APPlife Digital Solutions Inc 10-K for FY2026
APPlife Digital Solutions Inc (ALDS)
About this 10-K
APPlife Digital Solutions Inc filed this 10-K on October 8, 2026, covering the fiscal year ended June 30, 2026 (FY2026).
Headline figures
Fiscal year ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $2.3M
- Net loss
- $4.67M
- compared with a net loss of $997.76K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
OR
Commission File Number
(Name of small business issuer in its charter)
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(Registrant's telephone number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $0.001 PAR VALUE PER SHARE
(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 pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a
Large accelerated filer ☐ |
| Accelerated filer ☐ |
Non-accelerated filer x
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| Smaller reporting company |
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
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). ☐
The aggregate market value of the voting and non-voting common equity held by non-affiliates as of the most recently completed second fiscal quarter was approximately $
As of October 2, 2026, a total of
APPLIFE DIGITAL SOLUTIONS, INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
FORWARD LOOKING INFORMATION
MAY PROVE INACCURATE
THIS ANNUAL REPORT ON FORM 10-K CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO US THAT ARE BASED ON THE BELIEFS OF MANAGEMENT, AS WELL AS ASSUMPTIONS MADE BY AND INFORMATION CURRENTLY AVAILABLE TO US. WHEN USED IN THIS DOCUMENT, THE WORDS “ANTICIPATE,” “BELIEVE,” “ESTIMATE,” “SHOULD,” “PLAN,” AND “EXPECT” AND SIMILAR EXPRESSIONS, AS THEY RELATE TO US, ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS REFLECT OUR CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS, INCLUDING THOSE DESCRIBED IN THIS ANNUAL REPORT ON FORM 10-K. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED HEREIN AS ANTICIPATED, BELIEVED, ESTIMATED, PLANNED OR EXPECTED. WE DO NOT INTEND TO UPDATE THESE FORWARD-LOOKING STATEMENTS.
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PART I
ITEM 1. Business
Nature of Operations and Going Concern
APPlife Digital Solutions, Inc. (the “Company” or “Applife”) was formed March 5, 2018, in Nevada. The Company’s main operating subsidiary, Sugar Auto Parts, Inc. (“SAP”), was formed on January 6, 2025, as a Nevada corporation. SAP is headquartered at 701 Anacapa St, Suite C, Santa Barbara, CA 93101.
On April 30, 2025, SAP executed a Bill of Sale with AP4L ABC, LLC. (AP4L) to acquire substantially all of AP4L’s assets. Under the agreement, SAP purchased all intellectual property and general intangible assets, including domain names, the AP4L website and related rights, and certain supplier relationships that could be re-established or renegotiated. The Company operates primarily as an aftermarket automotive parts ecommerce business, specializing in online sales of suspension lift systems and related automotive accessories through its ecommerce platform. SAP leverages its digital presence to serve customers across the United States, offering a wide selection of products for Jeep, truck, and SUV owners.
The Company has a limited operating history, operations, and revenues and will need to raise capital to implement our planned operations.
Reverse Merger Transaction
On May 1, 2025, the Company entered into a definitive agreement to acquire SAP, with the transaction structured as a reverse merger. Following the Closing of the reverse merger on June 13, 2025, SAP became the operating entity of the combined company, with APPlife continuing as the registrant and reporting company. The transaction did not involve the transfer of employees, but SAP did engage a prior AP4L consultant to support ongoing business operations.
Products
As of the period from inception through today’s date, we have generated limited revenue and incurred expenses and operating losses, as part of our developmental stage activities in building our ecommerce platform and Sugar Auto Parts marketplace. Our auto parts ecommerce platform is our primary ecommerce website, offering a comprehensive catalog of suspension lift kits and related accessories for Jeep, truck, and SUV owners. The platform allows customers to browse, compare, and purchase products online, with a focus on providing quality aftermarket parts and a user-friendly shopping experience. Our sources of revenue are expected to come from product purchases and, in the future, may include advertising and sponsorships.
Competition
We directly compete for buyers to use our web sites over current ecommerce sites as well as sellers that utilize major marketplaces such as Amazon and eBay. However, we believe our specialty ecommerce website offers substantial value-added content including installation guides, install videos, high impact photos, order customization and live chat with a technical expert.
Additionally, we believe that our automotive parts marketplace Sugar Auto Parts, with no known large challengers presently in the space outside of “all things to all people” online marketplaces like Amazon and eBay, has the opportunity to quickly be branded when launched as the auto part’s industry premier marketplace just as sites like Etsy, Wayfair, Uber and Chewy have been able to successfully do in their industries.
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Marketing Strategy
Our marketing strategy is carefully built and tailored for our ecommerce platform. We focus on digital advertising, search engine optimization, and targeted promotions aimed at automotive enthusiasts and professional installers. Our goal is to differentiate ourselves through product specialization, competitive pricing, and customer service, although limited financial resources have constrained marketing efforts and impacted growth.
Employees
The Company operates with a streamlined team structure. Michael Hill was appointed Director and CEO of SAP on March 12, 2025, and following the acquisition of SAP by Applife on June 13, 2025, Mr. Hill was appointed CEO and Chairman of the Board of Directors for Applife. Barrett Evans serves as CFO and Director of the Company. The Company does not currently have a large full-time staff. Instead, the company relies on its executive leadership and a network of independent contractors and professional service providers in the United States to support its operations, business management, accounting, and legal needs. All executive and management functions are based in the U.S., with no employees or contractors located internationally. The Company generates all its revenue from its ecommerce platform serving U.S. customers, and there are no current plans to develop operations outside the United States.
Recent Developments During Fiscal Year 2026
Reverse Stock Split. On May 22, 2026, our Board of Directors approved a 1-for-250 reverse stock split of our outstanding common stock, which became effective June 12, 2026 following processing by FINRA. In connection with the reverse split, we filed a Certificate of Change with the Nevada Secretary of State reducing our authorized common stock from 5,000,000,000 shares to 20,000,000 shares. No fractional shares were issued; fractional shares were rounded up to the next whole share. Our common stock traded under the temporary symbol “ALDSD” for 20 business days following effectiveness and thereafter reverted to “ALDS,” under new CUSIP No. 03829G206.
Financing Activity. During fiscal year 2026, we financed our operations principally through the issuance of convertible and promissory notes and an equity line of credit. These included senior convertible notes issued to Labrys Fund II, L.P., 104 LLC, Bionance LLC, Tri-Bridge Ventures LLC, ClearThink Capital Partners, LLC and ProActive Capital Partners, L.P.; promissory notes issued to SportsAlert Media, Eric Newman, Sharon and Ed Wortman, Bruce Russell, Commerce Pundit, Bruce Davenport and Colby Hill; and an equity line of credit / convertible note facility with C/M Capital Master Fund LP entered into on November 20, 2025. In addition, in April 2026 our Chief Executive Officer made his personal credit card available to our Sugar Auto Parts subsidiary under a six-month credit facility agreement, in exchange for a monthly fee and an inducement share issuance. That facility is in default. See Item 13 and Note 11 to the consolidated financial statements. Several of these notes convert at a discount to the market price of our common stock and contain anti-dilution and reset features. See “Management’s Discussion and Analysis” and Notes to the Consolidated Financial Statements.
Operations. During fiscal 2026, our Sugar Auto Parts marketplace advanced from beta to a soft launch, we expanded our product catalog and installer network, and we surpassed cumulative revenue milestones since inception. As a result of financing constraints, we reduced paid-media spending during portions of the year. As of June 30, 2026, the Company impaired $2,697,728 in goodwill associated with the AP4L acquisition.
Related-Party Arrangements. In May 2026, we approved a one-year consulting agreement with Colby Hill, the son of our Chief Executive Officer, providing for cash compensation of $3,000 per month and 360 shares of Series B Preferred Stock. We also acknowledged an outstanding obligation of approximately $150,000 owed to Applife Holdings, owned by Matthew Reid, a director. See “Certain Relationships and Related Transactions.”
ITEM 1A. Risk Factors
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.
An investment in our common stock involves a high degree of risk. You should carefully consider the following risks and all of the other information contained in this Annual Report before deciding whether to invest in our
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common stock. If any of the following risks are realized, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of our common stock could decline, and you could lose all or part of your investment in our common stock. Additional risks of which we are not presently aware or that we currently believe are immaterial may also harm our business and results of operations. Some statements in this Annual Report, including such statements in the following risk factors, constitute forward-looking statements. See the section entitled “Cautionary Note Regarding Forward-Looking Statements.”
We have added and updated the risk factors below to reflect developments during fiscal year 2026. Although as a smaller reporting company we are not required to provide risk-factor disclosure under Item 1A, we have elected to provide the following.
There is substantial doubt about our ability to continue as a going concern.
We are a development-stage company with a limited operating history, recurring losses, negative cash flows from operations and a significant accumulated deficit. Our independent registered public accounting firm’s report contains an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. If we are unable to obtain additional financing on acceptable terms, we may be required to curtail or cease operations, and investors could lose their entire investment.
We will need substantial additional capital, and financings are likely to be highly dilutive to existing stockholders.
We do not generate sufficient revenue to fund our operations and depend on external financing. To date we have financed operations primarily through the issuance of convertible and promissory notes and an equity line of credit, many of which convert into common stock at a discount to prevailing market prices. Additional equity or convertible-debt financings will dilute existing stockholders, potentially substantially, and the terms of any such financings may include rights senior to those of our common stockholders.
Our outstanding variable-rate convertible notes could result in the issuance of a substantial number of shares and a decline in our stock price (“death spiral” risk).
A number of our convertible notes convert at a discount (in certain cases 35%) to the lowest trading prices over a trailing period, and contain full-ratchet or other anti-dilution and reset provisions. As our stock price declines, these notes become convertible into increasingly large numbers of shares, which may cause further downward pressure on our stock price and further dilution. Certain notes also contain most-favored-nation provisions that can cause terms to cross-contaminate across holders. These features could result in the issuance of shares materially in excess of our current outstanding share count and could adversely affect the market price of, and market for, our common stock.
We are in default under several of our debt obligations, and our lenders could accelerate repayment or take other action against us.
As of the date of this Annual Report, we are in default under (i) the convertible promissory note issued to Labrys Fund II, L.P. on August 1, 2025, which went into default on January 30, 2026 when we failed to make a required amortization payment; (ii) the two convertible promissory notes issued to C/M Capital Master Fund, LP on November 20, 2025 in the original principal amounts of $150,000 and $225,000, which matured on August 20, 2026 and were not repaid; and (iii) the credit card facility provided to our subsidiary by our Chief Executive Officer, which has been in default since April 22, 2026. Upon a default, our lenders may declare all amounts owed immediately due and payable, charge default interest and fees, convert their notes at increased discounts and pursue collection. A default under one of our financing agreements may also permit other lenders to accelerate their obligations. We do not have sufficient cash to repay these obligations. Our defaults may also prevent us from satisfying the conditions to selling shares to C/M Capital Master Fund, LP under our equity line of credit, which require, among other things, that no default or event of default exist under our indebtedness. If our lenders exercise their remedies, we may be forced to curtail or cease operations or to seek protection under the bankruptcy laws.
Our recent reverse stock split and reduced authorized share capital may limit our ability to satisfy conversions and raise capital.
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Effective June 12, 2026, we effected a 1-for-250 reverse stock split and reduced our authorized common stock to 20,000,000 shares. Given our substantial number of outstanding convertible securities and warrants, we may not have sufficient authorized and unissued shares to satisfy all conversions and exercises, which could require us to seek stockholder approval to increase authorized shares, could place us in default under certain instruments, and could limit our ability to raise additional capital. A reverse stock split may also not achieve its intended benefits and may adversely affect the liquidity and market price of our common stock.
A small number of insiders control a substantial majority of our voting power.
Our officers and directors and their affiliates, together with holders of our preferred stock, control a substantial majority of our voting power. As a result, these persons are able to control the outcome of matters requiring stockholder approval, including the election of directors and significant corporate transactions, and their interests may differ from those of other stockholders.
We engage in related-party transactions that present conflicts of interest.
We have entered into transactions with related parties, including a consulting arrangement with the son of our Chief Executive Officer, an outstanding obligation to a director, and issuances of preferred stock to officers and directors. Because we do not have an independent audit or compensation committee, these transactions are not reviewed by independent directors, and conflicts of interest may not be resolved in favor of our unaffiliated stockholders.
We depend on key personnel and third parties.
We depend heavily on the continued service of our Chief Executive Officer and Chief Financial Officer, and on third-party suppliers, fulfillment providers and e-commerce and payment platforms. The loss of key personnel or disruption in these third-party relationships could materially harm our business.
Tariffs, trade policy and supply-chain disruptions could increase our costs and reduce demand.
A significant portion of automotive parts and accessories are manufactured or sourced abroad. Changes in U.S. trade policy, including the imposition of tariffs, and disruptions in global supply chains, could increase our product costs, reduce our margins, cause inventory shortages, and reduce consumer demand, any of which could materially and adversely affect our results of operations.
We face intense competition.
We compete with large, well-capitalized e-commerce marketplaces such as Amazon and eBay, automotive parts retailers, and original-equipment manufacturers, many of which have substantially greater resources, brand recognition and scale than we do.
Cybersecurity incidents could disrupt our business and expose us to liability.
Our business depends on the confidentiality, integrity and availability of our information systems and those of our third-party providers. A cybersecurity incident, data breach or system failure could disrupt our operations, compromise customer or Company data, and subject us to liability and reputational harm. We have limited resources dedicated to cybersecurity. See “Item 1C. Cybersecurity.”
We have identified material weaknesses in our internal control over financial reporting.
Management has concluded that our disclosure controls and procedures and our internal control over financial reporting were not effective as of June 30, 2026 due to material weaknesses, including insufficient written documentation of internal control policies and insufficient accounting resources. If we fail to remediate these material weaknesses, we may be unable to report our financial results accurately or on a timely basis, which could harm investor confidence and the market price of our common stock.
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Our common stock is a “penny stock” and is thinly traded.
Our common stock is quoted on OTC Markets, is subject to the SEC’s “penny stock” rules, and is thinly traded. These factors may make it more difficult for stockholders to sell shares, may increase transaction costs, and may result in significant volatility in our stock price. We can provide no assurance that we will be able to uplist to a national securities exchange.
We do not intend to pay dividends.
We have never paid cash dividends and do not anticipate paying dividends in the foreseeable future. Any return on investment will depend on appreciation, if any, in the market price of our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Our board of directors and senior management recognize the critical importance of maintaining the trust and confidence of our clients, business partners and employees. Our management, led by our Chief Executive Officer, is actively involved in oversight of our risk management efforts, and cybersecurity represents an important component of the Company’s overall approach to enterprise risk management (“ERM”). Our cybersecurity processes and practices are fully integrated into the Company’s ERM efforts. In general, we seek to address cybersecurity risks through a cross-functional approach that is focused on preserving the confidentiality, security and availability of the information that we collect and store by identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.
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Risk Management and Strategy
As one of the critical elements of our overall ERM approach, our cybersecurity efforts are focused on the following key areas:
| ● | Governance: Management oversees cybersecurity risk mitigation and reports to the board of directors any cybersecurity incidents. |
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| ● | Collaborative Approach: We have implemented a cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner. |
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| ● | Technical Safeguards: We deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-virus and anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence. |
We have not engaged third-party service providers to conduct evaluations of our security controls, independent audits or consulting on best practices to address new challenges.
While we have not experienced any cybersecurity threats in the past in the normal course of business, in the future, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us.
ITEM 2. Properties
We do not own any property, nor do we have any contracts or options to acquire any property in the future. Presently, we are operating out of a small physical location and alternatively, virtual offices. This physical space is adequate for our present and our planned future operations. We currently pay $1,500 per month for use of this space. We have no current plans to occupy other or additional office space.
ITEM 3. Legal Proceedings
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 4. Mine Safety Disclosure
Not Applicable.
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PART II
ITEM 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Prices for our common stock are quoted on OTC Markets under the symbol “ALDS.” There were 8,212,128 shares of our common stock outstanding as of October 2, 2026, after giving effect to the 1-for-250 reverse stock split effected June 12, 2026.
On June 12, 2026, we effected a 1-for-250 reverse stock split of our common stock. All share and per-share amounts in this Annual Report have been retroactively adjusted to give effect to the reverse split unless otherwise indicated.
Security Holders
As of October 2, 2026, there were 87 holders of record of our common stock.
Dividends
We have not paid dividends during the three most recently completed fiscal years and have no current plans to pay dividends on our common stock. We currently intend to retain all earnings, if any, for use in our business.
Recent Sales and Other Issuances of Our Equity Securities During Fiscal Year 2025
On April 25, 2025, the Company’s subsidiary, Sugar Auto Parts, Inc. entered into three securities purchase agreements with investors, pursuant to which the investors entered into notes in the aggregate original principal amount of $810,000 and 162,000 Warrants to purchase Common Stock of the Company. On June 13, 2025, the notes converted into 810 shares of Series D Preferred Stock with a stated value of $1,000 per share and convertible into common shares at $5.00 per share, of the parent company, Applife Digital Solutions, Inc.
Just prior to the merger of Applife by SAP, Applife issued 99,106,364 shares of Common Stock of the Company to its respective shareholders bringing the total shares issued to the Applife shareholders of 260,000,000 common shares. On June 13, 2025, the date of the Merger, the Company issued 1,740,000,000 shares of Common Stock of the Company and 2,500 of Series Preferred C Stock as purchase consideration.
On June 13, 2025, the Company completed the transactions contemplated by the Acquisition Agreement (the “Agreement”) entered into with Sugar Auto Parts, Inc., a Nevada corporation (“Sugar”) on April 25, 2025. Pursuant to the Agreement, Company acquired all the equity interests in Sugar in exchange for 1,740,000,000 shares of restricted common stock of the Company. Additionally, just prior to the Merger, the Company issued 4,400 shares of a newly designated class of Series B Preferred Stock to settle existing liabilities. On June 13, 2025, after the Merger, the Company issued an additional 8,455 shares of a Series B Preferred Stock to settle liabilities with a debt holder from the AP4L acquisition (share counts for the Company's preferred stock were not affected by the subsequent 1-for-250 reverse stock split of the Company's common stock, effective June 12, 2026).
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, a copy of which was attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 25, 2025, and is incorporated by reference herein.
Recent Sales of Unregistered Securities During Fiscal Year 2026
During the fiscal year ended June 30, 2026, we issued the securities described below without registration under the Securities Act of 1933 (the “Securities Act”). Except as otherwise noted, each issuance was made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act for transactions by an issuer not involving a public offering. Each issuance was made to a single purchaser or a limited number of purchasers, each of whom was an
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accredited investor or an existing lender, service provider, officer or director with access to information about the Company; no general solicitation or advertising was used; and the securities were issued as restricted securities bearing a restrictive legend. The securities purchase agreements for the convertible notes issued to institutional investors also contemplate reliance on Rule 506(b) of Regulation D. Shares of common stock issued upon conversion of outstanding convertible notes were issued in exchange for those notes in reliance on Section 3(a)(9) of the Securities Act, and no commission or other remuneration was paid for soliciting the exchanges.
Convertible and promissory notes. We issued senior convertible notes to Labrys Fund II, L.P. (August 1, 2025 and November 18, 2025), 104 LLC (November 10, 2025), Bionance LLC (November 10, 2025), Tri-Bridge Ventures LLC (November 20, 2025), ClearThink Capital Partners, LLC (November 25, 2025) and ProActive Capital Partners, L.P. (March 9, 2026), each of which was reported in a Current Report on Form 8-K or in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2025. On November 20, 2025, we entered into an equity line of credit with C/M Capital Master Fund, LP and issued to it a $150,000 convertible promissory note and a $225,000 convertible commitment note, which were reported in our Current Report on Form 8-K filed November 25, 2025. Between April and June 2026, we also issued promissory notes in an aggregate principal amount of $97,500 to SportsAlert Media, LLC, Eric Newman, Sharon and Ed Wortman, Bruce Russell, Commerce Pundit, Bruce Davenport and Colby Hill, as described in Note 6 to our consolidated financial statements.
Common stock. On November 25, 2025, we issued 11,591 shares of common stock for services valued at $23,180. On March 9, 2026, we issued 80,000 shares of common stock to PCG Advisory, Inc. for investor relations services under an agreement reported in our Current Report on Form 8-K filed March 12, 2026. On May 27, 2026, we issued 45,000 shares of common stock as inducements, consisting of 33,000 shares to the lenders under our related and non-related party promissory notes and 12,000 shares to Michael Hill, our Chief Executive Officer, under the credit card facility described in Item 13. On January 26, 2026 and June 1, 2026, we issued 8,512 and 56,980 shares of common stock, respectively, upon conversion of convertible promissory notes, in reliance on Section 3(a)(9) of the Securities Act.
Preferred stock. On December 8, 2025, pursuant to a resolution of our Board of Directors dated October 5, 2025, we issued 1,300 shares of Series B Preferred Stock, stated value $100 per share, as compensation to current and former officers and directors: 750 shares to Michael Hill, our Chief Executive Officer; 450 shares to Barrett Evans, our Chief Financial Officer; and 100 shares to Michael Wheeler, a former officer. On May 27, 2026, we issued 360 shares of Series B Preferred Stock to Colby Hill, the son of our Chief Executive Officer, under a one-year consulting agreement. No cash consideration was received for these shares.
Rule 10b5-1 Trading Arrangements
During the fiscal year ended June 30, 2026, including the fourth fiscal quarter, none of our directors or officers adopted or terminated any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.
ITEM 6. Selected Financial Data
Not Applicable.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
Overview
AppLife Digital Solutions, Inc. (the “Company” or “Applife”) was formed March 5, 2018, in Nevada. The Company’s main operating subsidiary, Sugar Auto Parts, Inc. (“SAP”) is a Nevada corporation formed on January 6, 2025, by Mammoth Crest Capital, LLC, a Wyoming corporation that is 50% owned by Michael Hill and Barrett Evans, who are related parties. The Company is headquartered at 701 Anacapa St., Suite C, Santa Barbara, CA 93101. SAP operates primarily as an aftermarket automotive parts e-commerce business, specializing in online sales of suspension lift systems and related accessories through its flagship ecommerce platform. The Company serves customers across the United States, offering a wide selection of products for Jeep, truck, and SUV owners.
Reverse Merger with Sugar Auto Parts, Inc.
On June 13, 2025, SAP became a wholly-owned subsidiary of Applife.
Plan of Operation
Applife operates with a streamlined executive team led by Michael Hill and Barrett Evans, with all management and business operations based in the United States. We rely on its executive leadership and a network of independent contractors and professional service providers for business management, accounting, legal, and investor relations functions. All executive and management functions are located in Nevada and California, and there are no employees or contractors located internationally. We generate all of our revenue from our ecommerce platform serving U.S. customers. We have no current plans to develop operations outside the United States.
Our business model is focused on expanding our ecommerce operations, strengthening our product offerings, and pursuing strategic acquisitions that align with our vision for growth. We will continue to explore new opportunities to invest in projects and partnerships that can enhance our market position and revenue streams. Capital raised will be allocated to marketing, acquisitions, and revenue generation initiatives.
We are committed to building value through operational efficiency, targeted marketing, and strategic partnerships. We seek acquisition targets that fit our vision and areas of interest, are currently generating revenue with room for growth, and have strong management teams that will remain in place post-acquisition.
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Results of Operations for Year Ended June 30, 2026 and Period January 6, 2025 to June 30, 2025
| June 30, 2026 |
Revenue | $2,297,200 |
Cost of goods sold | (1,796.910) |
Operating expenses | 4,878,869 |
Other income (expenses) | (294,971) |
Net loss | $(4,673,550) |
| June 30, 2025 |
Revenue | $315,130 |
Cost of goods sold | (270,891) |
Operating expenses | 246,137 |
Other income (expenses) | (795,865) |
Net loss | $(997,763) |
Revenue
For the year ended June 30, 2026 and period January 6, 2025 to June 30, 2025, we had revenues of $2,297,200 and $315,130, respectively. This growth was primarily driven by the successful completion of key technical enhancements to our ecommerce platform during the quarter. These improvements helped us to significantly broaden our product inventory selection, making a wider array of high-demand items available to customers. At the same time, we accelerated our media and marketing initiatives, leveraging expanded reach and more targeted campaigns to drive higher traffic and conversion rates. Together, these strategic advancements directly contributed to the uplift in sales volume and overall revenue performance. Costs of sales were $1,796,910 and $270,891, respectively, which were approximately 78% and 86% of revenue. Gross margin was $500,290 and $44,239, respectively.
Operating Expenses
For the year ended June 30, 2026 and period January 6, 2025 to June 30, 2025, we had operating expenses of $4,878,869 and $246,137, respectively. This expense was primarily attributable to payments to contractors, employees and other operating expenses, including marketing and advertising and impairment of goodwill in the amount of $2,697,728.
Other Income (Expenses)
For the year ended June 30, 2026, other expenses include finance expense of $532,115, amortization of debt discounts on Series B Preferred Stock, convertible promissory notes and promissory notes to related and non-related parties of $707,755, other expenses of $17,621, a loss on disposal of fixed assets of $1,000, extinguishment loss of $12,013, offset by other income which is the change in the fair value of the derivative liabilities of $967,333. For the period ended January 6, 2025 to June 30, 2025, a majority of the other expenses represent $803,589 in financing expenses.
Net loss
We reported a net loss of $4,673,550 and $997,763 for the year ended June 30, 2026 and period January 6, 2025 to June 30, 2025.
Going Concern
As reflected in the accompanying consolidated financial statements, the Company has revenue generating operations and has an accumulated deficit of $8,295,331 as of June 30, 2026. In addition, there is a working capital deficiency of approximately $4,012,622 and a stockholder’s deficiency of $5,258,043 as of June 30, 2026. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going
13
concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company anticipates additional equity and debt financing to fund operations in the future. Should management fail to adequately address the issue, the Company may have to reduce its business activities or curtail its operations.
Liquidity and Capital Resources
Our cash balance was $21,725 on June 30, 2026. We recorded a net loss of $4,673,550 and $997,763 for the year ended June 30, 2026 and period January 6, 2025 to June 30, 2025. We expect our expenses will continue to increase with the exception of the impairment of goodwill during the foreseeable future as a result of increased operations and the development of our business operations. Consequently, we are dependent on the proceeds raised in the convertible notes from related and non-related parties of which generated $663,320 in cash, as well as the ELOC entered into during the year ended June 30, 2026 to continue to fund our operations and implement our business plan. If we are unable to raise sufficient capital, we will be required to delay or forego some portion of our business plan, which would have a material adverse effect on our anticipated results from operations and consolidated financial condition. There is no assurance that we will be able to obtain necessary amounts of capital or that our estimates of our capital requirements will prove to be accurate.
Due to our operating losses, our operations have not been a source of liquidity. We will need to obtain additional capital in order to expand operations and become profitable. In order to obtain additional capital beyond the current ELOC, we may need to sell additional shares of our common stock or borrow funds from private lenders. There can be no assurance that we will be successful in obtaining additional funding.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to existing shareholders. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing.
No assurance can be given that sources of financing will be available to us and/or that demand for our equity/debt instruments will be sufficient to meet our capital needs, or that financing will be available on terms favorable to us. If funding is insufficient at any time in the future, we may not be able to take advantage of business opportunities or respond to competitive pressures or may be required to reduce the scope of our planned marketing efforts and development of our apps, any of which could have a negative impact on our business and operating results. In addition, insufficient funding may have a material adverse effect on our financial condition, which could require us to:
∙Curtail the development of our business,
∙Seek strategic partnerships that may force us to relinquish significant rights to our business, or
∙Explore potential mergers or sales of significant assets of our Company.
Working Capital Deficit
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| June 30, 2026 |
Current assets | $ | 68,327 |
Current liabilities |
| 4,080,949 |
Working capital (deficit) | $ | (4,012,622) |
We anticipate generating losses and, therefore, may be unable to continue operations in the future. We expect to require additional capital, and we will have to issue debt or equity principally through the ELOC or enter into a strategic arrangement with a third party. The current liabilities of $4,080,949 include $1,635,651 of assumed liabilities, $665,017 of derivative liabilities, and $804,751 in convertible promissory notes and promissory notes
14
from related and non-related parties, net of discounts. In addition, accounts payable and accrued expenses of $379,107 have been increasing as amounts owed to consultants and vendors go unpaid due to cash flow shortages.
As of the date of this report, we are in default under the convertible promissory note issued to Labrys Fund II, L.P. on August 1, 2025, the two convertible promissory notes issued to C/M Capital Master Fund, LP that matured on August 20, 2026, and the credit card facility provided by our Chief Executive Officer. We do not have the cash to repay these obligations and are seeking extensions, waivers or other resolutions with these lenders. See “Risk Factors” and Notes 6, 11 and 13 to the consolidated financial statements.
Cash Flows
| June 30, 2026 | |
Net Cash Used in Operating Activities | $ | (752,992) |
Net Cash Used in Investing Activities |
| - |
Net Cash Provided by Financing Activities |
| 663,320 |
Net Decrease in Cash | $ | (89,672) |
| June 30, 2025 | |
Net Cash Used in Operating Activities | $ | (159,964) |
Net Cash Used in Investing Activities |
| (185,000) |
Net Cash Provided by Financing Activities |
| 456,361 |
Net Increase in Cash | $ | 111,397 |
Operating Activities
During the year ended June 30, 2026, cash used in the Company’s operating activities amounted to $752,992, which mainly consisted of the Company’s net loss amounting to $4,673,550. This amount was adjusted by noncash items in 2026 of financing expense of $532,115, an impairment of goodwill of $2,697,728 and a decrease from change in fair value of derivative liabilities of $967,333, and common and preferred shares issued for services of $269,265. Changes in assets and liabilities include an increase in prepaid expenses and other assets, decrease in inventories, increases in accounts payable and accrued expenses, and decrease in other liabilities of $684,802.
During the period January 6, 2025 to June 30, 2025, cash used in the Company’s operating activities amounted to $159,964, which mainly consisted of the Company’s net loss amounting to $997,763. This amount was adjusted by noncash items in 2025 of financing expense of $803,589 and an increase in accounts payable and accrued expenses, and decrease in other liabilities of $41,934.
Investing Activities
During the year ended June 30, 2026 and period January 6, 2025 to June 30, 2025, the Company used $0 and $185,000 in cash for investing activities.
Financing Activities
During the year ended June 30, 2026 and period January 6, 2025 to June 30, 2025, the Company received $663,320 and $600,000 in proceeds from the issuance of convertible promissory notes from related and non-related parties in 2026 and promissory notes in 2025.
Critical Accounting Policies and Estimates
The preparation of the Company’s consolidated financial statements and related disclosures are in conformity with U.S. generally accepted accounting principles (“GAAP”). The Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported in its consolidated financial statements and accompanying notes. Note 1, “Summary of Significant Accounting Policies,” of the Notes to Financial Statements included in this Form 10-K, describes the
15
significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.
Management believes the Company’s critical accounting policies and estimates are those related to revenue recognition, determination of fair value of stock-based compensation and determination of the fair value of the conversion feature of the convertible notes. Management considers these policies critical because they are both important to the portrayal of the Company’s financial condition and operating results, and they require management to make judgments and estimates about inherently uncertain matters. The Company’s management has reviewed these critical accounting policies and related disclosures.
Revenue Recognition
The Company recognizes revenue from the sale of products and services in accordance with ASC 606, “Revenue from Contracts with Customers,” by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
Revenue from product sales is recorded at the net sales price, or “transaction price,” which includes coupons, discounts, and processing fees. The Company constrains revenue by considering factors that could otherwise lead to a probable reversal of revenue. Collectability of revenue is reasonably assured based on historical evidence of collectability between the Company and its customers.
We offer consumer products through our website. Revenue is recognized when control of the goods is transferred to the customer, which occurs upon shipment to the customer.
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is primarily generated from the sale of automotive lift kits and accessories through its online platform. Revenue from product sales is recognized at a point in time, typically upon shipment or delivery when control of the goods passes to the customer.
The Company applies the ASC 606 five-step model:
1.Identify the contract with a customer: Established when an order is placed and payment terms are set.
2.Identify performance obligations: Usually a single obligation—delivery of products. Extended warranties, if offered, are separate obligations recognized over the warranty period.
3.Determine the transaction price: Based on expected consideration, excluding sales taxes.
4.Allocate the transaction price: For multiple obligations, allocation is based on relative standalone selling prices.
5.Recognize revenue: Product sales are recognized at a point in time; extended warranties are recognized over time.
Shipping and handling after control passes are treated as fulfillment costs and expensed as incurred. Contracts generally do not include variable consideration; if present, it is estimated and included only if a significant reversal is not probable. Revenue is recognized only when collectability is probable. Contract modifications are accounted for as separate contracts or as part of the existing contract, depending on their nature.
Revenue is disaggregated by major product line and timing (point in time vs. over time) in the notes to the consolidated financial statements.
16
Stock Based Compensation
The Company accounts for share-based compensation in accordance with the fair value recognition provision of FASB ASC 718, Compensation – Stock Compensation (“ASC 718”), prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on the estimated grant date fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for share-based compensation issued to non-employees and consultants in accordance with FASB ASC 718, Compensation – Stock Compensation (“ASC 718”). Following the Company's adoption of ASU 2018-07, awards to non-employees are measured and accounted for using the same model applied to employee awards, generally at grant-date fair value.
Derivative Liabilities
FASB ASC 815, Derivatives and Hedging, requires all derivatives to be recorded on the consolidated balance sheet at fair value. As of June 30, 2026, we used the Black-Scholes-Merton (BSM) model to estimate the fair value of the warrant liability and the conversion feature bifurcated from our convertible notes. Key assumptions of the BSM model include the market price of our stock, the conversion price of the debt, applicable volatility rates, risk-free interest rates and the instrument’s remaining term. These assumptions require significant management judgment. In addition, changes in any of these variables during a period can result in material changes in the fair value (and resultant gains or losses) of this derivative instrument.
Business Combination
The Company applies the provisions of ASC 805, “Business Combination” and allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Goodwill generated from a business combination is primarily attributable to synergies.
When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include but are not limited to future expected cash flows from acquired technology and acquired customer relationships from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred (Note 2 – Business Combinations).
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.
17
ITEM 8. Financial Statements
Applife Digital Solutions, Inc.
Contents
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Consolidated Financial Statements |
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Report of Independent Registered Public Accounting Firm (RBSM LLP, PCAOB ID 587) | F-1 |
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F-3 | |
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F-6 | |
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F-7 |
18
Report of Independent Registered Public Accounting Firm
The Stockholders and the Board of Directors of APPLife Digital Solutions, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of APPLife Digital Solutions, Inc. and subsidiaries (the Company) as of June 30, 2026 and 2025, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the year ended June 30, 2026 and the period from January 6, 2025 (Inception) to June 30, 2025, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2026 and 2025, and the results of its operations and its cash flows for the year ended June 30, 2026, and the period from Inception through June 30, 2025, in conformity with accounting principles generally accepted in the United States of America.
The Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has an accumulated deficit, recurring losses, and expects continuing future losses. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. 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 audits 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 consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
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 judgments.
F-1
We determined that there are no critical audit matters.
/s/ |
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We have served as the Company’s auditor since 2019. |
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PCAOB ID |
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October 8, 2026 |
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F-2
APPLIFE DIGITAL SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
| June 30, |
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Cash |
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Inventory |
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Operating lease and right of use asset |
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Total current assets |
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Other assets |
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Goodwill |
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Furniture and equipment |
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Domain list |
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Total assets |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current liabilities |
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Accounts payable and accrued expenses |
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Accounts payable and accrued expenses – related parties |
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Operating lease liability |
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Due to Applife Holdings |
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Derivative liabilities |
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Promissory notes – non-related parties |
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Promissory notes – related parties |
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Convertible promissory notes, net of discounts |
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Other liabilities |
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Total current liabilities |
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Convertible preferred stock liability – Series B preferred stock, $ |
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Total liabilities |
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Commitments and contingencies |
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Stockholders’ deficit |
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Preferred Stock Series C of $ |
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Preferred Stock Series D of $ |
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Common Stock of $ |
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Additional Paid in Capital |
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Accumulated (deficit) |
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Total stockholders’ deficit |
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Total liabilities and stockholders’ deficit |
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The accompanying notes are an integral part of these consolidated financial statements.
F-3
APPLIFE DIGITAL SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year Ended June 30, 2026 |
| Period January 6, 2025 to June 30, 2025 | |
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Revenue | $ | | $ | |
Cost of goods sold |
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Operating expenses |
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Impairment of goodwill |
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Total operating expenses |
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Loss from operations |
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Other income (expense) |
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Finance expense |
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Amortization of debt discounts |
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Change in fair value of Derivative Liability |
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Gain (loss) on extinguishment of debt |
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Loss on Disposal of Fixed Asset |
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Gain on sale |
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Other Expense |
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Total Other Expenses |
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Net loss before provision for income taxes | $ | ( | $ | ( |
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Net (loss) | $ | ( | $ | ( |
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Loss per share | $ | ( | $ | ( |
The accompanying notes are an integral part of these consolidated financial statements.
F-4
APPLIFE DIGITAL SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
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| Series D Preferred Shares |
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Balance, January 6, 2025 (Inception) |
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Shares issued related to acquisition of AP4L |
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Conversion of promissory notes into Series D Preferred stock |
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Net loss |
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Balance, June 30, 2025 |
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Derivative liability converted to additional paid in capital |
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Net loss |
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Balance, June 30, 2026 |
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The accompanying notes are an integral part of these consolidated financial statements.
F-5
| Year |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Goodwill impairment |
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Amortization of debt discounts |
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Professional fees incurred on convertible promissory notes |
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Common and preferred stock issued for services |
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Change in fair value of derivative liabilities |
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Loss on extinguishment of debt |
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Loss on disposal of fixed asset |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other assets |
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Accounts payable and accrued expenses |
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Accounts payable and accrued expenses – related parties |
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Other liabilities |
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Net cash (used) in operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase consideration – Applife Digital Solutions |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Payments on other liabilities |
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Proceeds from promissory notes – related parties |
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Proceeds from convertible promissory notes |
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Cash and cash equivalents, end of period |
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Supplemental disclosure of cash flow information: |
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Cash paid for taxes |
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Acquisition of AP4L |
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Issuance of Series B Preferred Stock to settle debt |
| $ |
| $ |
Effect of reverse capitalization |
| $ |
| $ |
Conversion of convertible debt into Preferred Series D |
| $ |
| $ |
Issuance of warrants with convertible debt |
| $ |
| $ |
Derivative liabilities converted to additional paid in capital |
| $ |
| $ |
Reclassification of related party advances to convertible promissory notes – related parties |
| $ |
| $ |
Shares issued in conversion of convertible promissory notes |
| $ |
| $ |
Derivative liabilities recorded as debt discount on convertible promissory notes |
| $ |
| $ |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
APPLIFE DIGITAL SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization, Going Concern and Summary of Significant Accounting Policies
Organization
APPlife Digital Solutions, Inc. (the “Company” or “Applife”) was formed March 5, 2018, in Nevada. The Company’s main operating subsidiary, Sugar Auto Parts, Inc. (“SAP”) is a Nevada corporation formed on January 6, 2025 (“inception”), by Mammoth Crest Capital, LLC, which is 50% owned by Michael Hill and Barrett Evans, who are related parties. The Company is headquartered in Santa Barbara, CA. The Company operates as an aftermarket automotive parts ecommerce business, specializing in online sales of suspension lift systems and related accessories through its flagship ecommerce platform. The Company serves customers across the United States, focusing on Jeep, truck, and SUV owners.
On April 30, 2025, SAP executed a Bill of Sale with AP4L ABC, LLC. (AP4L) to acquire substantially all of AP4L’s assets. Under the agreement, SAP purchased all intellectual property and general intangible assets, including domain names, the AP4L website and related rights, and certain supplier relationships that could be re-established or renegotiated. The Company operates primarily as an aftermarket automotive parts ecommerce business, specializing in online sales of suspension lift systems and related automotive accessories through its ecommerce platform. SAP leverages its digital presence to serve customers across the United States, offering a wide selection of products for Jeep, truck, and SUV owners.
On June 13, 2025, the Company completed its acquisition of SAP (the “Merger”). In accordance with ASC 805 Business Combinations (“ASC 805”) the transaction was treated as a reverse acquisition for financial reporting purposes, with Applife treated as the legal acquirer and SAP treated as the accounting acquirer. The Company remains the continuing registrant and reporting company. Accordingly, the historical financial and operating data of the Company, which covers periods prior to the closing date of the Merger, reflects the assets, liabilities, and results of operations for SAP and does not reflect the assets, liabilities and results of operations of the Company for the periods prior to June 13, 2025 (Note 2 – Business Combinations). SAP conducted no business until April 2025. All goodwill recognized in this transaction has been impaired in the year ended June 30, 2026.
The Company does not currently have any international offices or subsidiaries. All management, business operations, and service providers are located in the United States, primarily in Nevada and California. The Company generates all of its revenue from its ecommerce platform serving U.S. customers, and there are no current plans to expand operations internationally.
On January 26, 2026, the Company received a Notice of Effectiveness for its S-1 registration.
On May 22, 2026, the Board of Directors (the “Board”) of APPlife Digital Solutions, Inc. (the “Company”) approved a reverse stock split of the Company’s issued and outstanding shares of common stock at a ratio of one-for-two hundred fifty (1-for-250) (the “Reverse Stock Split”). The Reverse Stock Split was authorized by the written consent, dated March 14, 2025, of the holder of a majority of the voting power of the Company’s outstanding stock, which authorized the Board to effect a reverse stock split at a ratio ranging from 1-for-100 up to 1-for-1,000, with the final ratio to be determined by the Board. The Company filed a definitive information statement on Schedule 14C describing that action with the Securities and Exchange Commission on April 28, 2025, for delivery to stockholders of record as of April 10, 2025.
To effect the Reverse Stock Split, the Company filed a Certificate of Change pursuant to NRS 78.209 (the “Certificate of Change”) with the Secretary of State of the State of Nevada on June 3, 2026, which also effected a proportionate reduction in the number of authorized shares of common stock from 5,000,000,000 shares to 20,000,000 shares. The Reverse Stock Split became effective at 12:01 a.m. on June 12, 2026 (the “Effective Time”).
At the Effective Time, every two hundred fifty (250) shares of the Company’s issued and outstanding common stock will be automatically combined and converted into one (1) share of common stock. The Reverse Stock Split did not affect the number of authorized shares of preferred stock, the par value of the common stock, or the rights of stockholders, except for adjustments that result from the treatment of fractional shares described below.
No fractional shares were issued in connection with the Reverse Stock Split. Any stockholder who would otherwise be entitled to receive a fractional share of common stock as a result of the Reverse Stock Split instead received one (1) whole share of common stock in lieu thereof (i.e., fractional shares were rounded up to the next whole share).
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The Reverse Stock Split applies to the shares of common stock issuable upon the exercise of the Company’s outstanding warrants and stock options, with proportionate adjustments made to the exercise prices thereof in accordance with their terms.
All common share and per share figures have been retroactively restated to account for this reverse split.
Going Concern
The Company has generated losses and negative cash flows from operations since inception. The Company has historically financed its operations from debt and equity financing. The Company anticipates additional equity and debt financings to fund operations in the future. Should management fail to adequately address the issue, the Company may have to reduce its business activities or curtail its operations. There can be no assurance that any additional financing will be available to the Company on satisfactory terms and conditions, if at all. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The accompanying consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and classification of liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result if the Company is unable to continue as a going concern.
Basis of Presentation
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. All intercompany transactions have been eliminated in consolidation.
Cash and Cash Equivalents
For the purpose of the consolidated statement of cash flows, the Company considers cash equivalents to include cash and investments with an original maturity of three months or less.
The Company maintains its cash and cash equivalents at financial institutions in the United States, which may, at times, exceed federally insured limits or similar limits in foreign jurisdictions. On June 30, 2026, the Company’s cash balance did not exceed the FDIC insurance limit. The Company has not experienced any losses in such accounts.
Income Taxes
To address accounting for uncertainty in tax positions, the Company clarifies the accounting for income taxes by prescribing a minimum recognition threshold that a tax position is required to meet before being recognized in the financial statements. The Company also provides guidance on de-recognition, measurement, classification, interest, and penalties, accounting in interim periods, disclosure and transition.
The Company files income tax returns in the U.S. federal jurisdiction. The Company did not have any tax expense for the periods ended June 30, 2026 and 2025. The Company did not have any deferred tax liability or asset on its balance sheets as of June 30, 2026 and 2025.
Interest costs and penalties related to income taxes, if any, will be classified as interest expense and general and administrative costs, respectively, in the Company’s financial statements. For the periods ended June 30, 2026 and 2025, the Company did not recognize any interest or penalty expense related to income taxes. The Company believes that it is not reasonably possible for the amounts of unrecognized tax benefits to significantly increase or decrease within the next twelve months.
The Company files income tax returns with the Internal Revenue Service (“IRS”) and the state of California.
Use of Estimates
Generally accepted accounting principles require that the consolidated financial statements include estimates by management in the valuation of certain assets and liabilities. Significant matters requiring the use of estimates and assumptions include, but are not necessarily limited to, fair value of the Company’s stock, stock-based
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compensation, BCF (Beneficial Conversion Feature) liabilities feature of convertible debt, derivative liabilities, and valuation allowance relating to the Company’s deferred tax assets. Management uses its historical records and knowledge of its business in making these estimates. Management believes that its estimates and assumptions are reasonable, based on information that is available at the time they are made. Accordingly, actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue from the sale of products and services in accordance with ASC 606, ”Revenue from Contracts with Customers,” by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
Revenue from product sales is recorded at the net sales price, or “transaction price,” which includes coupons, discounts, and processing fees. The Company constrains revenue by considering factors that could otherwise lead to a probable reversal of revenue. Collectability of revenue is reasonably assured based on historical evidence of collectability between the Company and its customers.
We offer consumer products through our website. Revenue is recognized when control of the goods is transferred to the customer, which occurs upon shipment to the customer.
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is primarily generated from the sale of automotive lift kits and accessories through its online platform. Revenue from product sales is recognized at a point in time, typically upon shipment or delivery when control of the goods passes to the customer.
The Company applies the ASC 606 five-step model:
1.Identify the contract with a customer: Established when an order is placed and payment terms are set.
2.Identify performance obligations: Usually a single obligation—delivery of products. Extended warranties, if offered, are separate obligations recognized over the warranty period.
3.Determine the transaction price: Based on expected consideration, excluding sales taxes.
4.Allocate the transaction price: For multiple obligations, allocation is based on relative standalone selling prices.
5.Recognize revenue: Product sales are recognized at a point in time; extended warranties are recognized over time.
Shipping and handling after control passes are treated as fulfillment costs and expensed as incurred. Contracts generally do not include variable consideration; if present, it is estimated and included only if a significant reversal is not probable. Revenue is recognized only when collectability is probable. Contract modifications are accounted for as separate contracts or as part of the existing contract, depending on their nature.
Revenue is disaggregated by major product line and timing (point in time vs. over time) in the notes to the consolidated financial statements.
Stock Based Compensation
The Company accounts for share-based compensation in accordance with the fair value recognition provision of FASB ASC 718, Compensation – Stock Compensation (“ASC 718”), prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options, and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the consolidated financial statements based on the estimated grant date fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period).
The Company accounts for share-based compensation issued to non-employees and consultants in accordance with FASB ASC 718, Compensation – Stock Compensation (“ASC 718”). Following the Company's adoption of ASU
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2018-07, awards to non-employees are measured and accounted for using the same model applied to employee awards, generally at grant-date fair value.
Leases
The Company accounts for its leases in accordance with ASU 2016-02, “Leases” (Topic 842). This topic requires that a lessee recognize the assets and liabilities that arise from operating leases. The Company recognizes right-of-use assets and lease liabilities on the consolidated balance sheet for all leases with a term longer than 12 months and classifies them as operating leases. For leases with a term of 12 months or less, the Company elects not to recognize lease assets and lease liabilities on those leases. The right-of-use assets and lease liabilities have been measured by the present value of the Company’s remaining lease payments over the lease term using our incremental borrowing rates or implicit rates, when readily determinable.
Net Income (Loss) per Share
Basic net income (loss) per share is calculated by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is calculated by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding during the period, increased by potentially dilutive common shares (“dilutive securities”) that were outstanding during the period. Dilutive securities include the conversion of convertible preferred stock, convertible notes and warrants. Diluted net loss per common share is the same as basic net loss per common share for each period presented because the effect of all potentially dilutive securities would be anti-dilutive as a result of the Company's net loss. Potentially dilutive securities excluded from the calculation of diluted net loss per share include the Series B Preferred Stock, convertible into approximately 707,500 common shares, the Series C Preferred Stock, convertible into approximately 2,911,200 common shares, and the Series D Preferred Stock, convertible into 162,000 common shares, in each case as of June 30, 2026. There were also
Fair Value of Financial Instruments
The Company follows FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) to measure and disclose the fair value of its financial instruments. ASC 820 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements and establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by ASC 820 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.
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
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. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts reported in the Company’s financial statements for cash, and accounts payable and accrued expenses approximate their fair value because of the immediate or short-term nature of these financial instruments.
Derivative Liabilities
FASB ASC 815, Derivatives and Hedging, requires all derivatives to be recorded on the consolidated balance sheet at fair value. As of June 30, 2026, we used the Black-Scholes-Merton (BSM) model to estimate the fair value of the warrant liability and the conversion feature bifurcated from our convertible notes. Key assumptions of the BSM model include the market price of our stock, the conversion price of the debt, applicable volatility rates, risk-free interest rates and the instrument’s remaining term. These assumptions require significant management judgment. In addition, changes in any of these variables during a period can result in material changes in the fair value (and resultant gains or losses) of this derivative instrument.
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Inventories
Inventories, consisting of raw materials, work in process and products available for sale, are primarily accounted for using the first-in, first-out method (“FIFO”), and are valued at the lower of cost or net realizable value. This valuation requires management to make judgements based on currently available information about the likely method of disposition, such as through sales to individual customers and returns to product vendors.
Goodwill
Goodwill represents the excess of the acquisition price of a business over the fair value of identified net assets of that business. Goodwill has an indefinite lifespan and is not amortized. The Company evaluates goodwill for impairment at least annually and records an impairment charge when the carrying amount of a reporting unit with goodwill exceeds the fair value of the reporting unit.
The Company assesses qualitative factors to determine if it is necessary to conduct a quantitative goodwill impairment test. If deemed necessary, a quantitative assessment of the reporting unit’s fair value is conducted and compared to its carrying value in order to determine the impairment charge.
For the year ended June 30, 2026, the Company recorded $
Segment Information
In accordance with ASC 280, Segment Reporting (“ASC 280”), we identify our operating segments according to how our business activities are managed and evaluated. ASC 280 establishes standards for companies to report financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker (“CODM”), or group, in deciding how to allocate resources and assess performance.
Accounting Pronouncements
Recently Issued Accounting Standards Not Yet Adopted
In November 2024, the FASB issued Accounting Standards Update 2024-03 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)" which requires that at each interim and annual reporting period an entity:
1. Disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depreciation, depletion, and amortization included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the listed expense categories.
2. Include certain amounts that are already required to be disclosed under current generally accepted accounting principles (GAAP) in the same disclosure as the other disaggregation requirements.
3. Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.
4. Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.
These amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027: either (1) prospectively to financial statements issued for reporting periods after the effective date of this Update or (2) retrospectively to any or all prior periods presented in the financial statements. The Company expects to enhance disclosures of expenses based on new requirements.
Other accounting pronouncements issued but not yet effective are not believed by management to be relevant or to have a material impact on the Company’s present or future consolidated financial statements.
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Recently Adopted Accounting Standards
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” which is intended to enhance the transparency and decision usefulness of income tax disclosures. The guidance addresses investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. The guidance is effective for annual periods beginning after December 15, 2024. The Company has adopted ASU 2023-09 as of July 1, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements.
In November 2024, the FASB also issued Accounting Standards Update 2024-04 "Debt - Debt with Conversion and Other Options (Subtopic 470-20) “Induced Conversions of Convertible Debt Instruments” to clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. Under the amendments, to account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms of the instrument. An entity should assess whether this criterion is satisfied as of the date the inducement offer is accepted by the holder. If, when applying this criterion, the convertible debt instrument had been exchanged or modified (without being deemed substantially different) within the one-year period leading up to the offer acceptance date, an entity should compare the terms provided in the inducement offer with the terms that existed one year before the offer acceptance date. The amendments in this Update also clarify that the induced conversion guidance applies to a convertible debt instrument that is not currently convertible as long as it had a substantive conversion feature as of both its issuance date and the date the inducement offer is accepted. The amendments are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The amendments are effective for the Company beginning with its fiscal year ending June 30, 2027. The Company is evaluating the amendments and does not expect their adoption to have a material impact on its consolidated financial statements.
Note 2 – Business Combinations
Acquisition of AP4L ABC, LLC
On April 30, 2025, SAP acquired certain of the assets of AP4L ABC, LLC (“AP4L”), including intellectual property, domain names, the AP4L website, and certain supplier relationships. The acquisition was structured as an asset purchase and was intended to support SAP’s ecommerce operations through its ecommerce platform. The following is a summary of the transaction:
Assets acquired |
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Inventory | $ |
Furniture and equipment | |
Domain list | |
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Cash paid | $ |
Other items, net (see below) | |
Liabilities assumed | |
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Goodwill acquired | $ |
The Company issued common shares and Series C preferred stock to certain parties related to the AP4L transaction. Other items, net and liabilities assumed together represent the $
Reverse Acquisition with Sugar Auto Parts, Inc.
On June 13, 2025 (the "Closing Date"), SAP. closed an acquisition agreement with the Company (the “Merger”), as a result of which Applife assumed certain assets and liabilities of SAP. While Applife was the legal acquirer of SAP’s net assets in the Merger, for accounting purposes, the Merger is treated as a reverse recapitalization, whereby
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SAP is deemed to be the accounting acquirer, and the historical financial statements of SAP became the historical financial statements of Applife upon the closing of the Merger. Under this method of accounting, Applife was treated as the “acquired” company and SAP is treated as the acquirer for financial reporting purposes.
Accordingly, for accounting purposes, the Merger was treated as the equivalent of SAP issuing stock for the net assets of Applife, accompanied by a recapitalization. The net assets of Applife were stated at historical cost, with no goodwill or other intangible assets recorded.
As consideration,
According to the terms of the acquisition agreement,
As a result of the Merger, the shareholder of SAP gained voting rights equivalent to 87.4% of the voting rights for all classes of the Company’s issued and outstanding stock. The transaction costs and the fair value of the Common Stock and the fair value of the Preferred Stock were recorded as a reduction of additional paid-in capital.
The following is a summary of the Applife balance sheet prior to the reverse merger:
| Recapitalization | |
Prepaids | $ | |
Total assets | $ | |
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Accounts payable and accrued expenses | $ | |
Series B preferred stock, 4,400 shares, stated value of $440,000 |
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Total liabilities |
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Applife equity at June 13, 2025; 1,040,000 shares of common stock |
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Total liabilities and equity | $ | |
The following table reconciles the elements of the Merger to the Statements of Shareholders' Equity (Deficit) after the reverse merger:
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| Recapitalization |
Recognition of Applife equity | $ | ( |
Less: transactions costs allocated to SAP equity |
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Effect of Merger, net of transaction costs | $ | ( |
The following table details the number of shares of Common Stock issued immediately following the consummation of the merger:
| Number of Shares |
Common Stock owned by Applife’s Pre-Merger shareholders | |
Common Stock consideration issued to SAP due to Merger | |
Total outstanding shares of Common Stock immediately after the Merger | |
The following table details the number of shares of Series B Preferred Stock issued immediately following the consummation of the Merger:
| Number of Shares |
Series B Preferred Stock owned by Applife’s Pre-Merger shareholders | - |
Series B Preferred Stock consideration issued due to Merger | |
Total outstanding shares of Series B Preferred Stock immediately after the Merger | |
An additional
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The following table details the number of shares of Series C Preferred Stock issued immediately following the consummation of the Merger:
| Number of Shares |
Series C Preferred Stock owned by Applife’s Pre-Merger shareholders | - |
Series C Preferred Stock consideration issued due to Merger | |
Total outstanding shares of Series C Preferred Stock immediately after the Merger | |
Note 3 – Commitments and Contingencies
Legal Matters
From time to time the Company may be involved in certain legal actions and claims arising in the ordinary course of business. The Company was not a party to any specific legal actions or claims on June 30, 2026.
Note 4 – Other Liabilities
Debt related to the assumed liabilities consisted of the following:
June 30, 2026 |
| June 30, 2025 | |||
Former SAP creditors – Credit facilities* | $ |
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Mammoth Crest Capital* |
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Credit cards |
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Chris Davenport * |
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Vendor payables |
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Total | $ |
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*Related parties as common shares have been issued to the creditors
Note 5 – Series B Preferred Stock
On June 13, 2025, the Company issued Series B preferred stock to certain vendors of the Company prior to the Reverse Acquisition and for the Conversion of Convertible notes payable. Under the terms of the Series B Preferred stock, the Company issued
June 30, 2026 | |
Series B Preferred stock - 12,855 shares | $ |
Discount | ( |
Total | $ |
On December 8, 2025, the Company issued an additional
June 30, 2026 | |
Series B Preferred stock – 1,300 shares | $ |
Discount | ( |
Total | $ |
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On May 27, 2026, the Company issued
The carrying amount of the Series B preferred stock as of June 30, 2026 and 2025 was as follows:
June 30, 2026 |
| June 30, 2025 | |
Series B Preferred stock - | $ |
| $ |
Discount | ( |
| ( |
Total | $ |
| $ |
The Company amortized $
Note 6 – Debt
Convertible Notes Payable
The Company entered into convertible notes payable as follows as of June 30, 2026. The chart below does not include convertible notes payable that were converted prior to July 1, 2025.
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| June 30, 2026 |
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Convertible note entered into August 1, 2025 due August 1, 2026; One-time interest charge of $22,440 (12%) added to principal at inception. OID of $20,000 on this convertible note. Note is in default as the Company failed to make their required payment and recorded an additional discount of $148,729 on January 30, 2026. |
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Convertible note entered into November 10, 2025 due November 10, 2026; One-time interest charge of $7,200 (12%) added to principal at inception. OID and debt discount of $67,200 on this convertible note. | (a) |
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Convertible note entered into November 10, 2025 due November 10, 2026; One-time interest charge of $7,200 (12%) added to principal at inception. OID and debt discount of $67,200 on this convertible note. | (b) |
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Convertible note entered into November 18, 2025 due November 18, 2026; One-time interest charge of $7,200 (12%) added to principal at inception. OID and debt discount of $67,200 on this convertible note. | (c) |
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Convertible note entered into November 20, 2025 due November 20, 2026; One-time interest charge of $7,200 (12%) added to principal at inception. OID and debt discount of $67,200 on this convertible note. | (d) |
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Convertible note entered into November 20, 2025 due August 20, 2026 at 5% interest per annum. OID and debt discount of $85,165 on this convertible note. This note is in default as of the date of this report. | (e) |
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Convertible note entered into November 20, 2025 due August 20, 2026 at 8% interest per annum on the Equity Line of Credit. OID and debt discount of $127,748 on this convertible note. This note is in default as of the date of this report. | (f) |
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Convertible note entered into November 25, 2025 due November 25, 2026; One-time interest charge of $7,200 (12%) added to principal at inception. OID and debt discount of $67,200 on this convertible note. | (g) |
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Convertible note entered into March 9, 2026 due March 9, 2027; One-time interest charge of $7,200 (12%) added to principal at inception. OID and debt discount of $67,200 on this convertible note. | (h) |
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Total |
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Less: Discounts |
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Current portion of convertible promissory notes |
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Promissory Notes – Non-related Parties
The Company entered into promissory notes with non-related parties as follows as of June 30, 2026.
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| June 30, |
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Promissory note entered into April 21, 2026 due earlier of October 21, 2026 and the Company’s issuance of $1,000,000 in the sale of debt or equity to one or more investors who are not Affiliates, officers or directors. Interest will accrue at 10% per annum. | (j) |
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Promissory note entered into April 22, 2026 due earlier of October 22, 2026 and the Company’s issuance of $1,000,000 in the sale of debt or equity to one or more investors who are not Affiliates, officers or directors. Interest will accrue at 10% per annum. | (k) |
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Promissory note entered into May 27, 2026 due earlier of November 27, 2026 and the Company’s issuance of $1,000,000 in the sale of debt or equity to one or more investors who are not Affiliates, officers or directors. Interest will accrue at 10% per annum. | (n) |
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Promissory note entered into June 5, 2026 due earlier of December 5, 2026 and the Company’s issuance of $1,000,000 in the sale of debt or equity to one or more investors who are not Affiliates, officers or directors. Interest will accrue at 10% per annum. | (o) |
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Total |
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Less: Discounts |
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Current portion of promissory notes – non-related parties |
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Promissory Notes – Related Parties
The Company entered into promissory notes with related parties as follows as of June 30, 2026.
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| June 30, 2026 |
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Promissory note entered into April 10, 2026 due earlier of October 10, 2026 and the Company’s issuance of $1,000,000 in the sale of debt or equity to one or more investors who are not Affiliates, officers or directors. Interest will accrue at 10% per annum. | (i) |
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Promissory note entered into May 19, 2026 due earlier of November 19, 2026 and the Company’s issuance of $1,000,000 in the sale of debt or equity to one or more investors who are not Affiliates, officers or directors. Interest will accrue at 10% per annum. | (l) |
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Promissory note entered into May 19, 2026 due earlier of November 19, 2026 and the Company’s issuance of $1,000,000 in the sale of debt or equity to one or more investors who are not Affiliates, officers or directors. Interest will accrue at 10% per annum. | (m) |
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Promissory note entered into June 25, 2026 due earlier of December 25, 2026 and the Company’s issuance of $1,000,000 in the sale of debt or equity to one or more investors who are not Affiliates, officers or directors. Interest will accrue at 10% per annum. | (p) |
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Total |
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Less: Discounts |
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Current portion of promissory notes –related parties |
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F-16
Prior to July 1, 2025
The Company issued convertible debt with detachable warrants for $
The initial allocation of the proceeds was as follows:
|
|
|
Fair value of the warrants issued | $ | |
Discount on debt |
| ( |
Initial finance cost | $ |
The debt discount was amortized to interest expense which brought the carrying amount of the convertible notes to $
Subsequent to July 1, 2025
Convertible Promissory Notes
F-17
Promissory Notes – Non-related Parties
F-18
Promissory Notes – Related Parties
The Company recognized $
Equity Line of Credit
The CM Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the CM Purchase Agreement, the Company may issue and sell to CM, and CM shall purchase from the Company, up to $
The CM Purchase Agreement and the sale of up to $15,000,000 of shares of common stock thereunder was approved by the Company’s Board of Directors on November 20, 2025.
F-19
The CM Purchase Agreement essentially gives us the right to put (or offer to sell) common stock to CM as described below. Specifically, the purchase and sale terms provided for by the CM Purchase Agreement are summarized as follows:
(i) | Fixed Purchase. On any business day, the Company has the right to direct CM to purchase shares of common stock at a purchase price equal to 95% of the lower of (A) the daily volume weighted average price (“VWAP”) of the Company’s common stock for the five trading days immediately preceding the applicable purchase date for such Fixed Purchase and (B) the lowest trading price of a share of common stock on such date; provided that if the closing price of the common stock on such date is lower than such purchase price, then the purchase price shall be reduced to equal such closing price, and provided further that such purchases shall be subject to a daily limitation of $100,000; |
|
|
(ii) | VWAP Purchase. On any business day, the Company has the right to direct CM to purchase common stock at a purchase price equal to 95% of the lower of (A) the closing sale price on such date and (B) the VWAP during the applicable VWAAP Purchase Period. , provided that such purchases shall be subject to a daily limitation of $100,000; and |
|
|
(iii) | Additional VWAP Purchase. In addition to the foregoing, the Company also has the right to direct CM to purchase common stock at a purchase price equal to 95% of the lower of (A) the VWAP for the applicable Additional VWAP Purchase Period during the applicable Additional VWAP Purchase Date for such Additional VWAP Purchase, and (B) the Closing Sale Price of the Common Stock on such applicable Additional VWAP Purchase Date for such Additional VWAP Purchase, provided that such purchases shall be subject to a daily limitation of $100,000. |
The foregoing purchase terms are subject to certain conditions and limitations, including daily volume and dollar amount limitations with respect to each type of purchase described above within a given day, and a 4.99% beneficial ownership limitation with respect to CM’s ownership of the Company’s common stock.
The Company agreed to comply with certain covenants and conditions under the CM Purchase Agreement, which are set forth therein.
Unless earlier terminated as provided under the CM Purchase Agreement, the CM Purchase Agreement shall terminate automatically on the earliest to occur of (i) the expiration of the registration statement of which this prospectus forms a part pursuant to Rule 415(a)(5) of the Securities Act, (ii) the date on which CM shall have purchased the maximum amount pursuant to the CM Purchase Agreement, (iii) the date on which the Company’s common stock shall have failed to be listed or quoted on the OTC Markets OTCID Basic Market or on another national securities exchange, (iv) 30 trading days following commencement of bankruptcy proceedings, and (v) the date on which, pursuant to or within the meaning of any bankruptcy law, a custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors.
In addition, the Company may terminate the CM Purchase Agreement by giving CM, one trading day’s prior written notice, and CM may terminate the CM Purchase Agreement by giving the Company 10 trading days’ prior written notice upon the occurrence of certain specified events which more particularly set forth in the CM Purchase Agreement, including any failure to maintain the effectiveness of a registration statement registering the resale of the shares of common stock issuable under the CM Purchase Agreement, failure to maintain listing of the common stock on the OTC Markets OTCID Basic Market or a national securities exchange, and the occurrence of certain other enumerated events.
Registration Rights Agreement
In connection with the CM Purchase Agreement, on November 20, 2025 the Company also entered into a Registration Rights Agreement with CM pursuant to which the Company agreed to register CM’s resale of the shares of common stock issuable under the CM Purchase Agreement (such shares, the “ELOC Shares”) on a registration statement on Form S-1 or S-3 filed with the SEC within 30 days of this Agreement and to cause such registration statement to be declared effective the earlier of (A) the 60th day following the date on which the Company was required to file such registration statement, if such registration statement is subject to review by the SEC, and (B) the third business day following the date the Company is notified by the SEC that such registration statement will not be reviewed. Like the CM Purchase Agreement, CM has agreed to waive the timing discussed in this paragraph but not the obligation. The Company filed a Form S-1 on December 8, 2025.
F-20
Interest Expense and Amortization of Discounts
In connection with the aforementioned convertible notes, promissory notes – non-related parties and promissory notes - related parties, the Company in the year ended recorded $
A summary of the finance expense is as follows:
Origination fee on ELOC |
| $ | |
Derivative expense |
|
| |
Interest expense and other |
|
| |
Balance at June 30, 2026 |
| $ |
For the year ended June 30, 2026, the Company recorded $
Note 7 – Derivative Liabilities
Warrants Granted in June 13, 2025 Note Offering
The Company evaluated the Warrants in accordance with the guidance at ASC 480 and ASC 815-40 and determined that the Warrants are precluded from being considered indexed to the entity’s own stock, resulting in the Warrants being classified as a liability. The measurement of fair value of the Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $
A roll forward of the derivative liability is as follows:
Balance at June 30, 2025 |
| $ | |
Change in fair value of derivative liability |
|
| ( |
Balance at June 30, 2026 |
| $ |
Convertible Notes Issued Prior to July 1, 2025
The Company evaluated the terms of the Convertible Note issued in June 2025 in accordance with the guidance at ASC 815-40 and determined that prior to conversion, no liability characteristics existed to treat the conversion option as a derivative liability as the note is not yet convertible.
Convertible Notes Issued Subsequent to July 1, 2025
The Company evaluated the terms of the Convertible Note issued subsequent to July 1, 2025 in accordance with the guidance at ASC 815-40 and determined that each of the notes met the criteria necessary for bifurcation and the conversion option was reclassified to derivative liability as follows:
Derivative Liability at Inception |
| $ | |
Change in fair value of derivative liability |
|
| ( |
Conversions of debt |
|
| ( |
Balance at June 30, 2026 |
| $ |
As of June 30, 2026 the balance in derivative liabilities is $
A roll forward of the derivative liability is as follows:
Balance at June 30, 2025 |
| $ | |
New additions |
|
| |
Conversions of debt |
|
| ( |
Change in fair value of derivative liability |
|
| ( |
Balance at June 30, 2026 |
| $ |
F-21
Note 8 – Equity
Capitalization
The Company is authorized to issue a total of
Common Stock
The Company is authorized to issue up to
Preferred Stock
The Company is authorized to issue up to 10,000,000 shares of Preferred Stock.
Series A Convertible Preferred Stock
The Series A, par value $
The conversion rate in effect at any time for conversion of the Series A Stock shall be the product obtained by dividing the number of shares of Series A Stock by the closing share price on the date of conversion and multiplying that number by four hundred (400). There were 15,000 Series A shares that were converted into 6,000,000 common shares.
Series B Convertible Preferred Stock
The Series B, par value $
Series C Convertible Preferred Stock
The Series C, par value $
F-22
the record date fixed for such meeting or the effective date of such written consent, plus such number of votes that equals twenty-five percent (25%) of the number of votes to which the holders of other securities of the Company are entitled as of such dates. The conversion of the Series C Stock shall be the product obtained by multiplying .0001 (or 0.01%) by the aggregate number of the Company's Common Stock, on a fully diluted basis, at the time of the Conversion. Because the conversion formula is expressed as a percentage of the Company’s Common Stock on a fully diluted basis rather than as a fixed number of shares, the Reverse Stock Split did not change the conversion terms of the Series C Stock. The Series C is subject to automatically convert into common stock in the event of a Qualified Financing as defined.
Series D Convertible Preferred Stock
The Series D, par value $
The Series D Preferred Stock include certain reset and anti-dilution provisions that could reduce the conversion prices and exercise prices thereof if and whenever the Company grants, issues or sells any shares of Common Stock for a consideration per share (the "New Issuance Price") less than a price equal to the Conversion Price in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (such Conversion Price then in effect is referred to herein as the "Applicable Price" ( the foregoing a "Dilutive Issuance"), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price.
The Board of Directors of the Corporation is authorized to provide, by resolution, for one or more series of Preferred Stock to be comprised of authorized but unissued shares of Preferred Stock. Except as may be required by law, the shares in any series of Preferred Stock need not be identical to any other series of Preferred Stock. Before any shares of any such series of Preferred Stock are issued, the Board of Directors shall fix, and is hereby expressly empowered to fix, by resolution the rights, preferences and privileges of, and qualifications, restrictions and limitations applicable to, such series.
The Board of Directors is authorized to increase the number of shares of the Preferred Stock designated for any existing series of Preferred Stock by a resolution adding to such series authorized and unissued shares of the Preferred Stock not designated for any other series of Preferred Stock. The Board of Directors is authorized to decrease the number of shares of the Preferred Stock designated for any existing series of Preferred Stock by a resolution, subtracting from such series unissued shares of the Preferred Stock designated for such series.
Note 9 – Leases
The Company leases approximately 1,275 square feet of office space located at 4580 North Rancho, Unit 110, Las Vegas, Nevada, from the Sergio and Cheryl Salzano Family Trust under a commercial lease agreement dated August 1, 2023. The lease has an initial term of three years, expiring July 31, 2026, and provides for a fixed monthly rental payment of $
On June 13, 2025, the Company also entered into a separate month-to-month operating lease for its other office space that commenced on the same date with EMC2 Capital, a related party. The lease renews automatically on a month-to-month basis and provides for a fixed monthly rental payment of $
F-23
recognized for this lease, and the monthly rent is expensed as incurred. The operating lease right-of-use asset and lease liability on the consolidated balance sheet relate solely to the Las Vegas lease described above.
The Company’s weighted-average remaining lease term relating to its operating leases is
The following table presents information about the amount and timing of liabilities arising from the Company’s operating leases as of June 30, 2026:
Year ending June 30, 2027 |
| $ | |
Less: Imputed interest |
|
| ( |
Present value of operating lease liabilities |
| $ |
Note 10 – Segment Reporting
The CODM has been identified as the Chief Executive Officer, who reviews the operating results for the Company as a whole to make decisions about allocating resources and assessing financial performance. Accordingly, management has determined that the Company operates in one operating segment, and therefore one reportable segment. Our determination that we operate as a single operating segment is consistent with the financial information regularly reviewed by management for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting for future periods. The accounting policies for our single operating segment are the same as those described in the summary of significant accounting policies.
The key measures of segment profit or loss reviewed by our CODM are revenue, cost of goods sold, and operating expenses. These items are reviewed and monitored by the CODM to manage and forecast cash. The CODM also reviews these items to manage, maintain and enforce all contractual agreements to ensure costs are aligned with all agreements and budget.
Note 11 – Related Party Transactions
Promissory Note Payable
See note 6 for the promissory notes entered into with related parties.
Credit Card Facility Provided by the CEO
On April 15, 2026, the Company’s CEO agreed to provide a Credit Card for the Company to pay certain expenses needed for the business. The Company can charge up to $15,000 for up to six months. The balance must never exceed $
In the event the Company fails to make the minimum monthly payment, exceeds the $15,000 limit, or fails to pay the balance in full at the end of the six-month term, the Company shall be in default. If in default, the Company is still obligated to pay the minimum monthly payment of any outstanding amounts due. If the Company defaults on payment, the Company shall be responsible for paying the CEO the costs of collection, including reasonable attorneys’ fees.
The balance on the card first exceeded the $
F-24
Note 12 – Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
The following table summarizes the significant differences between the U.S. Federal statutory tax rate and the Company’s effective tax rate for financial statement purposes for the years ended June 30, 2026 and 2025:
SCHEDULE OF EFFECTIVE TAX RATE
June 30, 2026 | June 30, 2025 | |
Federal income taxes at statutory rate | ||
State income taxes at statutory rate | ||
Non-deductible interest and debt extinguishment | ( | ( |
Applife deferred tax assets | ||
Other miscellaneous expenses | ( | |
Goodwill impairment | ( | |
Derivative expenses and changes in derivative liability | ||
Change in valuation allowance | ( | ( |
Totals |
Net deferred tax assets consist of the following components as of June 30, 2026 and 2025:
SCHEDULE OF NET DEFERRED TAX ASSETS
June 30, 2026 | June 30, 2025 | |
Deferred tax assets: |
|
|
Net operating loss carryover | $ | $ |
Goodwill | ( | |
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 years ended June 30, 2026 and 2025 due to the following:
SCHEDULE OF FEDERAL INCOME TAX RATE
June 30, 2026 | June 30, 2025 | |
Income tax expense (benefit) at U.S. federal statutory rate | $( | $( |
Non-deductible interest and debt extinguishment | ||
State taxes net of federal benefit | ( | ( |
Applife deferred tax assets | ( | |
Other miscellaneous differences | ||
Goodwill impairment | ||
Derivative expenses and changes in derivative liability | ( | |
Valuation allowance | ||
Income tax expense | $ | $ |
Section 382 of the Internal Revenue Code provides an annual limitation on the amount of federal net operating losses and tax credits that may be used in the event of an ownership change. At June 30, 2026, the Company had net operating loss carryforwards totaling approximately $
F-25
been prepared, and the net operating loss carryforwards ultimately available to the Company may be materially less than the amounts stated above.
The Company classifies accrued interest and penalties, if any, for unrecognized tax benefits as part of income tax expense. The Company did not accrue any penalties or interest as of June 30, 2026 and 2025.
The provision (benefit) for income taxes for continuing operations for the years ended June 30, 2026 and 2025 is as follows:
SCHEDULE OF PROVISION (BENEFITS) FOR INCOME TAXES
June 30, 2026 | June 30, 2025 | |
Current | $ | $ |
Deferred | ||
Total | $ | $ |
The Company files corporate income tax returns in the United States (federal) and in California. Since the Company incurred net operating losses in every tax year since inception, the 2022 through 2025 income tax returns are subject to examination and adjustments by the IRS for at least three years following the year in which the tax attributes are utilized.
Note 13 – Subsequent Events
Management has evaluated all subsequent events in accordance with ASC 855-10, Subsequent Events, through October 8, 2026, the date the financial statements were issued. No subsequent events requiring recognition or disclosure were identified during this period, other than the following:
Subsequent to June 30, 2026,
F-26
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There are no reportable events under this Item for the year ended June 30, 2026.
Item 9A. Controls and Procedures
Disclosure Controls and Procedure
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, as amended (“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Framework used by Management to Evaluate the Effectiveness of Internal Control over Financial Reporting
As required by Section 404 of the Sarbanes-Oxley Act of 2002 and the related rule of the SEC, management assessed the effectiveness of our internal control over financial reporting using the Internal Control-Integrated Framework (2013) developed by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment and for the reasons described below, management concluded that our internal control over financial reporting was not effective as of June 30, 2026.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. This rule defines internal control over financial reporting as a process designed by, or under the supervision of, the Company’s Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:
·Refer to the upkeep of records which, with reasonable detail, accurately and fairly reflect our transactions and dispositions;
·Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors of the Company;
·Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements;
·Provide reasonable assurance that any unauthorized cash transactions are detected and prevented; and
·Provide reasonable assurance, that potential erroneous accounting entries are identified and corrected in a timely manner.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, 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.
Evaluation of Disclosure Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the
19
degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
As required by the SEC Rules 13a-15(b) and 15d-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level due to material weaknesses in internal controls over financial reporting (as described below).
Deficiencies and Significant Deficiencies
A material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Audit Standard No. 5, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that as of June 30, 2026 our internal controls over financial reporting were not effective at the reasonable assurance level:
1.We do not have sufficient written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of the Sarbanes-Oxley Act which is applicable to us for the year ended June 30, 2026. Management evaluated the impact of our failure to have sufficient written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
2.We do not have sufficient resources in our accounting function, which restricts the Company’s ability to gather, analyze and properly review information related to financial reporting in a timely manner. In addition, due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
Changes in internal control over financial reporting
There were no changes in our internal control over financial reporting during the year ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. Other Information
During the fiscal year ended June 30, 2026, to the Company’s knowledge, none of the Company’s directors or officers (as defined in Exchange Act Rule 16a-1(f)) adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
N/A
20
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance
Directors and Executive Officers
Set forth below are the names, ages and positions of our current directors and executive officers. Unless otherwise indicated, the address of each person listed is c/o Sugar Auto Parts, Inc. 701 Anacapa Street, Suite C, Santa Barbara, California 93101.
Name and Address | Age | Position |
Michael Hill | 50 | CEO, Secretary, Director |
Barrett Evans | 54 | CFO, Director |
Matt Reid | 51 | Director |
Michael Hill
Mr. Hill is our Chairman, Chief Executive Officer and Secretary and also serves as the Chief Executive Officer of Sugar Auto Parts, Inc. since March 2025. Mr. Hill is a seasoned executive and corporate advisor with over 20 years in both the private and public sectors. In January 2024, He founded and currently serves as the Chief Executive Officer of CallsDirect, a digital media company. In 2019, Mr. Hill co-founded SLL Media, a digital media company and serves as the Chief Executive Officer. During 2015 to 2019 he served as a Director and the Chief Executive Officer of Total Sports Media, an online sports and entertainment media company. From 2000 to 2015 Mr. Hill owned and operated several sales and marketing companies. Prior to this, Mr. Hill served in the United States Navy, receiving the honor of Enlisted Surface Warfare Specialist.
Barrett Evans
Mr. Evans is our Chief Financial Officer and the managing director of EMC2 Capital, LLC, a family office founded in 2020. He has also served as the President of Montecito Capital since 2006. Mr. Evans is a Director and CEO of Phytanix Bio, and a director of Dryworld Brands since 2020. Before founding Montecito Capital, Mr. Evans was the managing director of eFund Capital. Mr. Evans has served as a member of numerous public and private companies as a consultant, founder, executive, and director. Mr. Evans brings years of experience and knowledge of public markets to the Company. Mr. Evans has a bachelor's degree in political science from the University of California, Santa Barbara. Mr. Evans is qualified to serve on the Board due to his prior board experience for several public companies.
Matthew Reid
Matthew Reid is an experienced founder who has worked in the venture capital and private equity industry for the past 15 years where he has focused on sales, management, marketing and business development. He has owned and operated several successful businesses ranging from a commercial real estate mortgage company to a media investment group. During the last five years Mr. Reid has been working for himself developing apps and projects that eventually lead to the creation of the Company and has not worked at any other companies. Mr. Reid holds a Bachelor of Arts degree from New York University.
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Board Composition
Our By-Laws provide that the Board of Directors which shall constitute the whole board shall not be less than one (1) nor more than seven (7) or such other maximum number of directors as permitted by the Nevada General Corporation Law. The maximum or minimum number of directors cannot be changed, nor can a fixed number be substituted for the maximum and minimum numbers, except by a duly adopted amendment to the articles of incorporation or by an amendment to this bylaw.
No Committees of the Board of Directors; No Financial Expert
We do not presently have a separately constituted audit committee, compensation committee, nominating committee, executive committee or any other committees of our Board of Directors. Nor do we have an audit committee or financial expert. Management has decided not to establish an audit committee at present because our limited resources and limited operating activities do not warrant the formation of an audit committee or the expense of doing so. As such, our entire Board of Directors acts as our audit committee. We do not have a financial expert serving on the Board of Directors or employed as an officer based on management’s belief that the cost of obtaining the services of a person who meets the criteria for a financial expert under Section 407 of the Sarbanes-Oxley Act of 2002 and Item 407(d) of Regulation S-K is beyond our limited financial resources and the financial skills of such an expert are simply not required or necessary for us to maintain effective internal controls and procedures for financial reporting in light of the limited scope and simplicity of accounting issues raised in our financial statements at this stage of our development.
Auditors
Our principal registered independent auditor is RBSM LLP
Code of Ethics
The Company does not have a written code of ethics that applies to the Company’s officers.
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.
Director Independence
Our board of directors has undertaken a review of the independence of each director and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result of this review, our board of directors determined that none of our directors is independent. See Item 13, “Certain Relationships and Related Transactions, and Director Independence — Director Independence.”
Involvement in Legal Proceedings
None of our officers or directors has filed a personal bankruptcy petition, had a bankruptcy petition filed against any business of which they were a general partner or officer at the time of bankruptcy or within two years prior to that time, or has been convicted of or been the subject of any criminal proceedings or the subject of any order, judgment or decree involving the violation of any state or federal securities laws within the past ten (10) years.
22
Compliance with Section 16(a) Of the Exchange Act
Section 16(a) of that act requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file.
Delinquent Section 16(a) Reports
Based solely on our review of the reports filed with the SEC and written representations from our directors and executive officers, we believe that during fiscal 2026 the following reports were not filed on a timely basis: (i) Michael Hill did not timely file a Form 4 reporting the acquisition of 750 shares of Series B Preferred Stock on December 8, 2025, or a Form 4 reporting the acquisition of 12,000 shares of common stock on May 27, 2026; (ii) Barrett Evans did not timely file a Form 4 reporting the acquisition of 450 shares of Series B Preferred Stock on December 8, 2025; and (iii) Michael Hill and Barrett Evans each filed his initial statement of beneficial ownership on Form 3, which was due in June 2025, on October 24, 2025.
Insider Trading Policy
Our Board of Directors adopted an insider trading policy, effective September 30, 2026, governing the purchase, sale and other dispositions of the Company’s securities by our directors, officers, employees and consultants, and by the Company itself, that is reasonably designed to promote compliance with insider trading laws, rules and regulations and any listing standards applicable to us. Before that date, the Company had not adopted a written insider trading policy. A copy of the policy is filed as Exhibit 19 to this Annual Report on Form 10-K.
ITEM 11. Executive Compensation
Summary Compensation
Michael Hill is party to an employment agreement with Sugar Auto Parts, Inc., our wholly owned subsidiary, entered into as of March 12, 2025 and effective as of March 1, 2025, under which he serves as Chief Executive Officer of Sugar Auto Parts. Sugar Auto Parts became our wholly owned subsidiary on June 13, 2025, when Mr. Hill also became our Chief Executive Officer, and the agreement remains in effect. The agreement has an initial term of three (3) years that renews automatically for successive one-year periods, provides for a base salary of $300,000 per year, and makes Mr. Hill eligible for an annual bonus of up to $175,000 under a bonus plan to be agreed upon by the parties.
Barrett Evans is party to an employment agreement with Sugar Auto Parts, Inc. on substantially the same terms, also entered into as of March 12, 2025 and effective as of March 1, 2025, under which he serves as Chief Financial Officer of Sugar Auto Parts. Mr. Evans became our Chief Financial Officer on June 13, 2025, and the agreement remains in effect. It provides for a base salary of $180,000 per year and eligibility for an annual bonus of up to $175,000.
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Summary Compensation Table
The following table sets forth the compensation awarded to, earned by or paid to our named executive officers for the fiscal years ended June 30, 2026 and 2025.
Name and Principal Position | Fiscal Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) |
Michael Hill, Chief Executive Officer | 2026 | 300,000 | — | 75,000 | — | 375,000 |
| 2025 | — | — | — | — | — |
Barrett Evans, Chief Financial Officer | 2026 | 180,000 | — | 45,000 | — | 225,000 |
| 2025 | — | — | — | — | — |
(1) Salary amounts are the amounts earned under each officer’s employment agreement, including amounts accrued and unpaid at June 30, 2026. Mr. Hill and Mr. Evans waived the base salary payable under their employment agreements for the period from March 1, 2025, the effective date of the agreements, through June 30, 2025, and no salary was paid or accrued for fiscal 2025.
(2) Represents the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, of the shares of Series B Preferred Stock issued on December 8, 2025 (750 shares to Mr. Hill and 450 shares to Mr. Evans), recorded at the $100 stated value per share.
Outstanding Equity Awards
Our directors and officers do not have unexercised options, stock that has not vested, or equity incentive plan awards.
Compensation of Directors
Our directors do not receive separate compensation for their services as directors. The shares of Series B Preferred Stock issued to Mr. Hill and Mr. Evans on December 8, 2025 are reported in the Summary Compensation Table above. Mr. Reid did not receive any compensation during fiscal 2026.
Employment Contracts, Termination of Employment, Change-in-Control Arrangements
Other than the employment agreements with Mr. Hill and Mr. Evans described above, the indemnification and advancement agreements described below and the credit card facility agreement with Mr. Hill described in Item 13, there are no employment or other contracts with our officers or directors. Under each employment agreement, if the employer terminates the agreement without cause, which it may do on 30 days’ written notice, the executive is entitled to payment for the full remaining term of the agreement, including accrued but unpaid base salary, bonuses and accrued vacation, and, if the executive signs a one-year non-competition agreement and a general release within seven days after termination, one additional year of base salary. If the executive resigns for Good Reason (as defined in the agreement, and including a material adverse change in duties, a reduction in base salary or a required relocation of more than 20 miles), the executive is entitled to unpaid base salary for the remaining term and accrued vacation, subject to signing a general release. Upon termination for cause or disability, the executive is entitled only to accrued but unpaid base salary and vacation, and upon the executive’s death his heirs are entitled to six months of base salary and accrued vacation. Sugar Auto Parts, Inc. has also entered into indemnification and advancement agreements with Mr. Hill and Mr. Evans, each dated March 12, 2025 and in the form filed as Exhibit 10.15, which require it to indemnify them and advance their expenses to the fullest extent permitted by applicable law. There are no arrangements for directors, officers, employees or consultants that would result from a change-in-control.
24
Option Grant Timing (Item 402(x))
The Company does not have a stock option plan, has not granted stock options, stock appreciation rights or similar option-like instruments to its named executive officers or directors, and has not adopted a formal policy on the timing of such awards. The Board of Directors does not take material nonpublic information into account in determining the timing or terms of equity awards, and the Company has not timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. Because no option-like awards were granted during fiscal 2026, the tabular disclosure required by Item 402(x)(2) of Regulation S-K is not applicable.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners
The following table lists, as of October 2, 2026, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using beneficial ownership concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 8,212,128 shares of our common stock issued and outstanding as of October 2, 2026 (after giving effect to the 1-for-250 reverse stock split effected June 12, 2026).
Name and Address of Beneficial Owner (1) |
| Number of shares Beneficially Owned (2) |
| Percent of Class Owned (2) |
|
|
|
|
|
|
|
Directors and Officers |
|
|
|
|
|
Michael Hill |
| 2,105,000 |
| 25.6 | % |
Barrett Evans |
| 2,200,000 |
| 26.8 | % |
Matthew Reid |
| 408,957 |
| 5.0 | % |
All Directors and Officers as a Group |
| 2,713,957 |
| 33.0 | % |
5% shareholders |
|
|
|
|
|
Michael Hill |
| 2,105,000 |
| 25.6 | % |
Barrett Evans |
| 2,200,000 |
| 26.8 | % |
Chris Davenport |
| 2,268,000 |
| 27.6 | % |
|
|
|
|
|
|
5% shareholders as a group |
| 4,573,000 |
| 55.7 | % |
Total Directors and Officers and 5% Shareholders |
| 4,981,957 |
| 60.7 | % |
25
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
Director Independence
Our securities are not listed on a national securities exchange or on any inter-dealer quotation system which has a requirement that a majority of directors be independent. Our board of directors has undertaken a review of the independence of each director by the standards for director independence set forth in the NASDAQ Marketplace Rules. Under these rules, an independent director is one who is not an executive officer or an employee of the company and who does not have a relationship that, in the opinion of the board of directors, would interfere with exercising independent judgment in carrying out a director’s responsibilities. Our board of directors has determined that none of our three directors qualifies as an independent director under these rules. Mr. Hill and Mr. Evans are not independent because they serve as executive officers of the Company, and the board did not make an affirmative determination that Mr. Reid is independent.
Related-Party Transactions During Fiscal Year 2026
Promissory Note. On April 10, 2026 and May 19, 2026 the Company entered into a six month promissory note with SportsAlert Media, LLC for a total amount of $32,500. The note carries an interest rate of 10% per annum and shall convert a 20% discount to market.
Consulting agreement with Colby Hill. In May 2026, the Company approved a one-year consulting agreement with Colby Hill, the son of the Company’s Chief Executive Officer, providing for cash compensation of $3,000 per month and the issuance of 360 shares of Series B Preferred Stock. Mr. Colby Hill also holds a $10,000 promissory note of the Company.
Obligation to director. The Company has acknowledged an outstanding obligation of approximately $150,000 owed to Matthew Reid, a director of the Company, which the Company has committed to repay from the proceeds of future financings.
Obligation to Mammoth Crest Capital, LLC. Mammoth Crest Capital, LLC, which formed Sugar Auto Parts, Inc. and is owned 50% by Mr. Hill and 50% by Mr. Evans, is owed $910,000 by Sugar Auto Parts, Inc. The obligation was recorded as an assumed liability at June 30, 2025 in connection with the formation of Sugar Auto Parts, Inc. and its acquisition of the AP4L assets. No payments were made on the obligation during fiscal 2026, and $910,000 remained outstanding at June 30, 2026. Mammoth Crest Capital, LLC also holds 1,250 shares of Series C Preferred Stock. See Note 4 to the consolidated financial statements.
Obligation to Christopher Davenport. Christopher Davenport, who beneficially owns approximately 27.6% of our common stock and is the authorized user of the credit card facility described below, is a creditor of Sugar Auto Parts, Inc. for obligations assumed in connection with the AP4L asset acquisition. The amount owed to Mr. Davenport was $133,496 at June 30, 2025 and $104,398 at June 30, 2026. Mr. Davenport also holds 1,250 shares of Series C Preferred Stock. See Note 4 to the consolidated financial statements.
Credit card facility provided by the Chief Executive Officer. On April 15, 2026, Sugar Auto Parts, Inc., the Company’s wholly owned subsidiary, entered into a Credit Card Facility Agreement with Michael Hill, the Company’s Chief Executive Officer and Chairman of the Board, under which Mr. Hill made his personal credit card available for legitimate business expenses of the subsidiary and authorized Christopher Davenport to use the card on the Company’s behalf. The agreement was executed by all parties on April 23, 2026. The outstanding balance may not exceed $15,000 at any time, and the facility runs for six months, ending October 15, 2026, at which time the entire outstanding balance is payable in full. The Company must make the minimum monthly payment required by the card issuer and, in lieu of interest, pay Mr. Hill a monthly fee equal to 10% of the outstanding balance shown on each closing statement, increasing to 15% during any period of default, in each case due within ten days of the statement closing date. As additional consideration, the Company agreed to issue Mr. Hill 6,000 shares of common stock (1,500,000 shares before giving effect to the reverse stock split) upon execution of the agreement, and a further 6,000 shares (1,500,000 shares pre-split) immediately upon a default.
26
The Company is in default under the facility. The outstanding balance on the card first exceeded the $15,000 limit on April 22, 2026, which is an event of default under the agreement, and the balance was $19,936 at June 30, 2026. The card carried no balance at the inception of the facility, and all charges on the card during the period were business expenses of Sugar Auto Parts; Mr. Hill made no personal charges on the card. As a result of the default, the monthly fee payable to Mr. Hill increased from 10% to 15% of the outstanding balance, the additional 6,000 shares of common stock became issuable to Mr. Hill, and the Company became responsible for Mr. Hill’s costs of collection, including reasonable attorneys’ fees. All 12,000 shares — the 6,000 shares issuable upon execution and the 6,000 shares issuable upon default — were issued to Mr. Hill on May 27, 2026. The Company remains obligated to make the minimum monthly payments required by the card issuer and to repay the outstanding balance in full on October 15, 2026; the minimum monthly payments have been made when due. At June 30, 2026 the Company owed Mr. Hill $19,936 for the outstanding card balance and $8,701 of accrued and unpaid facility fees, or $28,637 in the aggregate. No portion of the monthly fee has been paid, and failure to pay the monthly fee when due is itself an event of default under the agreement. Mr. Hill has not initiated collection or other default proceedings, and the Company and Mr. Hill are discussing a resolution of the balance in excess of the limit. Because Mr. Hill is the Company’s Chief Executive Officer and Chairman of the Board, the Company’s obligations under the facility, including the default remedies, run to a related party and were not negotiated on an arm’s-length basis. See Note 11 to the consolidated financial statements.
The largest statement balance outstanding under the facility during fiscal 2026 was $19,936. At the August 27, 2026 statement closing date, the outstanding card balance was $19,545 and accrued and unpaid facility fees totaled $14,595. Expressed on an annual basis, the 15% monthly fee is equivalent to approximately 180% per year of the outstanding balance, in addition to the 12,000 shares of common stock, valued at $9,600, issued to Mr. Hill. The facility matures on October 15, 2026.
Insider preferred issuances. On December 8, 2025, the Company issued shares of Series B Preferred Stock to its officers and directors, including 750 shares of Series B Preferred Shares to Michael Hill, 450 shares of Series B Preferred Shares to Barrett Evans and, as a former officer, 100 shares of Series B Preferred Shares to Michael Wheeler.
ITEM 14. Principal Accountant Fees and Services
Audit Fees
The Company has engaged RBSM LLP (“RBSM”) as our independent registered public accounting firm since April 15, 2019. The audit fees to RBSM for the year ended June 30, 2026 and 2025 were approximately $42,500 and $41,000, respectively.
Audit-Related Fees
The aggregate fees billed in each of the last three fiscal quarters for assurance and related services by RBSM that are reasonably related to the performance of the audit or review of our consolidated financial statements including our quarterly interim reviews on Form 10-Q amounted to $18,000 each quarter.
Tax Fees
RBSM did not charge us any tax fees for the year ended June 30, 2026.
27
PART IV
ITEM 15. Exhibits, Financial Statement Schedules.
Exhibits
The exhibits listed in the following Exhibit Index are filed or furnished with, or incorporated by reference into, this Annual Report.
28
10.4 |
| Securities Purchase Agreement dated November 19, 2025 with Tri-Bridge Ventures, LLC |
| Form 8-K, filed 11/25/2025, Ex. 10.2 |
10.5 |
| Securities Purchase Agreement dated November 20, 2025 with C/M Capital Master Fund, LP |
| Form 8-K, filed 11/25/2025, Ex. 10.3 |
10.6 |
| Securities Purchase Agreement dated November 25, 2025 with ClearThink Capital Partners, LLC |
| Form 8-K, filed 11/25/2025, Ex. 10.4 |
10.7 |
| Common Stock Purchase Agreement dated November 20, 2025 with C/M Capital Master Fund, LP |
| Form 8-K, filed 11/25/2025, Ex. 10.6 |
10.8 |
| Registration Rights Agreement dated November 20, 2025 with C/M Capital Master Fund, LP |
| Form 8-K, filed 11/25/2025, Ex. 10.7 |
10.9 |
| Securities Purchase Agreement dated March 9, 2026 with ProActive Capital Partners, L.P. |
| Form 8-K, filed 3/12/2026, Ex. 10.1 |
10.10 |
|
| Form 8-K, filed 3/12/2026, Ex. 10.2 | |
10.11 |
|
| Form 8-K, filed 8/12/2026, Ex. 10.1 | |
10.12 |
|
| Filed herewith. | |
10.13† |
|
| Filed herewith. | |
10.14† |
|
| Filed herewith. | |
10.15† |
|
| Filed herewith. | |
19 |
|
| Filed herewith. | |
21.1 |
|
| Filed herewith. | |
31.1 |
| Certification of Principal Executive Officer Pursuant to Rule 13a-14 |
| Filed herewith. |
31.2 |
| Certification of Principal Financial Officer Pursuant to Rule 13a-14 |
| Filed herewith. |
32.1 |
| CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act |
| Filed herewith. |
32.2 |
| CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act |
| Filed herewith. |
101.INS* |
| XBRL Instance Document |
| Filed herewith. |
101.SCH* |
| XBRL Taxonomy Extension Schema Document |
| Filed herewith. |
101.CAL* |
| XBRL Taxonomy Extension Calculation Linkbase Document |
| Filed herewith. |
101.LAB* |
| XBRL Taxonomy Extension Labels Linkbase Document |
| Filed herewith. |
101.PRE* |
| XBRL Taxonomy Extension Presentation Linkbase Document |
| Filed herewith. |
101.DEF* |
| XBRL Taxonomy Extension Definition Linkbase Document |
| Filed herewith. |
104 |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| Filed herewith. |
*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
† Management contract or compensatory plan or arrangement. Exhibits incorporated by reference are identified by the form, filing date and exhibit number of the filing in which they were originally filed (Commission File No. 000-56144 unless otherwise noted).
29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| APPLIFE DIGITAL SOLUTIONS, INC. |
|
|
Dated: October 8, 2026 | /s/ Michael Hill |
| Michael Hill, Chief Executive Officer (Principal Executive Officer), Secretary and Director |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name |
| Title |
| Date |
|
|
|
|
|
/s/ Michael Hill |
| Chief Executive Officer (Principal Executive Officer), Secretary and Director |
| October 8, 2026 |
Michael Hill |
|
|
|
|
|
|
|
|
|
/s/ Barrett Evans |
| Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) and Director |
| October 8, 2026 |
Barrett Evans |
|
|
|
|
|
|
|
|
|
30
Exhibit 3.6
FRANCISCO V. AGUILAR Secretary of State 401 North Carson Street Carson City, Nevada 89701-4201 (775) 684-5708 Website: www.nvsos.gov | Filed in the Office of Secretary of State, State of Nevada Business Number: E0125562018-0 Filing Number: 20265787685 Filed On: 06/03/2026 16:53:13 PM Number of Pages: 2 |
Certificate of Change Pursuant to NRS 78.209
1. Entity Information: | Name of entity as on file with the Nevada Secretary of State: APPLIFE DIGITAL SOLUTIONS, INC. Entity or Nevada Business Identification Number (NVID): NV20181181229 |
2. Current Authorized Shares: | The current number of authorized shares and the par value, if any, of each class or series, if any, of shares before the change:
Common Stock: 5,000,000,000 authorized shares, $0.001 par value per share. Preferred Stock: 10,000,000 authorized shares, $0.001 par value per share. |
3. Authorized Shares After Change: | The number of authorized shares and the par value, if any, of each class or series, if any, of shares after the change:
Common Stock: 20,000,000 authorized shares, $0.001 par value per share. Preferred Stock: 10,000,000 authorized shares, $0.001 par value per share (no change). |
4. Issuance: | The number of shares of each affected class or series, if any, to be issued after the change in exchange for each issued share of the same class or series:
Each two hundred fifty (250) shares of Common Stock issued and outstanding immediately prior to the effective time shall be automatically reclassified, combined and converted into one (1) share of Common Stock, $0.001 par value per share. There is no change to the issued and outstanding shares of any series of Preferred Stock. |
5. Provisions: | The provisions, if any, for the issuance of fractional shares, or for the payment of money or the issuance of scrip to stockholders otherwise entitled to a fraction of a share and the percentage of outstanding shares affected thereby:
No fractional shares of Common Stock will be issued and no money or scrip will be paid in respect of fractional shares. Any stockholder who would otherwise be entitled to receive a fractional share of Common Stock as a result of the change shall instead receive one (1) whole share of Common Stock in lieu thereof (i.e., fractional shares shall be rounded up to the next whole share). The change affects one hundred percent (100%) of the outstanding shares of Common Stock; the issued and outstanding shares of Preferred Stock are not affected. |
6. Provisions: | The required approval of the stockholders has been obtained. |
7. Effective Date and Time: (Optional) | Date: 06/30/2026 Time: 12:00 AM (must not be later than 90 days after the certificate is filed) |
8. Signature: (Required) | /s/ Barrett Evans Signature of Officer Title: Officer Date: 06/03/2026 |
Exhibit 4.1
DESCRIPTION OF SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
The following summary describes the common stock of APPlife Digital Solutions, Inc. (the “Company,” “we,” “us” or “our”), which is the only class of our securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, and the preferred stock that affects the rights of our common stockholders. It is qualified in its entirety by reference to our Articles of Incorporation, as amended (including the Certificates of Designation for our Series A, Series B, Series C and Series D Preferred Stock and the Certificate of Change filed June 3, 2026), and our Bylaws, each of which is filed or incorporated by reference as an exhibit to our Annual Report on Form 10-K, and by applicable provisions of the Nevada Revised Statutes (“NRS”).
Authorized Capital Stock
Our authorized capital stock consists of 20,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share. Of the preferred stock, 15,000 shares are designated Series A Preferred Stock, 20,000 shares are designated Series B Preferred Stock, 2,500 shares are designated Series C Preferred Stock and 10,000 shares are designated Series D Preferred Stock. On June 3, 2026, we filed a Certificate of Change under NRS 78.209 that effected a 1-for-250 reverse split of our common stock, effective June 12, 2026, and proportionately reduced our authorized common stock from 5,000,000,000 shares to 20,000,000 shares. The reverse split did not change the number of authorized or outstanding shares of preferred stock.
Common Stock
Voting. Holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Holders of our Series A, Series B and Series C Preferred Stock vote together with the common stock as described below, and the Series C Preferred Stock carries supplemental voting rights. Except as otherwise required by law or our Articles of Incorporation, matters are decided by a majority of the votes cast, and directors are elected by a plurality of the votes cast. Stockholders may act by written consent of the holders of the voting power required to take the action at a meeting.
Dividends. Subject to the preferential rights of any outstanding preferred stock, holders of common stock are entitled to receive dividends when, as and if declared by our Board of Directors out of funds legally available for that purpose. We have never paid cash dividends on our common stock.
Liquidation. On our liquidation, dissolution or winding up, holders of common stock are entitled to share ratably in our assets remaining after payment of our liabilities and the liquidation preferences of any outstanding preferred stock, including the Series D Preferred Stock.
Other rights. Holders of common stock have no preemptive, subscription, conversion or redemption rights, and there are no sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and non-assessable.
Market. Our common stock is quoted on the OTC Markets under the symbol “ALDS.”
Preferred Stock
Our Board of Directors may, without further stockholder action, designate and issue one or more series of preferred stock out of authorized but undesignated shares and fix the rights, preferences, privileges, qualifications, limitations and restrictions of each series, including dividend rights, conversion rights, voting rights, redemption terms and liquidation preferences. The issuance of preferred stock could adversely affect the voting power and other rights of holders of common stock and could delay or prevent a change in control.
Series A Preferred Stock. No shares are outstanding. Holders vote with the common stock on an as-converted basis.
Series B Preferred Stock. As of June 30, 2026, 14,515 shares were outstanding. Each share is convertible into common stock having a value of $100, based on the closing price of the common stock on the trading day before conversion; the number of shares issuable on conversion therefore increases as the market price of our common stock declines. Holders vote with the common stock on an as-converted basis and participate with the common stock in a liquidation on an as-converted basis.
Series C Preferred Stock. 2,500 shares are outstanding. The Series C Preferred Stock is convertible, in the aggregate, into a number of shares of common stock equal to 0.01% per share (25% for all 2,500 shares) of our common stock on a fully diluted basis at the time of conversion, so the percentage is not diluted by later issuances of common stock. Holders vote with the common stock on an as-converted basis and are entitled to additional votes equal to 25% of the votes to which the holders of all other securities are entitled. The consent of the holders of a majority of the Series C Preferred Stock is required for any amendment of our Articles of Incorporation. The Series C Preferred Stock converts automatically on a Qualified Financing, as defined in its Certificate of Designation.
Series D Preferred Stock. As of June 30, 2026, 810 shares were outstanding, each with a stated value of $1,000 and convertible into common stock at a conversion price of $5.00 per share (the initial conversion price of $10.00 has been adjusted to $5.00 under the Certificate of Designation). The conversion price is subject to full-ratchet adjustment if we issue common stock or common stock equivalents at a price below the conversion price then in effect. Conversions are subject to a beneficial ownership limitation of 4.99%. On a liquidation, holders are entitled to a preference, before any payment to junior stock, equal to the Black-Scholes value of their warrants plus the greater of 125% of the conversion amount and the amount they would receive on conversion.
Anti-Takeover Provisions of Nevada Law and Our Governing Documents
Combinations with interested stockholders. NRS 78.411 to 78.444 generally restrict a Nevada corporation with 200 or more stockholders of record from engaging in a business combination with an interested stockholder (a person owning 10% or more of the voting power) for two years after the person becomes an interested stockholder, unless the combination or the transaction by which the person became an interested stockholder was approved by the board in advance, and impose conditions afterward.
Acquisition of controlling interest. NRS 78.378 to 78.3793 may deny voting rights to shares acquired in a “control share” acquisition of an “issuing corporation” unless the disinterested stockholders restore them. The statutes apply only to a corporation with 200 or more stockholders of record, at least 100 of whom have Nevada addresses, that does business in Nevada directly or through an affiliate. As of October 2, 2026, we had 87 holders of record of our common stock, and we therefore are not currently subject to these statutes.
Other provisions. The ability of our Board of Directors to issue preferred stock without stockholder approval, the supplemental voting rights and amendment consent right of the Series C Preferred Stock, and the concentration of voting power in our officers, directors and principal stockholders could each make a change in control more difficult.
Transfer Agent
The transfer agent and registrar for our common stock is Securities Transfer Corporation, Plano, Texas.
Exhibit 10.12
Credit Card Facility Agreement
Date: April 15, 2026
Parties: Cardholder / Lender: Michael Hill
Authorized User: Christopher Davenport
Company: Sugar Auto Parts, Inc.
Michael Hill (“Cardholder”) hereby authorizes Christopher Davenport (“Authorized User”) to use his personal Visa credit card (Last 4 Digits: [Redacted pursuant to Item 601(a)(6) of Regulation S-K]) on behalf of Sugar Auto Parts, Inc. (“Company”) for legitimate business expenses for a period of six (6) months, commencing on April 15, 2026 and ending on October 15, 2026.
2. Credit Facility Terms
•Credit Limit: The outstanding balance on the card must never exceed $15,000 at any time.
•Term: Six (6) months.
Repayment Requirements:
•The Company must make the minimum monthly payment required by the credit card issuer on any outstanding balance during the six-month period.
•At the end of the six-month period (October 15, 2026), the Company shall pay the entire outstanding balance in full.
3. Monthly Fee / Interest
Every month, based on the closing statement, the Company shall pay Michael Hill:
•10% of the outstanding balance if the account is in good standing, or
•15% of the outstanding balance if the account is in Default.
This payment is due within 10 days of the credit card closing statement date.
4. Stock Inducement
As additional consideration for providing this credit facility, the Company agrees to issue to Michael Hill 1,500,000 shares of ALDS common stock upon execution of this Agreement.
In the event the Company defaults under this Agreement, the Company shall immediately issue an additional 1,500,000 shares of APPlife Digital Solutions Inc. (ALDS) common stock to Michael Hill.
5. Default
The Company shall be in Default under this Agreement if any of the following occurs:
•Failure to make the required minimum monthly payment to the credit card issuer;
•The outstanding balance exceeds the $15,000 credit limit at any time;
•Failure to pay the entire outstanding balance in full by October 15, 2026;
•Failure to pay the monthly 10% (or 15% if in Default) fee to Michael Hill when due.
Upon Default:
•The Company shall continue to be obligated to make the minimum monthly payments on the credit card as required by the issuer.
•The monthly fee payable to Michael Hill shall increase to 15% of the outstanding balance.
•The Company shall immediately issue the additional 1,500,000 of APPlife Digital Solutions Inc (ALDS) shares to Michael Hill.
•The Company shall be responsible for all costs of collection incurred by Michael Hill, including reasonable attorneys’ fees.
6. Authorized Use
The card may only be used for legitimate business expenses of Sugar Auto Parts, Inc., including but not limited to:
•Travel & Accommodation (flights, hotels)
•Office supplies
•Software subscriptions and online services
•Payments to vendors and suppliers
Personal use is strictly prohibited.
7. Responsibilities of the Authorized User and Company
The Authorized User and/or Company agrees to:
•Submit itemized receipts for every transaction to the Company’s accounting department within 7 business days.
•Clearly categorize each expense.
•Provide monthly reporting to Michael Hill upon each credit card cycle close.
•Immediately report any lost or stolen card to Michael Hill and the credit card issuer.
•Ensure the outstanding balance never exceeds $15,000.
8. Misuse and Revocation
Any unauthorized use, personal purchases, or repeated failure to provide receipts or reports may result in immediate revocation of usage privileges, in addition to constituting a Default under this Agreement.
9. Acknowledgement and Signatures
By signing below, the parties acknowledge and agree to all terms and conditions of this Credit Card Facility Agreement.
Cardholder (Lender):
Michael Hill
Signature: /s/ Michael Hill
Date: April 23, 2026
Authorized User:
Christopher Davenport
Signature: /s/ Christopher Davenport
Date: April 23, 2026
Company:
Sugar Auto Parts, Inc.
By: /s/ Christopher Davenport
Name: Christopher Davenport Date: April 23, 2026
APPlife Digital Solutions, Inc.
By: /s/ Barrett Evans
Name: Barrett Evans Date: April 23, 2026
Exhibit 10.13
EMPLOYMENT AGREEMENT
SUGAR AUTO PARTS, INC.
MICHAEL HILL
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of March 12, 2025, and effective as of March 1, 2025 (the “Effective Date”), by and between Sugar Auto Parts, Inc., a Nevada corporation (the “Company”), and Michael Hill, the undersigned individual (the “Employee”). Company and Employee are collectively referred to herein as the “Parties” and at times each is individually referred to as a “Party.” This Agreement replaces and supersedes any and all prior agreements between the Parties.
BACKGROUND
The Company and Employee desire to enter into an Employment Agreement setting forth the terms and conditions of Employee’s employment with the Company.
NOW, THEREFORE, in consideration of the mutual agreements and covenants contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Employment. The Company hereby employs Employee to serve as Chief Executive Officer (the “CEO”) of the Company and to serve in such additional or different position(s) consistent with that of CEO as the Board of Directors of the Company (the “BOD”) and Employee mutually agree.
a. Term. The term of this Agreement shall commence on the Effective Date and shall be for a period of three (3) years (the “Initial Term”) unless this Agreement is sooner terminated pursuant to Section 5 hereof. At the expiration of the Initial Term, this Agreement will automatically renew for an unlimited number of successive one (1) year periods (each a “Renewal Term” and collectively with the Initial Term the “Term”) unless either party provides written notice to the other party at least thirty (30) days before the end of the current period.
b. Duties and Responsibilities. Employee will report to the BOD. Employee shall have each and all of the duties and responsibilities of the position of CEO and such other or different duties on behalf of the Company which are consistent with that position, as may be assigned, from time to time, by the Company’s BOD and within the limitations established by the bylaws of the Company.
c. Location. The principal location at which Employee shall perform services for the Company shall be the Employee’s home office.
2. Compensation.
a. Base Salary. Employee shall be paid a “Base Salary” at the annual rate of Three Hundred Thousand Dollars ($300,000.00). The annual Base Salary shall be reviewed on or before January 1 of each year by the BOD of the Company to determine if such Base Salary should be increased for the following year in recognition of Employee’s service to the Company unless this Agreement is sooner terminated pursuant to Section 5 hereof.
b. Payment. Payment of all compensation to Employee hereunder shall be made in accordance with the relevant Company policies in effect from time to time, i ncluding normal payroll practices, and such payments shall be subject to all applicable employment and withholding taxes.
c. Bonus. Employee shall be eligible for a bonus of up to One Hundred Seventy Five Thousand Dollars ($175,000.00) annually, the amount and terms of which shall be determined pursuant to a plan mutually agreed upon by the Parties (the “Bonus Plan”). The Bonus Plan for the 2025 calendar year shall be agreed upo n no later than May 31th, 2025. Future Bonus Plans shall be agreed upon annually, according to the same schedule.
d. Company Credit Card. Employee shall be issued a company credit card to use for Company business expenses.
e. Business Expenses. Upon prior authorization and submission of itemized expense statements in the manner specified by the Company, Employee shall be entitled to reimbursement for reasonable travel and other reasonable business expenses duly incurred by Employee in the performance of his duties under this Agreement.
3. Other Employment Benefits.
a. Benefit Plans. Employee shall be entitled to participate in the Company’s medical and dental plans, life and disability insurance plans and retirement plans pursuant to their terms and conditions. Employee shall be entitled to participate in any other benefit plan offered by the Company to its employees for which Employee otherwise qualifies to participate during the term of this Agreement (other than stock option or stock incentive plans, which are governed by Section 3(d) below). Nothing in this Agreement shall preclude the Company or any affiliate of the Company from terminating or amending any other employee benefit plan or program from time to time.
b. Vacation. Employee shall be entitled to three (3) weeks of vacation each calendar year of employment, exclusive of legal holidays, as long as the scheduling of Employee’s vacation does not interfere with the Company’s normal business operations.
c. Equity. Employee shall not be entitled to receive equity under this agreement other than Stock Options.
d. Stock Options. Employee shall be entitled to Stock Options to acquire shares of the common stock of the Company pursuant to the terms of the Company stock option plan, yet to be adopted by the Company.
e. Telephone. Company shall provide Employee with a phone and/or phone service at no charge to Employee.
f. No Other Benefits. Employee understands and acknowledges that the compensation and benefits contained in Sections 2 and 3 of this Agreement shall be in lieu of any and all other forms of compensation and benefits.
4. Employee’s Business Activities. Employee shall devote a substantial portion of his business time, attention and energy to the business and affairs of the Company and its affiliates, as its business and affairs now exist and as they hereafter may reasonably change. Employee may serve as a consultant, a member of the board of directors, or other positions of other organizations that do not compete with the Company, and may participate in other professional, civic, governmental organizations and activities that do not materially affect his ability to carry out his duties hereunder.
5. Termination.
a. Termination For Cause. Upon termination of this Agreement for cause, the Company shall be under no further obligation to Employee, except to pay all accrued but unpaid base salary and accrued vacation to the date of termination thereof. Notwithstanding anything herein to the contrary, the Company may terminate Employee’s employment hereunder for cause for any of the following reasons:
(i) conviction of a felony, any act involving moral turpitude or a misdemeanor where imprisonment is imposed;
(ii) commission of any act of theft, fraud, dishonesty, or falsification of any employment or Company record;
(iii) improper disclosure of the Company’s Confidential or Proprietary Information;
(iv) any action by Employee which has a material and continuing detrimental effect on the Company’s reputation or business;
(v) Employee’s failure or inability to perform any reasonable assigned duty following written notice from the Company of, and a reasonable opportunity to cure, such failure or inability;
(vi) any breach of this Agreement, which breach is not cured within ten (10) days following written notice of such breach;
(vii) any course of conduct amounting to gross incompetence;
(viii) chronic and unexcused absenteeism;
(ix) unlawful appropriation of a corporate opportunity; or
(x) misconduct in connection with the performance of any of Employee’s duties, including, without limitation, misappropriation of funds or property of the Company, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company, misrepresentation to the Company, or any violation of law or regulations on Company premises or to which the Company is subject.
b. Termination Without Cause. Company may terminate this Agreement at any time without cause with a 30 day written notice. Upon termination of this Agreement without cause, the Company shall be obligated to pay Employee for the full term, including all accrued but unpaid base salary, bonuses and accrued vacation to the date of termination thereof. In addition, provided that Employee executes a one (1) year non-competition agreement and a valid and comprehensive
release of any and all claims which Employee may have against the Company, in a form provided by the Company, within seven (7) days of termination, Employee shall be entitled to one (1) year additional Base Salary plus any accrued but unpaid Base Salary, bonuses and accrued vacation, less deductions as required by law.
c. Termination by Resignation with Good Reason. In the event that Employee should terminate this Agreement by resigning with Good Reason, as defined below, Employee shall be entitled to unpaid Base Salary for the remaining Term of the Agreement and accrued vacation, less deductions as required by law. Provided, however, that Employee executes a valid and comprehensive release of any and all claims which Employee may have against the Company, in a reasonable form provided by the Company, within seven (7) days of termination. Resignation for “Good Reason” may occur when Employee gives Company written notice, within thirty (30) days after the Employee has knowledge of the occurrence, without his written consent, of one of the instances described below, and the duly noticed instance has not been cured by Company within fifteen (15) days of Company’s receipt of such notice.
(i) Assignment to the Employee of duties materially and adversely inconsistent with the Employee’s duties and responsibilities as defined in Section 1(b) above;
(ii) a reduction by the Company of Employee’s Base Salary;
(iii) Company’s failure to provide bonuses or any material employee benefits due to be provided to Employee (other than any such failure which affects all similarly situated employees in the same manner);
(iv) a direction or order by the Company’s BOD that the Employee perform an unlawful act in the course of his employment;
(v) a requirement that the Employee relocate his principal office of employment more than twenty (20) miles from its current office locations;
(vi) required business travel materially in excess of Employee’s historic norms and more than four (7) business days per calendar month on average; or
(vii) the assignment of excessive work compared to Employee’s historic normal workload for the Company and more than fifty (50) hours per calendar week.
d. Disability. The Company may terminate this Agreement without liability should Employee become permanently prevented from properly performing his essential duties hereunder with reasonable accommodation by reason of illness or other physical or mental incapacity for a period of more than ninety (90) consecutive days. Upon such termination, Employee shall be entitled to all accrued but unpaid Base Salary and vacation.
e. Death. In the event of the death of Employee, the Company’s obligations hereunder shall automatically cease and terminate; provided, however, that the Company shall pay to Employee’s heirs or personal representatives Employee’s Base Salary for six (6) months after the date of death and vacation accrued to the date of death.
f. Cooperation. Following notice of termination, Employee shall cooperate with the Company, as reasonably requested by the Company, to affect a transition of Employee’s responsibilities and to ensure that the Company is aware of all matters being handled by Employee.
g. Assistance in Litigation. Employee shall, during and after termination or resignation, upon reasonable notice, furnish such information and proper assistance to the Company as may reasonably be required by the Company in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become a party; provided, however, that such assistance following termination or resignation shall be furnished at mutually agreeable times and for mutually agreeable compensation.
6. Confidential Information. Employee understands that some information obtained in connection with his employment, including, but not limited to, information regarding the Company’s present or proposed business, operations and ownership, is and/or will be confidential and proprietary information. Employee agrees that he will maintain the confidentiality of such information and will not use or disclose such information to others without the written consent of the Company, except when such use or disclosure is required by binding order of a court of governmental agency, in which case Employee shall notify and cooperate with the Company in obtaining any protective orders (or other assurances of confidential treatment) and in limiting the extent of confidential information disclosed. Information which is generally known in the industry or to the public or which has been disclosed to Employee by third parties who had a right to disclose such information shall not be deemed confidential or proprietary information.
7. Representations and Warranties. Employee represents and warrants that he is aware of no obligations, legal or otherwise, inconsistent with the terms of this Agreement or with his undertaking employment with the Company. Employee will not disclose to the Company, or use, or induce the Company to use, any proprietary information or trade secrets of others. Employee has returned or properly destroyed all property and confidential information belonging to all prior employers.
8. Remedies. The Parties acknowledge and agree that, in the event of any material breach or threatened material breach of this Agreement by Employee, the damage or imminent damage to the value and the goodwill of the Company shall be inestimable. As such, the Parties agree that the remedies at law for any material breach or threatened material breach of this Agreement by Employee, including monetary damages, are inadequate compensation for any loss and that Company shall be entitled to seek injunctive or other equitable relief with respect to its rights hereunder, in addition to any remedies available at law. Employee hereto waives any defense to such claim that a remedy at law would be adequate.
9. Parties Bound; Assignment. Employee’s rights and obligations under this Agreement shall not be transferable by assignment or otherwise, and any purported assignment, transfer or delegation thereof shall be void. This Agreement is binding upon, and inures to the benefit of, Company and its respective successors and assigns; provided that Company may not, without the prior written consent of Employee, which shall not reasonably be withheld, assign any rights, duties, or obligations hereunder, and any purported assignment in violation of the foregoing shall be void and ineffective. This provision shall not prohibit a transfer by operation of law of all the rights and obligations under this Agreement related to any corporate reorganization of Company.
10. No Third-Party Beneficiaries. Nothing in this Agreement shall confer any rights upon any person or entity other than the Parties and their respective successors and permitted assigns.
11. Headings. The headings, captions, and arrangements used in this Agreement are for convenience only and do not limit, amplify, or modify the terms of this Agreement.
12. Notice. Unless specifically otherwise provided, whenever this Agreement requires or permits any consent, approval, notice, request, or demand from one Party to another, such communication must be in writing (which may be sent by e-mail, courier or recognized overnight delivery service) to be effective and shall be deemed to have been given upon receipt when delivered personally or sent by electronic message (provided the recipient responds to the message and confirmation of both electronic messages are kept on file by the sending party) and on the date actually delivered after timely deposit with a nationally recognized overnight delivery service. Until changed by Notice pursuant hereto, the contact information for each Party is as follows:
If to Company:
Sugar Auto Parts, Inc.
701 Anacapa Street, Suite C
Santa Barbara, CA 93101
Email: [Redacted pursuant to Item 601(a)(6) of Regulation S-K]
If to Employee:
Michael Hill
[Redacted pursuant to Item 601(a)(6) of Regulation S-K]
Email: [Redacted pursuant to Item 601(a)(6) of Regulation S-K]
13. Survival. All covenants, agreement, representations, and warranties made in this Agreement shall survive all closings under this Agreement and, to the extent expressly stated in certain paragraphs of this Agreement, the expiration of the Initial Term or the early termination of this Agreement.
14. Governing Law. This Agreement shall be governed by the laws of California, without reference to its principles of conflict of laws. Each of the Parties irrevocably and unconditionally agrees and consents to submit to the non-exclusive personal jurisdiction of the U.S federal and state courts located in Santa Barbara County, California for purposes of disputes arising under this Agreement.
15. Arbitration. In the event of any dispute regarding the meaning, instruction, or intent of this Agreement, or of any matter of performance, fact, law, background, circumstance, or other matter of any kind whatsoever relating to this Agreement or the employment relationship, either during the existence of the employment relationship or afterwards, between the parties hereto, their assignees, their affiliates, their attorneys, or agents, the Parties stipulate and agree that such dispute shall be submitted to binding and final arbitration in Santa Barbara, California, or such other location as the parties may mutually agree. Arbitration shall be conducted in accordance with the rules of international arbitration of the American Arbitration Association (“AAA”) in effect at the time of this Agreement. One arbitrator agreed upon by the Parties shall be appointed from a panel of arbitrators submitted to the Parties by the AAA, or if the Parties cannot agree upon one arbitrator from such panel, an arbitrator from the panel shall be appointed in accordance with the AAA’s rules. Such appointment shall be made within thirty (30) days after the election to arbitrate. Arbitration may proceed in the absence of any Party if written notice of the proceedings has been given to such Party. Discovery shall be available to the Parties subject to the approval and control of the arbitrator. The decision by the arbitrator shall be binding on all Parties and may be entered in any court of competent jurisdiction for enforcement. Such a decision shall include the payment of all fees and costs of the prevailing Party by the losing Party. The determination of the “Prevailing Party” shall be made by the arbitrator. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided however, that nothing in this subsection shall be construed as precluding the Company from bringing an action for injunctive relief or other equitable relief. The arbitrator shall not have the right to award punitive damages, consequential damages, lost profits or speculative damages to either party. The parties shall keep confidential the
existence of the claim, controversy or disputes from third parties (other than the arbitrator), and the determination thereof, unless otherwise required by law or necessary for the business of the Company. The arbitrator(s) shall be required to follow applicable law. IF FOR ANY REASON THIS ARBITRATION CLAUSE BECOMES NOT APPLICABLE, THEN EACH PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER MATTER INVOLVING THE PARTIES HERETO.
16. Attorneys’ Fees. In the event of a dispute or litigation as to any terms or conditions of this Agreement, or if a Party brings an action or proceeding to enforce or declare any rights herein created, or to bring about or declare the termination, cancellation, or rescission of this Agreement, the prevailing Party in such action or proceeding shall be entitled to receive from the other Party fees and costs, including attorneys’ fees, as a court of competent jurisdiction may deem just and proper.
17. Entirety and Amendments. This Agreement represents the final agreement between the Parties with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the Parties. There are no unwritten oral agreements between the Parties. This Agreement may be amended only by an instrument in writing executed jointly by an authorized representative of the Company and Employee and supplemented only by documents delivered or to be delivered in accordance with the express terms hereof. The terms and provisions of this Agreement shall control any conflict between the terms and provisions of this Agreement and the terms and provisions of any other agreement.
18. Waivers. No course of dealing nor any failure or delay by either Party, or its respective officers, directors, employees, representatives, or attorneys with respect to exercising any right or remedy available to it hereunder shall operate as any waiver thereof under this Agreement. A waiver must be in writing and signed by the waiving Party to be effective, and such waiver shall be effective only in the specific instance and for the specific purpose for which it is given.
19. Multiple Counterparts. This Agreement has been executed in a number of identical counterparts, each of which shall be deemed an original for all purposes and all of which constitute, collectively, one agreement; but, in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
20. Confidentiality. The Parties agree to use their best efforts to maintain the confidentiality of the terms set forth in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the Effective Date.
COMPANY |
| EMPLOYEE |
Sugar Auto Parts, Inc. |
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By: /s/ Barrett Evans |
| By: /s/ Michael Hill |
Barrett Evans, on behalf of |
| Michael Hill |
Mammoth Crest Capital LLC, |
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sole shareholder of Sugar Auto |
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Parts, Inc. |
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Exhibit 10.14
EMPLOYMENT AGREEMENT
SUGAR AUTO PARTS, INC.
Barrett Evans
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of March 12, 2025, and effective as of March 1, 2025 (the “Effective Date”), by and between Sugar Auto Parts, Inc., a Nevada corporation (the “Company”), and Barrett Evans, the undersigned individual (the “Employee”). Company and Employee are collectively referred to herein as the “Parties” and at times each is individually referred to as a “Party.” This Agreement replaces and supersedes any and all prior agreements between the Parties.
BACKGROUND
The Company and Employee desire to enter into an Employment Agreement setting forth the terms and conditions of Employee’s employment with the Company.
NOW, THEREFORE, in consideration of the mutual agreements and covenants contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Employment. The Company hereby employs Employee to serve as Chief Financial Officer (the “CFO”) of the Company and to serve in such additional or different position(s) consistent with that of CEO as the Board of Directors of the Company (the “BOD”) and\ Employee mutually agree.
a. Term. The term of this Agreement shall commence on the Effective Date and shall be for a period of three (3) years (the “Initial Term”) unless this Agreement is sooner terminated pursuant to Section 5 hereof. At the expiration of the Initial Term, this Agreement will automatically renew for an unlimited number of successive one (1) year periods (each a “Renewal Term” and collectively with the Initial Term the “Term”) unless either party provides written notice to the other party at least thirty (30) days before the end of the current period.
b. Duties and Responsibilities. Employee will report to the BOD. Employee shall have each and all of the duties and responsibilities of the position of CEO and such other or different duties on behalf of the Company which are consistent with that position, as may be assigned, from time to time, by the Company’s BOD and within the limitations established by the bylaws of the Company.
c. Location. The principal location at which Employee shall perform services for the Company shall be the Employee’s home office.
2. Compensation.
a. Base Salary. Employee shall be paid a “Base Salary” at the annual rate of One Hundred EightyThousand Dollars ($180,000.00). The annual Base Salary shall be reviewed on or before January 1 of each year by the BOD of the Company to determine if such Base Salary should be increased for the following year in recognition of Employee’s service to the Company unless this Agreement is sooner terminated pursuant to Section 5 hereof.
b. Payment. Payment of all compensation to Employee hereunder shall be made in accordance with the relevant Company policies in effect from time to time, including normal payroll practices, and such payments shall be subject to all applicable employment and withholding taxes.
c. Bonus. Employee shall be eligible for a bonus of up to One Hundred Seventy-Five Thousand Dollars ($175,000.00) annually, the amount and terms of which shall be determined pursuant to a plan mutually agreed upon by the Parties (the “Bonus Plan”). The Bonus Plan for the 2025 calendar year shall be agreed upon no later than May 31th, 2025. Future Bonus Plans shall be agreed upon annually, according to the same schedule.
d. Company Credit Card. Employee shall be issued a company credit card to use for Company business expenses.
e. Business Expenses. Upon prior authorization and submission of itemized expense statements in the manner specified by the Company, Employee shall be entitled to reimbursement for reasonable travel and other reasonable business expenses duly incurred by Employee in the performance of his duties under this Agreement. AGREEMENT 3. Other Employment Benefits.
a. Benefit Plans. Employee shall be entitled to participate in the Company’s medical and dental plans, life and disability insurance plans and retirement plans pursuant to their terms and conditions. Employee shall be entitled to participate in any other benefit plan offered by the Company to its employees for which Employee otherwise qualifies to participate during the term of this Agreement (other than stock option or stock incentive plans, which are governed by Section 3(d) below). Nothing in this Agreement shall preclude the Company or any affiliate of the Company from terminating or amending any other employee benefit plan or program from time to time.
b. Vacation. Employee shall be entitled to three (3) weeks of vacation each calendar year of employment, exclusive of legal holidays, as long as the scheduling of Employee’s vacation does not interfere with the Company’s normal business operations.
c. Equity. Employee shall not be entitled to receive equity under this agreement other than Stock Options.
d. Stock Options. Employee shall be entitled to Stock Options to acquire shares of the common stock of the Company pursuant to the terms of the Company stock option plan, yet to be adopted by the Company.
e. Telephone. Company shall provide Employee with a phone and/or phone service at no charge to Employee.
f. No Other Benefits. Employee understands and acknowledges that the compensation and benefits contained in Sections 2 and 3 of this Agreement shall be in lieu of any and all other forms of compensation and benefits.
4. Employee’s Business Activities. Employee shall devote a substantial portion of his business time, attention and energy to the business and affairs of the Company and its affiliates, as its business and affairs now exist and as they hereafter may reasonably change. Employee may serve as a consultant, a member of the board of directors, or other positions of other organizations that do not compete with the Company, and may participate in other professional, civic, governmental organizations and activities that do not materially affect his ability to carry out his duties hereunder.
5. Termination.
a. Termination For Cause. Upon termination of this Agreement for cause, the Company shall be under no further obligation to Employee, except to pay all accrued but unpaid base salary and accrued vacation to the date of termination thereof. Notwithstanding anything herein to the contrary, the Company may terminate Employee’s employment hereunder for cause for any of the following reasons:
(i) conviction of a felony, any act involving moral turpitude or a misdemeanor where imprisonment is imposed;
(ii) commission of any act of theft, fraud, dishonesty, or falsification of any employment or Company record;
(iii) improper disclosure of the Company’s Confidential or Proprietary Information;
(iv) any action by Employee which has a material and continuing detrimental effect on the Company’s reputation or business;
(v) Employee’s failure or inability to perform any reasonable assigned duty following written notice from the Company of, and a reasonable opportunity to cure, such failure or inability;
(vi) any breach of this Agreement, which breach is not cured within ten (10) days following written notice of such breach;
(vii) any course of conduct amounting to gross incompetence;
(viii) chronic and unexcused absenteeism;
(ix) unlawful appropriation of a corporate opportunity; or
(x) misconduct in connection with the performance of any of Employee’s duties, including, without limitation, misappropriation of funds or property of the Company, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company, misrepresentation to the Company, or any violation of law or regulations on Company premises or to which the Company is subject.
b. Termination Without Cause. Company may terminate this Agreement at any time without cause with a 30 day written notice. Upon termination of this Agreement without cause, the Company shall be obligated to pay Employee for the full term, including all accrued but unpaid base salary, bonuses and accrued vacation to the date of termination thereof. In addition, provided that Employee executes a one (1) year non- competition agreement and a valid and comprehensive release of any and all claims which Employee may have against the Company, in
a form provided by the Company, within seven (7) days of termination, Employee shall be entitled to one (1) year additional Base Salary plus any accrued but unpaid Base Salary, bonuses and accrued vacation, less deductions as required by law.
c. Termination by Resignation with Good Reason. In the event that Employee should terminate this Agreement by resigning with Good Reason, as defined below, Employee shall be entitled to unpaid Base Salary for the remaining Term of the Agreement and accrued vacation, less deductions as required by law. Provided, however, that Employee executes a valid and comprehensive release of any and all claims which Employee may have against the Company, in a reasonable form provided by the Company, within seven (7) days of termination. Resignation for “Good Reason” may occur when Employee gives Company written notice, within thirty (30) days after the Employee has knowledge of the occurrence, without his written consent, of one of the instances described below, and the duly noticed instance has not been cured by Company within fifteen (15) days of Company’s receipt of such notice.
(i) Assignment to the Employee of duties materially and adversely inconsistent with the Employee’s duties and responsibilities as defined in Section 1(b) above;
(ii) a reduction by the Company of Employee’s Base Salary;
(iii) Company’s failure to provide bonuses or any material employee benefits due to be provided to Employee (other than any such failure which affects all similarly situated employees in the same manner);
(iv) a direction or order by the Company’s BOD that the Employee perform an unlawful act in the course of his employment;
(v) a requirement that the Employee relocate his principal office of employment more than twenty (20) miles from its current office locations;
(vi) required business travel materially in excess of Employee’s historic norms and more than four (7) business days per calendar month on average; or
(vii) the assignment of excessive work compared to Employee’s historic normal workload for the Company and more than fifty (50) hours per calendar week.
d. Disability. The Company may terminate this Agreement without liability should Employee become permanently prevented from properly performing his essential duties hereunder with reasonable accommodation by reason of illness or other physical or mental incapacity for a period of more than ninety (90) consecutive days. Upon such termination, Employee shall be entitled to all accrued but unpaid Base Salary and vacation.
e. Death. In the event of the death of Employee, the Company’s obligations hereunder shall automatically cease and terminate; provided, however, that the Company shall pay to Employee’s heirs or personal representatives Employee’s Base Salary for six (6) months after the date of death and vacation accrued to the date of death.
f. Cooperation. Following notice of termination, Employee shall cooperate with the Company, as reasonably requested by the Company, to affect a transition of Employee’s responsibilities and to ensure that the Company is aware of all matters being handled by Employee.
g. Assistance in Litigation. Employee shall, during and after termination or resignation, upon reasonable notice, furnish such information and proper assistance to the Company as may reasonably be required by the Company in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become a party; provided, however, that such assistance following termination or resignation shall be furnished at mutually agreeable times and for mutually agreeable compensation.
6. Confidential Information. Employee understands that some information obtained in connection with his employment, including, but not limited to, information regarding the Company’s present or proposed business, operations and ownership, is and/or will be confidential and proprietary information. Employee agrees that he will maintain the confidentiality of such information and will not use or disclose such information to others without the written consent of the Company, except when such use or disclosure is required by binding order of a court of governmental agency, in which case Employee shall notify and cooperate with the Company in obtaining any protective orders (or other assurances of confidential treatment) and in limiting the extent of confidential information disclosed. Information which is generally known in the industry or to the public or which has been disclosed to Employee by third parties who had a right to disclose such information shall not be deemed confidential or proprietary information.
7. Representations and Warranties. Employee represents and warrants that he is aware of no obligations, legal or otherwise, inconsistent with the terms of this Agreement or with his undertaking employment with the Company. Employee will not disclose to the Company, or use, or induce the Company to use, any proprietary information or trade secrets of others. Employee has returned or properly destroyed all property and confidential information belonging to all prior employers.
8. Remedies. The Parties acknowledge and agree that, in the event of any material breach or threatened material breach of this Agreement by Employee, the damage or imminent damage to the value and the goodwill of the Company shall be inestimable. As such, the Parties agree that the remedies at law for any material breach or threatened material breach of this Agreement by Employee, including monetary damages, are inadequate compensation for any loss and that Company shall be entitled to seek injunctive or other equitable relief with respect to its rights hereunder, in addition to any remedies available at law. Employee hereto waives any defense to such claim that a remedy at law would be adequate.
9. Parties Bound; Assignment. Employee’s rights and obligations under this Agreement shall not be transferable by assignment or otherwise, and any purported assignment, transfer or delegation thereof shall be void. This Agreement is binding upon, and inures to the benefit of, Company and its respective successors and assigns; provided that Company may not, without the prior written consent of Employee, which shall not reasonably be withheld, assign any rights, duties, or obligations hereunder, and any purported assignment in violation of the foregoing shall be void and ineffective. This provision shall not prohibit a transfer by operation of law of all the rights and obligations under this Agreement related to any corporate reorganization of Company.
10. No Third-Party Beneficiaries. Nothing in this Agreement shall confer any rights upon any person or entity other than the Parties and their respective successors and permitted assigns.
11. Headings. The headings, captions, and arrangements used in this Agreement are for convenience only and do not limit, amplify, or modify the terms of this Agreement.
12. Notice. Unless specifically otherwise provided, whenever this Agreement requires or permits any consent, approval, notice, request, or demand from one Party to another, such communication must be in writing (which may be sent by e-mail, courier or recognized overnight delivery service) to be effective and shall be deemed to have been given upon receipt when delivered personally or sent by electronic
message (provided the recipient responds to the message and confirmation of both electronic messages are kept on file by the sending party) and on the date actually delivered after timely deposit with a nationally recognized overnight delivery service. Until changed by Notice pursuant hereto, the contact information for each Party is as follows:
If to Company:
Sugar Auto Parts, Inc.
701 Anacapa Street, Suite C
Santa Barbara, CA 93101
Email: [Redacted pursuant to Item 601(a)(6) of Regulation S-K]
If to Employee:
Barrett Evans
701 Anacapa Street, Suite C
Santa Barbara, CA 93101
Email: [Redacted pursuant to Item 601(a)(6) of Regulation S-K]
13. Survival. All covenants, agreement, representations, and warranties made in this Agreement shall survive all closings under this Agreement and, to the extent expressly stated in certain paragraphs of this Agreement, the expiration of the Initial Term or the early termination of this Agreement.
14. Governing Law. This Agreement shall be governed by the laws of California, without reference to its principles of conflict of laws. Each of the Parties irrevocably and unconditionally agrees and consents to submit to the non-exclusive personal jurisdiction of the U.S federal and state courts located in Santa Barbara County, California for purposes of disputes arising under this Agreement.
15. Arbitration. In the event of any dispute regarding the meaning, instruction, or intent of this Agreement, or of any matter of performance, fact, law, background, circumstance, or other matter of any kind whatsoever relating to this Agreement or the employment relationship, either during the existence of the employment relationship or afterwards, between the parties hereto, their assignees, their affiliates, their attorneys, or agents, the Parties stipulate and agree that such dispute shall be submitted to binding and final arbitration in Santa Barbara, California, or such other location as the parties may mutually agree. Arbitration shall be conducted in accordance with the rules of international arbitration of the American Arbitration Association (“AAA”) in effect at the time of this Agreement. One arbitrator agreed upon by the Parties shall be appointed from a panel of arbitrators submitted to the Parties by the AAA, or if the Parties cannot agree upon one arbitrator from such panel, an arbitrator from the panel shall be appointed in accordance with the AAA’s rules. Such appointment shall be made within thirty (30) days after the election to arbitrate. Arbitration may proceed in the absence of any Party if written notice of the proceedings has been given to such Party. Discovery shall be available to the Parties subject to the approval and control of the arbitrator. The decision by the arbitrator shall be binding on all Parties and may be entered in any court of competent jurisdiction for enforcement. Such a decision shall include the payment of all fees and costs of the prevailing Party by the losing Party. The determination of the “Prevailing Party” shall be made by the arbitrator. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided however, that nothing in this subsection shall be construed as precluding the Company from bringing an action for injunctive relief or other equitable relief. The arbitrator shall not have the right to award punitive damages, consequential damages, lost profits or speculative damages to either party. The parties shall keep confidential the existence of the claim, controversy or disputes from third parties (other than the arbitrator), and the determination thereof, unless otherwise required by law or necessary for the business of the Company. The arbitrator(s) shall be required to follow applicable law. IF FOR ANY REASON THIS ARBITRATION CLAUSE BECOMES NOT APPLICABLE, THEN EACH PARTY, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER MATTER INVOLVING THE PARTIES HERETO.
16. Attorneys’ Fees. In the event of a dispute or litigation as to any terms or conditions of this Agreement, or if a Party brings an action or proceeding to enforce or declare any rights herein created, or to bring about or declare the termination, cancellation, or rescission of this Agreement, the prevailing Party in such action or proceeding shall be entitled to receive from the other Party fees and costs, including attorneys’ fees, as a court of competent jurisdiction may deem just and proper.
17. Entirety and Amendments. This Agreement represents the final agreement between the Parties with respect to the subject matter hereof and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the Parties. There are no unwritten oral agreements between the Parties. This Agreement may be amended only by an instrument in writing executed jointly by an authorized representative of the Company and Employee and supplemented only by documents delivered or to be delivered in accordance with the express terms hereof. The terms and provisions of this Agreement shall control any conflict between the terms and provisions of this Agreement and the terms and provisions of any other agreement.
18. Waivers. No course of dealing nor any failure or delay by either Party, or its respective officers, directors, employees, representatives, or attorneys with respect to exercising any right or remedy available to it hereunder shall operate as any waiver thereof under this Agreement. A waiver must be in writing and signed by the waiving Party to be effective, and such waiver shall be effective only in the specific instance and for the specific purpose for which it is given.
19. Multiple Counterparts. This Agreement has been executed in a number of identical counterparts, each of which shall be deemed an original for all purposes and all of which constitute, collectively, one agreement; but, in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.
20. Confidentiality. The Parties agree to use their best efforts to maintain the confidentiality of the terms set forth in this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the Effective Date.
COMPANY |
| EMPLOYEE |
Sugar Auto Parts, Inc. |
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By: /s/ Michael Hill |
| By: /s/ Barrett Evans |
Michael Hill, on behalf of |
| Barrett Evans |
Mammoth Crest Capital LLC, |
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sole shareholder of Sugar Auto |
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Parts, Inc. |
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Exhibit 10.15
FORM OF
INDEMNIFICATION AND ADVANCEMENT AGREEMENT
This Indemnification and Advancement Agreement (“Agreement”) is made as of March 12, 2025, by and between Sugar Auto Parts, Inc., a Nevada corporation (the “Company”), and [●], a member of the Board of Directors or an officer of the Company (“Indemnitee”). This Agreement supersedes and replaces any and all previous Agreements between the Company and Indemnitee covering indemnification and advancement.
RECITALS
WHEREAS, the Board of Directors of the Company (the “Board”) believes that highly competent persons have become more reluctant to serve publicly-held corporations as directors, officers, or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification and advancement of expenses against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;
WHEREAS, the Board has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among United States-based corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself. The bylaws and certificate of incorporation of the Company (each as may be amended from time to time, the “Bylaws” and “Certificate of Incorporation,” respectively) require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to the Nevada Revised Statutes (the “NRS”). The Bylaws, Certificate of Incorporation, and the NRS expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification and advancement of expenses;
WHEREAS, the uncertainties relating to such insurance, to indemnification, and to advancement of expenses may increase the difficulty of attracting and retaining such persons;
WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company and its stockholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by Applicable Law (as defined below) so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified;
WHEREAS, this Agreement is a supplement to and in furtherance of the Bylaws, Certificate of Incorporation and any resolutions adopted pursuant thereto, and is not a substitute therefor, nor diminishes or abrogates any rights of Indemnitee thereunder; and
WHEREAS, Indemnitee does not regard the protection available under the Bylaws, Certificate of Incorporation, NRS and insurance as adequate in the present circumstances, and may not be willing to serve or continue to serve as an officer or director without adequate additional protection, and the Company desires Indemnitee to serve or continue to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified and be advanced expenses.
NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
Section 1. Services to the Company. Indemnitee agrees to serve as a director or officer of the Company. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law). This Agreement does not create any obligation on the Company to continue Indemnitee in such position and is not an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.
Section 2. Definitions. As used in this Agreement:
(a) “Agent” means any person who is authorized by the Company or an Enterprise to act for or represent the interests of the Company or an Enterprise, respectively.
(b) “Applicable Law” means applicable law, including as it presently exists or may hereafter be amended, but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than such law permitted the Company to provide prior to such amendment.
(c) A “Change in Control” occurs upon the earliest to occur after the date of this Agreement of any of the following events:
i. Acquisition of Stock by Third Party. Any Person (as defined below) is or becomes the Beneficial Owner (as defined below), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities unless the change in relative beneficial ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors; ii. Change in Board of Directors. During any period of two (2) consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Sections 2(c)(i), 2(c)(iii) or 2(c)(iv)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board; iii. Corporate Transactions. The effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after such merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of
such surviving entity; iv. Liquidation. The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; and
v. Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to such reporting requirement. vi. For purposes of this Section 2(c), the following terms have the following meanings: 1 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time. 2 “Person” has the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that Person excludes (i) the Company, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (iii) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company. 3 “Beneficial Owner” has the meaning given to such term in Rule 13d-3 under the Exchange Act; provided, however, that Beneficial Owner excludes any Person otherwise becoming a Beneficial Owner by reason of the stockholders of the Company approving a merger of the Company with another entity.
(d) “Corporate Status” describes the status of a person who is or was acting as a director, officer, employee, fiduciary, or Agent of the Company or an Enterprise.
(e) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(f) “Enterprise” means any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other entity for which Indemnitee is or was serving at the request of the Company as a director, officer, employee, or Agent.
(g) “Expenses” includes all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts and other professionals, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent, and (ii) for purposes of Section 14(d) only, Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement, by litigation or otherwise. Expenses, however, do not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.
(h) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” does not include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.
(i) The term “Proceeding” includes any threatened, pending or completed action, suit, claim, counterclaim, cross claim, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative, legislative, or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, potential party, non-party witness or otherwise by reason of Indemnitee’s Corporate Status or by reason of any action taken by Indemnitee (or a failure to take action by Indemnitee) or of any action (or failure to act) on Indemnitee’s part while acting pursuant to Indemnitee’s Corporate Status, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification, reimbursement, or advancement of Expenses can be provided under this Agreement. A Proceeding also includes a situation the Indemnitee believes in good faith may lead to or culminate in the institution of a Proceeding.
Section 3. Indemnity in Third-Party Proceedings. The Company will indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, the Company will indemnify Indemnitee to the fullest extent permitted by Applicable Law against all Expenses, judgments, fines and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of such Expenses, judgments, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding had no reasonable cause to believe that Indemnitee’s conduct was unlawful.
Section 4. Indemnity in Proceedings by or in the Right of the Company. The Company will indemnify Indemnitee in accordance with the provisions of this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, the Company will indemnify Indemnitee to the fullest extent permitted by Applicable Law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. The Company will not indemnify Indemnitee for Expenses under this Section 4 related to any claim, issue or matter in a Proceeding for which Indemnitee has been finally adjudged by a court to be liable to the Company, unless, and only to the extent that, the Nevada Court (the “Nevada Court”) or any court in which the Proceeding was brought determines upon application by Indemnitee that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification.
Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. To the fullest extent permitted by Applicable Law, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with any Proceeding to the extent that Indemnitee is successful, on the merits or otherwise. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with or related to each
successfully resolved claim, issue or matter to the fullest extent permitted by law. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, will be deemed to be a successful result as to such claim, issue or matter.
Section 6. Indemnification For Expenses of a Witness. To the fullest extent permitted by Applicable Law, the Company will indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with any Proceeding to which Indemnitee is not a party but to which Indemnitee is a witness, deponent, interviewee, or otherwise asked to participate.
Section 7. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company will indemnify Indemnitee for the portion thereof to which Indemnitee is entitled.
Section 8. Additional Indemnification. Notwithstanding any limitation in Sections 3, 4, or 5, the Company will indemnify Indemnitee to the fullest extent permitted by Applicable Law (including but not limited to, the NRS and any amendments to or replacements of the NRS adopted after the date of this Agreement that expand the Company’s ability to indemnify its officers and directors) if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor).
Section 9. Exclusions. Notwithstanding any provision in this Agreement, the Company is not obligated under this Agreement to make any indemnification payment to Indemnitee in connection with any Proceeding:
(a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except to the extent provided in Section 16(b) and except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision; or
(b) for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 15(b) of the Exchange Act (as defined in Section 2(b) hereof) or similar provisions of state statutory law or common law, (ii) any reimbursement of the Company by the Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by the Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act) or (iii) any reimbursement of the Company by Indemnitee of any compensation pursuant to any compensation recoupment or clawback policy adopted by the Board or the compensation committee of the Board, including but not limited to any such policy adopted to comply with stock exchange listing requirements implementing Section 10D of the Exchange Act; or
(c) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Proceeding or part of any Proceeding is to enforce Indemnitee’s rights to indemnification or advancement, of Expenses, including a Proceeding (or any part of any Proceeding) initiated pursuant to Section 14 of this Agreement, (ii) the Board authorized the Proceeding (or any part of
any Proceeding) or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under Applicable Law.
Section 10. Advances of Expenses.
(a) The Company will advance, to the fullest extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding (or any part of any Proceeding) not initiated by Indemnitee or any Proceeding (or any part of any Proceeding) initiated by Indemnitee if (i) the Proceeding or part of any Proceeding is to enforce Indemnitee’s rights to obtain indemnification or advancement of Expenses from the Company or Enterprise, including a proceeding initiated pursuant to Section 14 or (ii) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation. The Company will advance the Expenses within thirty (30) days after the receipt by the Company of a written statement or statements requesting such advances from time to time, whether prior to or after final disposition of any Proceeding.
(b) Advances will be unsecured and interest free. Indemnitee undertakes to repay the amounts advanced (without interest) to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. Thus Indemnitee qualifies for advances upon the execution of this Agreement and delivery to the Company. No other form of undertaking is required other than the execution of this Agreement. The Company will make advances without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement.
Section 11. Procedure for Notification of Claim for Indemnification or Advancement.
(a) Indemnitee will notify the Company in writing of any Proceeding with respect to which Indemnitee intends to seek indemnification or advancement of Expenses hereunder as soon as reasonably practicable following the receipt by Indemnitee of written notice thereof. Indemnitee will include in the written notification to the Company a description of the nature of the Proceeding and the facts underlying the Proceeding and provide such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of such Proceeding. Indemnitee’s failure to notify the Company will not relieve the Company from any obligation it may have to Indemnitee under this Agreement, and any delay in so notifying the Company will not constitute a waiver by Indemnitee of any rights under this Agreement. The Secretary of the Company will, promptly upon receipt of such a request for indemnification or advancement, advise the Board in writing that Indemnitee has requested indemnification or advancement.
(b) The Company will be entitled to participate in the Proceeding at its own expense.
Section 12. Procedure Upon Application for Indemnification.
(a) Unless a Change in Control has occurred, the determination of Indemnitee’s entitlement to indemnification will be made:
i. by a majority vote of the Disinterested Directors, even though less than a quorum of the Board; ii. by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum of the Board; iii. if there are no such Disinterested Directors or, if such Disinterested Directors so direct, by written opinion provided by
Independent Counsel selected by the Board; or iv. if so directed by the Board, by the stockholders of the Company.
(b) If a Change in Control has occurred, the determination of Indemnitee’s entitlement to indemnification will be made by written opinion provided by Independent Counsel selected by Indemnitee (unless Indemnitee requests such selection be made by the Board) (c) The party selecting Independent Counsel pursuant to subsection (a)(iii) or (b) of this Section 12 will provide written notice of the selection to the other party. The notified party may, within ten (10) days after receiving written notice of the selection of Independent Counsel, deliver to the selecting party a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection will set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected will act as Independent Counsel. If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Nevada Court has determined that such objection is without merit. If, within thirty (30) days after the later of submission by Indemnitee of a written request for indemnification pursuant to Section 11(a) hereof and the final disposition of the Proceeding, Independent Counsel has not been selected or, if selected, any objection to has not been resolved, either the Company or Indemnitee may petition the Nevada Court for the appointment as Independent Counsel of a person selected by such court or by such other person as such court designates. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 14(a) of this Agreement, Independent Counsel will be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).
(d) Indemnitee will cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. The Company will advance and pay any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making the indemnification determination irrespective of the determination as to Indemnitee’s entitlement to indemnification and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. The Company promptly will advise Indemnitee in writing of the determination that Indemnitee is or is not entitled to indemnification, including a description of any reason or basis for which indemnification has been denied and providing a copy of any written opinion provided to the Board by Independent Counsel.
(e) If it is determined that Indemnitee is entitled to indemnification, the Company will make payment to Indemnitee within thirty (30) days after such determination.
Section 13. Presumptions and Effect of Certain Proceedings.
(a) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination will, to the fullest extent not prohibited by law, presume Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 11(a) of this Agreement, and the Company will, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption. Neither the failure of the Company (including by its directors or Independent Counsel) to have made a determination prior to the commencement of any action
pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or Independent Counsel) that Indemnitee has not met such applicable standard of conduct, will be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
(b) If the determination of the Indemnitee’s entitlement to indemnification has not been made pursuant to Section 12 within sixty (60) days after the later of (i) receipt by the Company of Indemnitee’s request for indemnification pursuant to Section 11(a) and (ii) the final disposition of the Proceeding for which Indemnitee requested Indemnification (the “Determination Period”), the requisite determination of entitlement to indemnification will, to the fullest extent not prohibited by law, be deemed to have been made and Indemnitee will be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. The Determination Period may be extended for a reasonable time, not to exceed an additional thirty (30) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto; and provided, further, the Determination Period may be extended an additional fifteen (15) days if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 12(a)(iv) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, will not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.
(d) For purposes of any determination of good faith, Indemnitee will be deemed to have acted in good faith if Indemnitee acted based on the records or books of account of the Company, its subsidiaries, or an Enterprise, including financial statements, or on information supplied to Indemnitee by the directors or officers of the Company, its subsidiaries, or an Enterprise in the course of their duties, or on the advice of legal counsel for the Company, its subsidiaries, or an Enterprise or on information or records given or reports made to the Company, its subsidiaries or an Enterprise by an independent certified public accountant or by an appraiser, financial advisor or other expert selected with reasonable care by or on behalf of the Company, its subsidiaries, or an Enterprise. Further, Indemnitee will be deemed to have acted in a manner “not opposed to the best interests of the Company,” as referred to in this Agreement if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan. The provisions of this Section 13(d) is not exclusive and does not limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.
(e) The knowledge and/or actions, or failure to act, of any director, officer, trustee, partner, managing member, fiduciary, agent or employee of the Enterprise may not be imputed to Indemnitee for purposes of determining Indemnitee’s right to indemnification under this Agreement.
Section 14. Remedies of Indemnitee.
(a) Indemnitee may commence litigation against the Company in the Nevada Court to obtain indemnification or advancement of Expenses provided by this Agreement in the event that (i) a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) the Company does not advance Expenses pursuant to Section 10 of this Agreement, (iii) the determination of entitlement to indemnification is not made pursuant to Section 12 of this Agreement within the Determination Period, (iv) the Company does not indemnify Indemnitee pursuant to Section 5 or 6 or the second to last sentence of Section 12(d) of this Agreement within sixty (60) days after receipt by the Company of a written request therefor, (v) the Company does not indemnify Indemnitee pursuant to Section 3, 4, 7, or 8 of this Agreement within sixty (60) days after a determination has been made that Indemnitee is entitled to indemnification, or (vi) in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or Proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to the Indemnitee hereunder. Alternatively, Indemnitee or the Company, at their option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Indemnitee must commence such Proceeding seeking an adjudication or an award in arbitration within one hundred and eighty (180) days following the date on which Indemnitee first has the right to commence such Proceeding pursuant to this Section 14(a); provided, however, that the foregoing clause does not apply in respect of a Proceeding brought by Indemnitee to enforce Indemnitee’s rights under Section 5 of this Agreement. The Company will not oppose Indemnitee’s right to seek any such adjudication or award in arbitration and the Indemnitee will not oppose the Company’s right to seek any such adjudication or award in arbitration.
(b) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 14 will be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee may not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 14 the Company will have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be, and will not introduce evidence of the determination made pursuant to Section 12 of this Agreement.
(c) If a determination is made pursuant to Section 12 of this Agreement that Indemnitee is entitled to indemnification, the Company will be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 14, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under Applicable Law.
(d) The Company is, to the fullest extent not prohibited by law, precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 14 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and will stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.
(e) It is the intent of the Company that, to the fullest extent permitted by law, the Indemnitee not be required to incur legal fees or other Expenses associated with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Indemnitee hereunder. The Company, to the fullest extent permitted by law, will (within thirty (30) days after receipt by the Company of a written request therefor) advance to Indemnitee such Expenses which are incurred by Indemnitee in connection with any action concerning this Agreement, Indemnitee’s right to indemnification or advancement of Expenses from the Company, or concerning any directors’ and officers’ liability insurance policies maintained by the Company, and will indemnify Indemnitee against any and all such Expenses unless the court determines that each of the Indemnitee’s claims in such action were made in bad faith or were frivolous or are prohibited by law.
Section 15. Non-exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The indemnification and advancement of Expenses provided by this Agreement are not exclusive of any other rights to which Indemnitee may at any time be entitled under Applicable Law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. The indemnification and advancement of Expenses provided by this Agreement may not be limited or restricted by any amendment, alteration or repeal of this Agreement in any way with respect to any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status occurring prior to any amendment, alteration or repeal of this Agreement. To the extent that a change in Nevada law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Bylaws, Certificate of Incorporation, or this Agreement, it is the intent of the parties hereto that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy is cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or employment of any other right or remedy.
(b) The Company hereby acknowledges that Indemnitee may have certain rights to indemnification, advancement of Expenses and/or insurance provided by one or more other Persons with whom or which Indemnitee may be associated. The relationship between the Company and such other Persons, other than an Enterprise, with respect to the Indemnitee’s rights to indemnification, advancement of Expenses, and insurance is described by this subsection, subject to the provisions of subsection (d) of this Section 16 with respect to a Proceeding concerning Indemnitee’s Corporate Status with an Enterprise.
i. The Company hereby acknowledges and agrees: 1) the Company is the indemnitor of first resort with respect to any request for indemnification or advancement of Expenses made pursuant to this Agreement concerning any Proceeding; 2) the Company is primarily liable for all indemnification and indemnification or advancement of Expenses obligations for any Proceeding, whether created by law, organizational or constituent documents, contract (including this Agreement) or otherwise; 3) any obligation of any other Persons with whom or which Indemnitee may be associated to indemnify Indemnitee and/or advance Expenses to Indemnitee in respect of any proceeding are secondary to the obligations of the Company’s obligations; and 4) the Company will indemnify Indemnitee and advance Expenses to Indemnitee hereunder to the fullest extent provided herein without regard to any rights Indemnitee may have against any other Person with whom or which Indemnitee may be associated or insurer of any such Person; ii. The
Company irrevocably waives, relinquishes and releases (A) any other Person with whom or which Indemnitee may be associated from any claim of contribution, subrogation, reimbursement, exoneration or indemnification, or any other recovery of any kind in respect of amounts paid by the Company to Indemnitee pursuant to this Agreement and (B) any right to participate in any claim or remedy of Indemnitee against any Person, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from any Person, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right. iii. In the event any other Person with whom or which Indemnitee may be associated or their insurers advances or extinguishes any liability or loss for Indemnitee, the payor has a right of subrogation against the Company or its insurers for all amounts so paid which would otherwise be payable by the Company or its insurers under this Agreement. In no event will payment by any other Person with whom or which Indemnitee may be associated or their insurers affect the obligations of the Company hereunder or shift primary liability for the Company’s obligation to indemnify or advance of Expenses to any other Person with whom or which Indemnitee may be associated. iv. Any indemnification or advancement of Expenses provided by any other Person with whom or which Indemnitee may be associated is specifically in excess over the Company’s obligation to indemnify and advance Expenses or any valid and collectible insurance (including but not limited to any malpractice insurance or professional errors and omissions insurance) provided by the Company.
(c) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Company, the Company will obtain a policy or policies covering Indemnitee to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies, including coverage in the event the Company does not or cannot, for any reason, indemnify or advance Expenses to Indemnitee as required by this Agreement. If, at the time of the receipt of a notice of a claim pursuant to this Agreement, the Company has director and officer liability insurance in effect, the Company will give prompt notice of such claim or of the commencement of a Proceeding, as the case may be, to the insurers in accordance with the procedures set forth in the respective policies. The Company will thereafter take all reasonably necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. Indemnitee agrees to assist the Company efforts to cause the insurers to pay such amounts and will comply with the terms of such policies, including selection of approved panel counsel, if required.
(d) The Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee for any Proceeding concerning Indemnitee’s Corporate Status with an Enterprise will be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such Enterprise. The Company and Indemnitee intend that any such Enterprise (and its insurers) be the indemnitor of first resort with respect to indemnification and advancement of Expenses for any Proceeding related to or arising from Indemnitee’s Corporate Status with such Enterprise. The Company’s obligation to indemnify and advance Expenses to Indemnitee is secondary to the obligations the Enterprise or its insurers owe to Indemnitee. Indemnitee agrees to take all reasonably necessary and desirable action to obtain from an Enterprise indemnification and advancement of Expenses for any Proceeding related to or arising from Indemnitee’s Corporate Status with such Enterprise.
(e) In the event of any payment made by the Company under this Agreement, the Company will be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee from any Enterprise or insurance carrier. Indemnitee will execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.
Section 16. Duration of Agreement. This Agreement continues until and terminates upon the later of: (a) ten (10) years after the date that Indemnitee ceases to have a Corporate Status or (b) one (1) year after the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by Indemnitee pursuant to Section 14 of this Agreement relating thereto. The indemnification and advancement of Expenses rights provided by or granted pursuant to this Agreement are binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or of any other Enterprise, and inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.
Section 17. Severability. If any provision or provisions of this Agreement is held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will not in any way be affected or impaired thereby and remain enforceable to the fullest extent permitted by law; (b) such provision or provisions will be deemed reformed to the extent necessary to conform to Applicable Law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) will be construed so as to give effect to the intent manifested thereby.
Section 18. Interpretation. Any ambiguity in the terms of this Agreement will be resolved in favor of Indemnitee and in a manner to provide the maximum indemnification and advancement of Expenses permitted by law. The Company and Indemnitee intend that this Agreement provide to the fullest extent permitted by law for indemnification and advancement in excess of that expressly provided, without limitation, by the Certificate of Incorporation, the Bylaws, vote of the Company stockholders or disinterested directors, or Applicable Law.
Section 19. Enforcement.
(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving or continuing to serve as a director or officer of the Company.
(b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement is a supplement to and in furtherance of the Certificate of Incorporation, the Bylaws and Applicable Law, and is not a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.
Section 20. Modification and Waiver. No supplement, modification or amendment of this Agreement is binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement will be deemed or constitutes a waiver of any other provisions of this Agreement nor will any waiver constitute a continuing waiver.
Section 21. Notice by Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. The failure of Indemnitee to so notify the Company does not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise.
Section 22. Notices. All notices, requests, demands and other communications under this Agreement will be in writing and will be deemed to have been duly given if (a) delivered by hand to the other party, (b) sent by reputable overnight courier to the other party or (c) sent by facsimile transmission or electronic mail, with receipt of oral confirmation that such communication has been received:
(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee provides to the Company.
(b) If to the Company to:
Sugar Auto Parts, Inc.
701 Anacapa Street, Suite C
Santa Barbara, CA 93101
Attention: General Counsel
or to any other address as may have been furnished to Indemnitee by the Company.
Section 23. Contribution. To the fullest extent permissible under Applicable Law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, will contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).
Section 24. Applicable Law and Consent to Jurisdiction. This Agreement and the legal relations among the parties are governed by, and construed and enforced in accordance with, the laws of the State of Nevada, without regard to its conflict of laws rules. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 14(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or Proceeding arising out of or in connection with this Agreement may be brought only in the Nevada Court and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Nevada Court for purposes of any action or Proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or Proceeding in the Nevada Court, and (iv) waive, and agree not to plead or to make, any claim that any such action or Proceeding brought in the Nevada Court has been brought in an improper or inconvenient forum.
Section 25. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which will for all purposes be deemed to be an original but all of which together constitutes one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.
Section 26. Headings. The headings of this Agreement are inserted for convenience only and do not constitute part of this Agreement or affect the construction thereof.
[Signature page follows]
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.
SUGAR AUTO PARTS, INC. |
| INDEMNITEE | |
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By: |
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Name: |
| Name: | |
Office: |
| Address: | |
[Signature Page to Indemnification Agreement]
APPLIFE DIGITAL SOLUTIONS, INC.
INSIDER TRADING POLICY
Adopted by the Board of Directors effective September 30, 2026
1. Purpose
Federal and state securities laws prohibit buying, selling or otherwise trading in a company’s securities while aware of material nonpublic information about that company, and prohibit passing that information on to others who may trade. This Insider Trading Policy (this “Policy”) of APPlife Digital Solutions, Inc. (together with its subsidiaries, the “Company”) is intended to promote compliance with those laws, to protect the Company and the persons covered by this Policy from liability, and to avoid even the appearance of improper trading.
2. Persons Covered
This Policy applies to (a) each director and officer of the Company; (b) each employee of the Company; (c) each consultant, contractor or advisor to the Company who has access to material nonpublic information about the Company; and (d) the family members of each of those persons who share his or her household or whose transactions in Company securities are directed by, or subject to the influence of, that person, and any trust, partnership, corporation or other entity that person controls (together, “Covered Persons”). Each Covered Person is responsible for the compliance of his or her family members and controlled entities.
Directors and officers of the Company, and any other person the Compliance Officer designates in writing, are “Designated Insiders” and are also subject to the blackout period and pre-clearance requirements in Sections 6 and 7.
3. Securities and Transactions Covered
This Policy applies to all transactions in the Company’s securities, including its common stock, preferred stock (of any series), convertible notes, warrants and options, and any derivative security whose value is tied to the Company’s securities, whether or not issued by the Company (“Company Securities”). Covered transactions include purchases, sales, gifts, pledges, transfers, and conversions or exercises of convertible or derivative securities, whether made in the open market, in a private transaction or with the Company.
Acquisitions of securities directly from the Company—such as shares issued under a Board-approved compensation arrangement, shares issued in a Board-approved financing, or shares received on the conversion of a Company note or preferred stock, or the cash exercise of a warrant, in accordance with its terms—are subject to the pre-clearance requirement in Section 7 but are not otherwise restricted by the blackout periods. Any later sale or other disposition of those shares is fully subject to this Policy.
4. General Prohibitions
No Covered Person may:
·buy, sell or otherwise trade in Company Securities while aware of material nonpublic information about the Company;
·disclose (“tip”) material nonpublic information about the Company to any other person, including family members and friends, or recommend that any person buy or sell Company Securities, while aware of that information; or
·buy, sell or otherwise trade in the securities of any other company—including any customer, supplier, lender, investor or acquisition counterparty of the Company—while aware of material nonpublic information about that company obtained in the course of his or her service to the Company.
The fact that a transaction may be necessary or justifiable for independent reasons (for example, a need to raise money for a personal expense or to cover a margin call) is not an exception to this Policy.
5. Material Nonpublic Information
Material. Information is “material” if a reasonable investor would consider it important in deciding whether to buy, hold or sell a security, or if it would be likely to affect the market price of the security. Either positive or negative information may be material. Examples of information that ordinarily should be treated as material include:
·unreleased quarterly or annual financial results, and changes in previously announced results, estimates or guidance;
·the Company’s liquidity, going concern status, defaults or events of default under notes or other obligations, or the need to raise capital;
·pending or proposed financings, including issuances of convertible notes, preferred stock or warrants, draws under an equity line, and note conversions or amendments;
·pending or proposed mergers, acquisitions, dispositions, reverse mergers or other significant transactions;
·stock splits, reverse stock splits, dividends and changes in capital structure;
·changes in the Company’s independent auditor, a restatement, or a notice that previously issued financial statements should not be relied upon;
·changes in directors or senior management; and
·significant litigation or regulatory developments, cybersecurity incidents, or the gain or loss of a significant customer, supplier or lender.
When in doubt, information should be presumed to be material.
Nonpublic. Information is “nonpublic” until it has been broadly disclosed to the public (for example, in a filing with the Securities and Exchange Commission (the “SEC”) or a widely disseminated press release) and the market has had time to absorb it. For purposes of this Policy, information is considered public beginning at the opening of trading on the second full trading day after its broad public release.
6. Blackout Periods
Quarterly Blackout Periods. Designated Insiders may not trade in Company Securities during the period beginning on the fifteenth (15th) day of the last month of each fiscal quarter (currently September 15, December 15, March 15 and June 15) and ending at the opening of trading on the second full trading day after the Company files its Quarterly Report on Form 10-Q or Annual Report on Form 10-K for that quarter or year. Because the Company’s periodic reports are sometimes filed near or after their due dates, a quarterly blackout period does not end until the related report has actually been filed.
Event-Specific Blackout Periods. The Compliance Officer may impose an additional blackout period on some or all Covered Persons at any time because of a pending development that is or may be material (for example, a financing, a default, or an acquisition). The existence of an event-specific blackout period is itself confidential and may not be disclosed to others.
A Covered Person who is aware of material nonpublic information may not trade even if a blackout period is not in effect.
7. Pre-Clearance
Each Designated Insider must obtain the written approval (email is sufficient) of the Compliance Officer before engaging in any transaction in Company Securities, including a gift, pledge, conversion, warrant exercise or acquisition from the Company. The Compliance Officer is under no obligation to approve a transaction and may refuse without giving a reason. A pre-cleared transaction must be completed within three (3) trading days after approval, and may not be completed if the Designated Insider becomes aware of material nonpublic information before the transaction is completed. Pre-clearance does not relieve any person of his or her own responsibility for complying with the law.
8. Rule 10b5-1 Trading Plans
The restrictions in Sections 4, 6 and 7 do not apply to transactions made under a written trading plan that satisfies Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and that was pre-cleared by the Compliance Officer (a “10b5-1 Plan”). A 10b5-1 Plan may be adopted or modified only outside a blackout period and while the person is not aware of material nonpublic information, and must comply with the cooling-off periods, good-faith, single-trade and overlapping-plan requirements of Rule 10b5-1. Each director and officer must notify the Compliance Officer within two (2) business days after adopting, modifying or terminating a 10b5-1 Plan or any other written trading arrangement, so that the Company can make the disclosure required by Item 408(a) of Regulation S-K.
9. Prohibited Transactions
Because the following transactions present a heightened risk of legal violation or may put a person’s interests out of alignment with those of the Company’s stockholders, no director, officer or employee may, at any time:
·engage in short sales of Company Securities;
·buy or sell puts, calls or other exchange-traded or over-the-counter derivatives on Company Securities;
·engage in hedging or monetization transactions (such as prepaid variable forwards, equity swaps, collars or exchange funds) involving Company Securities; or
·hold Company Securities in a margin account or pledge Company Securities as collateral for a loan, unless approved in advance by the Board.
10. Transactions by the Company
The Company will not engage in transactions in its own securities, including issuances, sales and repurchases, in violation of the insider trading laws.
11. Section 16 and Rule 144
Directors and officers subject to Section 16 of the Exchange Act must file a Form 4 with the SEC within two (2) business days after any change in their beneficial ownership of Company Securities, including acquisitions from the Company and note or preferred stock conversions, and are subject to the short-swing profit recovery provisions of Section 16(b). Sales by directors, officers and other affiliates must also comply with Rule 144 under the Securities Act of 1933, as amended. The Company will assist with these filings upon request, but each individual remains personally responsible for them.
12. Post-Termination Transactions
A person who is aware of material nonpublic information when his or her service with the Company ends may not trade in Company Securities until that information has become public or is no longer material. A person who leaves during a blackout period remains subject to it until it ends.
13. Compliance Officer
The Chief Financial Officer is the Compliance Officer for purposes of this Policy. The Chief Executive Officer acts as Compliance Officer for any transaction by, or pre-clearance request from, the Chief Financial Officer. The Compliance Officer may designate another officer or outside counsel to assist in administering this Policy, and may interpret this Policy and grant exceptions only as permitted by law. Questions about this Policy should be directed to the Compliance Officer.
14. Consequences of Violation
Insider trading and tipping can result in civil and criminal penalties, including imprisonment, fines and disgorgement of profits, for the individuals involved and, in some cases, for the Company and its supervisory personnel. A violation of this Policy, even if it does not violate the law, may result in disciplinary action, up to and including removal or termination for cause. Any Covered Person who becomes aware of a violation of this Policy should report it promptly to the Compliance Officer.
15. Acknowledgment; Amendments
This Policy is effective as of September 30, 2026 and applies to each Covered Person from that date, whether or not he or she has yet signed the certification attached to this Policy. Each director, officer and employee, and each consultant designated by the Compliance Officer, must sign that certification within thirty (30) days after the effective date of this Policy or, if later, upon commencing service with the Company. The Board may amend this Policy at any time.
CERTIFICATION
I certify that I have received, read and understand the Insider Trading Policy of APPlife Digital Solutions, Inc., and that I will comply with it for as long as I am subject to it. I understand that a violation of the Policy may result in disciplinary action, up to and including removal or termination for cause, and may also violate federal and state securities laws.
Signature: ____________________________________
Printed name: _________________________________
Title / relationship to the Company: _____________________
Date: _______________
Exhibit 21.1
SUBSIDIARIES OF APPLIFE DIGITAL SOLUTIONS, INC.
Name |
| Jurisdiction of Organization |
| Ownership |
Sugar Auto Parts, Inc. |
| Nevada |
| 100% |
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Hill, certify that:
1. I have reviewed this annual report on Form 10-K for the fiscal year ended June 30, 2026 of APPlife Digital Solutions, 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. The registrant’s other certifying officer(s) and I are 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, including its consolidated subsidiaries, 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. The registrant’s other certifying officer(s) and I have disclosed, based on our 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: October 8, 2026
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| /s/ Michael Hill |
| By: | Michael Hill |
| Its: | Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Barrett Evans, certify that:
1. I have reviewed this annual report on Form 10-K for the fiscal year ended June 30, 2026 of APPlife Digital Solutions, 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. The registrant’s other certifying officer(s) and I are 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, including its consolidated subsidiaries, 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. The registrant’s other certifying officer(s) and I have disclosed, based on our 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: October 8, 2026
|
| /s/ Barrett Evans |
| By: | Barrett Evans |
| Its: | Chief Financial 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
In connection with the Annual Report of APPlife Digital Solutions, Inc. (the “Company”) on Form 10-K for the fiscal year ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Hill, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) 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 Company.
| /s/ Michael Hill |
|
By: | Michael Hill |
|
| Chief Executive Officer (Principal Executive Officer) |
|
Date: October 8, 2026
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of APPlife Digital Solutions, Inc. (the “Company”) on Form 10-K for the fiscal year ended June 30, 2026 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Barrett Evans, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) 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 Company.
| /s/ Barrett Evans |
|
By: | Barrett Evans |
|
| Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
|
Date: October 8, 2026
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.