | — | | | | — | |
| Options outstanding at June 30, 2023 | | | 1,000,000 | | | $ | 0.05 | | | | — | |
| Options exercisable at June 30, 2023 | | | 1,000,000 | | | $ | 0.05 | | | $ | — | |
| Schedule of range of exercise prices | | | | | | |
| Range of Exercise Prices | | Number Outstanding
6/30/2023 | | Weighted Average
Remaining Contractual
Life | | Weighted Average
Exercise Price |
| $ | 0.05 | | | | 1,000,000 | | | | .41 years | | | $ | 0.05 | |
NOTE 12 – WARRANTS
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 $290,000 (the “Note”), a five-year warrant to purchase up to 100,000,000 shares of common stock at a price of $0.003 per share (the “First Warrant”) and a warrant to purchase up to 100,000,000 shares of common stock at a price of $0.003 per share (the “Second Warrant”), which warrants are only exercisable upon an “Event of Default” as defined in the Note.
Using the fair value calculation, the relative fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $188,675, accounted for in additional paid in capital.
On December 16, 2022, the Company, closed a Securities Purchase Agreement (the “Purchase Agreement”) with Mast Hill, pursuant to which the Company issued Mast Hill a convertible promissory note in the principal amount of $233,000 (the “Note”), a five-year warrant to purchase up to 155,000,000 shares of common stock at a price of $0.0015 per share (the “First Warrant”) and a warrant to purchase up to 100,000,000 shares of common stock at a price of $0.003 per share (the “Second Warrant”), which warrants are only exercisable upon an “Event of Default” as defined in the Note.
Using the fair value calculation, the relative fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $108,769, accounted for in additional paid in capital and debt discount to be amortized over the term of the loan.
On January 13, 2023, the Company, closed a Securities Purchase Agreement (the “Purchase Agreement”) with Mast Hill, pursuant to which the Company issued Mast Hill a convertible promissory note in the principal amount of $347,000 (the “Note”), a five-year warrant to purchase up to 347,000,000 shares of common stock at a price of $0.001 per share (the “First Warrant”) and a warrant to purchase up to 148,000,000 shares of common stock at a price of $0.003 per share (the “Second Warrant”). The second warrant is only exercisable upon an “Event of Default” as defined in the Note.
Using the fair value calculation, the relative fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $126,066, accounted for in additional paid in capital and debt discount to be amortized over the term of the loan.
A summary of the status of the Company’s outstanding stock options and changes during the period is presented below:
| Schedule of warrant outstanding | | | | | | | | | | | | |
| Warrants | | Warrants | | Weighted Average
Exercise
Price | | Aggregate
Intrinsic
Value |
| Warrants outstanding at June 30, 2021 | | | — | | | $ | — | | | | — | |
| Granted | | | 1,950,000 | | | $ | 0.44 | | | | — | |
| Exercised | | | — | | | $ | — | | | | — | |
| Expired | | | — | | | $ | — | | | | — | |
| Warrants outstanding at June 30, 2022 | | | 1,950,000 | | | $ | 0.44 | | | | — | |
| Granted | | | 455,000,000 | | | $ | 0.004 | | | | — | |
| Exercised | | | | | | $ | — | | | | — | |
| Expired | | | | | | $ | — | | | | — | |
| Warrants outstanding at June 30, 2023 | | | 456,950,000 | | | | $0.004 | | | | — | |
| Warrants exercisable at June 30, 2023 | | | 456,950,000 | | | | $0.004 | | | $ | — | |
| Schedule of range of exercise prices | | | | | | |
| Range of Exercise Prices | | Number Outstanding
3/31/2023 | | Weighted Average
Remaining Contractual
Life | | Weighted Average
Exercise Price |
| | $0.0015 - 0.44 | | | | 201,950,000 | | | | 4.72 years | | | $ | 0.004 | |
NOTE 13 – 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 21% is being used for the fiscal year ended June 30, 2023 and 2022.
Net deferred tax assets consist of the following components as of June 30:
| Schedule of net deferred tax assets | | | | | | | | |
| | | 2023 | | 2022 |
| Deferred Tax Assets: | | | | | | | | |
| NOL Carryover | | $ | 2,299,000 | | | $ | 1,301,000 | |
| Deferred tax liabilities: | | | | | | | | |
| Less valuation allowance | | | (2,299,000 | ) | | $ | (1,301,000 | ) |
| 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:
| Schedule of income tax provision | | | | | | | | |
| | | 2023 | | 2022 |
| Federal income tax benefit attributable to: | | | | | | | | |
| Current operations | | $ | (998,000 | ) | | $ | (567,000 | ) |
| Less: Valuation allowance | | | 998,000 | | | | 567,000 | |
| Net provision for Federal income taxes | | $ | — | | | $ | — | |
At June 30, 2023, the Company had net operating loss carry forwards of approximately $2,299,000 that may be offset against future taxable income from the year 2024 to 2042. No tax benefit has been reported in the June 30, 2023 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
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 14 - SUBSEQUENT EVENTS
In accordance with 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.
Subsequent to June 30, 2023, Mast Hill converted $36,024 of accrued interest into 300,200,000 shares of common stock.
Subsequent to June 30, 2023, 1800 Diagonal converted $4,795 of principal into 78,600,000 shares of common stock.
Subsequent to June 30, 2023, Coventry converted $6,175 of accrued interest into 90,000,000 shares of common stock.
