UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-Q
☒
Quarterly report pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934For the quarterly period ended SeptemberJune 30, 2017
☐
Transition report pursuant to Section 13 or 15(d) of the Exchange ActFor the transition period from _________ to _________.
ALTITUDE INTERNATIONAL HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
(f/ka/ Altitude International, Inc.)
New York | 000-55639 | 13-3778988 | ||
(State or Other Jurisdiction | (Commission | (I.R.S. Employer | ||
of Incorporation) | File Number) | Identification No.) | ||
4500 SE Pine Valley Street, Port Saint Lucie, FL 33301
(Address of Principal Executive Offices)
(772)323-0625
(Registrant'sRegistrant’s Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES☒ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See 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 is a shell company (as defined in Regulation 12b-2 of the Exchange Act): YES ☐NO☒
Securities registered to Section 12(b) of the Act: None.
State the number of shares outstanding of each of the issuer'sissuer’s classes of common stock, as of the latest practicable date: 21,728,659 shares issued, issuable, and outstanding at November 7, 2017.as of July 28, 2022.
Page | |||
PART I. | FINANCIAL INFORMATION | ||
3 | |||
Item 1. | 3 | ||
4 | |||
5 | |||
6 | |||
Condensed Consolidated Statements of Cash Flows (unaudited) | 7 | ||
8 | |||
Item 2. | 23 | ||
Item 3. | 27 | ||
Item 4. | |||
27 | |||
PART II. | OTHER INFORMATION | 28 | |
Item 1. | 28 | ||
Item 2. | 29 | ||
Item 3. | 29 | ||
Item 4. | 29 | ||
Item 5. | 29 | ||
Item 6. | 30 | ||
31 |
2 |
PART I. FINANCIAL INFORMATION
ALTITUDE INTERNATIONAL HOLDINGS, INC.
(UNAUDITED)
Contents
Page | ||
Condensed Consolidated Financial Statements (unaudited) | ||
4 | ||
5 | ||
Condensed Consolidated Statement of Changes in Stockholders’ Equity for the | 6 | |
7 | ||
8-22 |
3 |
ALTITUDE INTERNATIONAL HOLDINGS, INC.
September 30, | ||||
2017* | ||||
(Unaudited) | ||||
ASSETS | ||||
Current Assets | ||||
Cash – attorney escrow account | $ | 44,955 | ||
Prepaid expense | 4,167 | |||
Total Current Assets | $ | 49,122 | ||
Office Equipment | ||||
Office equipment | 9,584 | |||
9,584 | ||||
Intangible Assets | ||||
Trademarks | 12,130 | |||
Total Intangible Assets | 12,130 | |||
Total Assets | $ | 70,836 | ||
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY | ||||
Current Liabilities | ||||
Accounts payable – related party | $ | 4,167 | ||
Accrued expenses | 184,920 | |||
Shareholder’s advance | 26,764 | |||
Total Current Liabilities | 215,851 | |||
Total Liabilities | 215,851 | |||
Commitments and Contingencies | ||||
Stockholders’ Deficiency | ||||
Preferred Stock - no par value, 5,000,000 shares authorized, no shares issued and outstanding | - | |||
Common stock - no par value, 70,000,000 shares authorized, at September 30, 2017, 21,728,659 shares issued and outstanding at September 30, 2017 | 237,269 | |||
Additional Paid in capital | (149,769 | ) | ||
Accumulated deficit | (232,515 | ) | ||
Total Stockholders’ Deficiency | (145,015 | ) | ||
Total Liabilities and Stockholders’ Deficiency | $ | 70,836 |
and therefore no comparative numbers for December 31, 2016 exist.
Condensed Consolidated Balance Sheets
(unaudited)
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 1,699,450 | $ | 423,165 | ||||
Accounts receivable, net | 830,393 | 91,520 | ||||||
Inventory | 256,450 | 161,235 | ||||||
Prepaid acquisition costs | 1,000,000 | - | ||||||
Prepaid expense | 136,695 | 88,134 | ||||||
Deferred offering costs | 187,500 | |||||||
Deferred acquisition costs | 125,472 | - | ||||||
Other current assets | 2,616 | - | ||||||
Total current assets | 4,238,575 | 764,054 | ||||||
Fixed assets, net | 74,154 | 71,036 | ||||||
Intangible assets, net | 272,500 | 287,500 | ||||||
Goodwill | 29,659,798 | 29,493,398 | ||||||
Total assets | $ | 34,245,027 | $ | 30,615,988 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Notes payable, net of discounts | $ | 2,669,078 | $ | - | ||||
Accounts payable and accrued expenses | 737,690 | 436,896 | ||||||
Stockholders’ advance | 36,211 | 36,211 | ||||||
PPP loan | 20,800 | 20,800 | ||||||
Loan payable | 501,724 | - | ||||||
Deferred revenue | 1,819,373 | 1,388,126 | ||||||
Total current liabilities | 5,784,877 | 1,882,033 | ||||||
Non-current liabilities | ||||||||
Other non-current liability | 380,000 | - | ||||||
Notes payable, net of current portion | 782,129 | 1,288,887 | ||||||
Total non-current liabilities | 1,162,129 | 1,288,887 | ||||||
Total liabilities | 6,947,006 | 3,170,920 | ||||||
Commitments and contingencies - Note 8 | - | - | ||||||
Stockholders’ equity | ||||||||
Preferred stock - 0 par value, shares authorized, and shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively | - | - | ||||||
Common stock - 0 par value, shares authorized, and shares issued, issuable, and outstanding at June 30, 2022 and December 31, 2021, respectively | 31,431,990 | 30,362,949 | ||||||
Accumulated deficit | (4,133,969 | ) | (2,917,881 | ) | ||||
Total stockholders’ equity | 27,298,021 | 27,445,068 | ||||||
Total liabilities and stockholders’ equity | $ | 34,245,027 | $ | 30,615,988 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4 |
For the three months ended | For the period from May 18, 2017 (Date of Inception) To | |||||||
September 30, 2017 | September 30, 2017 | |||||||
Revenue | $ | - | $ | - | ||||
Operating Expenses | ||||||||
Professional fees | 30,040 | 30,040 | ||||||
Other general and administrative expenses | 188,686 | 202,475 | ||||||
Total operating expenses | 218,726 | 232,515 | ||||||
Loss from operations | (218,726 | ) | (232,515 | ) | ||||
Total Other Income (Expenses), Net | - | - | ||||||
Net loss before tax | (218,726 | ) | (232,515 | ) | ||||
Provision for income taxes | - | - | ||||||
Net loss | $ | (218,726 | ) | $ | (232,515 | ) | ||
Earnings per share - basic and fully diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||
Weighted-average number of shares of common stock outstanding - basic and fully diluted | 21,728,659 | 27,008,674 |
(unaudited)
For the Three Months Ended | For the Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Revenue | $ | 2,660,202 | $ | 1,670,640 | $ | 4,781,938 | $ | 3,575,979 | ||||||||
Operating expenses | ||||||||||||||||
Direct costs of revenue | 1,680,992 | 1,162,804 | 2,376,997 | 1,964,315 | ||||||||||||
Professional fees | 220,182 | 108,681 | 536,330 | 162,047 | ||||||||||||
Salary and related expenses | 1,103,576 | 223,681 | 1,821,671 | 747,442 | ||||||||||||
Stock-based compensation | 409 | - | 86,309 | - | ||||||||||||
Marketing expense | 97,373 | 51,123 | 145,687 | 80,888 | ||||||||||||
Rent expense | 57,183 | 125,727 | 223,673 | 207,442 | ||||||||||||
Other general and administrative expenses | 236,606 | 114,769 | 615,703 | 501,892 | ||||||||||||
Total operating expenses | 3,396,320 | 1,786,785 | 5,806,369 | 3,664,026 | ||||||||||||
Income (loss) from operations | (736,118 | ) | (116,145 | ) | (1,024,431 | ) | (88,047 | ) | ||||||||
Other income (expenses) | ||||||||||||||||
Amortization of debt discount | (121,186 | ) | - | (121,186 | ) | - | ||||||||||
Interest expense | (54,500 | ) | (8,397 | ) | (70,472 | ) | (17,865 | ) | ||||||||
Total other income (expenses) | (175,686 | ) | (8,397 | ) | (191,658 | ) | (17,865 | ) | ||||||||
Net income (loss) | $ | (911,806 | ) | $ | (124,542 | ) | $ | (1,216,089 | ) | $ | (105,912 | ) | ||||
Earnings per share - basic and fully diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Weighted average number of shares of common stock - basic and fully diluted | 380,769,619 | 58,646,269 | 370,937,178 | 56,940,822 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5 |
For the period from | ||||
May 18, 2017 (Date of Inception) | ||||
To September 30, 2017 | ||||
Operating Activities: | ||||
Net loss | $ | (232,515 | ) | |
Adjustments to reconcile net loss from operations to net cash used in operating activities: | ||||
Depreciation Expense | 871 | |||
Amortization Expense | 154 | |||
Change in assets and liabilities: | ||||
Prepaid expense | (4,167 | ) | ||
Accounts payable – related party | 4,167 | |||
Accrued expenses | 184,920 | |||
Net Cash Used In Operating Activities | (46,570 | ) | ||
Investing Activities: | ||||
Purchase of plant and equipment | (10,455 | ) | ||
Purchase of trademark | (12,284 | ) | ||
Net Cash Used In Investing Activities | (22,739 | ) | ||
Financing Activities: | ||||
Issuance of Common Stock, net of transaction cost $12,500 | 87,500 | |||
Shareholder’s Advance | 26,764 | |||
Net Cash Provided By Financing Activities | 114,264 | |||
Net Increase in Cash | 44,955 | |||
Cash, Beginning Of Period | - | |||
Cash, End Of Period | $ | 44,955 | ||
Supplemental Disclosure of Cash Flow Information: | ||||
Cash paid during the period: | ||||
Interest paid | $ | - | ||
Income taxes paid | $ | - | ||
Supplemental Disclosure of Non-cash Flow investing activities: | ||||
Acquisition of office equipment by a shareholder | $ | 10,455 | ||
Acquisition of trademark by a shareholder | $ | 12,284 |
June 30, 2022 and 2021
(unaudited)
Preferred Stock | Common Stock | Additional | Members’Deficit and BHI | |||||||||||||||||||||||||||||||||
No of Shares | No Par Value | Shares | No Par Value | Paid in Capital | Common Stock | Non-controlling Members’Deficit | Accumulated Deficit | Total | ||||||||||||||||||||||||||||
Balance, December 31, 2020 | - | $ | - | - | $ | - | $ | 100 | $ | (1,981,343 | ) | $ | (44,454 | ) | $ | (26,005 | ) | $ | (2,051,702 | ) | ||||||||||||||||
Net loss for the period ended March 31, 2021 | - | - | - | - | - | - | - | 18,630 | 18,630 | |||||||||||||||||||||||||||
Balance, March 31, 2021 | - | $ | - | - | $ | - | $ | 100 | $ | (1,981,343 | ) | $ | (44,454 | ) | $ | (7,375 | ) | $ | (2,033,072 | ) | ||||||||||||||||
Net loss for the period ended June 30, 2021 | - | - | - | - | - | - | - | (124,542 | ) | (124,542 | ) | |||||||||||||||||||||||||
Balance, June 30, 2021 | - | $ | - | - | $ | - | $ | 100 | $ | (1,981,343 | ) | $ | (44,454 | ) | $ | (131,917 | ) | $ | (2,157,614 | ) | ||||||||||||||||
Balance, December 31, 2021 | 51 | $ | - | 358,070,905 | $ | 30,362,949 | $ | - | $ | - | $ | - | $ | (2,917,881 | ) | $ | 27,445,068 | |||||||||||||||||||
Issuance of common stock for acquisition | - | - | 10,000,000 | 531,096 | - | - | - | - | 531,096 | |||||||||||||||||||||||||||
Issuance of common stock for services | - | - | 1,537,500 | 85,900 | - | - | - | - | 85,900 | |||||||||||||||||||||||||||
Net loss for the period ended March 31, 2022 | - | - | - | - | - | - | - | (304,282 | ) | (304,282 | ) | |||||||||||||||||||||||||
Balance, March 31, 2022 | 51 | $ | - | 369,608,405 | $ | 30,979,945 | $ | - | $ | - | $ | - | $ | (3,222,163 | ) | $ | 27,757,782 | |||||||||||||||||||
Beginning balance, value | 51 | $ | - | 369,608,405 | $ | 30,979,945 | $ | - | $ | - | $ | - | $ | (3,222,163 | ) | $ | 27,757,782 | |||||||||||||||||||
Issuance of common stock for services | - | - | 12,500 | 409 | - | - | - | - | 409 | |||||||||||||||||||||||||||
Issuance of common stock as debt discount to loan | - | - | 16,363,636 | 451,636 | - | - | - | - | 451,636 | |||||||||||||||||||||||||||
Amortization of debt discount | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Net loss for the period ended June 30, 2022 | - | - | - | - | - | - | - | (911,806 | ) | (911,806 | ) | |||||||||||||||||||||||||
Balance, June 30, 2022 | 51 | $ | - | 385,984,541 | $ | 31,431,990 | $ | - | $ | - | $ | - | $ | (4,133,969 | ) | $ | 27,298,021 | |||||||||||||||||||
Ending balance, value | 51 | $ | - | 385,984,541 | $ | 31,431,990 | $ | - | $ | - | $ | - | $ | (4,133,969 | ) | $ | 27,298,021 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6 |
For the Six Months ended June 30, 2017
Common Stock | Additional | |||||||||||||||||||
No of | No | Paid in | Accumulated | |||||||||||||||||
Shares | Par Value | Capital | Deficit | Total | ||||||||||||||||
Balance, May 14, 2017 | - | - | - | - | - | |||||||||||||||
Issuance of shares upon incorporation – May 18, 2017 | 6,102,000 | 6,102 | (6,102 | ) | - | - | ||||||||||||||
Recapitalization for reverse merger – restatement adjustment of shares issued at incorporation | 15,126,659 | 143,667 | (143,667 | ) | - | - | ||||||||||||||
Issuance of common stock, net of transaction cost $12,500 | 500,000 | 87,500 | - | - | 87,500 | |||||||||||||||
Net loss for the period | - | - | - | (232,515 | ) | (232,515 | ) | |||||||||||||
Balance, September 30, 2017 - unaudited | 21,728,659 | $ | 237,269 | $ | (149,769 | ) | $ | (232,515 | ) | $ | (145,015 | ) |
(unaudited)
2022 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (1,216,089 | ) | $ | (105,912 | ) | ||
Adjustments to reconcile net loss to net cash used in operations: | ||||||||
Depreciation and amortization expense | 27,794 | 13,146 | ||||||
Amortization of debt discount | 121,186 | - | ||||||
Stock-based compensation | 86,309 | - | ||||||
Bad debt expense | 45,254 | - | ||||||
Change in assets and liabilities: | ||||||||
Accounts receivable | (336,186 | ) | (149,200 | ) | ||||
Inventory | (95,215 | ) | (66,236 | ) | ||||
Prepaid expense | 69,589 | 79,816 | ||||||
Other assets | (1,816 | ) | (1,816 | ) | ||||
Accounts payable and accrued expenses | 62,305 | 253,960 | ||||||
Accounts payable and accrued expenses - related party | - | (113,422 | ) | |||||
Deferred revenue | 211,330 | (1,195,156 | ) | |||||
Net cash used in operating activities | (1,025,539 | ) | (1,284,820 | ) | ||||
Cash flows provided by investing activities: | ||||||||
Acquisition of Rush Soccer, net | 1,216,126 | - | ||||||
Acquisition of BHI | - | 134,003 | ||||||
Prepaid acquisition costs | (1,000,000 | ) | - | |||||
Deferred acquisition costs | (125,472 | ) | - | |||||
Purchase of fixed assets | (11,847 | ) | 5,973 | |||||
Net cash provided by investing activities | 78,807 | 139,976 | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from private placement of BHI common stock | - | 1,183,000 | ||||||
Proceeds from notes payable, net of debt issuance costs | 2,517,275 | 1,493,923 | ||||||
Deferred offering costs | (187,500 | ) | - | |||||
Repayment of notes payable | (106,758 | ) | (1,003,768 | ) | ||||
Net cash provided by financing activities | 2,223,017 | 1,673,155 | ||||||
Net increase in cash | 1,276,285 | 528,311 | ||||||
Cash at beginning of period | 423,165 | 134,003 | ||||||
Cash at end of period | $ | 1,699,450 | $ | 662,314 | ||||
Cash paid for interest | $ | 54,500 | $ | 53,956 | ||||
Cash paid for taxes | $ | - | $ | - | ||||
Non-cash investing and financing activities: | ||||||||
Issuance of common stock for financing | $ | 451,636 | $ | - | ||||
Issuance of common stock for acquisition | $ | - | $ | - |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7 |
ALTITUDE INTERNATIONAL HOLDINGS, INC.
(f/k/a Altitude International, Inc.)
and Subsidiaries
Notes to the Condensed Consolidated Financial Statements
June 30, 2017
(unaudited)
NOTE 1 — BACKGROUND AND DESCRIPTION– NATURE OF BUSINESS
Company Background
Altitude International Holdings, Inc. (“Titan”(f/k/a Altitude International, Inc., the “Company,” “we,” “us,” “our,” or the “Company”“Altitude-NY”), was incorporated in the State of New York on July 13, 1994.
On June 27, 2017, the Company successfully closed a Share Exchange transaction (“Share(the “Share Exchange”) with the shareholders of Altitude International, Inc,Inc. (“Altitude”), a Wisconsin corporation. Altitude was incorporated on May 18, 2017, under the laws of the state of Wisconsin. Wisconsin and has been operating as a wholly owned subsidiary of Altitude-NY since the Share Exchange. Altitude will operate operates through Northern, Central, and South America sales by way of its sole distribution agreement with Woodway Inc. to execute the current business plan of athletic training industry, specifically altitude training. Our objective is to be recognized as one of the upper tier specialty altitude training equipment providers.
On April 24, 2020, the Company formed a wholly owned subsidiary in Wisconsin called “Altitude Sports Management Corp.,” which has no activity to date.
On July 6, 2021, Altitude
Pursuant to the terms of the Share Exchange,Agreement, the Company agreed to issue 6,102,000 shares of its common stock to all the individual shareholders of Altitude, holding 6,102,000BHI in exchange for % ownership of BHI. The Company also agreed to issue shares of Altitudeits Series A preferred stock on a pro rata basis (one to one share exchange). In exchange for this stock issuance, the Company received 100% of the outstanding shares of Altitude. Following this Share Exchange, Altitude became a wholly-owned subsidiary of Titan. There was a cancellation of 14,700,000 shares of common stock of Titan that was held by Titan’s former majority stockholderGregory Breunich as part of the share exchange agreement, which all had a net effect of a decrease of 8,598,000 shares in Titan outstanding shares. The business, assets and liabilities of Titan has changed as a result of this reverse acquisition by Altitude, to Altitude’s business plan.
Following the closing of the Share Exchange Agreement, was raising $100,000 in the Company. On June 27, 2017, the Company issued 500,000 shares of its common stock to an accredited investor pursuant toBHI is a Subscription Agreement for $100,000, or $0.20 per share which was kept at escrow account. During the recapitalization, the Company incurred legal fees of $12,500 which was paid through the attorney’s escrow account and recorded as transaction costs which were netted against the $100,000 proceeds. There is $44,955 remaining in the attorney’s escrow account at September 30, 2017, reported on the accompanying condensed consolidated balance sheet.
We operate through the following 11 wholly-owned subsidiaries: Breunich Holding, Inc., a Delaware corporation (“BHI”), Altitude International, Inc., a Wisconsin corporation (“Altitude Chambers”), Altitude Sports Management Corp., a Wisconsin corporation (“Altitude Sports Management Corp.”), ITA-USA Enterprise, LLC, a Florida limited liability company (“Altitude Academies” or “Club Med Academies”), CMA Soccer, LLC, a Florida limited liability company (“CMAS”), Trident Water, LLC, a Florida limited liability company (“Altitude Water”), Altitude Wellness, LLC, a Florida limited liability company (“Altitude Wellness”), NVL Academy, LLC, a Florida limited liability company (“Altitude Volleyball”), North Miami Beach Academy LLC, a Florida limited liability company (“NMBA”), Six Log Cleaning & Sanitizing LLC, a Florida limited liability company (“SLCS”), and Altitude Online, LLC, a Florida limited liability company (“Altitude Online”).
8 |
Nature of Operations
Altitude International Holdings, Inc. is a holding company focused on a people-first, global wellness group through its operating subsidiaries which are comprised of multiple scalable related revenue streams that together create a vertically integrated high-performance sports, education, and technology group. Our mission is to redefine and revolutionize athletic preparation and training while providing relief, opportunity, and wellness to those that need it the most.
Our sports and education properties comprise what is currently known as Altitude Academies. Our wholly owned subsidiary, Altitude International, Inc. manufactures a variety of world-class hypoxic training chambers, which enables competitive athletes of all kinds to train in a simulated high-altitude environment. This controlled oxygen-deficient environment coupled with specific training protocols achieves numerous scientifically proven benefits in athletic development. Altitude recently has launched its high-performance wellness center, Altitude Wellness, LLC, to serve as the reoccurring revenue model for Altitude’s chamber technology. Altitude Water manufactures several types of Atmospheric Water Generators (“AWG”) ranging from small residential and light commercial to heavy-duty military-grade machines designed for larger-scale uses. Altitude Water’s next-generation air-to-water machines and our proprietary “EnviroGuard™” purification system controlled by our proprietary software produce some of the issuedpurest and outstanding common sharesfinest drinking water in the world. Altitude Water’s drinking water is highly oxygenated, ideally suited for athlete hydration amid competitive performance.
Altitude’s growth initiatives include scaling the existing tuition categories, adding new ones in sports, arts, and sciences in the coming years, pursuing a consolidation strategy within the soccer club system in the United States, and exponentially growing our accredited academic model. Strategic to our continued growth, the establishment of Titan.
NOTE 2 — – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America and has a year-end of December 31.
The unaudited condensed consolidated financial statements of the Company for the six month periods ended June 30, 2022, and 2021 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and has a year-end of December 31.
Principles of consolidation
The consolidated financial statements include the accounts of
9 |
ITA-USA Enterprise LLC, doing business as Club Med Academies and as Altitude Academies, specializes in training and education of young aspiring student-athletes from around the world, providing a pathway from middle school to college to the professional ranks. The Company has no direct relationship with Club Med. ITA’s proprietary educational model currently focuses on sports and academics. The business model is scalable to other disciplines, i.e., the arts and science sectors. It is a tuition-based business hosting boarding and non-boarding students.
CMA Soccer LLC, doing business as Altitude Soccer, the soccer division of Club Med Academies, hosts student-athletes from multiple nations worldwide like all other Club Med Academy sports. CMAS utilizes highly specialized training methodologies blending all of the critical elements required to build an elite-level player. Those who attend participate in a 10 hour per day regimen of soccer and academics. CMAS is a college and professional bound program placing its graduates in colleges throughout the United States and even some in the professional ranks throughout Europe, South America, and the USA. Rush Soccer is a nationally competitive youth soccer club network that administers boys’ and girls’ teams internationally with proprietary training methodology, documentation, and materials, proprietary technologies and platforms, and a database of individuals.
NVL Academy LLC, doing business as Altitude Volleyball, is the beach volleyball and indoor volleyball tuition-based operation. Most of the athletes, except for a few individuals, come from the USA. For the most part, Volleyball in the United States is a women’s sport. NVL operates and functions like all other academy sports.
Trident Water LLC manufactures Atmospheric Water Generators (“AWG’s”). They range from smaller residential, light commercial, and heavy-duty military-grade machines. The machines supply 12, 100, to 200 gallons per day. Trident’s patented purification process produces what management believes is the purest of water that is then put through filters replenishing the calcium and magnesium minerals to make the finest drinking water on the market today.
North Miami Beach Academy LLC, a local park operation with the City of North Miami Beach, provides junior, adult, and family programming for the city residents. In addition to the local park deliverables, NMBA operates a non-boarding tennis and academic academy.
Six Log Cleaning & Sanitizing, LLC provides a wide variety of services to its corporate customers, including but not limited to: general office cleaning, carpet cleaning, window cleaning, and other janitorial protocols. Fogging to prevent and protect against exposure to various bacteria, fungi, and viruses is another Six Log offering.
Altitude International, Inc. manufactures air separation systems and chambers to regulate oxygen, carbon dioxide, humidity and temperature levels in Altitude’s hypoxic chamber training environments. Altitude’s chambers simulate altitudes from 0-39,000 feet, ideal for athletic training. Altitude’s chambers are currently utilized by the National Football League (“NFL,” the Miami Dolphins) and one university (Tulane University) sports teams to train and develop their athletes. An Altitude chamber will be installed for a National Basketball Association (“NBA,” Orlando Magic) shortly.
Altitude Wellness LLC focuses on helping our members reach their individual health goals by offering various experiences that enhance the way you look and feel. Multiple modalities ranging from altitude chambers, cryo chambers, ozone chambers, red light therapy, IV therapy, infrared sauna, and neurofeedback are just a few of the treatments that will be available. The Altitude Wellness Experience will be a combination of a hundred little things that make each member feel special. From warm and chilled eucalyptus towels when you arrive to fresh juices and healthy snacks, all are vital to the experience. The highly trained staff will include nurses, dietitians, trainers, therapists, and health specialists. Each will know the patient by name and be familiar with their profile, which will be completed on the app and available to the Experience Specialists upon each check-in. As of June 30, 2022, Altitude Wellness is not operating.
Altitude Online Learning LLC was recently established in 2021 to support and address the global demand for distance learning. This is a natural extension of our existing brick-and-mortar academic operations. Through our corporation system status, Altitude Online Learning is fully accredited. The economics of an online distance school presents a significant potential opportunity. Now students from around the world will have the opportunity to earn an American diploma in their home countries while attending Altitude Online Learning.
Altitude Sports Management Corp. has not been defined for its use as of June 30, 2022.
All intercompany accounts and transactions are eliminated in consolidation.
10 |
Use of Estimates
The preparation of financial statements in conformity with generally accepted 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 disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Concentrations
Cash is comprised of cash balances. Cash is held at major financial statements include some amountsinstitutions and is subject to credit risk to the extent that those balances exceed applicable Federal Deposit Insurance Corporation (“FDIC”) of $250,000. The Company had material balances in excess of the insured limits as of June 30, 2022, and December 31, 2021, of approximately $1,449,450 and $173,000, respectively.
Accounts Receivable
As of June 30, 2022, and December 31, 2021, the net accounts receivable balances were $830,393 and $91,520, net of allowances. There were allowances for doubtful accounts of $248,990 and $205,455 on June 30, 2022 and December 31, 2021, respectively. The credit terms provided are as follows:
1. | Altitude Academies – The tuition is paid typically in two installments but, on a case-by-case basis, modifications do occur. | |
2. | Rush Soccer – Rebates for soccer kits purchased by club members and membership rebates. | |
3. | Altitude Water – The normal credit terms are 50% down with final payment upon delivery. | |
4. | Altitude Chambers – The normal credit terms are 50% down with progress payments until final payment upon delivery. |
Bad debt expense is determined based on management’s best estimatesthe aging of accounts receivable and judgments. subsequent collections. Typically, receivables aged 60 days, or more are reviewed for determination. Receivables over 90 days, unless payment terms with some payments made to date, are reserved as additional allowance for doubtful accounts.
Prepaid Acquisition Costs
The most significant estimatesCompany has made two $500,000 payments as a deposit for the acquisition of the Sandpiper resort property (see Note 3). These deposits are nonrefundable.
11 |
Deferred Costs
Deferred costs for offering costs as of June 30, 2022 is $187,500. These costs relate to the valuationCompany’s capital raise and Form S-1 as filed and are for legal and professional fee expenses.
Deferred costs for the acquisition of the software rightsSandpiper resort property (see Note 3) are for legal and redeemable common stock liability. It is reasonably possible that as more current information becomes available, any adjustment could be significant in future reporting periods.
Fixed Assets
Fixed assets are stated at cost, net of accumulated depreciation. Expenditures that extend the life, increase the capacity, or improve the efficiency of property and equipment are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation is recognized using the straight-line method over the following approximate useful lives:
SCHEDULE OF ESTIMATED USEFUL LIVES
Computers, software, and office equipment | 1 – 6 years | |
Machinery and equipment | 3 – 5 years | |
Leasehold improvements | Lesser of lease term or estimated useful life | |
Operating / shop equipment | 4 – 7 years | |
Transportation equipment | 5 – 6 years |
Inventory and equipment
The inventory is comprised of Atmospheric Water Generators (“AWG’s”) at Trident and acquired intangibles are capitalized whenchamber related parts at Altitude International and is valued at the Company believes that there is a high likelihood that the patent will be issued and there will be future economic benefit associated with the patent. These costs will be amortized on a straight-line basis over a 20 years life from the datelower of patent filing. All costs associated with abandoned patent applications are expensed. In addition, the Company will review the carrying value of patents for indicators of impairment on a periodic basis and if it determines that the carrying value is impaired, it values the patent at fair value.cost or market. As of SeptemberJune 30, 2017, carrying value of patent2022, and December 31, 2021, the inventory was approximately $12,130.
Inventory is indicated, the Company measures the amount of such impairment by comparing the fair value to the carrying value. The amortization of the trademark was not significant for the period ended September 30, 2017.
SCHEDULE OF INVENTORY
Finished Goods | $ | 32,000 | ||
Parts | 224,450 | |||
Total | $ | 256,450 |
Impairment of Long-Lived Assets
The Company’s long-lived assets and other assets (consisting of property and equipment) are reviewed for impairment in accordance with the guidance of the FASB ASC Topic 360-10, Property, Plant, and Equipment, and FASB ASC Topic 205, Presentation of Financial Statements.Equipment. Long lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by that asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.
Revenue Recognition
Our sales are generated from six revenue streams: 1) contracts with customers for the design, development, manufacture, and installation of simulated altitude athletic equipment, 2) sports training and academic tuition, and 3) hosting events, 4) membership fees, 5) uniform sales, and 6) sale of atmospheric water generators. For the simulated athletic equipment and the water filtration systems, we provide our products under fixed-price contracts. Under fixed-price contracts, we agree to perform the specified work for a pre-determined price. To the extent our actual costs vary from the estimates upon which the price was negotiated, we will generate more or less profit or could incur a loss.
We account for a contract after it has been approved by all parties to the arrangement, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.
12 |
We evaluate the products or services promised in each contract at inception to determine whether the contract should be accounted for as having one or more performance obligations. The products and services in our contracts are typically not distinct from one another due to their complex relationships, customization, and the significant contract management functions required to perform under the contract. Accordingly, our contracts are typically accounted for as one performance obligation, except for the simulated altitude athletic equipment whereas there is a service obligation over a period of time.
We determine the transaction price for each contract based on the consideration we expect to receive for the products or services being provided under the contract.
In regard to the simulated altitude athletic equipment and the atmospheric water generators (“AWG”), we recognize revenue as performance obligations are satisfied and the customer obtains control of the products and services. In determining when performance obligations are satisfied, we consider factors such as contract terms, payment terms and whether there is an alternative future use of the product or service. Substantially all of our revenue is recognized over time as we perform under the contract because if our customer were to terminate the contract for reasons other than our non-performance, we would have the right to recover damages which would include, among other potential damages, the right to payment for our work performed to date plus a reasonable profit to deliver products or services that do not have an alternative use to us.
In regard to the sports training and academics tuition revenue recognition policy, the tuition is recognized over the course of the training period which is typically a semester. In determining when performance obligations are satisfied, we consider factors as to actual attendance at the academy.
In regard to the revenue associated with Rush Soccer, the revenue related to events is recognized at the time of the event. The revenue associated with uniforms is recognized at the time of delivery. Membership fees are recognized at the beginning of the membership period.
In regard to the simulated athletic equipment and the atmospheric water generators, the revenue is recognized upon delivery and/or installation, specific to the customer.
Deferred Revenue
Our payment terms generally require a substantial initial deposit to confirm a reservation and tuition for the school year or training period. Historically, our deferred revenue balances are comprised solely of customer deposit balances and changes from May 18, 2017 (dateperiod to period due to the seasonal nature of inception)billings and cash collections, the number of students in each program and the recognition of revenue. A deposit made to September 30, 2017 the Company had not experienced impairment losses on its long-lived assets.
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as incurred. Advertising costs foran expense over the period from May 18, 2017 (date of inception) to September 30, 2017 was approximately $10,000.
Fair Value of Financial Instruments
The book values of cash, prepaid expenses,accounts receivable, and accounts payable approximate their respective fair values due to the short-term nature of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs).
13 |
The hierarchy consists of three levels
● | Level one — Quoted market prices in active markets for identical assets or liabilities; | |
● | Level two — Inputs other than level one inputs that are either directly or indirectly observable; and | |
● | Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. |
Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.
Net loss per common share areis computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted-averageweighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. The Company does not have any dilutive shares of common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effectas of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presentedJune 30, 2022, or the date of issuance, whichever is later.
Income Taxes
The Company accounts for income taxes.taxes in accordance with FASB ASC 740, “Income Taxes.” Deferred income taxes arise fromtax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between incomethe financial statements carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases.
Deferred tax assets and financial reporting and principally relate to recognition of revenue and expenses in different periods for financial and tax accounting purposes andliabilities are measured using currently enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered or settled.
The effect of a change in tax rules on deferred tax assets and laws. In addition,liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset canwill not be generated by net operating loss (NOLs) carryover. Ifrealized.
Tax benefits of uncertain tax positions are recognized only if it is more likely than not that some portionthe Company will be able to sustain a position taken on an income tax return. The Company has no liability for uncertain tax positions as of June 30, 2022. Interest and penalties in any, related to unrecognized tax benefits would be recognized as interest expense. The Company does not have any accrued interest or allpenalties associated with unrecognized tax benefits, nor was any significant interest expense recognized during the six months ended June 30, 2022.
Goodwill and Intangible Assets
The Company accounts for intangible assets in accordance with the authoritative guidance issued by the FASB. Intangibles are valued at their fair value and are amortized taking into account the character of the acquired intangible asset and the expected period of benefit. The Company evaluates intangible assets for impairment, at a deferred tax asset willminimum, on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be realized,recoverable from its estimated undiscounted future cash flows. Recoverability of intangible assets is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends, and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. The Company tests its goodwill using a market-based approach to determine the estimated fair value of the reporting unit as to which the goodwill has been allocated. As of June 30, 2022, based on the assessment of Management, the Company determined that goodwill associated with the share exchange in which the Company acquired BHI amounted to $29,493,398. The Company will evaluate goodwill annually for any impairment. The Company also determined that the acquisition of Soccer Partners (see Note 4) had provisional goodwill of $166,834. The Company will have an independent valuation allowanceof the acquisition to determine any change in the estimated amount recorded.
14 |
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options, which simplifies accounting for convertible instruments. The new guidance eliminates two of the three models in ASC 470-20 that require separating embedded conversion features from convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation. The guidance is recognized.
Recently Issued Accounting Standards: Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
NOTE 3 – ACQUISITION
Soccer Partners America
On March 7, 2022, Altitude International Holdings, Inc. and CMA Soccer LLC entered into a Consulting, Management and License Agreement with Soccer Partners America (“Soccer Partners”), a Colorado not for profit corporation. Soccer Partners, under the brand name of Rush Soccer, has developed the largest known network of affiliated independent youth soccer clubs and with CMA Soccer, will establish a Rush residential academy program and a men’s professional soccer team. As part of the agreement, certain members of the management of Soccer Partners were granted a combined total of 556,000. The Company also pays consideration of $20,000 per year for a period of 20 years, or $400,000, to Soccer Partners. Management has recorded a provisional goodwill, as of June 30, 2022, of $166,834, and may be adjusted based on management’s final determination of the fair value of the assets and liabilities acquired. shares of common stock of the Company and employment agreements for five individuals. The Company’s common stock is not historically traded at a significant volume which has caused significant fluctuations in the price per share. For the initial valuation, the stock was valued at $ per share per the closing price on March 4, 2022, or $
The following table summarizes the consideration given for Altitude and the fair values of the assets and liabilities assumed at the acquisition date.
SCHEDULE OF BUSINESS COMBINATIONS AT FAIR VALUE
Consideration given: | ||||
Common stock shares given | $ | 556,000 | ||
Future consideration | 400,000 | |||
Total consideration given | $ | 956,000 | ||
Fair value of identifiable assets acquired, and liabilities assumed: | ||||
Cash | $ | 1,216,126 | ||
Accounts receivable | 447,941 | |||
Prepaid expenses | 118,150 | |||
Other current assets | 800 | |||
Fixed assets, net | 4,065 | |||
Loan payable | (501,724 | ) | ||
Accounts payable and accrued expenses | (176,275 | ) | ||
Deferred revenue | (219,917 | ) | ||
Note payable | (100,000 | ) | ||
Total identifiable net asset | 789,166 | |||
Goodwill | 166,834 | |||
Total consideration | $ | 956,000 |
Pro-Forma Financial Information
The following unaudited pro-forma data summarizes the result of operations for the six months ended June 30, 2021, and 2020, as if the acquisition Rush Soccer had been completed on January 1, 2021. The pro-forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2021.
SCHEDULE OF PRO-FORMA FINANCIAL INFORMATION
For the Six Months Ended June 30, 2022 | ||||||||||||||||
Rush | Pro-forma | |||||||||||||||
ALTD | Soccer | Adjustments | Total | |||||||||||||
Revenue and income, net | $ | 3,770,318 | $ | 1,444,875 | $ | - | $ | 5,215,193 | ||||||||
Operating expenses | 5,320,287 | 1,785,438 | - | 7,105,725 | ||||||||||||
Loss from operations | (1,549,970 | ) | (340,563 | ) | - | (1,890,533 | ) | |||||||||
Other income (expense) | (191,658 | ) | 140,800 | - | (50,858 | ) | ||||||||||
Net loss | $ | (1,741,627 | ) | $ | (199,763 | ) | $ | - | $ | (1,941,390 | ) | |||||
Net loss per common share - basic and fully diluted | $ | (0.00 | ) | $ | (0.01 | ) | ||||||||||
Weighted average number of common shares outstanding during the period - basic and fully diluted | 370,937,178 | 370,995,488 |
For the Six Months Ended June 30, 2021 | ||||||||||||||||
Rush | Pro-forma | |||||||||||||||
ALTD | Soccer | Adjustments | Total | |||||||||||||
Revenue and income, net | $ | 3,575,979 | $ | 985,229 | $ | - | $ | 4,561,208 | ||||||||
Operating expenses | 3,664,026 | 1,099,105 | - | 4,763,131 | ||||||||||||
Income (loss) from operations | (88,047 | ) | (113,876 | ) | - | (201,923 | ) | |||||||||
Other income (expense) | (17,865 | ) | - | - | (17,865 | ) | ||||||||||
Net income (loss) | $ | (105,912 | ) | $ | (113,876 | ) | $ | - | $ | (219,788 | ) | |||||
Net income (loss) per common share - basic and fully diluted | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||||
Weighted average number of common shares outstanding during the period - basic and fully diluted | 56,940,822 | 65,241,426 |
Sandpiper Resort Property Acquisition
On April 27, 2022, the Company executed a Purchase and Sale Agreement (the “Agreement”) with Sandpiper Resort Properties, Inc. and Holiday Village of Sandpiper, Inc., for the sale of its property in Port Saint Lucie, Florida (the “Property”). The Property being sold in the Agreement is the Property on which the Company’s facilities are currently located and where the Company currently operates.
The purchase price for the Property is $55,000,000, with an initial refundable deposit of $500,000 due within five business days of the execution of the Agreement. This deposit was delivered by the Company on May 2, 2022. An additional non-refundable deposit of $500,000 was paid on June 6, 2022. With this payment, the first deposit became non-refundable. See Note 2.
The Closing Date of the purchase of the Property shall occur no later than August 31, 2022, or at such time as the parties agree. The Company may assign the Agreement to an affiliate of the Company no later than five days prior to the Closing Date, as long as the Company is charged interest or penaltiesnot released of its obligations under the Agreement and the Company is responsible for any associated costs. See Note 12.
16 |
NOTE 4 – FIXED ASSETS
The Company has fixed assets related to income tax matters,computer and equipment, furniture and fixtures, leasehold improvements, operating / shop equipment and transportation equipment. The depreciation of the Company would record such interest as interest expenseequipment is over a three-year period. As of June 30, 2022, and would record such penalties as other expense in the consolidated statements of operations. No such charges have been incurred by the Company. For the period from May 18, 2017 (date of inception) to September 30, 2017,December 31, 2021, the Company had fixed assets, net of accumulated depreciation, of $74,154 and $71,036, respectively. The fixed assets are as follows:
SCHEDULE OF FIXED ASSETS
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Computer and equipment | $ | 157,686 | $ | 148,893 | ||||
Furniture and fixtures | 17,331 | 17,331 | ||||||
Leasehold improvements | 162,840 | 234,835 | ||||||
Operating / shop equipment | 264,242 | 185,128 | ||||||
Transportation equipment | 36,991 | 36,991 | ||||||
Total fixed assets | 639,090 | 623,178 | ||||||
Less: Accumulated depreciation | 564,936 | 552,142 | ||||||
Total fixed assets, net | $ | 74,154 | $ | 71,036 |
Depreciation for the six months ended June 30, 2022, and 2021 was $12,794 and $13,146, respectively.
NOTE 5 – GOODWILL AND INTANGIBLE ASSETS
The Company has goodwill related to the acquisition of Altitude International Holdings, Inc. As of June 30, 2022, and December 31, 2021, the Company had goodwill of $29,659,798 and $29,493,398, respectively.
The Company has intangible assets related to the license agreement between Altitude International, Inc. and Sporting Edge. The Company is amortizing this intangible asset over a period of ten years. As of June 30, 2022, and December 31, 2021, the intangible assets were $272,500 and $287,500, respectively. For the six months ended June 30, 2022, and 2021, the Company recorded amortization expense for intangible assets of $15,000 and $0, respectively.
The future amortization of the license agreement is as follows:
SCHEDULE OF INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE
2022 | $ | 15,000 | ||
2023 | 30,000 | |||
2024 | 30,000 | |||
2025 | 30,000 | |||
2026 | 30,000 | |||
Thereafter | 137,500 | |||
Total | $ | 272,500 |
NOTE 6 – NOTES PAYABLE
SCHEDULE OF NOTES PAYABLE
June 30, 2022 | December 31, 2021 | |||||||||||||||||||||||
Accrued | Accrued | |||||||||||||||||||||||
Principal | Interest | Total | Principal | Interest | Total | |||||||||||||||||||
SBA EIDL | $ | 149,169 | $ | - | $ | 149,169 | $ | 149,169 | $ | - | $ | 149,169 | ||||||||||||
FVPO Funds | - | - | - | 91,758 | 20,574 | 112,332 | ||||||||||||||||||
Grand Slam | 419,560 | - | 419,560 | 434,560 | - | 434,560 | ||||||||||||||||||
FVPO Funds (a) | 3,250,000 | - | 3,250,000 | 500,000 | - | 500,000 | ||||||||||||||||||
SBA EIDL | 113,400 | - | 113,400 | 113,400 | - | 113,400 | ||||||||||||||||||
SBA | 100,000 | - | 100,000 | - | - | - | ||||||||||||||||||
Subtotal | 4,032,129 | - | 4,032,129 | 1,288,887 | 20,574 | 1,309,461 | ||||||||||||||||||
Debt Discounts (a) | (580,922 | ) | - | (580,922 | ) | - | - | - | ||||||||||||||||
Total | $ | 3,451,207 | $ | - | $ | 3,451,207 | $ | 1,288,887 | $ | 20,574 | $ | 1,309,461 |
On May 5, 2020, the Company received $20,800 in the form of a loan through the CARES Act Paycheck Protection Program. The balance on June 30, 2022 and December 31, 2021 was $20,800 and $20,800, respectively.
17 |
On January 11, 2019, ITA entered into a Term Loan Commitment (the “Loan Note”) with Feenix, which provides for a loan of $300,000. The loan note has a three-year term and bears interest at a rate of 8.5% per annum. The loan note may be prepaid at any time prior to maturity with no uncertain tax positions.
On October 31, 2011, ITA entered into a Promissory Loan (the “Loan Note”) with Grand Slam Partners (“Grand Slam”), which provides for a loan of $735,714. Beginning on December 31, 2012, and on or before December 31st thereafter until the loan note is paid in full, ITA shall pay an annual lump sum payment at the conclusion of each calendar year equal to the greater of 25% of net profits of the corresponding calendar year or $30,000 (“Scheduled Annual Payment”). The Loan Note may be prepaid at any time prior to maturity with no prepayment penalties. As of June 30, 2022 and December 30, 2021, the balances of the loan note payable were $419,560 and $434,560, respectively.
On May 27, 2020, and August 25, 2020, ITA and NVL received unsecured loans from the Small Business Administration (“SBA”) of $149,900 and $113,400, respectively. These 2020 SBA loans bear interest at 3.75% per annum and are payable over 30 years with all payments of principal and interest deferred for the first twelve months. Substantially all of the assets of the Company are pledged as security for this loan. The balances on June 30, 2022, and December 31, 2021, was $149,169 and $113,400, respectively, for both periods. These notes are secured by substantially all assets of ITA and NVL.
On December 20, 2021, Trident Water and Altitude International Holdings, Inc. entered into an unsecured Loan Agreement with FVP Servicing, LLC for $500,000. The loan matures on December 20, 2023, and bears interest of 12%. The balance as of December 31, 2021, was $500,000. The loan is secured by the assets of Trident Water and Altitude International Holdings, Inc. and guaranteed by all entities of the Company. On February 8, 2022, the Company entered into a First Amendment to Loan Agreement for an additional incremental advance of $100,000. On April 29, 2022, the Company executed a Second Amendment to Loan Agreement with Feenix. This amendment relates to the Feenix loan dated December 20, 2021. The amendment provided the Company $2,650,000. As of June 30, 2022, and December 31, 2021, the balances were $3,250,000 and $500,000, respectively. See Note 9.
In the acquisition of Soccer America (see Note 3), the Company assumed the SBA loan dated June 15, 2020, with a balance of $100,000. The promissory note requires monthly payments of $641. The promissory note matures on June 15, 2050, and bears interest of 2.75%. The promissory note is secured by the assets of Soccer America. As of June 30, 2022, the balance was $100,000.
NOTE 7 – COMMITMENTS AND CONTINGENCIES
The Company is subject, from time to time, to claims by third parties under various legal disputes. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows.
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
18 |
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
September 30, 2017 | ||||
Office equipment | $ | 10,455 | ||
Less: Accumulated depreciation | (871 | ) | ||
$ | 9,584 |
September 30, 2017 | ||||
Trademark | $ | 12,284 | ||
Less: Accumulated amortization | (154 | ) | ||
$ | 12,130 |
Total September 30 | Deferred Tax Asset | |||||||
2017 | 2017 | |||||||
Net operating loss carry-forward | 233,000 | 88,000 | ||||||
Less: valuation allowance | (233,000 | ) | (88,000 | ) | ||||
Total | $ | - | $ | - |
2017 | ||||
Tax benefit at U.S. federal statutory rate | $ | (88,000 | ) | |
State income taxes/(benefit) before valuation allowance, net of federal benefit | - | |||
Increase in valuation allowance | 88,000 | |||
Total provision for income tax benefit | $ | - |
On June 27, 2017, Altitude International, Inc., (“Licensee” or “the Company) entered a license agreement with Sporting Edge UK. Sporting Edge UK Ltd., Inc., a related company in United Kingdom (“Licensor”), the licensor is the sole and exclusive owner of and has the right to license to the licensee the ability to manufacture and sell rights to the full range of membrane basedmembrane-based systems for the production of reduced oxygen environments and associated services as well as the use of patents and trademarks held by Sporting Edge UK Ltd or Mr. David Vincent.
On January 24, 2019, Altitude and Sporting Edge UK Ltd (“Licensor”) agreed to grant the licensee exclusive right andentered into a Revised Licensing Agreement that grants a license to Altitude to use Sporting Edge UK’s proprietary technology related to properly engineered, membrane-based designs for simulated altitude training equipment. The annual license fee under the Manufacturingrevised agreement is $1.00 per year. The product line ranges from personal at home use machines to fully integrated environmental rooms and Sales Rightschambers. Altitude has the licensing rights to use all technology to manufacture the products and to sell them (directly or through distributors) in the Territory includingfollowing territories:
● | The Continent of North America, Central America and South America. |
● | Other territories as may be agreed upon from time to time, on a temporary or permanent basis. |
All royalty amounts due under the Continent2017 license agreement were waived. The Company will continue to pay for equipment per the agreement.
On October 31, 2021, Altitude Wellness LLC and 16929 Wellness Consultants Inc. (“16929 Wellness”) entered into a Management Agreement. As part of North America, Central America and the Continentagreement, the Company pays the management of South America. On16929 Wellness a monthly payment of $20,000 until the effectiveearlier of six months following the date of thisthe agreement or the day that the monthly management fee from selling franchises is greater than $20,000 per month. 16929 Wellness granted a waiver on the $20,000 payment for November 2021. The Company will pay 16929 Wellness a monthly fee of $1,250 for each franchise that uses Dr. Kenneth JH Lee as a medical director and for a period20% of 5 years thereafter,all initial franchisee franchise fees (estimated to be $8,000 per franchise purchased. As part of the agreement, 3,000,000 shares of common stock of the Company (“Licensee”) shall pay upfront payment of $10,000were issued to Licensor annually. In addition, commencing on the sixth anniversary of the effective date the licensee shall pay continuing royalty fees on all sales of product manufactured using the IP. The royalty payable shall be calculated as 0.5% of the Sale Price. The Company recorded the payment due of $4,167 under Prepaid expenses and accounts payable as of September 30, 2017.
NOTE 8 – RELATED PARTY TRANSACTIONS
For the six months ended June 30, 2017,2022, the balance dueCompany compensated Gregory Breunich and Gabriel Jaramillo collectively $180,000, which was paid to our current CEO, Mr. Dave Vincent was recorded under Shareholder’s Advance approximately $26,764, which is a verbal agreement, non-interest bearing, unsecured and payabletheir company, Trans World Performance LLC.
For the six months ended June 30, 2022, the Company compensated Gregory Breunich $20,000 in addition to the above compensation.
The above balances were paid during the period ended June 30, 2022. The payments are reflected in professional fees on demand. These advances included $10,455 of acquisition of office equipment and $12,284 of acquisition of trademark which were disclosed at supplemental disclosure of non-cash flow investing activities of the statement of cash flow.
NOTE 9 – STOCKHOLDERS’ EQUITY
Preferred Stock
On February 5, 2015, the Board Robert Kanuth, in which it will provide for reimbursement of private airline travel expenses incurred on behalfDirectors of the Company authorized shares of preferred stock with 0 par value. Each share of the preferred stock is entitled to one vote and is convertible into one share of common stock.
On July 21, 2021, the Company filed a Certificate of Designation for his useSeries A Preferred Stock. The Series A Preferred Stock shares vote together with the common stock and have voting rights equal to 0.019607 multiplied by the total issued and outstanding shares of an aircraft in which he has an interest in. These travel expenses totaled $123,750 forcommon stock eligible (the “Numerator”) to vote at the three months ended Septembertime of the respective vote divided by 0.49 minus the Numerator. As of December 31, 2021, with shares of common stock outstanding, the 51 shares of Series A Preferred Stock would have 369,547,734 votes per share of Series A Preferred Stock.
19 |
On July 23, 2021, the Company issued shares of preferred stock to Gregory Breunich as part of the July 23, 2021 agreement between the Company and BHI.
As of June 30, 20172022, and forDecember 31, 2021, the period from May 18, 2017 to September 30, 2017. This amount is included in accrued expenses at September 30, 2017.
Common Stock
Altitude was incorporated on May 18, 2017, under the laws of the state of Wisconsin with $0.001$ par value. On June 12, 2017, Altitude issued 6,102,000 shares of its common stock at par value of $0.001The shareholders have one vote per share as founder shares for future potential services from 15 individuals, including Mr. Dave Vincent, who isof common stock. authorized common stock with
After the majority equity interest shareholderclosing of certain Stock Purchase Agreements, in private sale transaction and the director of the Company, with a total recorded at par value of $6,102.
On February 10, 2021, the Company filed amended Articles of Incorporation with the State of New York to amend its authorized shares of common stock by an additional 605,000,000 shares of capital stock consisting of (i) shares of common stock, 0 par value, and (ii) shares of preferred stock, 0 par value. whereas the total authorized is a total of
On January 1, 2022, the Company issued its legal counsel 1,488. shares of common stock for legal work for January 2022. The common stock of the Company is thinly traded and had a value of $ per share, therefore the Company recorded the transaction at $
On February 1, 2022, the Company issued its legal counsel 862. shares of common stock for legal work for February 2022. The common stock of the Company is thinly traded and had a value of $ per share, therefore the Company recorded the transaction at $
On February 22, 2022, the Company issued issued and outstanding, 14,700,000 of which were cancelled on June 27, 2017. As considerationto Hospitality Funding Inc. in exchange for the Share Exchange Agreement, the shareholders of Altitude received a total of 6,102,000 restricted shares of Titan proportionateservices related to their shareholdings in Altitude. shares of common stock of the Company
On March 1, 2022, the Company issued 500,000 shares of its common stock to an accredited investor pursuant to a Subscription Agreement for $100,000, or $0.20 per share. Total proceed received was $87,500 after paying transaction costs of $12,500. Immediately following the Share Exchange agreement, there will are 21,728,659legal counsel shares of common stock for legal work for March 2022. The common stock of the Company is thinly traded and had a value of $ per share, therefore the Company recorded the transaction at $750.
On March 17, 2022, the Company issued a consultant 27,800. shares of common stock for services. The common stock is thinly traded and had a value of $ per share, therefore the Company recorded the transaction at $
On March 7, 2022, Altitude International Holdings, Inc. and CMA Soccer LLC entered into a Consulting, Management and License Agreement with Soccer Partners America (“Soccer Partners”), a Colorado not for profit corporation. Soccer Partners, under the brand name of Rush Soccer, has developed the largest known network of affiliated independent youth soccer clubs and with CMA Soccer, will establish a Rush residential academy program and a men’s professional soccer team. As part of the agreement, certain members of the management of Soccer Partners were granted a combined total of 556,000. See Note 3. shares of common stock of the Company and employment agreements for five individuals. The common stock of the Company is thinly traded and had a value of $ per share, therefore the Company recorded the transaction at $
On April 1, 2022, the Company issued its legal counsel 409. shares of common stock for legal work for April 2022. The common stock of the Company is thinly traded and had a value of $ per share, therefore the Company recorded the transaction at $
On April 29, 2022, as part of the financing with Feenix (see Note 6), the Company issued Feenix shares of common stock as a loan discount.
Stock Option Plan
On February 13, 2018, the Company’s shareholders and Board of Directors approved the 2017 Incentive Stock Plan.
There are currently no stock options currently issued and outstanding under the 2017 Plan, as all no shares of preferred stock outstanding. remaining stock options issued and
NOTE 10 – INCOME TAXES
As of SeptemberJune 30, 2017,2022, the Company has net operating loss carry forwards of $504,804 that $254,336 may be available to reduce future years’ taxable income through 2041. In 2020, there were no preferred stock issuedtax impacts as Breunich Holdings, Inc. was taxed as a limited liability company. The Company’s net operating loss carry forwards may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code.
The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 21% to loss before taxes for fiscal year 2021 and outstanding. As2020), as follows:
SCHEDULE OF INCOME TAX EXPENSE (BENEFIT)
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Tax expense (benefit) at the statutory rate | $ | (202,301 | ) | $ | (205,425 | ) | ||
State income taxes, net of federal income tax benefit | (48,167 | ) | (48,911 | ) | ||||
Change in valuation allowance | 250,468 | 254,336 | ||||||
Total | $ | - | $ | - |
The tax effects of Septemberthe temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities.
The tax years 2021 and 2020 remains for examination by federal agencies and other jurisdictions in which it operates.
The tax effect of significant components of the Company’s deferred tax assets and liabilities at June 30, 2017,2022, and December 31, 2021, are as follows:
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES
June 30, | December 31, | |||||||
2022 | 2021 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforward | $ | 504,804 | $ | 254,336 | ||||
Timing differences | - | - | ||||||
Total gross deferred tax assets | 504,804 | 254,336 | ||||||
Less: Deferred tax asset valuation allowance | (504,804 | ) | (254,336 | ) | ||||
Total net deferred taxes | $ | - | $ | - |
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
Because of the historical earnings history of the Company, the net deferred tax assets for 2022 and 2021 were fully offset by a 100% valuation allowance. The valuation allowance for the remaining net deferred tax assets was $504,804 and $254,336 as of June 30, 2022, and December 31, 2021, respectively. Due to the transaction between the Company and BHI, which resulted in a change of control, net operating loss carryforwards prior to the transaction may not be usable for the future.
21 |
NOTE 11 – REVENUE CLASSES
The Company has 21,728,659 sharessix distinct revenue streams: altitude chambers, tuition-based sports academies, hosting events, membership fees, uniform sales and atmospheric water generators. Selected financial information for the Company’s operating revenue classes are as follows:
SCHEDULE OF OPERATING REVENUE CLASSES
For the Six | For the Six | |||||||
Months ended | Months ended | |||||||
June 30, 2022 | June 30, 2021 | |||||||
Revenues: | ||||||||
Altitude chambers | $ | 420,913 | $ | - | ||||
Tuition-based sports academies | 3,250,660 | 3,277,555 | ||||||
Hosting events | 737,393 | - | ||||||
Uniform sales | 71,730 | - | ||||||
Membership fees | 202,497 | - | ||||||
Atmospheric water generators | 98,745 | 298,424 | ||||||
Total | $ | 4,781,938 | $ | 3,575,979 |
NOTE 12 – SUBSEQUENT EVENTS
On July 27, 2022, the Company executed a Third Addendum to Purchase and Sale Agreement (the “Addendum”) with Sandpiper Resort Properties, Inc. and Holiday Village of no par common stock issuedSandpiper, Inc. (collectively, “Sandpiper”), modifying that certain Purchase and outstanding.Sale Agreement effective as of April 25, 2022 (the “Agreement”) for the purchase by the Company of property in Port Saint Lucie, Florida (the “Property”). See Note 3. The Property being sold is the Property on which the Company’s facilities are currently located and where the Company currently operates and includes approximately 216 acres and approximately 3,000 feet of waterfront property.
Under the terms of the Addendum, the Agreement is modified such that the Company shall pay a Third Deposit of $250,000 to Sandpiper by July 29, 2022. The Company’s total deposit shall then be $1,250,000. Additionally, the parties have agreed that the Closing Date shall be August 31, 2022.
Further, section 12.12.2 and 12.12.3 of the Agreement, discussing Material Loss and Nonmaterial Loss respectively, are amended by the Addendum. Section 12.12.2 is changed such that if the Casualty Renovation Cost exceeds $250,000 and either party elects not to pay the excess then either party may terminate the Agreement by Notice delivered to the other party, in which case the deposit shall be returned to the Company. Pursuant to the amended 12.12.3 section, if the Casualty Renovation Cost is less than or equal to $250,000, neither party shall have any right to terminate the Agreement.
22 |
The statements contained in the following MD&A and elsewhere throughout this Quarterly Report on Form 10-Q, including any documents incorporated by reference, that are not historical facts, including statements about our beliefs and expectations, are “forward-looking statements” within the meaning of Operations
These forward-looking statements, which reflect our total operating expenses formanagement’s beliefs, objectives, and expectations as of the three months ended September 30, 2017:
For the three months ended | ||||
September 30, 2017 | ||||
Advertising expenses | $ | 10,384 | ||
Legal and professional fee | 30,040 | |||
Travel expenses | 169,998 | |||
Other general and administrative costs | 8,304 | |||
Operating expenses | $ | 218,726 |
We caution that the foregoing list of factors is not exclusive, and new factors may emerge, or changes to the foregoing factors may occur, that could impact our business. We undertake no obligation to publicly update or revise these statements, whether as a business combination, although thereresult of new information, future events or otherwise, except to the extent required by the federal securities laws.
This discussion should be read in conjunction with our financial statements on our 2021 Form 10-K, and our financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.
Plan of Operation
The 2022 operational plan consists of:
1. | Continue establishing and expanding the different segments associated with the expanded ALTD operations. The divisions include: |
a. | Altitude Chamber Technology Division | |
b. | Tennis, Golf, Basketball, Volleyball and Academic Academies Division | |
c. | Soccer Academy Division, including RUSH Soccer | |
d. | Water Manufacturing / Technology Division | |
e. | Cleaning and Sanitation Division | |
f. | Altitude Wellness Division | |
g. | Altitude Online Learning Division |
2. | Adopt a comprehensive branding, marketing, digital and social media strategy for the revenue lines above. | |
3. | Update a back-office administration plan and adopt a staffing and management hierarchy for the multi-discipline operation. | |
4. | Plan to expand in complementary ways, including establishing a basketball division (estimated to be ready for student athletes in 2022) and swimming and lacrosse divisions) estimated to be ready for student athletes in 2023). |
No assurances can be no assurancegiven that any of these plans will come to fruition or that if implemented that they will necessarily yield positive results.
23 |
Recent Developments
Purchase Agreement
On April 27, 2022, the Company entered into a purchase and sale agreement (the “Purchase Agreement”) by and among the Company, Sandpiper Resort Properties, Inc. (“SRP”) and Holiday Village of Sandpiper, Inc. (“HVS”, and together with SRP, the “Sellers”), whereby the Company agreed to purchase Sellers’ real estate property in Port Saint Lucie, Florida (the “Property”). The Property being sold in the Purchase Agreement is the Property on which the Company’s facilities are currently located and where the Company currently operates and includes approximately 216 acres and approximately 3,000 feet of waterfront property.
The purchase price for the Property is $55,000,000, with an initial deposit of $500,000 due within five business days of the execution of the Purchase Agreement. This deposit was delivered by the Company on May 2, 2022. The Company has until May 31, 2022 to complete its due diligence on the Property, until which time it can terminate the Purchase Agreement or elect to proceed to a closing. If the Company elects to proceed to a closing, an additional nonrefundable deposit of $500,000 is due within five days following the expiration of the due diligence period.
On May 31, 2022, the Company executed a First Addendum to Purchase and Sale Agreement (the “Addendum”) with Sandpiper, acknowledging the deposit became nonrefundable and allowing an extension of the Closing until July 29, 2022, if elected.
On June 20, 2022, the Company’s second deposit in the amount of $500,000 to Sandpiper Resort Properties, Inc. and Holiday Village of Sandpiper, Inc. (collectively, “Sandpiper”), delivered according to the terms of that certain Purchase and Sale Agreement effective as of April 25, 2022 (the “Agreement”) for the purchase by the Company of property in Port Saint Lucie, Florida (the “Property”), became nonrefundable except in certain circumstances. The first deposit of $500,000 and the second deposit shall be applied to the Purchase Price of the Property upon closing and is nonrefundable to the Company except in the event of a default by Sandpiper of its obligations under the Agreement that is not cured within any applicable cure period provided in the Agreement or as otherwise specifically provided in this Agreement.
On July 27, 2022, the Company executed a Third Addendum to Purchase and Sale Agreement (the “Addendum”) with Sandpiper Resort Properties, Inc. and Holiday Village of Sandpiper, Inc. (collectively, “Sandpiper”), modifying that certain Purchase and Sale Agreement effective as of April 25, 2022 (the “Agreement”) for the purchase by the Company of property in Port Saint Lucie, Florida (the “Property”). The Property being sold is the Property on which the Company’s facilities are currently located and where the Company currently operates and includes approximately 216 acres and approximately 3,000 feet of waterfront property.
Under the terms of the Addendum, the Agreement is modified such that the Company willshall pay a Third Deposit of $250,000 to Sandpiper by July 29, 2022. The Company’s total deposit shall then be successful in effecting a business combination.
Further, section 12.12.2 and 12.12.3 of Inception)the Agreement, discussing Material Loss and Nonmaterial Loss respectively, are amended by the Addendum. Section 12.12.2 is changed such that if the Casualty Renovation Cost exceeds $250,000 and either party elects not to September 30, 2017
For the period from | ||||
May 18, 2017 (Date of Inception) to | ||||
September 30, 2017 | ||||
Advertising expenses | $ | 10,384 | ||
Legal and professional fee | 30,040 | |||
Travel expenses | 179,781 | |||
Other general and administrative costs | 12,610 | |||
Operating expenses | $ | 232,515 |
Bridge Loan
On April 29, 2022, the Company compliesand its wholly owned subsidiary, Trident Water, LLC, entered into a Second Amendment to Loan Agreement (the “Amended Loan Agreement”) with its periodic reporting requirements and effectsFVP Servicing, LLC, a business combination, although there can be no assuranceDelaware limited liability company (“FVP”). The Amended Loan Agreement amends that certain loan agreement dated as of December 20, 2022, as amended on February 8, 2022 between the Company will be successful in effecting a business combination.
Under the terms of the Amended Loan Agreement, the Company had cash and cash equivalentsreceived an increase to the amount of approximately $44,955. The Company has financed its cash requirementsthe loan from FVP in an incremental advance in the saleamount of common stock and advances from related parties. Also at September 30, 2017, the Company had current liabilities of $215,851 consisting of shareholder’s advance of $26,764 and other current liabilities of $189,087. Uses of funds have included activities to establish our business, professional fees and other general and administrative expenses.
24 |
Impact of COVID-19 Pandemic In response to |
Off-balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Results of Operations
For the three months ended June 30, 2022, compared to the three months ended June 30, 2021
Revenue
The Company had revenue of $2,660,202 for the three months ended June 30, 2022, compared to $1,670,640 for the comparable period in 2021. The increase in 2022 compared to 2021 is due to 2021 being impacted by COVID-19 restrictions whereas 2022 reflects the rebound in the tuition business as the Company works its way out of the impact of COVID-19. Additionally, the acquisition of Soccer Partners (“Rush Soccer”) on March 7, 2022 provided $773,950 for the three months ended June 30, 2022.
Direct Costs of Revenue
The Company had direct costs of revenue of $1,680,992 for the three months ended June 30, 2022, compared to $1,162,804 for the comparable period in 2021. In 2021, direct costs of revenue were at a higher percentage of sales, compared to the same period in 2022. In 2022 the Company was able to reduce the expenses related to sales due to a renegotiated contract. Additionally, the acquisition of Rush Soccer added approximately $774,000 for the three months ended June 30, 2022.
Operating Expenses
The Company had operating expenses of $3,396,320 for the three months ended June 30, 2022, compared to $1,786,785 for the three months ended June 30, 2021. The increase was primarily due to professional fees ($220,182 for the three months ended June 30, 2022, compared to $108,681 for the same period in 2021) and salary and related expenses ($1,103,576 for the three months ended June 30, 2022, compared to $223,681 for the same period in 2021). The operating expenses for the three months ended June 30, 2022 are comprised of the following: direct costs of revenue, $1,680,992, professional fees, $220,182, salary and related expenses, $1,103,576, stock-based compensation, $409, marketing expense, $97,373, rent expense, $57,183, and other general and administrative, $236,606. Additionally, the acquisition of Rush Soccer added approximately $359,000 for the three months ended June 30, 2022.
25 |
Net Income (Loss)
The Company had a net loss of $911,806 for the three months ended June 30, 2022, compared to net income of $124,542 for the three months ended June 30, 2021.
For the six months ended June 30, 2022, compared to the six months ended June 30, 2021
Revenue
The Company had revenue of $4,781,938 for the six months ended June 30, 2022, compared to $3,575,979 for the comparable period in 2021. The increase in 2022 compared to 2021 is due to 2021 being impacted by COVID-19 restrictions whereas 2022 reflects the rebound in the tuition business as the Company works its way out of the impact of COVID-19. Additionally, the acquisition of Soccer Partners (“Rush Soccer”) on March 7, 2022 provided approximately $1,012,000 for the six months ended June 30, 2022.
Direct Costs of Revenue
The Company had direct costs of revenue of $2,376,997 for the six months ended June 30, 2022, compared to $1,964,315 for the comparable period in 2021. In 2021, direct costs of revenue were at a higher percentage of sales, compared to the same period in 2022. In 2022 the Company was able to reduce the expenses related to sales due to a renegotiated contract. Additionally, the acquisition of Rush Soccer added approximately $699,000 for the six months ended June 30, 2022.
Operating Expenses
The Company had operating expenses of $5,806,369 for the six months ended June 30, 2022, compared to $3,664,026 for the six months ended June 30, 2021. The increase was primarily due to stock-based compensation ($86,309 for the six months ended June 30, 2022, compared to $0 for the same period in 2021), professional fees ($536,330 for the six months ended June 30, 2022, compared to $162,047 for the same period in 2021), and marketing expense ($145,687 for the six months ended June 30, 2022, compared to $80,888 for the same period in 2021). The operating expenses for the six months ended June 30, 2022 are comprised of the following: direct costs of revenue, $2,376,997, professional fees, $536,330, salary and related expenses, $1,821,671, stock-based compensation, $86,309, marketing expense, $145,687, rent expense, $223,673, and other general and administrative, $615,703. Additionally, the acquisition of Rush Soccer added approximately $486,000 for the six months ended June 30, 2022.
Net Income (Loss)
The Company had a net loss of $1,216,089 for the six months ended June 30, 2022, compared to $105,912 for the six months ended June 30, 2021.
Liquidity and Capital Resources
As of June 30, 2022, the Company had cash and cash equivalents of $1,699,450. We do not have sufficient resources to effectuate our business. We expect to incur expenses offset by revenues during the next twelve months of operations. We estimate that these expenses will be comprised primarily of general expenses including overhead, legal and accounting fees. To maintain our plan of growth, we need to raise a minimum of an additional $750,000. These factors raise substantial doubts about the Company’s ability to continue as a going concern.
Operations used cash of $1,025,539 for the six months ended June 30, 2022 compared to $1,284,820 for the same period in 2021.
We provided cash from investing for financing activities of $78,807 for the six months ended June 30, 2022 compared to $139,976 for the same period in 2021.
We had cash provided by financing activities for the six months ended June 30, 2022, of $2,223,017 compared to $1,673,155 for the same period in 2021.
26 |
We will have to raise funds to pay for our expenses. We may have to borrow money from shareholders or issue debt or equity or enter into a strategic arrangement with a third party. There can be no assurance that additional capital will be available to us. We currently have no arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. Since we have no such arrangements or plans currently in effect, our inability to raise funds for our operations will have a severe negative impact on our ability to remain a viable company.
Evaluation of Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company'scompany’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its chief executive and chief financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information whichthat it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC'sSEC’s rules and forms and that information required to be disclosed is accumulated and communicated to the chief executive and interim chief financial officer to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are not effective as of such date. The Chief Executive Officer and Chief Financial Officer have determined that the Company continues to have the following deficiencies which represent a material weakness:
● | The Company does not have a majority of independent directors; |
● | Lack of in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. With material, complex and non-routine transactions, management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of these transactions; |
● | Insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting; and |
● | Insufficient written policies and procedures over accounting transaction processing and period end financial disclosure and reporting processes. |
● | To remediate our internal control weaknesses, management intends to implement the following measures: |
The additional hiring is contingent upon The Company’s efforts to obtain additional funding through equity or debt and the results of its operations. Management hopes to secure funds in the coming fiscal year but provides no assurances that it will be able to do so.
27 |
The Company’s officer doesofficers do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits 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, within the company 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. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on 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. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control Over Financial Reporting
During the fiscal quarter covered by this Quarterly Report, there has been noa significant change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. Except as set forth below, we are currently not aware of any such pending or threatened legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
Item 1A. Risk Factors
We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 15, 2022.
28 |
On April 1, 2022, the Company issued 12,500 shares of common stock to its legal counsel for services rendered to the Company. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.
On April 29, 2022, the Company issued 16,363,636 shares of common stock to Feenix as part of financing. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.
None.
Not applicable.
Item 5. Other Information
None.
29 |
**Filed Herewith.
30 |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURE | TITLE | DATE | ||
/s/ Gregory Breunich | Principal Executive Officer and Principal Financial and Accounting Officer | |||
31 |