Aeternum Health, Inc 10-K, filed Jun 22, 2023
Aeternum Health, Inc. (AETN)
About this 10-K
Aeternum Health, Inc filed this 10-K on June 22, 2023, covering the fiscal year ended February 28, 2023.
Headline figures
Fiscal year ended February 28, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $597.31K
- compared with a net loss of $2.07M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the fiscal year ended
or
For the transition period from _________ to _________
Commission
File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
(Address of Principal Executive Offices with Zip Code)
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes
☐
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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).
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 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 ☐ |
Emerging
Growth Company |
Smaller
reporting 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. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s
most recently completed second fiscal quarter. $
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: shares of common stock as of June 16, 2023.
UNITED STATES BASKETBALL LEAGUE, INC.
TABLE OF CONTENTS
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PART I
Item 1. Business.
Forward-Looking Statements
Unless the context indicates otherwise, as used in this Annual Report, the terms “SPEV,” “we,” “us,” “our,” “our company” and “our business” refer, to United States Basketball League, Inc. Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements.” These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.
Overview
Until March 22, 2023, we were an emerging diversified investment vehicle focused on acquiring equity in companies that we believed were or could be leaders in the markets in which they were involved. .
On November 23, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Shurepower, LLC d/b/a Shorepower Technologies (“Shorepower”), under which Shorepower was merged with and into SPEV (formerly “USBL”) The closing occurred on March 22, 2023.
Shorepower is a transportation electrification infrastructure manufacturer of Electric Vehicle Supply Equipment (EVSE), Truck Stop Electrification (TSE) and electric standby Transport Refrigeration Unit (eTRU) stations. They have 60 operational TSE facilities with over 1,800 individual electrified parking spaces in 31 states. Shorepower’s stations are EPA SmartWay-Verified and CARB-Verified. Shorepower has its headquarters in Hillsboro, Oregon, near Portland, Oregon, and an office in Detroit, Michigan metro area. Shorepower is a certified minority owned business enterprise (MBE). The Shorepower management team is comprised of a group of seasoned individuals with knowledge of technology, transportation and heavy-duty vehicles and nearly two decades working together. Combined, the team has managed over $16 million in government contracts and grant funds to deploy transportation electrification throughout the nation.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.
Item 1B. Unresolved Staff Comments
None
| 3 |
Item 2. Properties
Not applicable.
Item 3. Legal Proceedings.
There are no material claims, actions, suits, proceedings, or investigations that are currently pending or, to the Company’s knowledge, threatened by or against the Company or respecting its operations or assets, or by or against any of the Company’s officers, directors, or affiliates.
Item 4. Mine Safety Disclosures.
Not applicable.
PART II.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is quoted on the OTC QB Market under the symbol “SPEV (formerly “USBL”)”.
Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule. The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares. Broker-dealers who sell penny stocks to persons other than established customers and accredited investors must make a special suitability determination for the purchase of the security. Accredited investors, in general, include individuals with assets in excess of $1,000,000 (not including their personal residence) or annual income exceeding $200,000 or $300,000 together with their spouse, and certain institutional investors. The rules require the broker-dealer to receive the purchaser’s written consent to the transaction prior to the purchase and require the broker-dealer to deliver a risk disclosure document relating to the penny stock prior to the first transaction. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent to customers disclosing recent price information for the penny stocks.
Holders
As of May 25, 2023 there were approximately 736 holders of record of our common stock, although we believe that there are other persons who are beneficial owners of our common stock held in street name. The transfer agent and registrar for our common stock is Olde Monmouth Stock Transfer, 200 Memorial Pkwy, Atlantic Highlands, NJ 07716. Their telephone number is (732) 872-2727.
Dividends
We have not paid cash or stock dividends and have no present plan to pay any dividends, intending instead to reinvest our earnings, if any. For the foreseeable future, we expect to retain any earnings to finance the operation and expansion of our business and the payment of any cash dividends on our common stock is unlikely.
Recent Sales of Unregistered Securities
As of February 17, 2023, to fund the purchase of Shorepower, we sold 11,000,000 shares of our common stock through the purchase of units at a price of $0.06 per unit, each unit consisting of one share of common stock and one warrant to purchase one shares of our common stock, for total proceeds of $660,000.
Issuer Purchase of Securities
We did not repurchase any of our securities during our fiscal year ended February 28, 2023.
Item 6. [Reserved]
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
Results of Operations
Year Ended February 28, 2023, Compared to the Year Ended February 28, 2022
Revenue
We recognized consulting revenue of $0 for the year ended February 28, 2023, compared to $5,000 for the year ended February 28, 2022.
Professional Fees
For the year ended February 28, 2023, we incurred $131,300 of professional fees compared to $31,551 for the year ended February 28, 2022, an increase of $99,749 or 316.2%. Professional fees generally consist of audit, legal, accounting and transfer agent fees. The increase in the current year is due to an increase of legal, audit and transfer agent fees.
General and Administrative Expense
For the year ended February 28, 2023, we incurred $263,505 of general and administrative expenses compared to $229,484 for the year ended February 28, 2022, an increase of $34,021 or 14.8%. The increase in the current period is primarily the result of stock compensation of $183,042 and other fees related to our SEC filings.
Officer Compensation
For the year ended February 28, 2023, we incurred $135,000 of director compensation expense compared to $0 for the year ended February 28, 2022. During the current year we issued 500,000 shares of common stock for total non-cash stock compensation of $135,000.
Director Compensation
For the year ended February 28, 2023, we incurred $67,500 of director compensation expense compared to $48,000 for the year ended February 28, 2022. During the current year we issued 250,000 shares of our common stock for total non-cash stock compensation of $67,500. During the prior year we issued common stock to two of our directors for total non-cash stock compensation of $48,000.
Other Income/Expense
During the year ended February 28, 2023, we had no other income or expense. During the year ended February 28, 2022, we recognized a gain of forgiveness of debt of $55,270 (Note 5), related party loss on conversion of debt of $127,480 (Note 4), an expense of $1,699,145 related to the conversion of preferred stock and $2,000 of other income.
Net Loss
For the year ended February 28, 2023, we had a net loss of $597,305 compared to $2,073,390 for the year ended February 28, 2022. Our decrease in net loss is largely attributed to our decrease in other expense from the prior year.
Liquidity and Capital Resources
Operating Activities
For the year ended February 28, 2023, we used $160,670 in operating activities compared to $117,989 for the year ended February 28, 2022.
Financing Activities
During the year ended February 28, 2023, we received $660,000 from the sale of our common stock. During the year ended February 28, 2022, we received $240,000 from the sale of our common stock. We received a cash advance from our CEO of $3,000, $28,870 from another related party and $29,800 from members of the prior management. We also received $3,581 from another party to assist with general operating expenses.
We will need to raise additional financing through grants, loans, securities offerings or additional investments to fund our ongoing operations. Under the Bipartisan Infrastructure Law that became law on November 15, 2021, Congress will inject $7.5 billion specifically for charging stations. Shorepower has been highly successful in obtaining government contracts and grants to deploy electric transportation infrastructure projects, in the past. We have a goal of securing up to 5% ($375,000,000) of the available funds and up to 10% by the end of the EV charging station program under the Bipartisan Infrastructure Law.
As indicated in the report of the independent registered public accounting firm, the financial statements referred to above have been prepared for the Company assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 3. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts or classification of liabilities that might be necessary in the event the Company cannot continue in existence.
Critical Accounting Policies
Refer to Note 2 of our financial statements contained elsewhere in this Form 10-K for a summary of our critical accounting policies and recently adopted and issued accounting standards.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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Item 8. Financial Statements and Supplementary Data
UNITED STATES BASKETBALL LEAGUE, INC.
TABLE OF CONTENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
United States Basketball League, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of United States Basketball League, Inc. (the “Company”) as of February 28, 2023 and February 28, 2022 and the related statements of operations, stockholders’ equity (deficiency), and cash flows for the year ended February 28, 2023 and February 28, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of United States Basketball League Inc. as of February 28, 2023 and February 28, 2022 and the results of its operations and cash flows for the year ended February 28, 2023 and February 28, 2022 conformity with accounting principles generally accepted in the United States.
Explanatory Paragraph
As discussed in Note 10 to the financial statements, the 2022 financial statements have been restated to correct two misstatements.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on my audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor are we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Going Concern Uncertainty
The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgements. We determined that there were no critical audit matters.
/s/
June 22, 2023
We have served as the Company’s auditor since 2020.
Auditor info:
PCAOB ID 6631
| F-2 |
UNITED STATES BASKETBALL LEAGUE, INC.
BALANCE SHEETS
| February 28, | February 28, | |||||||
| 2023 | 2022 | |||||||
| (Restated) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | $ | ||||||
| Funds held in escrow | ||||||||
| Prepaid stock for services | ||||||||
| Other prepaids | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Equity (Deficit): | ||||||||
| Preferred stock, $ par value, shares authorized; shares issued and outstanding | ||||||||
| Series A preferred stock, $ par value, shares designated; and shares issued and outstanding, respectively | ||||||||
| Series B preferred stock, $ par value, shares designated; and shares issued and outstanding, respectively | ||||||||
| Preferred stock value | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Common shares to be issued | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock, at cost; shares of common stock | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
UNITED STATES BASKETBALL LEAGUE, INC.
STATEMENTS OF OPERATIONS
| For the Years Ended | ||||||||
| February 28, | ||||||||
| 2023 | 2022 | |||||||
| $ | $ | |||||||
| Operating Expenses: | ||||||||
| Professional fees | ||||||||
| General and administrative | ||||||||
| Officer compensation | ||||||||
| Director compensation | ||||||||
| Total operating expenses | ||||||||
| Loss from Operations | ( | ) | ( | ) | ||||
| Other Income (Expense): | ||||||||
| Gain on forgiveness of debt | ||||||||
| Other income | ||||||||
| Preferred stock expense | ( | ) | ||||||
| Loss on conversion of debt – related party | ( | ) | ||||||
| Total other expense | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Loss per Common Share: Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Number of Common Shares Outstanding: Basic and Diluted | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
UNITED STATES BASKETBALL LEAGUE, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED FEBRUARY 28, 2023 and 2022
| Common Stock | Series
A Preferred Stock | Series
B Preferred Stock | Additional Paid-in | Accumulated | Shares to | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | be Issued | Capital |
Deficit | Be Issued | Shares | Amount | (Deficit) | ||||||||||||||||||||||||||||||||||||
| Balance, February 28, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||||||||||
| Common stock issued for director services | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Forgiveness of related party debt | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock sold for cash | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for loans payable – related party | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred stock to common stock | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Balance, February 28, 2022 (restated) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Balance | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for director services | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for officer compensation | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services – related party | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for pending acquisition | — | ( | ) | — | |||||||||||||||||||||||||||||||||||||||||||
| Common stock and warrants sold for cash | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion of preferred stock to common stock | ( | ) | ( | ) | — | ( |
) | — | |||||||||||||||||||||||||||||||||||||||
| Net Loss | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Balance, February 28, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||
| Balance | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
UNITED STATES BASKETBALL LEAGUE, INC.
STATEMENTS OF CASH FLOWS
| For the Years Ended | ||||||||
| February 28, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Gain on forgiveness of debt | ( | ) | ||||||
| Loss on conversion of debt – related party | ||||||||
| Preferred stock expense | ||||||||
| Common stock granted for director fees | ||||||||
| Common stock granted for officer compensation | ||||||||
| Common stock issued for services – related party | ||||||||
| Common stock issued for services | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaids | ||||||||
| Accounts payable and accrued expenses | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Loan receivable – related party | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Increase in due to related parties | ||||||||
| Loan payable | ||||||||
| Repayment of loan payable | ( | ) | ||||||
| Cash proceeds from sale of common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Net change in cash | ||||||||
| Funds held in escrow | ( | ) | ||||||
| Cash, beginning of year | ||||||||
| Cash, end of year | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | $ | ||||||
| Income tax paid | $ | $ | ||||||
| Supplemental disclosure of non-cash financing activity: | ||||||||
| Related party loans converted to common stock | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
UNITED STATES BASKETBALL LEAGUE, INC.
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2023
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
United States Basketball League, Inc. (“SPEV (formerly “USBL”)”, “the Company”) was incorporated in Delaware on May 29, 1984 as a wholly owned subsidiary of Meisenheimer Capital, Inc. (“MCI”) for the purpose of developing and managing a professional basketball league, the United States Basketball League (the “League”). Prior to the pending merger, SPEV has primarily engaged in selling franchises and managing the League. From 1985 and up to the present time, SPEV has sold a total of approximately forty active franchises (teams), a vast majority of which were terminated for non-payment of their respective franchise obligations.
On April 7, 2021, through a series of Stock Purchase Agreements (the “Purchase Agreements”), the majority owners of the Company, Richard C. Meisenheimer, Daniel T. Meisenheimer, III, James Meisenheimer, Meisenheimer Capital, Inc. and Spectrum Associates, Inc. (the “Sellers”) sold common shares which it held, to a new investor group. The Sellers also sold of SPEV’s preferred stock at a per share price of $ per share to EROP Enterprises, LLC. As a result of the sale of common and preferred stock by the Sellers, the Company experienced a change in control.
World Equity Markets acted in the capacity of a broker/dealer for the Purchase Agreements and was issued shares of common stock for its services, and Verde Capital was issued shares for Consulting Services. Effective April 7, 2021, the Board of Directors accepted the resignation of Daniel T. Meisenheimer, III as Chairman of the Board of Directors and President of the Company. Effective April 7, 2021, Saeb Jannoun was appointed to fill the vacancy following the resignation of Daniel T. Meisenheimer, III as Chairman of the Board of Directors and President of the Company. Mr. Michael Pruitt also joined the Board.
On
November 23, 2022, SPEV entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Shurepower, LLC d/b/a
Shorepower Technologies, Inc. (“Shorepower”) under which Shorepower will be merged with and into SPEV subject to several
closing conditions, including satisfactory completion of due diligence reviews by each party to the Merger Agreement, Shorepower
providing SPEV with the most recent two years of audited financial statements by a PCAOB auditor, SPEV authorizing a new class of
Series B preferred stock with each Series B preferred share having the voting power of
shares of SPEV common stock, SPEV completing a stock and warrant financing to have a minimum of $
The closing occurred on March 22, 2023.
Shorepower
is a transportation electrification infrastructure manufacturer of Electric Vehicle Supply Equipment (EVSE), Truck Stop Electrification
(TSE) and electric standby Transport Refrigeration Unit (eTRU) stations. They have
The Company changed its name to Shorepower Technology, Inc. effective June 20, 2023.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
| F-7 |
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s accounting estimates include the collectability of receivables, useful lives of long-lived assets and recoverability of those assets, impairment in fair value of goodwill.
Concentration of Credit Risk
We maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant credit risk on cash.
Stock-based Compensation
In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 allows companies to account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods.
Cash Equivalents
The
Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There
were
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| Level 3: | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements on February 28, 2023 and 2022.
Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented.
| F-8 |
Income Taxes
Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Company’s control, it is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred taxes could change in the near term.
Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. As of February 28, 2023, and 2022, no liability for unrecognized tax benefits was required to be reported.
Revenue Recognition
In 2014, the FASB issued guidance on revenue recognition (“ASC 606”), with final amendments issued in 2016. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes.
Recently Issued Accounting Pronouncements
The Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity
of operations, realization of assets, and liquidation of liabilities in the normal course of business. As shown in the accompanying financial
statements, the Company has an accumulated deficit of $
NOTE 4 – RELATED PARTY TRANSACTIONS
During
the year ended February 28, 2022, Saeb Jannoun, CEO, advanced the Company $
During
the year ended February 28, 2022, EROP Enterprises LLC (“EROP”), a significant shareholder, advanced the Company $
| F-9 |
On
April 7, 2021, the Company issued restricted shares of common stock each to two of its directors for services. The shares were
valued at $, the closing stock price on the date of grant, for total non-cash expense of $
During
the year ended February 28, 2022, EROP purchased shares of common stock for $
From February 1, 2022 through February 28, 2022, EROP
provided consulting services for total cash compensation of $
During
the year ended February 28, 2022, the Company was engaged by a relative of a shareholder to provide consulting services. As of February
28, 2022, the Company has recorded $
During
the year ended February 28, 2023, the Company granted shares of common stock to EROP for services per the terms of a consulting
agreement. The shares were valued at $, the closing stock price on the date of grant, for total non-cash expense of $
During
the year ended February 28, 2023, the Company granted shares of common stock to Thirty-05, LLC, a company owned by Saeb Jannoun,
its CEO, for officer and director services. The shares were valued at $, the closing stock price on the date of grant, for total
non-cash expense of $
During
the year ended February 28, 2023, the Company granted shares of common stock to Michael Pruitt for director services. The shares
were valued at $, the closing stock price on the date of grant, for total non-cash expense of $
On February 23, 2023, pursuant to the terms of the merger with Shorepower, the Company granted shares of Series B preferred stock and shares of its common stock to Jeff Kim, the CEO of Shorepower.
During
Q4 2022, the Company advanced $
NOTE 5 – DUE TO PRIOR RELATED PARTIES
On April 7, 2021, as part of the purchase and sale agreement, the principals of MCI consisting of Daniel Meisenheimer III, Richard Meisenheimer and their affiliated entities agreed to cancel previously issued and outstanding loans made to the Company.
Spectrum
Associates agreed to cancel indebtedness in the amount of $
As
a result of the debt cancellation the Company recognized a gain on the forgiveness of debt of $
NOTE 6 – COMMON STOCK
On April 29, 2021, the Company issued shares of common stock to World Equity Markets who acted in the capacity of a broker/dealer for the Purchase Agreements (Note 1). The shares were valued at $, the closing stock price on the date of grant, for total non-cash expense of $. The expense is being amortized over the -month term of the service agreement with World Equity Markets. As of February 28, 2022, the Company recognized $ of the expense.
On April 6, 2021, the Company issued shares of common stock to Verde Capital, LLC for consulting services. The shares were valued at $, the closing stock price on the date of grant, for total non-cash expense of $. The expense is being amortized over the -year term of the service agreement with Verde Capital, LLC. As of February 28, 2022, the Company recognized $ of the expense.
During
the year ended February 28, 2022, the Company sold shares of common stock for total cash proceeds of $
| F-10 |
On May 18, 2021, the Company increased its authorized shares of common stock to shares.
During
the year ended February 28, 2023, the Company granted shares of common stock to Millennial Investments, LLC for consulting services
per the terms of a consulting agreement. The shares were valued at $, the closing stock price on the date of grant, for total non-cash
expense of $
On
February 17, 2023, the Company sold shares
of common stock through the purchase of units at a price of $ per
unit, each unit consisting of one share of its common stock and one warrant to purchase shares of its common stock, for total
proceeds of $
On March 4, 2023, shares of Series A Preferred stock were cancelled and shares of common stock were issued (Note 7).
Refer to Note 4 for shares issued to a related party.
NOTE 7 – PREFERRED STOCK
On May 18, 2021, the Company increased its authorized shares of Preferred Stock from to shares.
There
are shares designated as Series A preferred stock
(“Series A”). Each share of the Series A has five votes, is entitled to a
As of February 28, 2023, there were shares of Series A issued and outstanding.
As
part of the contemplated merger, the Company designated of its shares of authorized preferred stock as Series B
preferred.
Refer to Note 4 for shares issued to a related party.
NOTE 8 – WARRANTS
On
February 17, 2023, the Company sold shares of common stock through the purchase of units at a price of $ per unit, each
unit consisting of one share of common stock and one warrant to purchase common stock, for total proceeds of $
In accordance to ASC 815-40, an equity-linked financial instrument can be classified in equity only if it (1) is indexed to the reporting entity’s own stock and (2) meets all other conditions for equity classification. The warrants are classified as equity instruments because a fixed amount of cash is exchanged for a fixed amount of equity.
The fair value of the warrants was determined using the Black-Scholes option pricing model which requires the input of subjective assumptions, the expected life of the warrants, and the expected stock price volatility. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different for future awards.
SCHEDULE OFWARRANT OF FAIR VALUE ASSUMPTIONS
Years Ended February 28, | ||||||||
| 2023 | 2022 | |||||||
| Expected life (years) | N/A | |||||||
| Risk-free interest rate | % | N/A | ||||||
| Expected volatility | % | N/A | ||||||
| Dividend yield | % | N/A | ||||||
The expected life of the warrants was estimated using the “simplified method,” as the Company has no historical information to develop reasonable expectations about future exercise patterns for its warrant grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. The expected life of awards that vest immediately use the contractual maturity since they are vested when issued.
For stock price volatility, the Company calculated its expected volatility based on the historical closing price of its common stock, par value $0.01 per share. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the warrant at the grant-date.
SCHEDULE OF WARRANT ACTIVITY
Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contract Term | Intrinsic Value | |||||||||||||
| Outstanding, February 28, 2022 | — | - | ||||||||||||||
| Issued | $ | - | ||||||||||||||
| Cancelled | $ | — | - | |||||||||||||
| Exercised | $ | — | - | |||||||||||||
| Outstanding, February 28, 2023 | $ | $ | ||||||||||||||
NOTE 9 – INCOME TAXES
Deferred
taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating
loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of
the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment. The U.S. federal income tax rate of
| F-11 |
Net deferred tax assets consist of the following components as of February:
SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES
| 2023 | 2022 | |||||||
| Deferred tax assets: | ||||||||
| NOL Carryover | $ | ( | ) | $ | ( | ) | ||
| Related Party Accruals | ||||||||
| Less: valuation allowance | ||||||||
| Net deferred tax asset | $ | $ | ||||||
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the period ended February 28, due to the following:
SCHEDULE OF INCOME TAX PROVISION
| 2023 | 2022 | |||||||
| Deferred Tax Assets: | ||||||||
| Book Loss | $ | ( | ) | $ | ( | ) | ||
| Related Party Accruals | ( | ) | ||||||
| Other nondeductible expenses | ||||||||
| Less valuation allowance | ||||||||
| Net deferred tax provision | $ | $ | ||||||
At
February 28, 2023, the Company had net operating loss carry forwards of approximately $
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2016.
NOTE 10 – RESTATEMENT
The balance sheet as of February 28, 2022, was being restated to correctly present shares of Series A preferred stock that were converted into shares of common stock. The conversion, although effective on February 28, 2022, the common shares were not processed and issued by the transfer agent until March 4, 2022. The restatement had no impact on the statement of operations and the statement of cash flows for the year ended February 28,2022.
| F-12 |
SCHEDULE OF RESTATED BALANCE SHEET
| As of February 28, 2022 | ||||||||||||
| As Reported | Adjusted | As Restated | ||||||||||
| Current Assets: | ||||||||||||
| Cash | $ | $ | $ | |||||||||
| Prepaid stock for services | ||||||||||||
| Total Assets | $ | $ | $ | |||||||||
| Current Liabilities: | ||||||||||||
| Accounts payable | $ | $ | $ | |||||||||
| Total Current Liabilities | ||||||||||||
| Stockholders’ Equity (Deficit): | ||||||||||||
| Series A preferred stock, $ par value, shares issued and outstanding | ||||||||||||
| Common stock, $ par value, shares authorized; | ( | ) | ||||||||||
| Additional paid-in capital | ( | ) | ||||||||||
| Common shares to be issued | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||||
| Treasury stock, at cost; shares of common stock | ( | ) | ( | ) | ||||||||
| Total Stockholders’ Equity | ||||||||||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | $ | |||||||||
In
addition, a disclosure was added to Note 4, for $
NOTE 11 – SUBSEQUENT EVENTS
The Company’s Agreement and Plan of Merger (the “Merger Agreement”) with Shurepower, LLC d/b/a Shorepower Technologies (“Shorepower”) under which Shorepower was merged with and into SPEV (the “Merger”) was closed on March 22, 2023.
Under
the terms of the Merger Agreement, Shorepower now owns
Following
the closing of the merger between SPEV and Shorepower, Shorepower has transferred its current debt obligations of $
Effective on the date of closing the merger, Saeb Jannoun and Michael D. Pruitt resigned as directors of the Company, and Mr. Jannoun resigned as the CEO. Jeff Kim was appointed as the sole officer and director.
Effective June 20, 2023, the Company’s name was changed to Shorepower Technologies Inc and its ticker symbol to SPEV.
| F-13 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures.
Management’s Report Disclosure Controls and Procedures
Based on their evaluation as of February 28, 2023, our management, with the participation of our President and Chief Financial Officer, being our principal executive and principal financial officer, respectively, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, the President and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of February 28, 2023.
There were no changes in our internal controls over financial reporting that occurred during the quarter ended February 28, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company in accordance with and as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management’s assessment of the effectiveness of the small business issuer’s internal control over financial reporting is as of February 28, 2023. We believe that internal control over financial reporting is not effective.
Item 9B. Other Information
None
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The following persons served as our directors and executive officers for the fiscal years ended February 28, 2023 and 2022 as well as following the merger with Shorepower on March 22, 2023. Each director holds office until the next annual meeting of the stockholders or until his successor has been duly elected and qualified. Each executive officer serves at the discretion of the Board of Directors of the Company.
| Name | Age | Position | ||
| Jeff Kim (1) | 50 | CEO, President and Director | ||
| Saeb Jannoun (2) | 66 | Former Chairman of the Board and President | ||
| Michael D. Pruitt (2) | 62 | Former Board Member |
| (1) | Appointed March 22, 2023. | |
| (2) | Resigned all positions March 22, 2023. |
| 6 |
Background of Executive Officers and Directors
Mr. Kim has been involved with truck idle-reduction technologies for more than 20 years as an engineering consultant and design specialist. In a project sponsored by NYSERDA (New York State Energy Research & Development Authority), he performed an operational analysis of competing off-board truck stop electrification (TSE) facilities which helped develop a comprehensive understanding of the technical issues of TSE technologies. He then led the design of the simpler and more cost effective Shorepower TSE infrastructure system that includes power and entertainment connections: electrical power, video, and wireless Internet. He also led the design team responsible for the engineering and assembly of Shorepower’s comprehensive unattended automated payment and control system. Mr. Kim presented preliminary findings for the TSE demonstrations at the Transportation Research Board’s 83rd Annual Meeting in Washington, DC in January 2004.
Mr. Kim has been responsible for all Shorepower corporate operations and will continue to work with local, state and regional stakeholders to develop a strong market position for electric transportation infrastructure. He will continue to recommend product improvements and establish R&D objectives, lead product engineering, manage assimilation of data collected from electrified facilities, and oversee site construction and deployment activities at future locations. Mr. Kim has also been intimately involved with an Electric Power Research Institute (EPRI) effort to develop electrical codes and standards for electric transportation power infrastructure. In February 2007 (https://www.ecmag.com/magazine/articles/article-detail/codes-standards-big-rigs-getting-good-nights-rest) the group submitted recommended standards to the National Electric Code (NEC), which is now in the National Electrical Code Handbook, used by the majority of jurisdictions throughout North America.
In 2005 Mr. Kim completed the development and demonstration of a higher power Shorepower variant to provide electrical power to electric standby transport refrigeration units (eTRU) on trailers, to keep refrigerated loads, such as meats, ice cream and pharmaceuticals, cool while stopped (or during loading/unloading). This technology leveraged the existing Shorepower system design, but with significantly increased power ratings that can employ a simplified automated control system. This system was the first of its kind deployed to two warehouses in New York but is now commonly used as a more efficient and clean alternative to running diesel TRUs.
Mr. Kim performed an operational analysis of TSE facilities as part of the work sponsored by the U.S. Department of Energy and has a comprehensive understanding of the technical attributes of these technologies. This $20 million project commissioned over 50 facilities with over 1,800 individual electrified parking spaces in 31 states. Jeff was also instrumental in the engineering and construction management of these facilities, which includes design, cost considerations, safety, vehicle access/egress and maintenance of these facilities. This project was conducted from 2010 through 2015 with the majority of the construction activity completed in 2012 through 2013.
Mr. Kim was appointed by Oregon’s governor to the Alternative Fuels Infrastructure Working Group which helped develop the State’s electrification plan. in September 2008 (https://www.greencarcongress.com/2008/09/oregon-governor.html). This plan provided guidance to jurisdictions within the state to help adopt electric vehicle (EV) friendly zoning and planning codes and standards.
Mr. Kim also consulted for TEPCO (Tokyo Electric Power Company) in 2008, to help develop a transportation electrification plan in Japan and how to capitalize on providing electricity to power the transportation sector.
Mr. Kim led the engineering team that designed, manufactured and installed some of the first (SAE J1772) Level 2 charging stations in the world in 2009, to prepare for the arrival of the first current generation of electric vehicles in 2010+. In partnership with PGE, an electric utility company in Oregon, this program deployed over 300 charging points in and around Oregon to help prepare for the introduction of the first electric vehicles to hit the market that included the Nissan Leaf and Chevy Volt.
| 7 |
Mr. Kim received a Bachelors Degree in Renewable Energy Resources from the University of California-Berkeley in 1995 and a Masters in Mechanical Engineering from the University of Maryland at College Park in 2003.
Saeb Jannoun, CEO. Saeb is a serial entrepreneur, and investor since 1994. Mr. Jannoun has a Bachelor’s in business administration and a CFP degree. He has been the CEO and a Board Member of several public companies and is currently the CEO of United States Basketball League Inc. Mr. Jannoun is the founder of Tess Holdings LLC, Living 360 LLC and Thirty 05 LLC., which concentrate on investments ranging from health care to real estate. One of the main goals attributed to Mr. Jannoun’s leadership is finding the best partners for companies he is involved in and building shareholder value.
Michael D. Pruitt joined our Board of Directors in April 2021. He founded Avenel Financial Group, a boutique financial services firm concentrating on emerging technology company investments in 1999. In 2001, he formed Avenel Ventures, a technology investment and private venture capital firm. In February 2005, Mr. Pruitt formed Chanticleer Holdings, Inc., then a public holding company (now known as Sonnet BioTherapeutics Holdings, Inc.), and he served as Chairman of the Board of Directors and Chief Executive Officer until April 1, 2020, at which time the restaurant operations of Chanticleer Holdings were spun out into a new public entity, Amergent Hospitality Group, Inc., where Mr. Pruitt has served as its Chairman and Chief Executive Officer to date. Mr. Pruitt also served as a director on the board of Hooters of America, LLC from 2011 to 2019. Mr. Pruitt received a B.A. degree from Costal Carolina University. He currently sits on the Board of Visitors of the E. Craig Wall Sr. College of Business Administration, the Coastal Education Foundation Board, and the Athletic Committee of the Board of Trustees. Mr. Pruitt’s over 15 years of day-to-day operational leadership and service as a board member at public companies Chanticleer Holdings, IMAC Holdings and Amergent Hospitality Group make him well qualified as a member of the Board. He also brings transactional expertise in mergers and acquisitions and capital markets.
The Company does not have a separate audit committee. The Board of Directors functions as the audit committee.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers, directors and persons who own more than ten percent of a registered class of its equity securities to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission. These persons are required by SEC regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file with the SEC. Based solely upon our review of the copies of the forms the Company has received, we believe that all such persons complied on a timely basis with all filing requirements applicable to them with respect to transactions during fiscal 2023.
Code of Ethics
Following the merger with Shorepower, we have adopted a Code of Ethics applicable to its principal executive officer, and principal financial officer which is available on our website. The Board is responsible for overseeing the Code of Conduct and must approve any waivers of the Code of Conduct for employees, executive officers and directors. Any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website.
Item 11. Executive Compensation
The following table sets forth information with respect to all compensation paid by us to our Chief Executive Officer for the last two fiscal years ended February 28, 2023 and 2022:
| Summary Compensation Table | ||||||||||||||||||||||||||||||||||||
| Name and Principal Position | Year | Salary
($) | Bonus
($) | Stock
Awards ($) | Option
Awards ($) | Non-Equity
Incentive Plan Compensation ($) | Nonqualified
Deferred Compensation Earnings ($) | All
Other Compensation ($) | Total | |||||||||||||||||||||||||||
| Saeb Jannoun | 2023 | $ | 0 | $ | 0 | $ | 135,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 135,000 | |||||||||||||||||||
| Former CEO, Director | 2022 | $ | 0 | $ | 0 | $ | 24,000 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 24,000 | |||||||||||||||||||
| 8 |
Employment Agreements
We entered into an executive employment agreement with our executive officer, Jeff Kim. Under the terms of his employment agreement, Mr. Kim s annual base salary is $200,000 but payment of such salary is subject to the cash flow of the Company as determined by the Board and agreed to by Mr. Kim and his base salary cannot exceed $10,000 per month for the nine months from the date of the employment agreement. Alternatively, Mr. Kim may elect to defer his salary and receive repayment of his current outstanding loans to the Company, not to exceed $10,000 per month, for nine months from the date of his employment agreement. Mr. Kim’s employment agreement provides that he is eligible for bonuses in cash and/or stock as mutually agreed to by Mr. Kim and the Board, restricted stock and stock option awards at the discretion of the Board and to participate in the Company’s health and welfare benefit plans maintained for the benefit of Company employees. Mr. Kim has declined to participate in any annual cash bonus program provided by the Company, without regard to his eligibility for any such program. Mr. Kim’s employment agreement contains customary confidentiality, non-solicitation and intellectual property assignment provisions.
Pursuant to the employment agreement, in the event of a termination for good reason by Mr. Kim, he will receive 12 months of his then-current base salary to be paid over a period of six months and an acceleration of vesting for all unvested stock or stock option grants.
The foregoing description of the employment agreement with Mr. Kim is a summary only and is qualified in its entirety by the full text of the employment agreement, a copy of which is incorporated herein by reference to Exhibit 10.5 in the Current Report on Form 8-K filed with the SEC on March 27, 2023.
Outstanding Equity Awards at Fiscal Year-End
None.
Director Compensation
| Name and Principal Position | Fees
Earned or Paid in Cash ($) | Stock
Awards ($) | Option
Awards ($) | Non-Equity
Incentive Plan Compensation ($) | Nonqualified
Deferred Compensation Earnings ($) | All
Other Compensation ($) | Total | |||||||||||||||||||||
| Michael Pruitt | $ | 0 | $ | 67,500 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 67,500 | ||||||||||||||
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information as of May 23, 2023, with respect to the beneficial ownership of our outstanding Common Stock by (i) any holder of more than five (5%) percent thereof; (ii) each of our officers and directors and (iii) directors and officers of the Company as a group.
The address of each holder listed below, except as otherwise indicated, is c/o United States Basketball League, Inc., 8270 Woodland Center, Tampa, FL 33614.
| Name and Address of Beneficial Owner | Shares Beneficially owned of Common Stock | Percent of Common Stock Beneficially Owned | ||||||
| Directors and Named Executive Officers: | ||||||||
| Jeff Kim | 26,089,758 | 55 | % | |||||
| 5% Holders: | ||||||||
| EROP Enterprises LLC (1) | 3,799,146 | 8 | % | |||||
(1) EROP Enterprises LLC is managed by Vince Sbarra who has sole voting and dispositive power over the shares held EROP Enterprises LLC. The business address of this stockholder is 3000 Millcreek Avenue, Suite 375, Alpharetta, Georgia 30022.
Item 13. Certain Relationships and Related Transactions, and Director Independence
During the year ended February 28, 2022, Saeb Jannoun, CEO advanced the Company $3,000 for general operating expense. The advance was non-interest bearing and due on demand. On July 26, 2021, Mr. Jannoun converted the $3,000 into 30,000 shares of common stock. The shares were valued at $0.50, the closing stock price on the date of conversion, for a loss on conversion of debt of $12,000.
During the year ended February 28, 2022, EROP Enterprises LLC (“EROP”), a significant shareholder, advanced the Company $28,870 for general operating expense. The advance was non-interest bearing and due on demand. On July 26, 2021, EROP converted $28,870 into 288,700 shares of common stock. The shares were valued at $0.50, the closing stock price on the date of conversion, for a loss on conversion of debt of $115,480.
On April 7, 2021, the Company issued 200,000 restricted shares of common stock each to two of its directors for services. The shares were valued at $0.12, the closing stock price on the date of grant, for total non-cash expense of $48,000.
| 9 |
During the year ended February 28, 2022, EROP purchased 1,475,000 shares of common stock for $147,500. In addition, the Company granted 200,000 shares of common stock to EROP for services per the terms of a consulting agreement. The shares were valued at $0.52, the closing stock price on the date of grant, for total non-cash expense of $104,000. The expense was being amortized over the one-year term of the service agreement with EROP. As of February 28, 2022, the Company recognized $73,667 of the expense.
During the year ended February 28, 2022, the Company was engaged by a relative of a shareholder to provide consulting services. As of February 28, 2022, the Company has recorded $5,000 of consulting revenue for services provided.
During the year ended February 28, 2023, the Company granted 500,000 shares of common stock to EROP for services per the terms of a consulting agreement. The shares were valued at $0.27, the closing stock price on the date of grant, for total non-cash expense of $135,000.
During the year ended February 28, 2023, the Company granted 500,000 shares of common stock to Thirty-05, LLC, a company owned by Saeb Jannoun, for officer and director services. The shares were valued at $0.27, the closing stock price on the date of grant, for total non-cash expense of $135,000.
During the year ended February 28, 2023, the Company granted 250,000 shares of common stock to Michael Pruitt for director services. The shares were valued at $0.27, the closing stock price on the date of grant, for total non-cash expense of $67,500.
On February 23, 2023, pursuant to the terms of the merger with Shorepower, the Company granted 2,000,000 shares of Series B preferred stock and 26,089,758 shares of common stock to Jeff Kim, the CEO of Shorepower and new CEO of SPEV.
Item 14. Principal Accountant Fees and Services
Below is the aggregate amount of fees billed for professional services rendered by QI CPA LLC our principal accountants with respect to our last two fiscal years.
| 2023 | 2022 | |||||||
| Audit fees | $ | 11,000 | $ | 11,750 | ||||
| Audit related fees | $ | — | $ | — | ||||
| Tax fees | $ | — | $ | — | ||||
| All other fees | $ | — | $ | — | ||||
| Total | $ | 11,000 | $ | 11,750 | ||||
All of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the last two fiscal years were approved by our board of directors.
Audit Fees
Consist of fees billed for professional services rendered for the audit of our financial statements and review of interim financial statements included in quarterly reports and services that are normally provided by the principal accountants in connection with statutory and regulatory filings or engagements.
Audit Related Fees
Consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees”.
Tax Fees
Consist of fees billed for professional services for tax compliance, tax advice and tax planning. These services include preparation of federal and state income tax returns.
All Other Fees
Consist of fees for product and services other than the services reported above.
| 10 |
PART VI
Item 15. Exhibits
The following exhibits are filed as part of this Annual Report.
| Exhibit Number | Description | |
| 10.1+ | Employment Agreement dated March 22, 2023 between the Company and Jeff Kim | |
| 14.1 | Code of Ethics | |
| 31.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*) | |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (*) | |
| 101.INS* | Inline XBRL Instance Document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
+ Incorporated by reference to Exhibit 10.5 in the Company’s Current Report on Form 8-K filed March 27, 2023.
Item 16. Form 10-K Summary
None.
| 11 |
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| UNITED STATES BASKETBALL LEAGUE, INC. | |
| Dated: June 22, 2023 | |
| /s/ Jeff Kim | |
| Jeff Kim | |
President and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
| 12 |
Exhibit 14.1
CODE OF BUSINESS CONDUCT AND ETHICS
The Chief Executive Officer (“CEO”) and all senior financial officers, including the Chief Financial Officer, Vice President of Finance and principal accounting officer of United States Basketball League, Inc. (the “Company”), and of any subsidiary that becomes subject to the periodic reporting requirements under Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, are bound by the provisions set forth in this Code of Business Conduct and Ethics relating to ethical conduct, conflicts of interest, compliance with law and standards designed to deter wrongdoing. The CEO and senior financial officers are subject to the following specific policies:
1. The CEO and all senior financial officers are responsible for full, fair, accurate, timely and understandable disclosure in the periodic reports required to be filed by the Company with the Securities and Exchange Commission (“SEC”). Accordingly, it is the responsibility of the CEO and each senior financial officer promptly to bring to the attention of the Company’s Audit Committee any material information of which he or she may become aware that affects the disclosures made by the Company in its public filings or otherwise assist the Audit Committee in fulfilling its responsibilities as specified in the Company’s financial reporting policies and applicable law.
2. The CEO and each senior financial officer shall promptly bring to the attention of the Audit Committee any information he or she may have which he or she reasonably believes reflects or indicates (a) significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s financial reporting, audits or internal controls or (c) any attempt to improperly influence, coerce or mislead the Company’s independent auditors in violation of Section 303(a) of the Sarbanes-Oxley Act of 2002 and the rules of the SEC passed there under.
3. The CEO and each senior financial officer shall promptly bring to the attention of the General Counsel or the CEO and to the Audit Committee any information he or she may have which he or she reasonably believes reflects or indicates a violation of this Code of Business Conduct and Ethics or any actual or apparent conflicts of interest between personal and professional relationships, involving any management or other employees who have a significant role in the Company’s financial reporting, audits or internal controls.
4. The CEO and each senior financial officer shall promptly bring to the attention of the General Counsel or the CEO and to the Audit Committee any information he or she may have which he or she reasonably believes indicates a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof.
5. The Board of Directors shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of the Code of Business Conduct and Ethics or of these additional procedures by the CEO and the Company’s senior financial officers. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code of Business Conduct and Ethics and to these additional procedures, and shall include written notices to the individual involved that the Board has determined that there has been a violation and the action to be taken, which action may include censure by the Board, demotion or re-assignment of the individual involved, suspension with or without pay or benefits (as determined by the Board) or termination of the individual’s employment. In determining what action is appropriate in a particular case, the Board of Directors or such designee shall take into account all relevant information, including without limitation the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violations in the past.
6. Any waiver of this Code of Business Conduct and Ethics may be made only by the Board of Directors of the Company and shall be disclosed to the persons in the manner provided by applicable law and by any regulatory agency having authority over the Company.
Exhibit 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jeff Kim, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of The United States Basketball League, Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| Date: June 22, 2023 | |
| /s/ Jeff Kim | |
| Jeff Kim | |
| Chief Executive Officer and Chief Financial Officer | |
| (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Jeff Kim, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | the Annual Report on Form 10-K of The United States Basketball League, Inc. for the year ended February 28, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of The United States Basketball League, Inc. |
Dated: June 22, 2023
| /s/ Jeff Kim | |
| Jeff Kim | |
| President, Chief Executive Officer, Chief Financial | |
| Officer, and Director | |
| (Principal Executive Officer, Principal Financial | |
| Officer and Principal Accounting Officer) |