Accredited Solutions, Inc 10-K for FY2022
Accredited Solutions, Inc. (ASII)
About this 10-K
Accredited Solutions, Inc filed this 10-K on July 18, 2023, covering the fiscal year ended December 31, 2022 (FY2022).
Headline figures
Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $483.04K
- compared with $0 a year earlier
- Net loss
- $31.69K
- compared with a net loss of $30 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number
(Name of Small Business Issuer in its charter) |
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(State of incorporation) |
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(Address of principal executive office) |
| (Zip Code) |
Registrant's telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Not applicable | Not applicable | Not applicable |
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.001
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
| Emerging growth company | ||
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act): Yes
On June 30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $
As of July 11, 2023, the Company had
Documents incorporated by reference: None.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which include but are not limited to, statements concerning our business strategy, plans and objectives, projected revenues, expenses, gross profit, income, and mix of revenue. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “potential,” “believes,” “seeks,” “hopes,” “estimates,” “should,” “may,” “will,” “with a view to” and variations of these words or similar expressions are intended to identify forward-looking statements. These statements do not guarantee future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements.
Item 1. Business
Throughout this Annual Report on Form 10-K, Accredited Solutions, Inc. is referred to as “we,” “our,” “us,” the “Company,” or “Accredited Solutions.”
The Company was formed as a Nevada corporation on November 26, 2007. The Company was involved in exploration and development of mining properties until September 30, 2013, when it discontinued operations. In June 2017, the Company’s creditors filed a petition in the District Court of Harris County, Texas for the appointment of a receiver. In August of 2017, the court appointed a receiver (who was subsequently appointed as an officer and director of the Company), and in February 2018, the receiver appointed William Alessi as a director of the Company and then resigned as a director and officer of the Company.
On February 6, 2019, the Company acquired trademarks and intellectual property, which includes all rights and trade secrets to the hemp-derived CBD-infused line of consumer beverages sold under the “Good Hemp” brand. Since then, the Company has been conducting operations under the “Good Hemp” trade name and through the http://www.goodhemplivin.com/ website. Information on this website is not a part of this report on Form 10-Q.
On April 30, 2019, the Company acquired the “CANNA HEMP” and “CANNA” trademarks including all rights and trade secrets and related inventory.
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On August 24, 2020, with an effective date of July 1, 2020, the Company entered into a joint venture agreement with Paul Hervey (“Hervey”), an individual, for the purpose of cultivating hemp on approximately 9 acres of farmland and in approximately 3,700 square feet of greenhouse space in North Carolina (referred to as “Olin Farms”). In October 2021, Olin Farms ceased operations, and the limited liability company joint venture entity was dissolved in North Carolina.
On February 9, 2021, the Company formed Good Hemp Wellness, LLC, a limited liability company formed under the laws of the State of North Carolina, to sell CBD products to customers through chiropractic offices. In October 2021, this company was dissolved in North Carolina, and it is being treated as discontinued operations in the consolidated financial statements. The Company plans to sell Good Hemp Wellness CBD inventory directly.
On April 1, 2021, the Company entered into an agreement to purchase Diamond Creek Group, LLC, a North Carolina limited liability company which sells the Diamond Creek brand of high alkaline water products, for a total purchase price of $643,000. On April 2, 2021, the Company closed the acquisition and paid the initial $500,000 portion of the purchase price, and on April 23, 2021, paid the $143,000 purchase price balance.
Effective May 11, 2022, the Company completed a Plan and Agreement of Merger (the “PXS Merger Agreement”) with Petro X Solutions, Inc. (“PXS”), a Wyoming corporation, with PXS becoming our wholly-owned subsidiary as a result of the PXS Merger. Pursuant to the PXS Merger Agreement, as amended, an aggregate of 120,000,000 shares of Company common stock were issued to the shareholders of PXS in the PXS Merger. PXS markets competitively-priced, environmentally-friendly products that are designed to work as well as or better than their toxic competitors. Effective June 1, 2023, the PXS Merger was rescinded, such that all securities issued by the Company in connection with the PXS Merger were cancelled and the ownership of PXS returned to its prior owners. PXS is being treated as discontinued operations in the consolidated financial statements.
On March 14, 2022, we entered into another Plan and Agreement of Merger (the “Restoration Merger Agreement”), with Restoration Artechs, Inc. (“Restoration”), a California corporation. Restoration is a Carlsbad, California-based restoration service company specializing in surface restoration, especially commercial and residential stainless steel surfaces. The Restoration Merger Agreement was abandoned and never consummated.
Recent Divestiture Events
Sale of Good Hemp-Related Assets.
In February 2023, the Company sold all of its Good Hemp-related assets to JanBella Group, LLC, a company controlled by the Company’s current controlling shareholder, William Alessi (then, a third-party). In consideration of such assets, Mr. Alessi forgave $5,000 of indebtedness of the Company.
Rescission of PXS Acquisition. Effective June 1, 2023, the PXS acquisition was rescinded, such that all securities issued by the Company in connection with the PXS acquisition were cancelled and the ownership of PXS returned to its prior owners. PXS is being treated as discontinued operations in the consolidated financial statements.
Current Products and Growth Strategy
Diamond Creek High Alkaline Water is a 9.5pH high alkaline natural spring water, sourced from the highest quality, award winning springs. Diamond Creek is available in one gallon, one liter and half liter bottles and aids in balancing the body’s pH while providing superior hydration resulting from a proprietary ionization process.
We are focused on expanding our US distribution reach to service more national chain stores; increase awareness of our brands in the United States; securing additional chain, convenience and key account distributors and store listings for our brands nationwide and internationally; increasing our warehouse direct-to-retail channel.
We are looking for strategic acquisitions and partnerships in the beverage sector.
Industry Background
Non-alcoholic beverages are among the most widely distributed food products in the world and are being sold through more than 400,000 retailers in the United States, our core market. The United States has more than 2,600 beverage companies and 500 bottlers of beverage products. Collectively they account for more than $100 billion in annual sales. It is estimated that globally more than $300 billion worth of non-alcoholic beverages are sold annually. The beverage market is controlled by two giants, The Coca-Cola Company (“Coke”) and PepsiCo, combining for over 70% of the non-alcoholic beverage market. Carbonated beverage sales are slipping, while non-carbonated beverage sales are growing. The demand for “better-for you” and functional drinks are two of the fastest growing beverage categories. Experts predict that beverage companies that only offer carbonated beverages will have to work hard to off-set flagging demand. Industry watchers believe that growth will be largely confined to non-carbonated beverages and will chiefly affect functional drinks.
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Bottled water maintains a steady growth pace, ranking at the top of beverage sales by volume in the United States. Total bottled water sales reached $18.1B from 2019-2020 seeing a 5.7% year over year growth. The global bottled water market size is expected to reach USD 505.19 billion by 2028, according to a new report by Grand View Research, Inc. It is expected to expand at a CAGR of 11.1% from 2021 to 2028. The growing awareness regarding the adverse health effects of consuming sugary drinks, such as weight gain, obesity, diabetes, and heart disease, is supporting the consumption of alternative beverages, such as still and sparkling water.
The growth of the market is primarily attributed to rising awareness regarding the importance of hydration. According to a study conducted by the International Bottled Water Association in 2018, it was revealed that 93% of American citizens want bottled water to be sold in most stores selling beverages. A substantial part of the population prefers to quench their thirst using bottled water over other beverages.
Increasing preference for nutrient-fortified water is trending owing to the rising importance of health and wellness among buyers. Bottled water demand has been increasing among travelers, working professionals, and for use in households.
Distribution Systems
Our distribution strategy is comprised of traditional beverage distribution through established channels.
Direct Store Delivery (“DSD”) – DSD players, and regional and local distributors touch over 90% of retail chains in the US. DSDs primarily distribute beverages, chips, snacks and milk and provide pre-sales, delivery and merchandising services to their customers. Service levels are daily and weekly, and they require 25% to 30% gross profit from sales to their customers. We will grant these independent distributors the exclusive right in defined territories to distribute finished cases of one or more of our products through written agreements. These agreements typically include compensation to those distributors in the event we provide product directly to one of our regional retailers located in the distributor’s region. We will choose our distributors based on their perceived ability to build our brand franchise in convenience stores and grocery stores.
Direct to Retail Channel (“Warehouse Direct”) – We are targeting listings with large retail convenience store and grocery store chains where we ship direct to the chain stores warehousing system. Retailers must have warehousing and delivery capabilities. Services to retailers will be provided by an assigned broker, approved by us, to oversee pre-sale and merchandising services. Our direct to retail channel of distribution is an important part of our strategy to target large national or regional restaurant chains, retail accounts, including mass merchandisers and premier food-service businesses. Through these programs, we will negotiate directly with the retailer to carry our products, and the account is serviced through the retailer’s appointed distribution system. These arrangements are terminable at any time by these retailers or us and will contain no minimum purchase commitments.
Production Facilities
Our strategy is to outsource the manufacturing and warehousing of our products to independent contract manufacturers (“co-packers”). Once our products are manufactured, we store finished product in a warehouse adjacent to the co-packer or in third party warehouses. Our co-packer has been chosen based on its proximity to markets. We do not have annual minimum production commitments with our co-packer. Our co-packer may terminate its arrangements with us at any time, in which case we could experience disruptions in our ability to deliver product to customers. We regularly review our contract packing needs considering regulatory compliance and logistical requirements and may add or change co-packers based on those needs.
Raw Materials
Substantially all the raw materials used in the bottling and packaging of our products are purchased by us in accordance with our specifications. The water source for our Diamond Creek Water has proven to be reliable. We believe that we have adequate sources of raw materials.
New Product Development
Our product philosophy will continue to be based on developing products in those segments of the market that offer the greatest chance of success such as health, wellness and natural refreshment and rehydration, and we will continue to seek out underserved market niches. We believe we can quickly respond, given our technical and marketing expertise, to changing market conditions with new and innovative products. We are committed to developing products that are distinct, meet a quantifiable need, are proprietary, lend themselves to a markup on production costs of least a 60%, project a quality and healthy image, and can be distributed through existing distribution channels. We are identifying brands of other companies with a view to acquiring them or taking on the exclusive distribution of their products.
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Intellectual Property
We own the following intellectual property: Diamond Creek trademark.
Seasonality
Our sales are seasonal and experience fluctuations in quarterly results because of many factors. Historically, the industry experiences an increase in revenues during the warm weather months of April through September. Timing of customer purchases will vary each year and sales can be expected to shift from one quarter to another. Thus, we believe that period-to-period comparisons of results of operations are not necessarily meaningful and should not be relied upon as any indication of future performance or results expected for the entire fiscal year.
Other Information
As of December 31, 2022, the Company had two employees.
The Company’s office is located at 20311 Chartwell Center Drive, Ste. 1469, Cornelius, North Carolina, 28031.
Item 1A. Risk Factors.
Not applicable to a smaller reporting company.
Item 1B. Unresolved Staff Comments.
Not applicable.
Item 2. Properties.
The Company’s office space is provided free of charge by its controlling shareholder, William Alessi.
Item 3. Legal Proceedings.
From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of December 31, 2022, and as of the date of this Annual Report, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the Company’s results of operations.
Item 4. Mine Safety Disclosures
None.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
The Company’s common stock is not traded on any national securities exchange but is quoted on the alternative trading system operated by OTC Markets Group, Inc. (the OTC Link ATS) under the “ASII” trading symbol at the OTC Pink level. The following table summarizes the high and low historical trading prices of the Company’s common stock for the periods indicated as reported by OTCMarkets.com (as historic high and low bid prices are not reported by OTCMarkets.com).
Fiscal Year Ended December 31, 2021
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| High |
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| Low |
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First Quarter |
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| 1.24 |
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| 0.7101 |
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Second Quarter |
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| 4.20 |
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| 0.85 |
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Third Quarter |
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| 1.9499 |
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| 0.6185 |
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Fourth Quarter |
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| 0.8999 |
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| 0.0761 |
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Fiscal Year Ended December 31, 2022
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| High |
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| Low |
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First Quarter |
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| 0.149 |
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| 0.028 |
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Second Quarter |
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| 0.0769 |
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| 0.0111 |
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Third Quarter |
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| 0.0282 |
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| 0.0023 |
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Fourth Quarter |
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| 0.0043 |
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| 0.0011 |
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We are currently authorized to issue 2,500,000,000 shares of common stock, par value $0.001, and 30,000,000 shares of preferred stock, par value $0.001, of which 15,000 shares are designated “Series A Preferred Stock.”
As of the date of this Annual Report, the Company had (a) 14,000 shares of Series A Preferred Stock outstanding which are owned by one (1) holder of record and (b) 678,796,778 shares of common stock outstanding which are owned by approximately 40 shareholders of record.
Series A Preferred Stock. On October 11, 2022, the Company filed with the State of Nevada a Certificate of Designation (the “Certificate of Designation”), which established a Series A Preferred Stock with the following rights, preferences, powers, restrictions and limitations:
Designation, Amount and Par Value. The series of Preferred Stock shall be designated as Series A Preferred Stock and the number of shares so designated shall be Fifteen Thousand (15,000). Each share of the Series A Preferred Stock shall have a par value of $0.001.
Fractional Shares. The Series A Preferred Stock may be issued in fractional shares.
Voting Rights. The holders of the Series A Preferred Stock shall, as a class, have rights in all matters requiring shareholder approval to a number of votes equal to two (2) times the sum of:
| (a) | The total number of shares of common stock which are issued and outstanding at the time of any election or vote by the shareholders; plus |
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| (b) | The number of votes allocated to shares of Preferred Stock issued and outstanding of any other class that shall have voting rights. |
Dividends. The Series A Preferred Stock shall be treated pari passu with the Company’s common stock, except that the dividend on each share of Series A Preferred Stock shall be equal to the amount of the dividend declared and paid on each share of the Company’s common stock multiplied by the Conversion Rate, as that term is defined herein.
Liquidation. Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, payments to the holders of Series A Preferred Stock shall be treated pari passu with the Company’s common stock, except that the payment on each share of Series A Preferred Stock shall be equal to the amount of the payment on each share of the Company’s common stock multiplied by the Conversion Rate, as that term is defined herein.
Conversion and Adjustments.
Conversion Rate. The Series A Preferred Stock shall be convertible into shares of the Company’s common stock, as follows:
Each share of Series A Preferred Stock shall be convertible at any time into a number of shares of the Company’s common stock that equals 0.001 percent (0.001%) of the number of issued and outstanding shares of the Company’s common stock outstanding on the date of conversion, such that 1,000 shares of Series A Preferred Stock would convert into one percent (1%) of the number of issued and outstanding shares of the Company’s common stock outstanding on the date of conversion (the “Conversion Rate”).
No Partial Conversion. A holder of shares of Series A Preferred Stock shall be required to convert all of such holder’s shares of Series A Preferred Stock, should any such holder exercise his, her or its rights of conversion.
Adjustment for Merger and Reorganization, etc. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger (a “Reorganization Event”) involving the Company in which the Company’s common stock (but not the Series A Preferred Stock) is converted into or exchanged for securities, cash or other property, then each share of Series A Preferred Stock shall be deemed to have been converted into shares of the Company’s common stock at the Conversion Rate.
Protection Provisions. So long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without first obtaining the unanimous written consent of the holders of Series A Preferred Stock, alter or change the rights, preferences or privileges of the Series A Preferred Stock so as to affect adversely the holders of Series A Preferred Stock.
Waiver. Any of the rights, powers or preferences of the holders of the Series A Preferred Stock may be waived by the affirmative consent or vote of the holders of at least a majority of the shares of Series A Preferred Stock then outstanding.
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No Other Rights or Privileges. Except as specifically set forth herein, the holder(s) of the shares of Series A Preferred Stock shall have no other rights, privileges or preferences with respect to the Series A Preferred Stock.
Common Stock. Holders of our common stock are entitled to receive dividends as may be declared by the Board of Directors. The Company’s Board of Directors is not restricted from paying any dividends but is not obligated to declare a dividend. No cash dividends have ever been declared and it is not anticipated that cash dividends will ever be paid.
Item 6. Selected Financial Data
Not applicable.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
The statements contained in the following MD&A and elsewhere throughout this Annual Report on Form 10-K, including any documents incorporated by reference, that are not historical facts, including statements about our beliefs and expectations, are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend” and similar words or expressions. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances are forward-looking statements.
These forward-looking statements, which reflect our management’s beliefs, objectives, and expectations as of the date hereof, are based on the best judgement of our management. All forward-looking statements speak only as of the date on which they are made. Such forward-looking statements are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially from those anticipated in such statements, including, without limitation, the following: economic, social and political conditions, global economic downturns resulting from extraordinary events such as the COVID-19 pandemic and other securities industry risks; interest rate risks; liquidity risks; credit risk with clients and counterparties; risk of liability for errors in clearing functions; systemic risk; systems failures, delays and capacity constraints; network security risks; competition; reliance on external service providers; new laws and regulations affecting our business; net capital requirements; extensive regulation, regulatory uncertainties and legal matters; failure to maintain relationships with employees, customers, business partners or governmental entities; the inability to achieve synergies or to implement integration plans and other consequences associated with risks and uncertainties detailed in our filings with the SEC, including our most recent filings on Forms 10-K and 10-Q.
We caution that the foregoing list of factors is not exclusive, and new factors may emerge, or changes to the foregoing factors may occur, that could impact our business. We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws.
Certain information contained in this discussion and elsewhere in this report may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and is subject to the safe harbor created by that act. The safe harbor created by the Private Securities Litigation Reform Act will not apply to certain “forward looking statements” because we issued “penny stock” (as defined in Section 3(a)(51) of the Securities Exchange Act of 1934 and Rule 3(a)(51-1) under the Exchange Act) during the three year period preceding the date(s) on which those forward looking statements were first made, except to the extent otherwise specifically provided by rule, regulation or order of the Securities and Exchange Commission. We caution readers that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statements which may be deemed to have been made in this Report or which are otherwise made by or on our behalf. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “explore,” “consider,” “anticipate,” “intend,” “could,” “estimate,” “plan,” or “propose” or the negative variations of those words or comparable terminology are intended to identify forward-looking statements. Factors that may affect our results include, but are not limited to, the risks and uncertainties associated with:
| · | Our ability to raise capital necessary to sustain our anticipated operations and implement our business plan, |
| · | Our ability to implement our business plan, |
| · | Our ability to generate sufficient cash to survive, |
| · | The degree and nature of our competition, |
| · | The lack of diversification of our business plan, |
| · | The general volatility of the capital markets and the establishment of a market for our shares, and |
| · | Disruption in the economic and financial conditions primarily from the impact of past terrorist attacks in the United States, threats of future attacks, police and military activities overseas and other disruptive worldwide political and economic events and environmental weather conditions. |
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We are also subject to other risks detailed from time to time in our other filings with Securities and Exchange Commission and elsewhere in this report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
| · | have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; |
| · | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); |
| · | submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and |
| · | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. |
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1.07 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
History of Operations
On February 6, 2019, the Company acquired trademarks and intellectual property, which included all rights and trade secrets to the hemp-derived CBD-infused line of consumer beverages sold under the “Good Hemp” brand. On April 30, 2019, the Company acquired the “CANNA HEMP” and “CANNA” trademarks including all rights and trade secrets and related inventory.
On August 24, 2020, with an effective date of July 1, 2020, the Company entered into a joint venture agreement with Paul Hervey (“Hervey”), an individual, for the purpose of cultivating hemp on approximately 9 acres of farmland and in approximately 3,700 square feet of greenhouse space in North Carolina (referred to as “Olin Farms”). In October 2021, Olin Farms ceased operations, and the limited liability company joint venture entity was dissolved.
On February 9, 2021, the Company formed Good Hemp Wellness, LLC, a limited liability company formed under the laws of the State of North Carolina, to sell CBD products to customers through chiropractic offices. In October 2021, this company was dissolved in North Carolina, and it is being treated as discontinued operations in the consolidated financial statements. In February 2023, the Company sold all of its Good Hemp-related assets to JanBella Group, LLC, a company controlled by the Company’s current controlling shareholder, William Alessi (then, a third-party). In consideration of such assets, Mr. Alessi forgave $5,000 of indebtedness of the Company.
On April 1, 2021, the Company entered into an agreement to purchase Diamond Creek Group, LLC, a North Carolina limited liability company which sells the Diamond Creek brand of high alkaline water products, for a total purchase price of $643,000. On April 2, 2021, the Company closed the acquisition and paid the initial $500,000 portion of the purchase price, and on April 23, 2021, paid the $143,000 purchase price balance.
Effective May 11, 2022, the Company acquired, by merger, Petro X Solutions, Inc., a Wyoming corporation (“PXS”). In the transaction, the Company issued a total of 120,000,000 shares of its common stock. PXS markets competitively-priced, environmentally-friendly products that are designed to work as well as or better than their toxic competitors. Its primary product, EnviroXstreamTM, is a plant-based, non-toxic, safe, yet powerful, cleaner/degreaser technology that expedites the natural bio-degradation process of hydrocarbons and other compounds. EnviroXstreamTM is currently a California South Coast AQMD-Certified Clean Air Solvent, and in the past has been, an EPA-designated Safer Choice product. EnviroXstreamTM distinguishes itself by its efficacy, which is buttressed by its “green” credentials. Effective June 1, 2023, the PXS acquisition was rescinded, such that all securities issued by the Company in connection with the PXS acquisition were cancelled and the ownership of PXS returned to its prior owners. PXS is being treated as discontinued operations in the consolidated financial statements.
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Basis of Presentation
Effective May 11, 2022, the Company consummated the Merger Agreement with PXS, pursuant to which PXS became a wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, the Company issued 100,000,000 shares of its common stock to the shareholders of PXS and four persons were added to the Company’s Board of Directors. Pursuant to the Merger Agreement, the Company’s four new directors were issued a total of 81,083,333 shares of Company common stock. Thus, a change in control of the Company occurred in connection with the Merger Agreement.
Due to the effects of the “reverse merger” acquisition of PXS occurring effective May 11, 2022, in accordance with ASC 805 Business Combinations, the presentation of the financial statements represents the continuation of PXS, the accounting acquirer, except for the legal capital structure. Historical shareholders’ equity of the Company, the accounting acquiree, has been adjusted to reflect the recapitalization. Retained earnings (deficit) of the PXS, the accounting acquirer have been carried forward after the acquisition and operations prior to the merger are those of PXS, the accounting acquirer. Earnings per share for periods prior to the merger have been adjusted to reflect the recapitalization.
Accordingly, (1) the Company’s Consolidated Balance Sheet as of December 31, 2022, reports the Company and PXS on a consolidated basis, (2) the Company’s Consolidated Balance Sheet as of December 31, 2021, reports the Company as it existed prior to its acquisition of PXS, (3) the Company’s Consolidated Statement of Changes in Stockholders’ Equity (Deficit) for December 31, 2021, reflects the Company as it existed prior to its acquisition of PXS, and for December 31, 2022 reflects an adjustment for the reverse merger (recapitalization) between the Company and PXS, (4) the Company’s Consolidated Statement of Operations and Consolidated Statement of Cash Flows for the year ended December 31, 2022, reports the Company and PXS on a consolidated basis, and (5), the Company’s Consolidated Statement of Operations and Consolidated Statement of Cash Flows for the year ended December 31, 2021, report historical information of PXS.
Current Plan of Business
Since the June 1, 2023, rescission of the PXS acquisition, the Company has re-focused its operating plans on expanding its Diamond Creek Water business. However, without additional capital, it is unlikely that such business will expand rapidly, if at all.
Results of Operations
For the year ended December 31, 2022, compared to the year ended December 31, 2021.
Revenues
We had $483,036 and $0 in revenue for the years ended December 31, 2022 and 2021, respectively. Revenue increased in 2022 as compared to 2021 because of the acquisition of Diamond Creek in the reverse merger in May 2022. Diamond Creek actually experienced a decrease in sales volumes resulting from sudden and extreme inflationary pressures faced by Diamond Creek for the shipping and delivery of its bottled water during the second, third and much of the fourth quarter of 2022. In response to such inflationary pressures, Diamond Creek simply did not ship orders that would, as a result of the extremely inflated shipping costs, result in a transactional loss. This strategy, while yielding lower total revenue, permitted Diamond Creek to continue operating without requiring infusions of capital.
Cost of Sales
We had $387,909 and $0 of cost of sales for the years ended December 31, 2022 and 2021, respectively.
Operating Expenses
Operating expenses for the years ended December 31, 2022 and 2021, were $301,444 and $0, respectively. The increase in expenses for 2022 compared to 2021 is due primarily to the acquisition of Diamond Creek in the reverse merger in May 2022.
Other Income (Expenses)
Other income for the years ended December 31, 2022 and 2021, were $231,918 and $0, respectively. The gain on derivatives for the years ended December 31, 2022 and 2021, was $2,189,161 and 0, respectively. The loss on extinguishment of debt for the years ended December 31, 2022 and 2021, was $1,149,267 and $0, respectively.
Net Income (Loss)
Net income (loss) for the years ended December 31, 2022 and 2021, was ($31,688) and ($30), respectively.
Liquidity and Capital Resources
We had a cash balance of $1,418 and negative working capital of $4,369,108 at December 31, 2022, and a cash balance of $0 and working capital of $22,172 at December 31, 2021.
The Company’s anticipated capital requirements for the next 12 months will consist of expenses of being a public company and general and administrative expenses all of which we currently estimate will cost $100,000, excluding revenue related expenses and salaries. We will be required to seek additional funding in order to cover such anticipated expenses. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding, either through sales of equity or debt instruments, to fund such expenses. We currently do not have any agreements, arrangements or understandings with any person or entity to obtain funds through bank loans, lines of credit or any other sources.
| 9 |
Sources and Uses of Cash
Operating activities during the year ended December 31, 2022, used $233,526 of net cash. Operating activities during the year ended December 31, 2021 used $30 of net cash. Net cash provided by financing activities of $125,000 was received from the issuance of convertible notes payable and $110,00 was received from the issuance of common stock during the year ended December 31, 2022. Net cash provided by financing activities of $20,000 was received from the issuance of common stock during the year ended December 31, 2021.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies
Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, depreciable lives of the web site and property and equipment, valuation of warrant and beneficial conversion feature debt discounts, valuation of share-based payments and the valuation allowance on deferred tax assets.
Changes in Accounting Principles. No significant changes in accounting principles were adopted during fiscal 2022 and 2021.
Impairment of Long-Lived Assets. The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
Fair Value of Financial Instruments and Fair Value Measurements. The Company measures their financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses escrow liability and short-term loans the carrying amounts approximate fair value due to their short maturities.
We have adopted accounting guidance for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.
Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 was effective for the Company in its first quarter of 2019.
Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (“ASU 2016-08”); ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”); and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). The Company must adopt ASU 2016-08, ASU 2016-10 and ASU 2016-12 with ASU 2014-09 (collectively, the “new revenue standards”).
The new revenue standards may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company adopted the new revenue standards in its first quarter of 2018 utilizing the full retrospective transition method.
| 10 |
Stock-Based Compensation. The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees. The Company accounts for non-employee share-based awards in accordance with ASC Topic 505-50. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model.
Inflation
Inflation had a detrimental impact on our 2022 operations. Our Diamond Creek sales volumes significantly dropped due to sudden and extreme inflationary pressures faced by Diamond Creek for the shipping and delivery of its bottled water during the second, third and much of the fourth quarter of 2022. In response to such inflationary pressures, Diamond Creek simply did not ship orders that would, as a result of the extremely inflated shipping costs, result in a transactional loss. This strategy, while yielding lower total revenue, permitted Diamond Creek to continue operating without requiring infusions of capital. Inflationary pressures continue to impact the operating results of Diamond Creek, though not to the extreme levels experienced in 2022.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
Not applicable.
Item 8. Financial Statements
| 11 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Accredited Solutions Inc
20311 Chartwell Center Drive
Suite 1469
Cornelius, NC 28031
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Accredited Solutions, Inc. (the Company) as of December 31, 2022, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year ended December 31, 2022, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of the year ended December 31, 2022, and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Substantial doubt about the Company's ability to continue as a going concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has a working capital deficit, and accumulated deficit for the year ended December 31, 2022. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
| 12 |
Critical Audit Matters
A critical audit matter is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee or the Company’s governance and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating critical audit matters, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. We have determined there are critical matters related to the Company’s convertible debentures.
As described in Notes 7, Notes Payable and Note 9 – Derivative Liabilities to the consolidated financial statements, the Company had convertible debentures that required accounting considerations and significant estimates.
The Company determined that variable conversion features issued in connection with certain convertible debentures required derivative liability classification. These variable conversion features were initially measured at fair value and subsequently have been remeasured to fair value at each reporting period. The Company determined the fair value of the embedded derivatives using the Black-Scholes-Merton option pricing model. The value of the embedded derivative liabilities related to the convertible debentures was $2,838,278 and gain recognized from the change of derivative liability was $2,189,161 at December 31, 2022 compared to the merger date May 11, 2022.
We identified the accounting considerations and related valuations, including the related fair value determinations of the embedded derivative liabilities of such as a critical audit matter. The principal considerations for our determination were: (1) the accounting consideration in determining the nature of the various features (2) the evaluation of the potential derivatives and potential bifurcation in the instruments, and (3) considerations related to the determination of the fair value of the various debt and equity instruments and the conversion features that include valuation models and assumptions utilized by management. An audit of these elements is especially challenging and requires auditor judgement due to the nature and extent of audit effort required to address these matters, including the extent of specialized skill or knowledge needed.
Our audit procedures related to management’s conclusion on the evaluation and related valuation of embedded derivatives, included the following, among others: (1) evaluating the relevant terms and conditions of the various financings, (2) assessing the appropriateness of conclusions reached by the Company with respect to the accounting for the convertible debt, and the assessment and accounting for potential derivatives and (3) independently recomputing the valuations determined by Management.
Emphasis of a Matter
As described in Note 4 – Acquisition of Petro X Solutions, Inc, the Company acquired Petro X Solutions, Inc. (PXS) on May 11, 2022. The acquisition was treated as a reverse merger in accordance with ASC 805-40-45-1. The Company was treated as the legal acquirer and PXS was treated as the accounting acquirer. The financial statements presents the Company and PXS on a consolidated basis. The disclosure also discusses the presentation of the Company’s Consolidated Balance Sheet as of December 31, 2021.
As described in Note 5 – Rescission of Acquisition of Petro X Solutions, Inc., effective June 1, 2023, the PXS Merger was rescinded, such that all securities issued by the Company in connection with the PXS Merger were cancelled and the ownership of PXS returned to its prior owners. PXS is being treated retroactively as discontinued operations in the consolidated financial statements.
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We have served as the Company’s auditor since 2022. | |
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July 17, 2023 PCAOB ID: |
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| 13 |
ACCREDITED SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
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| December 31, 2022 |
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| December 31, 2021 |
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| ASSETS |
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| Current assets |
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| Cash |
| $ |
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| $ |
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| Accounts receivable |
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| Prepaid expenses |
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| Current assets held for sale |
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| Total current assets |
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| Other assets |
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| Property, plant and equipment, net |
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| Goodwill |
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| Intellectual property |
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| Total assets |
| $ |
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| $ |
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| LIABILITIES AND STOCKHOLDERS' DEFICIT |
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| Current liabilities |
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| Accounts payable |
| $ |
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| $ |
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| Accrued liabilities |
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| Interest payable |
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| Interest payable to related parties |
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| Notes payable |
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| Convertible notes, net of discounts |
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| Convertible notes to related parties, net of discounts |
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| Derivative liabilities |
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| Current liabilities held for sale |
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| Total current liabilities |
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| Total liabilities |
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| Stockholders' deficit |
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| Preferred stock - Class A - |
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| Common stock - |
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| Additional paid in capital |
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| Accumulated deficit |
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| ( | ) |
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| ( | ) |
| Total stockholders' deficit |
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| ( | ) |
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| Total liabilities and stockholders' deficit |
| $ |
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| $ |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
| 14 |
ACCREDITED SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
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| For the Years Ended |
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| December 31, 2022 |
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| December 31, 2021 |
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| Net sales |
| $ |
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| Cost of sales |
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| Gross profit |
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| Operating expenses |
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| General and administrative expenses |
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| Depreciation and amortization expense |
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| Total operating expenses |
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| Operating loss |
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| Other income (expense) |
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| Change in derivative liabilities |
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| Interest expense |
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| Loan fees |
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| Loss on extinguishment of debt |
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| Loss on impairment of intangible assets |
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| Total other income (expense) |
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| Net income (loss) from continuing operations |
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| Net income (loss) from discontinued operations |
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| Net income (loss) |
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| Net loss per share from continuing operations - basic and diluted |
| $ |
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Net loss per share from discontinued operations – basic and diluted |
| $ | ( | ) |
| $ | ( | ) |
Net loss per share – basic and diluted |
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Weighted average number of common shares – basic and diluted |
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The accompanying notes are an integral part of these unaudited condensed financial statements.
| 15 |
ACCREDITED SOLUTIONS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
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| Balance, December 31, 2020 |
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| Issuance of common stock for cash |
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| Issuance of common stock for exercise of warrant |
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| Net loss for the year |
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| - |
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| - |
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| Balance, December 31, 2021 |
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| - |
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| Issuance of common stock for cash |
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| Cancellation of common stock |
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| - |
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| Reverse merger acquisition |
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| - |
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| Conversion of common stock into preferred stock |
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| Issuance of preferred stock for services |
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| - |
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| Issuance of common stock for conversion of note payable |
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| Issuance of common stock for sponsorship agreement |
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| Warrants issued for commitment fee |
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| - |
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| - |
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| ( | ) |
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| Net loss for the year |
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| - |
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| - |
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| ( | ) |
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| Balance, December 31, 2022 |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | |||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
| 16 |
ACCREDITED SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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| For the Years Ended |
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| December 31, 2022 |
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| December 31, 2021 |
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| Cash flows from operating activities: |
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| Net loss |
| $ | ( | ) |
| $ | ( | ) |
| Net loss from discontinued operations |
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| Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Stock-based compensation |
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Loss on extinguishment of debt |
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Impairment of intangible assets |
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Gain on derivative liabilities |
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| Changes in operating assets and liabilities: |
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Accounts receivable |
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Prepaid expenses |
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Accounts payable |
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Accrued liabilities |
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Interest payable |
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Interest payable to related parties |
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Operating cash flows from discontinued operations |
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| Net cash used in operating activities |
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| Cash flows from investing activities: |
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Net funds received with acquisition of subsidiary |
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| Net cash flows from investing activities |
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|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| Proceeds from convertible notes payable, net of discounts |
|
|
|
|
|
| ||
Financing activities of discontinued operations |
|
|
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|
|
| ||
| Net cash provided by financing activities |
|
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| ||
|
|
|
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|
|
|
|
|
| Net change in cash |
|
|
|
|
|
| ||
| Cash and cash equivalents - beginning of period |
|
|
|
|
|
| ||
| Cash and cash equivalents - end of period |
|
|
|
|
|
| ||
| Cash and cash equivalents of discontinued operations |
|
| ( | ) |
|
| ( | ) |
| Cash and cash equivalents - end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
| Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
| Cash paid for interest |
| $ |
|
| $ |
| ||
| Cash paid for income taxes |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
| Supplemental non-cash information |
|
|
|
|
|
|
|
|
Conversion of common stock into preferred stock |
| $ |
|
| $ |
| ||
Spire sponsorship agreement for common stock |
| $ |
|
| $ |
| ||
Conversion of notes payable into common stock |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these financial statements.
| 17 |
ACCREDITED SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2022 and 2021
NOTE 1 – NATURE OF OPERATIONS
Accredited Solutions, Inc. (the “Company” or “Accredited”), formerly known as Keyser Resources, Inc., Lone Star Gold, Inc. and Good Hemp, Inc., was incorporated in the State of Nevada on November 26, 2007.
The Company was involved in the exploration and development of mining properties until September 30, 2013, when it discontinued operations. In 2017, the Company was put into receivership and, in 2018, it emerged from receivership. On September 12, 2019, the Company’s corporate name changed to Good Hemp, Inc.
On April 1, 2021, the Company entered into an agreement to purchase Diamond Creek Group, LLC, a North Carolina limited liability company which sells the Diamond Creek brand of high alkaline water products, for a total purchase price of $
Effective May 11, 2022, the Company completed a Plan and Agreement of Merger (the “PXS Merger Agreement”) with Petro X Solutions, Inc., a Wyoming corporation (“PXS”), with PXS becoming our wholly-owned subsidiary as a result of the PXS Merger. Pursuant to the PXS Merger Agreement, as amended, an aggregate of
Effective June 1, 2023, the PXS Merger was rescinded, such that all securities issued by the Company in connection with the PXS Merger were cancelled and the ownership of PXS returned to its prior owners.
PXS is being treated as discontinued operations in the consolidated financial statements.
The Company’s operations are centered on those of Diamond Creek Group and its bottled water products.
| 18 |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America and has a year-end of December 31st.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the recoverability of long-lived assets and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that 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 and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Consolidation
The financial statements include the financial statements of the Company and its’ wholly-owned subsidiaries Diamond Creek Group, LLC, Good Hemp Wellness, LLC and Petro X Solutions, Inc. Good Hemp Wellness, LLC was discontinued during 2021. Petro X Solutions, Inc. was discontinued during 2023. All intercompany transactions have been eliminated in consolidation.
Impairment of Long-Lived Assets
Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.
Fair Value of Financial Instruments
The FASB issued ASC 820-10, Fair Value Measurements and Disclosures, for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:
- | Level 1: Quoted prices in active markets for identical assets or liabilities |
- | Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. |
- | Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
| 19 |
Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.
Cash and Cash Equivalents
For purposes of the statement of cash flows, cash equivalents include demand deposits, money market funds, and all highly liquid debt instructions with original maturities of three months or less.
The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Inventory
Inventory consisting of raw materials and finished product is stated at the lower of cost (first in, first out method) or net realizable value.
Concentration and Credit Risk
At December 31, 2022, all the Company’s receivables were with three customers. Sales to these three customers comprised 68% of the Company's sales during the year ended December 31, 2022.
Cash - The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Accounts Receivable and Allowance for Doubtful Accounts
Trade accounts receivable consists of product sales to customers. Trade accounts receivable are generally due 30 days after issuance of the invoice. Receivables past due more than 120 days are considered delinquent. Delinquent receivables are written off based on specific circumstances of the customer. At December 31, 2022 and 2021, an allowance was not deemed necessary.
Derivative Financial Instruments
For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Commitment and Contingencies
The Company follows ASC 450-20, Loss Contingencies, to report accounting for contingencies. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
The Company follows ASC 440-10, Commitments, to report accounting for certain commitments.
Net Income (Loss) Per Common Share
The Company computes net income or loss per share in accordance with ASC 260 Earnings per Share. Under the provisions of the Earnings per Share Topic ASC, basic net income (loss) per share is computed by dividing the net income (loss) available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net income (loss) per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive.
| 20 |
Income Taxes
The Company accounts for its income taxes in accordance with ASC 740 Income Taxes, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is provided for the amount of deferred tax assets that would otherwise be recorded for income tax benefits primarily relating to operating loss carryforwards as realization cannot be determined to be more likely than not.
The statement establishes a more-likely-than-not threshold for recognizing the benefits of tax return positions in the financial statements. Also, the statement implements a process for measuring those tax positions which meet the recognition threshold of being ultimately sustained upon examination by the taxing authorities. There are no uncertain tax positions taken by the Company on its tax returns and the adoption of the statement had no material impact to the Company’s financial statements. The Company files tax returns in the US and states in which it has operations and is subject to taxation. Tax years subsequent to 2018 remain open to examination by U.S. federal and state tax jurisdictions.
Revenue Recognition
Revenue is recognized in accordance with ASC 606. The Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company evaluates the goods or services promised within each contract related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
The Company recognizes revenue upon completion of our performance obligations or expiration of the contractual time to use services such as professional service hours purchased in bulk for a given time period.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.
NOTE 3 – GOING CONCERN
The accompanying consolidated financial statements have been prepared using generally accepted in the United States of American applicable to a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has recurring losses, an accumulated deficit and a working capital deficiency. As reflected in the financial statements, the Company had a working capital deficit of $
The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company is unable to continue as a going concern.
| 21 |
NOTE 4 – ACQUISITION OF PETRO X SOLTUIONS, INC.
Effective May 11, 2022, the Company consummated a plan and agreement of merger (the “Merger Agreement”) with Petro X Solutions, Inc., a Wyoming corporation (“PXS”), pursuant to which PXS became a wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, the Company issued
Due to the effects of the “reverse merger” acquisition of PXS occurring effective May 11, 2022, in accordance with ASC 805 Business Combinations, the presentation of the financial statements represents the continuation of PXS, the accounting acquirer, except for the legal capital structure. Historical shareholders’ equity of the Company, the accounting acquiree, has been adjusted to reflect the recapitalization. Retained earnings (deficit) of PXS, the accounting acquirer have been carried forward after the acquisition and operations prior to the merger are those of PXS, the accounting acquirer. Earnings per share for periods prior to the merger have been adjusted to reflect the recapitalization.
NOTE 5 – RESCISSION OF ACQUISITION OF PETRO X SOLUTIONS, INC.
Effective May 11, 2022, the Company completed a Plan and Agreement of Merger (the Merger Agreement) with PXS, with PXS becoming the Company’s wholly-owned subsidiary as a result of the PXS Merger. Pursuant to the Merger Agreement, an aggregate of
Effective June 1, 2023, the PXS Merger was rescinded, such that all securities issued by the Company in connection with the PXS Merger were cancelled and the ownership of PXS returned to its prior owners. PXS is being treated as discontinued operations in the consolidated financial statements.
Accordingly, (1) the Company’s Consolidated Balance Sheet as of December 31, 2022, reports the Company and PXS on a consolidated basis, (2) the Company’s Consolidated Balance Sheet as of December 31, 2021, reports the Company as it existed prior to its acquisition of PXS, (3) the Company’s Consolidated Statement of Stockholders’ Deficit for December 31, 2021, reflects the Company as it existed prior to its acquisition of PXS, and for December 31, 2022 reflects an adjustment for the reverse merger (recapitalization) between the Company and PXS, (4) the Company’s Consolidated Statement of Operations and Consolidated Statement of Cash Flows for the year ended December 31, 2022, reports the Company and PXS on a consolidated basis, and (5), the Company’s Consolidated Statement of Operations and Consolidated Statement of Cash Flows for the year ended December 31, 2021, report historical information of PXS.
NOTE 6 – INTANGIBLE ASSETS
On February 6, 2019, the Company, entered into an Intellectual Property Purchase Agreement with S. Mark Spoone, a Colorado corporation (the “Seller”), to acquire all of Mr. Spoone’s intellectual property associated with Mr. Spoone’s “Good Hemp” hemp-derived CBD-infused line of consumer beverages, for a purchase price consisting of
| 22 |
On April 30, 2019, the Company acquired from S. Mark Spoone the CANNA HEMP and CANNA trademarks including all rights and trade secrets and related inventory for consideration totaling $
Effective February 28, 2020, the Company entered into a Branding Agreement (the “Branding Agreement”) with Spire Holdings, LLC (“Spire Holdings”), pursuant to which the Company would immediately issue Spire Holdings
On February 10, 2021, the Company and Spire Holdings entered into an Amendment to Branding Agreement amending the sponsorship dates to be during the 2021-2022 NASCAR Cup Series racing seasons instead of the 2020-2021 racing season.
On April 1, 2021, the Company entered into an agreement to purchase Diamond Creek Group, LLC, a North Carolina limited liability company which sells the Diamond Creek brand of high alkaline water products, for a total purchase price of $
Purchase Price Allocation |
| Amount |
| |
Acquisition cost |
| $ |
| |
Assets acquired |
|
|
|
|
Cash and cash equivalents |
|
|
| |
Accounts receivable |
|
|
| |
Property and equipment |
|
|
| |
Trademark |
|
|
| |
Total assets acquired |
|
|
| |
|
|
|
|
|
Liabilities assumed |
|
|
|
|
Accounts payable and accrued liabilities |
|
|
| |
Note payable |
|
|
| |
Total liabilities assumed |
|
|
| |
|
|
|
| |
Impairment of goodwill |
|
|
| |
Goodwill |
| $ |
| |
On December 31, 2022 the Company impaired the Good Hemp-related assets by $
NOTE 7 – NOTES PAYABLE
On February 4, 2021, the Company entered into a securities purchase agreement with Power Up Lending Group pursuant to which the Company agreed to issue to the Investor an
On February 16, 2021, the Company entered into a securities purchase agreement with Power Up Lending Group pursuant to which the Company agreed to issue to the Investor an
Effective February 16, 2021, the Company entered into a securities purchase agreement with AES Capital Management, LLC, pursuant to which the Company agreed to issue to an
On March 26, 2021, the Company entered into a securities purchase agreement with Leonite Capital LLC (“Leonite”) pursuant to which the Company agreed to issue to the Investor an
| 23 |
On April 21, 2021, the Company entered into a securities purchase agreement (the “GS Capital SPA”) with GS Capital Partners, LLC, a New York limited liability company, pursuant to which the Company agreed to issue to the investor a
On April 20, 2021, the Company entered into a securities purchase agreement (the “Power Up SPA”) with Power Up Lending Group Ltd., a Virginia corporation, pursuant to which the Company agreed to issue to the investor a
On May 4, 2021, the Company entered into a securities purchase agreement with Metrospaces, Inc., a Florida corporation, pursuant to which the Company agreed to issue to the investor a
On August 13, 2021, the Company entered into a securities purchase agreement with Geneva Roth Remark Holdings, Inc., a New York corporation, pursuant to which the Company agreed to issue to the investor a Convertible Note, dated August 13, 2021, in the principal amount of $
| 24 |
On October 5, 2021, the Company entered into a securities purchase agreement (the “Jefferson SPA”) with Jefferson Street Capital, LLC, a New Jersey limited liability company, pursuant to which the Company agreed to issue to the investor a
On October 19, 2021, the Company entered into a securities purchase agreement (the “Sixth Street SPA”) with Sixth Street Lending, LLC, a Virginia limited liability company, pursuant to which the Company agreed to issue to the investor a
One July 27, 2022, the Company entered into a securities purchase agreement (the “SPA”) with 1800 Diagonal Lending LLC, a Virginia limited partnership (“1800 Diagonal”), pursuant to which the Company agreed to issue to 1800 Diagonal a
NOTE 8 – RELATED PARTY TRANSACTIONS
All related party transactions are recorded at the exchange amount which is the value established and agreed to by the related party.
A payable to a related party of $
Mr. William Alessi is the Company’s former CEO and director of the Company. The JanBella Group is an entity controlled by Mr. Alessi. Chris Chumas is a former director of the Company.
On July 18, 2019, the Company issued promissory notes to Mr. Alessi, JanBella Group and Mr. Chumas to evidence the amounts they advanced to the Company. The notes are due on demand, bear interest at 10% per year, and are secured by all of the Company's assets. At the option of the noteholders, the notes may be converted into shares of the Company's common stock.
On January 29, 2020, the Company issued
On October 15, 2021, the Company paid $
At December 31, 2022, the Company owed Mr. Alessi $
At December 31, 2022, the Company owed JanBella Group $
At December 31, 2022, the Company owed Mr. Chumas $
| 25 |
Effective May 11, 2022, the Company consummated a plan and agreement of merger (the Merger Agreement) with PXS, pursuant to which PXS became a wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, the Company issued
On October 11, 2022, the Company entered into three separate securities exchange agreements (collectively, the “Exchange Agreements”). Specifically, the Company entered into Exchange Agreements with three of its former officers and directors, (a) Fabian G. Deneault (the “Deneault Agreement”); (b) Eric Newlan (the “Newlan Agreement”); and (c) William E. Sluss (the “Sluss Agreement”).
Pursuant to the Exchange Agreements, the Company is to issue a total of
Exchange Agreement | Number of Shares of Common Stock Exchanged | Number of Shares of Series A Preferred Stock Issued | ||
Deneault Agreement |
| |||
Newlan Agreement |
|
| ||
Sluss Agreement |
|
|
All
In October 2022, the Company issued
NOTE 9 – DERIVATIVE LIABILITIES
The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of December 31, 2022. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model.
For the year ended December 31, 2022, the assumptions utilized in estimating fair values of the liabilities measured on a recurring basis are as follows:
|
| Year Ended |
| |
|
| December 31, 2022 |
| |
Expected term |
|
| ||
Expected average volatility |
|
| % | |
Expected dividend yield |
|
|
| |
Risk-free interest rate |
|
| % | |
The fair value measurements of the derivative liabilities at December 31, 2022, is summarized:
Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
The fair value measurements of the derivative liabilities at December 31, 2021 is summarized:
Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Legal Matters
The Company is subject, from time to time, to claims by third parties under various legal disputes. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows. As of December 31, 2022, the Company did not have any legal actions pending against it.
| 26 |
NOTE 11 – CAPITAL STOCK
In April 2022, the Company issued
On May 8, 2022, four shareholders surrendered
On May 11, 2022, the Company issued
During the fiscal year ended December 31, 2022, the Company issued
During the fiscal year ended December 31, 2022, the Company issued
During the fiscal year ended December 31, 2022, the Company issued
During the fiscal year ended December 31, 2022, the Company issued
During the fiscal year ended December 31, 2022, the Company issued
During the fiscal year ended December 31, 2022, the Company issued
During the fiscal year ended December 31, 2022, the Company issued
On October 11, 2022, three shareholders exchanged
On December 5, 2022, the Company issued
See Part II – Unregistered Sales of Equity Securities and Use of Proceeds regarding the sale of unregistered securities and use of proceeds.
NOTE 12 – WARRANTS
As a placement agent fee in connection with the Company’s entering into a Standby Equity Commitment Agreement with MacRab, LLC, in August 2022, the Company issued to MacRab, LLC
NOTE 13 – INCOME TAXES
The company operates in the United States; accordingly, federal and state income taxes have been provided based upon the tax laws and rates of the United States deferred taxes are determined based on the temporary differences between the financial statement and income tax bases of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse.
The Company is subject to United States income taxes at a rate of
|
| December 31, |
|
| December 31, |
| ||
|
| 2022 |
|
| 2021 |
| ||
Income tax (payable) recovery at statutory rate of 21% |
| $ | ( |
| $ | ( | ) | |
Valuation allowance change |
|
|
|
|
|
| ||
Provision for income taxes |
| $ |
|
| $ |
| ||
| 27 |
NOTE 14 – DISCONTINUED OPERATIONS
In May 2023, the Company decided to discontinue operations of its subsidiary, Petro X Solutions (PXS). Effective June 1, 2023, the PXS acquisition was rescinded and it ceased being a subsidiary of the Company.
In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations (held for sale) in the consolidated balance sheets and consist of the following:
|
| December 31, 2022 |
|
| December 31, 2021 |
| ||
CURRENT ASSETS OF DISCONTINUED OPERATIONS: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ |
|
| $ |
| ||
Inventories |
|
|
|
|
|
| ||
Prepaid expenses |
|
|
|
|
|
| ||
TOTAL CURRENT ASSETS OF DISCONTINUED OPERATIONS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES OF DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
Accounts payable |
| $ |
|
| $ |
| ||
TOTAL CURRENT LIABILITIES OF DISCONTINUED OPERATIONS |
| $ |
|
| $ |
| ||
In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the Consolidated Statements of Operations. The results of operations for this entity for the years ended December 31, 2022 and 2021, have been reflected as discontinued operations in the Consolidated Statements of Operations, and consist of the following:
|
| Years Ended |
| |||||
|
| December 31, 2022 |
|
| December 31, 2021 |
| ||
Net sales |
| $ |
|
| $ |
| ||
Cost of sales |
|
|
|
|
|
| ||
Gross profit |
|
| ( | ) |
|
|
| |
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES OF DISCONTINUED OPERATIONS: |
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
OPERATING INCOME (LOSS) OF DISCONTINUED OPERATIONS |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAXES OF DISCONTINUED OPERATIONS |
|
| ( | ) |
|
| ( | ) |
Provision for income taxes of discontinued operations |
|
|
|
|
|
| ||
NET INCOME (LOSS) OF DISCONTINUED OPERATIONS |
| $ | ( | ) |
| $ | ( | ) |
In accordance with the provisions of ASC 205-20, the Company has separately reported the cash flow activity of the discontinued operations in the Consolidated Statements of Cash Flows. The cash flow activity from discontinued operations for the years ended December 31, 2022 and 2021, have been reflected as discontinued operations in the Consolidated Statements of Cash Flows and consist of the following:
|
| Years Ended |
| |||||
|
| December 31, 2022 |
|
| December 31, 2021 |
| ||
DISCONTINUED OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Inventories |
|
|
|
|
|
| ||
Prepaid expenses and other current assets |
|
| ( | ) |
|
|
| |
Accounts payable and accrued liabilities |
|
|
|
|
|
| ||
Net cash provided by operating activities of discontinued operations |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES OF DISCONTINUED OPERATIONS |
|
|
|
|
|
|
|
|
Issuance of common stock for cash |
| $ |
|
| $ |
| ||
Exercise of warrants for common stock |
|
|
|
|
|
| ||
Net cash used in financing activities of discontinued operations |
| $ |
|
| $ |
| ||
NOTE 15 – SUBSEQUENT EVENTS
The Company has evaluated all transactions from December 31, 2022, through the financial statement issuance date for subsequent event disclosure consideration and noted no significant subsequent event that needs to be disclosed other than as set forth below.
| 28 |
Sale of Good Hemp-Related Assets
In February 2023, the Company sold all of its Good Hemp-related to JanBella Group, LLC, a company controlled by the Company’s current controlling shareholder, William Alessi (then, a third-party). In consideration of such assets, Mr. Alessi forgave $
In connection with the sale of assets to
Change-in-Control Agreements
Effective June 1, 2023, there occurred a change in control of the Company. On such date, pursuant to four separate Control Securities Purchase Agreements (collectively, the “Change-in-Control Agreements”), William Alessi acquired all of the outstanding shares of the Company’s Series A Preferred Stock, which securities provide Mr. Alessi voting control of the Company, as follows:
Name of Seller |
| Name of Purchaser |
| Securities Purchased |
| Consideration |
|
|
| $ | |||
|
|
| $ | |||
|
|
| $ | |||
|
|
| $ |
As a class, the Series A Preferred Stock possesses
In connection with the Change-in-Control Agreements, Eduardo A. Brito was appointed as a Director of the Company.
Rescission Agreement
On May 31, 2023, the Company” and Petro X Solutions, Inc. (PXS), entered into a Rescission Agreement and Mutual Release (the “Rescission Agreement”). Pursuant to the Rescission Agreement, the Plan and Agreement of Merger dated as of March 8, 2022, and closed May 11, 2022 (the “Merger Agreement”), between the Company and PXS was rescinded. The Rescission Agreement closed June 1, 2023.
Under the terms of the Rescission Agreement, all securities of the Company issued to the shareholders of PXS pursuant to the Merger Agreement were cancelled and all of the securities acquired by the Company pursuant to the Merger Agreement were returned to the shareholders of PXS in existence immediately prior to the closing of the Merger Agreement.
Following the consummation of the Rescission Agreement, including all related agreements, the only business of the Company was that of its wholly-owned subsidiary, Diamond Creek Group, LLC, which sells the Diamond Creek brand of high alkaline water products.
The Rescission Agreement was a condition precedent to the Change-in-Control Agreements.
Mutual Release
As a condition precedent to the Change-in-Control Agreements, the Company entered into a Mutual Release (the “Mutual Release”) with PXS, William Alessi, Chris Chumas, Fabian G. Deneault, Eric Newlan, William E. Sluss and Douglas V. Martin. In addition, pursuant to the terms of the Mutual Release, the parties released every other party from any all claims now existing and/or future claims. In addition, each of the parties hereby agreed not to disparage any of the other parties, their respective officers, directors, employees, stockholders, agents and affiliates, in any manner likely to be harmful to them or their business, business reputation or personal reputation.
Assignment of Spire Motorsports Contract
As a condition precedent to the Change-in-Control Agreements, the Company and Spire Motorsports entering an agreement whereby the Motorsports Sponsorship Agreement, including all remaining obligations thereunder in the amount of $
Loans from Related Party
Since March 31, 2023, a former officer and director of the Company, Eric Newlan (then an officer and director of the Company) made advances on behalf of the Company in the total amount of $
Issuances of Common Stock
Subsequent to December 31, 2022, the Company issued
| 29 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Dismissal of Registrant’s Certifying Accountant. On November 7, 2022 (the “Dismissal Date”), the Board of Directors of the Company dismissed Boyle CPA, LLC (“Boyle”) as the Company’s independent registered public accounting firm and informed Boyle of such decision on the same date.
The reports of Boyle on the audited consolidated financial statements of the Company for the fiscal years ended December 31, 2021 and 2020, did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, other than an explanatory paragraph relating to the Company’s ability to continue as a going concern.
During the fiscal years ended December 31, 2021 and 2020, as well as during the subsequent interim periods preceding the Dismissal Date, there were no (1) “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) with Boyle with respect to any matter relating to accounting principles or practices, financial statement disclosures, or auditing scope or procedure, which disagreement(s), if not resolved to the satisfaction of Boyle, would have caused it to make reference thereto in its reports on the audited consolidated financial statements of the Company for such years; or (2) “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K and the related instructions), except the material weaknesses reported in Part II, Item 9A “Controls and Procedures” in the Company’s Annual Reports on Form 10-K for the years ended December 31, 2021, and December 31, 2020.
The Company has provided Boyle with a copy of this Current Report on Form 8-K, in accordance with Item 304(a)(3) of Regulation S-K and requested that Boyle provide the Company with a letter addressed to the SEC stating whether or not Boyle agrees with the above disclosures. A copy of Boyle’s letter to the SEC dated November 8, 2022, is attached hereto as Exhibit 16.1.
Appointment of New Certifying Accountant. On November 7, 2022 (the “Engagement Date”), the Company’s Board of Directors approved the selection and engagement of Victor Mokuolu, CPA PLLC (“Mokuolu”) as the Company’s new independent registered public accounting firm. During the years ended December 31, 2021 and 2020, and the subsequent interim periods through the Engagement Date, neither the Company, nor anyone on its behalf, consulted Mokuolu regarding any of the matters or events set forth in Items 304(a)(2)(i) or (ii) of Regulation S-K.
Item 9A. Controls and Procedures.
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure. We concluded that our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act were not effective as of December 31, 2022, to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, and summarized and reported within the time periods specified in SEC rules and forms and our disclosure controls and procedures were also ineffective to ensure that the information required to be disclosed in reports that we file under the Exchange Act is accumulated and communicated to our principal executive and financial officers to allow timely decisions regarding required disclosures.
Management’s Annual Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in rule 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of the CEO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Internal controls over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records which in reasonable detail accurately and fairly reflect the transactions and disposition of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made in accordance with authorizations of management and directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| 30 |
A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
In evaluating the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, management used the criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the criteria established by COSO, management (with the participation of the CEO and CFO) identified the following material weaknesses in the Company’s internal control over financial reporting as of December 31, 2022, which arose from the limited number of number of staff at the Company and the inability to achieve proper segregation of duties:
| · | The Company lacked effective controls for ensuring the accuracy of reporting over significant account balances, including the review, approval, and documentation of related transactions and account reconciliations and other complex accounting procedures. |
| · | The Company lacked effective controls because their directors are not independent. |
As a result of these material weaknesses, management concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2022, based on the criteria established in Internal Control – Integrated Framework (2013) issued by COSO.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report.
Limitations on the Effectiveness of Controls
The Company’s management, including the CEO and acting CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control over Financial Reporting
Except as set forth above, there were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report on Form 10-K.
Item 9B. Other Information.
None.
| 31 |
Item 10. Directors, Executive Officers and Corporate Governance.
The following table sets for the names, ages and positions of our board members and executive officers as of the date of this Annual Report:
Name |
| Age |
| Position |
|
|
|
|
|
Eduardo A. Brito |
| 49 |
| President, Chief Executive Officer, Secretary and Director |
Rodney L. Sperry |
| 55 |
| Chief Financial Officer |
Directors are generally elected at an annual shareholders’ meeting and hold office until the next annual shareholders’ meeting, or until their successors are elected and qualified. Executive officers are elected by directors and serve at the board’s discretion.
Eduardo A. Brito, appointed as our CEO and Sole Director on June 1, 2023, began his entrepreneurial career at the age of 17, when he co-founded GEO Express, a Miami-based shipping and import/export company. Mr. Brito worked in the film and entertainment industries from 2000 until 2018. During this time, he was Executive Producer at Estrella TV-, the 3rd largest Latino TV network in the US. While at Estrella TV, he produced two television series-, Buscando Amor and Gana La Verde (the Spanish Blind Date and Fear Factor Shows). Mr. Brito received his BA from UCLA 2003. He is fluent in Spanish and English.
Rodney L. Sperry, appointed as our Chief Financial Officer on June 22, 2021, has fifteen years of experience in public company accounting. His industry background includes audits for both private and publicly traded companies in various industries including manufacturing, distribution, mining, energy, and not for profit organizations. He has served as outside controller for several public companies over the last eleven years and has been responsible for SEC filings and compliance. Mr. Sperry was a licensed CPA in the State of Utah from February 2001 through September 2014, and he has operated his own accounting and business consulting practice for the past twelve years. He obtained his Bachelor’s degree in accounting from Westminster College and his Master’s degree in business administration (MBA) from Utah State University.
The Company believes that its directors are qualified to serve as directors due to their experience in the capital markets and retail industries, and their general business knowledge.
The Company does not have an independent director, as that term is defined in Section 803 of the NYSE Company Guide. The Company does not have a financial expert.
Indemnification of Directors and Officers
Pursuant to Section 78.7502 of the Nevada Revised Statutes, we have the power to indemnify any person made a party to any lawsuit by reason of being a director or officer of the Company, or serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Our articles of incorporation provide that the Company shall indemnify its directors and officers to the fullest extent permitted by Nevada law.
With regard to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the common shares being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.
Director Compensation
There are no formal agreements with our directors for compensation, although they have received shares for their services from time to time.
Director Independence
During the period ended December 31, 2022, we had no independent directors.
Involvement on Certain Material Legal Proceedings During the Last Five Years
No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations.
No bankruptcy petitions have been filed by or against any business or property of any director, officer, significant employee or consultant of the Company nor has any bankruptcy petition been filed against a partnership or business association where these persons were general partners or executive officers.
| 32 |
No director, officer, significant employee or consultant has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.
No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law.
Directors’ and Officers’ Liability Insurance
The Company does not maintain directors’ and officers’ liability insurance.
Code of Ethics
We intend to adopt a code of ethics that applies to our officers, directors and employees, including our principal executive officer and principal accounting officer, but have not done so to date due to our relatively small size. We intend to adopt a written code of ethics in the near future.
Board Composition
Our Bylaws provide that the Board of Directors shall consist of not less than one nor more than fifteen directors. Each director of the Company serves until his successor is elected and qualified, subject to removal by the Company’s majority shareholders. Each officer shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined by the Board of Directors and shall hold his office until his successor is elected and qualified, or until his earlier resignation or removal.
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 determined 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.
Compliance with Section 16(A) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).
Based solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the fiscal year ended December 31, 2022, were not filed timely.
| 33 |
Item 11. Executive Compensation.
The following table summarizes the compensation earned by the Company’s principal executive officers during the two years ended December 31, 2022 and 2021.
Summary Compensation Table
Name and Principal Position |
| Fiscal Year Ended 12/31 |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards ($) |
|
| Option Awards ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Non-qualified Deferred Compensation Earnings ($) |
|
| All Other Compen- sation ($) |
|
| Total ($) |
| ||||||||
Eduardo A. Brito |
| 2022 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
Chief Executive Officer (1) |
| 2021 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
Rodney L. Sperry |
| 2022 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| 15,862 |
|
|
| 15,862 |
|
Chief Financial Officer (2) |
| 2021 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| 11,840 |
|
|
| 11,840 |
|
William Alessi |
| 2022 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
Former Chief Executive Officer (3) |
| 2021 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
Emma Setzer |
| 2022 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
Former Chief Financial Officer (4) |
| 2021 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
Ron F. Sickels |
| 2022 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
Former Chief Executive Officer (5) |
| 2021 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
Douglas V. Martin |
| 2022 |
|
| 12,500 |
|
|
| --- |
|
|
| 10,778 |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
|
|
|
|
| 23,278 |
|
Former Interim CEO (6) |
| 2021 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
Fabian G. Deneault |
| 2022 |
|
| 30,000 |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
|
|
|
|
|
|
|
Executive Vice President (7) |
| 2021 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
William E. Sluss |
| 2022 |
|
| 12,500 |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
|
|
|
|
| 12,500 |
|
Former Chief Operating Officer (8) |
| 2021 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
Eric Newlan |
| 2022 |
|
| 30,000 |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
|
|
|
|
| 30,000 |
|
Former Vice Pres. and Secretary (9) |
| 2021 |
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
|
| --- |
|
(1) | Mr. Brito did not become our Chief Executive Officer until June 1, 2023. | ||||||||||
(2) | Mr. Sperry was appointed out Chief Financial Officer on June 22, 2021. | ||||||||||
(3) | Mr. Alessi resigned as our Chief Executive Officer on May 11, 2022. | ||||||||||
(4) | Ms. Setzer served as our Chief Financial Officer from September 5, 2020, through June 22, 2021. | ||||||||||
(5) | Mr. Sickels served as our Chief Executive Officer from May 11, 2022, through July 24, 2022. | ||||||||||
(6) | Mr. Martin served as our Interim CEO from July 26, 2022, through June 1, 2023. | ||||||||||
(7) | Mr. Deneault served as our Executive Vice President from May 11, 2022, through June 1, 2023. | ||||||||||
(8) | Mr. Sluss served as our Chief Operating Officer from May 11, 2022, through June 1, 2023. | ||||||||||
(9) | Mr. Newlan served as our Vice President and Secretary from May 11, 2022, through June 1, 2023. | ||||||||||
Long-Term Incentive Plans. The Company does not provide its officers or employees with pension, stock appreciation rights, long-term incentive or other plans, nor does it provide non-qualified deferred compensation to its officers or employees, and therefore, the Summary Compensation Table above does not include columns for nonequity incentive plan compensation and nonqualified deferred compensation earnings, since there were none.
Employee Pension, Profit Sharing or other Retirement Plans. The Company does not have a defined benefit, pension plan, profit sharing or other retirement plan, although it may adopt one or more of such plans in the future.
Compensation Committee Interlocks and Insider Participation. During the years ended December 31, 2021 and 2020, none of the Company’s officers was also a member of the compensation committee or a director of another entity, which other entity had one of its executive officers serving as one of the Company’s directors.
Outstanding Equity Awards
Our directors and officers do not have unexercised options, stock that has not vested, or equity incentive plan awards.
| 34 |
Compensation of Directors
Director Compensation Table
|
| Fiscal |
| Fees Earned or Paid in Cash |
|
| Stock Awards |
|
| Option Awards |
|
| All Other Compensation |
|
| Total |
| |||||
Name |
| Year |
|
| (1) |
|
| (2) |
|
| (3) |
|
| (4) |
| ($) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
William Alessi (5) |
| 2022 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
| 2021 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chris Chumas (6) |
| 2022 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
| 2021 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ron F. Sickels (7) |
| 2022 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
| 2021 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fabian G. Deneault (8) |
| 2022 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
| 2021 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William E. Sluss (8) |
| 2022 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
| 2021 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric Newlan (8) |
| 2022 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
| 2021 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eduardo A. Brito (9) |
| 2022 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
|
| 2021 |
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
__________
(1) | The dollar value of salary (cash and non-cash) earned. |
(2) | The value of the shares of restricted stock issued as compensation for services computed in accordance with ASC 718 on the date of grant. |
(3) | The value of all stock options computed in accordance with ASC 718 on the date of grant. |
(4) | All other compensation received that could not be properly reported in any other column of the table. |
(5) | Mr. Alessi resigned as a director of the Company on May 11, 2022. |
(6) | Mr. Chumas resigned as a director of the Company on May 11, 2022. |
(7) | Mr. Sickels served as a Director of the Company from May 11, 2022, through July 24, 2022. |
(8) | This person served as a Director of the Company from May 11, 2022, through June 1, 2023. |
(9) | Mr. Brito was appointed as a Director of the Company on June 1, 2023. |
Employment Contracts, Termination of Employment, Change-in-Control Arrangements
The Company does not have employment or director agreements.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners
The following table lists, as of the date of this Annual Report, the shareholdings of (i) each person owning beneficially 5% or more of the Company’s outstanding securities; (ii) each executive officer of the Company, and (iii) all officers and directors as a group. Unless otherwise indicated, each owner has sole voting and investment power over his securities. Information relating to beneficial ownership of securities 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.
Except as disclosed herein, we do not have any outstanding options, or other securities exercisable for or convertible into shares of our common stock. Unless otherwise indicated, the address of each person listed is c/o Accredited Solutions, Inc., 20311 Chartwell Center Drive, Suite 1469, Cornelius, North Carolina 28031.
| 35 |
COMMON STOCK
Name of Beneficial Owner |
| Title of Class |
| Amount and Nature of Beneficial Ownership (1) |
|
| Percent of Class (2) |
| ||
Eduardo A. Brito (3) |
| Common Stock |
|
| 0 |
|
|
| 0 | % |
Rodney L. Sperry (4) |
| Common Stock |
|
| 0 |
|
|
| 0 | % |
William Alessi |
| Common Stock |
|
| 95,031,549 | (5) |
|
| 12.28 | % |
All Officers and Directors as a Group (2 persons) |
| Common Stock |
|
| 0 |
|
|
| 0 | % |
_________
(1) | Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power to the shares of the Company’s common stock. |
(2) | Based on 773,828,327 shares outstanding as of the date of this Annual Report, (A) including 678,796,778 shares of the Company's common stock that are issued and outstanding and (B) an additional 95,031,549 shares of common stock that are not issued, but are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1). For each Beneficial Owner listed, any instruments convertible within 60 days have been also included for purposes of calculating their percent of class. |
(3) | Officer and director. |
(4) | Officer. |
(5) | None of these shares has been issued, but underlie the currently convertible shares of Series A Preferred Stock. |
| 36 |
SERIES A PREFERRED STOCK
Name of Beneficial Owner |
| Title of Class |
| Amount and Nature of Beneficial Ownership (1) |
|
| Percent of Class (2) |
| ||
William Alessi (3) |
| Series A Preferred Stock(4) |
|
| 14,000 |
|
|
| 100 | % |
________
(1) | Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. The beneficial owner listed above has direct ownership of and sole voting power to the shares of the Company's Series A Preferred Stock. |
(2) | As of the date of this Annual Report, a total of 14,000 shares of the Company's Series A Preferred Stock issued and outstanding. |
(3) | With the voting rights of the Series A Preferred Stock, Mr. Alessi controls the Company through his ownership of the Company’s Series A Preferred Stock. |
(4) | The holders of the Series A Preferred Stock, as a class, have voting rights in all matters requiring shareholder approval equal to 66.67% of all shares eligible to vote. Each share of Series A Preferred Stock shall be convertible at any time into a number of shares of the Company’s common stock that equals 0.001 percent (0.001%) of the number of issued and outstanding shares of the Company’s common stock outstanding on the date of conversion, such that 1,000 shares of Series A Preferred Stock would convert into one percent (1%) of the number of issued and outstanding shares of the Company’s common stock outstanding on the date of conversion. |
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Loans From Officers and Directors
As of the date of this Annual Report, the Company owed a former officer and director and current controlling shareholder, William Alessi, a total of $241,547 in principal and interest. This indebtedness is evidenced by a convertible note, which, as amended, was due on October 31, 2022, and is convertible into shares of Company common stock at $.001 per share.
As of the date of this Annual Report, the Company owed JanBella Group, LLC, a company owned by Mr. Alessi, a total of $148,063 in principal and interest. This indebtedness is evidenced by a convertible note, which, as amended, was due on October 31, 2022, and is convertible into shares of Company common stock at $.001 per share.
As of the date of this Annual Report, the Company owed a former officer and director, Chris Chumas, a total of $138,884 in principal and interest. This indebtedness is evidenced by a convertible note, which, as amended, was due on October 31, 2022, and is convertible into shares of Company common stock at $.001 per share.
As of the date of this Annual Report, the Company owed a former officer and director, Eric Newlan, a total of $14,100, which loan was made on open account and is payable on demand. The amount owed to Mr. Newlan represents advances made by him in payment of certain operating expenses of the Company subsequent to December 31, 2022.
Securities Exchange Agreements
On October 11, 2022, the Company entered into three separate securities exchange agreements (collectively, the “Exchange Agreements”). Specifically, the Company entered into Exchange Agreements with three of its former officers and directors, (a) Fabian G. Deneault (the “Deneault Agreement”); (b) Eric Newlan (the “Newlan Agreement”); and (c) William E. Sluss (the “Sluss Agreement”).
| 37 |
Pursuant to the Exchange Agreements, the Company is to issue a total of 13,000 shares of its Series A Preferred Stock, in exchange for a total of 33,166,670 shares of its Common Stock, as follows:
Exchange Agreement | Number of Shares of Common Stock Exchanged | Number of Shares of Series A Preferred Stock Issued | ||
Deneault Agreement |
| 14,083,330 shares | 5,500 shares | |
Newlan Agreement |
| 14,083,340 shares |
| 5,500 shares |
Sluss Agreement |
| 5,000,000 shares |
| 2,000 shares |
All 33,166,670 shares that were the subject of the Exchange Agreements were cancelled and returned to the status of authorized and unissued.
Officer Bonus
In October 2022, the Company issued 1,000 shares of its Series A Preferred Stock to its Interim CEO, Douglas V. Martin, as a retention bonus. Such shares were valued at $10,778, in the aggregate.
Change-in-Control Agreements
Effective June 1, 2023, there occurred a change in control of the Company. On such date, pursuant to four separate Control Securities Purchase Agreements (collectively, the “Change-in-Control Agreements”), William Alessi acquired all of the outstanding shares of the Company’s Series A Preferred Stock, which securities provide Mr. Alessi voting control of the Company, as follows:
Name of Seller |
| Name of Purchaser |
| Securities Purchased |
| Consideration |
Fabian G. Deneault |
| William Alessi |
| 5,500 Shares of Series A Preferred Stock |
| $10 and other good and valuable consideration, including the delivery of the Mutual Release. |
William E. Sluss |
| William Alessi |
| 2,000 Shares of Series A Preferred Stock |
| $10 and other good and valuable consideration, including the delivery of the Mutual Release. |
Eric Newlan |
| William Alessi |
| 5,500 Shares of Series A Preferred Stock |
| $10 and other good and valuable consideration, including the delivery of the Mutual Release. |
Douglas V. Martin |
| William Alessi |
| 1,000 Shares of Series A Preferred Stock |
| $10 and other good and valuable consideration, including the delivery of the Mutual Release. |
As a class, the Series A Preferred Stock possesses 66.67% voting power of the Company.
In connection with the Change-in-Control Agreements, Eduardo A. Brito was appointed as a Director of the Company.
Rescission Agreement
On May 31, 2023, the Company” and Petro X Solutions, Inc. (PXS), entered into a Rescission Agreement and Mutual Release (the “Rescission Agreement”). Pursuant to the Rescission Agreement, the Plan and Agreement of Merger dated as of March 8, 2022, and closed May 11, 2022 (the “Merger Agreement”), between the Company and PXS was rescinded. The Rescission Agreement closed June 1, 2023.
Under the terms of the Rescission Agreement, all securities of the Company issued to the shareholders of PXS pursuant to the Merger Agreement were cancelled and all of the securities acquired by the Company pursuant to the Merger Agreement were returned to the shareholders of PXS in existence immediately prior to the closing of the Merger Agreement.
Following the consummation of the Rescission Agreement, including all related agreements, the only business of the Company was that of its wholly-owned subsidiary, Diamond Creek Group, LLC, which sells the Diamond Creek brand of high alkaline water products.
The Rescission Agreement was a condition precedent to the Change-in-Control Agreements.
Mutual Release
As a condition precedent to the Change-in-Control Agreements, the Company entered into a Mutual Release (the “Mutual Release”) with PXS, William Alessi, Chris Chumas, Fabian G. Deneault, Eric Newlan, William E. Sluss and Douglas V. Martin. In addition, pursuant to the terms of the Mutual Release, the parties released every other party from any all claims now existing and/or future claims. In addition, each of the parties hereby agreed not to disparage any of the other parties, their respective officers, directors, employees, stockholders, agents and affiliates, in any manner likely to be harmful to them or their business, business reputation or personal reputation.
| 38 |
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, a director is not considered to be independent if he or she also is an executive officer or employee of the corporation. Our board of directors has determined that the Company does not have any independent directors.
Item 14. Principal Accountant Fees and Services.
The following table sets forth fees billed to us by our independent auditors for the years ended December 31, 2021 and 2020 for (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, (ii) services rendered that are reasonably related to the performance of the audit or review of our financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance.
Services |
| 2022 |
|
| 2021 |
| ||
Audit fees |
| $ | - |
|
| $ | 0 |
|
Audit-related fees |
|
| - |
|
|
| - |
|
Tax fees |
|
| - |
|
|
| - |
|
All other fees |
|
| - |
|
|
| - |
|
Total fee |
| $ | _ |
|
| $ | 0 |
|
| 39 |
PART IV
Item 15. Exhibits and Financial Statement Schedules.
The following exhibits are filed with this Form 10-K or incorporated by reference:
Exhibit |
| Description |
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
|
| 40 |
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
| ||
|
101 INS ** |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
101 SCH ** |
| Inline XBRL Taxonomy Extension Schema Document |
101 CAL ** |
| Inline XBRL Taxonomy Calculation Linkbase Document |
101 DEF ** |
| Inline XBRL Taxonomy Extension Definition Linkbase Document |
101 LAB ** |
| Inline XBRL Taxonomy Labels Linkbase Document |
101 PRE ** |
| Inline XBRL Taxonomy Presentation Linkbase Document |
104 ** |
| Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
*Filed herewith.
** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
| 41 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ACCREDITED SOLUTIONS, INC. |
| |
|
|
|
|
Dated: July 17, 2023 | By: | /s/ Eduardo Brito |
|
|
| Eduardo Brito |
|
|
| Chief Executive Officer |
|
|
|
|
|
| By: | /s/ Rodney Sperry |
|
|
| Rodney Sperry |
|
|
| Chief Financial Officer |
|
Pursuant to the requirements of the Securities Exchange Act of l934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature |
| Title |
| Date |
|
|
|
|
|
| /s/ Eduardo Brito |
| Director |
| July 17, 2023 |
Eduardo Brito |
|
|
|
|
| 42 |
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
REQUIRED BY RULE 13A-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 AS AMENDED,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Eduardo A. Brito, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Accredited 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 consolidated 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 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, 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 consolidated 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 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: July 17, 2023 | By: | /s/ Eduardo A. Brito |
|
|
|
| Eduardo A. Brito Chief Executive Officer (Principal Executive Officer) |
|
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER
REQUIRED BY RULE 13A-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 AS AMENDED,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Rodney Sperry, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Accredited 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 consolidated 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 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, 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 consolidated 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 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: July 17, 2023 | By: | /s/ Rodney Sperry |
|
|
|
| Rodney Sperry Chief Financial Officer (Principal Accounting Officer) |
|
EXHIBIT 32.1
CERTIFICATION OF
PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
I, Eduardo A. Brito, Chief Executive Officer of Accredited Solutions, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
| (1) | the Annual Report on Form 10-K of the Company for the period ended December 31, 2022 (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. |
| Date: July 17, 2023 | By: | /s/ Eduardo A. Brito |
|
|
|
| Eduardo A. Brito Chief Executive Officer (Principal Executive Officer) |
|
EXHIBIT 32.2
CERTIFICATION OF
PRINCIPAL ACCOUNTING OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
I, Rodney Sperry, Chief Financial Officer of Accredited Solutions, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
|
| (1) | the Annual Report on Form 10-K of the Company for the period ended December 31, 2022 (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. |
| Date: July 17, 2023 | By: | /s/ Rodney Sperry |
|
|
|
| Rodney Sperry Chief Financial Officer (Principal Accounting Officer) |
|