Hammer Technology Holdings Corp 10-K for FY2024
Hammer Technology Holdings Corp. (HMMR)
About this 10-K
Hammer Technology Holdings Corp filed this 10-K on February 4, 2025, covering the fiscal year ended July 31, 2024 (FY2024).
Headline figures
Fiscal year ended July 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $3.28M
- up 0.7% from $3.26M a year earlier
- Net loss
- $1.23M
- compared with a net loss of $2.58M a year earlier
- Diluted EPS
- -$0.02
- compared with -$0.04 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended
Commission File Number
(Exact name of registrant as specified in its charter)
| (State of incorporation) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| None | None | None |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes [X]
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 [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer | [ ] | [X] | |
| Accelerated Filer | [ ] | Smaller Reporting Company | |
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ].
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of January 31, 2024 was approximately $
As of February 4, 2025, there were 63,155,947 shares of the registrant's $0.001 par value common stock issued and
Documents Incorporated by Reference
None
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This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "believe," "expect," "anticipate," "intend," "estimate," "may," "should," "could," "will," "plan," "future," "continue," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by any forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things: HAMMER TECHNOLOGY HOLDINGS CORP.TABLE OF CONTENTS TO THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 2024 |
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PART I
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "believe," "expect," "anticipate," "intend," "estimate," "may," "should," "could," "will," "plan," "future," "continue," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by any forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things:
• risk that general economic and business conditions, both nationally and in our markets, may change substantially, or sufficiently to change or impact our business,
• risk that our expectations and estimates concerning future financial performance, financing plans and the impact of competition,
• risk in our ability to implement our growth strategy,
• risk anticipated trends in our business,
• risk that we will not be able to remediate identified material weaknesses in our internal control over financial reporting and disclosure controls and procedures,
• risk that we fail to meet the requirements of the agreements under which we acquired our business interests, including any cash payments to the business operations, which could result in the loss of our right to continue to operate or develop the specific businesses described in the agreements,
• risk that we cannot attract, retain and motivate qualified personnel, particularly employees, consultants and contractors for our operations
• risks related to tax assessments
• advances in technologies, and
• other risk factors set forth herein.
In addition, in this report, we use words such as "anticipates," "believes," "plans," "expects," "future," "intends," and similar expressions to identify forward-looking statements. As used in this current report, the terms "we", "us", "our" and the "company" refer to Hammer Technology Holdings Corp.
We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Annual Report on Form 10K. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.
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ITEM 1. BUSINESS
Our Corporate History and Background
The Company was incorporated in the State of Nevada on September 23, 2010, under the name Recursos Montana S.A. The Company's principal activity was as a pre-exploration stage company engaged in the acquisition and exploration of mineral properties then owned by the Company. During this time, the Company was deemed a "shell company" in the pre-exploration stage and was ultimately unable to commence exploration activities.
On February 2, 2015, the Company entered into a Share Exchange Agreement with Tanaris Power Holdings, Inc., whereby the Company acquired 100% of Tanaris Power Holdings, Inc. issued and outstanding common stock in exchange for shares of the Company's common stock equal 51% of the issued and outstanding common stock and cash consideration to Tanaris in the aggregate amount of $350,000. Tanaris Power Holdings, Inc. was the owner of certain rights in connection with the marketing and sale of smart lithium-ion batteries and battery technologies for various industrial vehicles markets and related applications. On March 6, 2015, the Company amended its Articles of Incorporation to change its name to Tanaris Power Holdings, Inc.
On April 25, 2016, Tanaris Power Holdings, Inc., a Nevada corporation entered into a Share Exchange Agreement (the "Share Exchange Agreement") with Hammer Fiber Optics Investments, Ltd., a Delaware corporation ("HFOI"), and the controlling stockholders of HFOI (the "HFOI Shareholders"). Pursuant to the Share Exchange Agreement, the Company acquired 20,000,000 shares of common stock of HFOI from the HFOI shareholders (the "HFOI Shares") and in exchange the Company issued to the HFOI Shareholders 50,000,000 (post-Merger) restricted shares of its common stock (the "HMMR Shares"). As a result of the Share Exchange Agreement, HFOI became a wholly owned subsidiary of the Company. Hammer Fiber Optics Investments, Ltd. was formed in the State of Delaware on June 13, 2014.
On April 13, 2016, our board of directors approved a Plan of Merger (the "Plan of Merger") under Nevada Revised Statutes (NRS) Section 92A.180 to merge (the "Merger") with our wholly-owned subsidiary Hammer Fiber Optics Holdings Corp., a Nevada corporation, to effect a name change from Tanaris Power Holdings, Inc. to Hammer Fiber Optics Holdings Corp. The transaction was accounted for as a reverse merger. The Plan of Merger also provided for a 1 for 1,000 exchange ratio for shareholders of both the Company and Hammer Fiber Optics Holdings Corp., which had the effect of a 1 for 1,000 reverse split of our common stock. Articles of Merger were filed with the Secretary of State of Nevada on April 13, 2016 and, on April 14, 2016, this corporate action was submitted to FINRA for its review and approval.
On May 3, 2016, the Financial Industry Regulatory Authority ("FINRA") approved the merger with our wholly-owned subsidiary, Hammer Fiber Optics Holdings Corp. Accordingly, thereafter, the Company's name was changed and our shares of common stock began trading on the Over the Counter Bulletin Board (OTCBB) under our new ticker symbol "HMMR" as of May 27, 2016.
On September 11, 2018, our board of directors approved stock purchase agreements with 1stPoint Communications LLC and its subsidiaries, Endstream Communications LLC, Open Data Centers LLC and Shelcomm Inc. for the acquisition of all of the equity of the entities. 1stPoint and its subsidiaries possess CLEC licenses in Florida, New York State, and a nationwide CMRS (Commercial Mobile Radio Services) license. The companies operate a data center facility in Piscataway, New Jersey. The acquisition of 1stPoint Communications, LLC, Open Data Centers, LLC and Shelcomm, Inc. closed on November 1, 2018. The acquisition of Endstream Communications, LLC closed on December 17, 2018. On January 29, 2019 our board of directors approved a stock purchase agreement with American Network, Inc to acquire all of its equity. The acquisition of American Network, Inc closed on September 1, 2019.
As of April 30, 2020 our board of directors approved the discontinuation of the operations of Open Data Centers LLC. The operations of Open Data Centers, LLC were discontinued effective April 30, 2020 and the Company shut down its operations in its Piscataway, NJ data center.
On October 25, 2021 our board of directors approved a share exchange agreement with Telecom Financial Services Limited ("TFS") for the acquisition of one hundred percent (100%) of its stock. TFS owns the intellectual property critical to the operations of the company's financial technology business unit as well as certain key supplier, marketing and operating agreements. The acquisition of TFS closed on January 3, 2022. TFS has been renamed HammerPay [USA] Ltd.
On July 31, 2023 our board of directors approved the discontinuation of the operations of Hammer Wireless (SL) Limited, the company's data communications service in Sierra Leone. The operations were discontinued in March 2020 and all assets have been written down.
On August 7, 2024, the Company authorized and executed a Purchase Agreement with Viper Networks, Inc. with the intention to sell the Company’s telecommunications assets to Viper. The assets include 1st Point Communications LCC, and all its subsidiaries, Endstream Communications LLC, American Networks Inc., and 10% ownership in Wikibuli Inc. Viper has acquired these assets in exchange for 2,500,000 (2.5 Million) shares of the Company's common stock. The transaction closed on November 1, 2024. With the divestiture of the telecommunications assets, the Company has begun to concentrate its efforts on its fintech initiatives. HammerPay is a scalable, mobile-first financial services technology platform featuring an advanced digital wallet and neo-banking system, designed for global deployment in both developed and emerging markets.
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On July 31, 2024, the Board approved a resolution to amend the Articles of Incorporation to change the Company's name to Hammer Technology Holdings Corp. The Board believes that the name change better reflects the nature of the Company's ongoing business operations. The majority vote of shareholders approved the name change by written consent in lieu of a meeting on September 1, 2024.
Current Operations
Hammer Technology Holdings Corp (OTCPK:HMMR) is a company focused on sustainable shareholder value investing in both financial services technology and wireless telecommunications infrastructure.
Hammer's financial technologies business is focused on providing digital stored value technology via its HammerPay mobile payments platform to enable digital commerce between consumers and branded merchants across the developing world, ensuring Swift, Safe and Secure encrypted remittances and banking transactions.
Hammer's "Everything Wireless" go to market strategy for its telecommunications business includes the development of high speed fixed wireless service for residential, small business and enterprise clients using its wireless fiber platform, Hammer Wireless AIR®, mobility networks including 4G5G//LTE, Over-the-Top services such as voice, SMS and collaboration services and hosting services.
Employees
We currently have ten employees, six of which are full-time employees and four are part time.
Available Information
Our Internet website address is http://www.hmmrgroup.com. Through our website, we make available, free of charge, reports that we file with the Securities and Exchange Commission ("SEC"), which include, but are not limited to, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any and all amendments to such reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. These SEC reports can be also accessed through the investor relations section of our website. The information found on our website is not part of this or any other report we file with or furnish to the SEC.
ITEM 1A. RISK FACTORS
You should carefully consider each of the risks and uncertainties described below and elsewhere in this Annual Report on Form 10-K, as well as any amendments or updates reflected in subsequent filings with the SEC. We believe these risks and uncertainties, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results and could materially and adversely affect our business operations, results of operations, financial condition and liquidity. Further, additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our results and business operations.
Risks Associated with Our Business
Our operations and financial performance could be negatively impacted if the markets for our products do not develop and expand as we anticipate.
The markets for our products and services are characterized by rapidly changing technologies, evolving industry or regulatory standards and new product introductions. Our success is dependent on the successful introduction of new products and services, or upgrades of current products and services, and our ability to compete with new technologies. The following factors related to our products, services and markets, if they do not continue as in the recent past, could have an adverse impact on our operations:
• our ability to develop new products in response to government regulations and laws;
• our ability to secure and retain adequate spectrum to facilitate ongoing operations and deployment of our services beyond our present geographic footprint.
• Global economic downturns, market declines, or financial disruptions, including those affecting migration patterns, could harm our business, financial condition, operations, and cash flows.
• Competition from various providers, including banks, payment services, digital currencies, and emerging technologies, could adversely impact our ability to compete effectively and achieve future success.
• If customer confidence in our business or in consumer money transfer and payment service providers generally deteriorates, our business, financial condition, results of operations, and cash flows could be adversely affected.
• Failure to maintain agent or business relationships under acceptable terms, including challenges from compliance costs, banking access issues, or non-compliance by agents or subagents, could adversely affect our business and financial condition.
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Violation of labor laws and practices by our manufacturers and suppliers could harm our business.
We require our manufacturers and suppliers to operate in compliance with applicable laws and regulations. While the Company promotes ethical business practices, we do not control our manufacturers or suppliers or their labor practices. The violation of labor or other laws by any of our manufacturers or suppliers, or divergence of their labor practices from those generally accepted as ethical in the local markets, could interrupt or otherwise disrupt the shipment of our products, harm the value of our trademarks, damage our reputation or expose us to potential liability for their wrongdoings.
A privacy breach could damage our reputation and our relationship with our customers, expose the Company to litigation risk and adversely affect our business.
As part of our normal course of business, we collect, process and retain sensitive and confidential customer information. Despite security measures we have in place, our facilities and systems may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information could severely damage our reputation and our relationships with our customers, expose the Company to risks of litigation and liability and adversely affect our business.
Our Articles of Incorporation exculpates our officers and directors from certain liability to our Company or our stockholders.
Our Articles of Incorporation contain a provision limiting the liability of our officers and directors for their acts or failures to act, except for acts involving intentional misconduct, fraud or a knowing violation of law. This limitation on liability may reduce the likelihood of derivative litigation against our officers and directors and may discourage or deter our stockholders from suing our officers and directors based upon breaches of their duties to our Company.
Our directors and named executive officers are also our principal stockholders, and as such they will be able to exert significant influence over matters submitted to stockholders for approval, which could delay or prevent a change in corporate control or result in the entrenchment of management or the Board of Directors, possibly conflicting with the interests of other stockholders.
Our directors and named executive officers are also our principal stockholders and as such they exert significant influence in determining the outcome of corporate actions requiring stockholder approval and otherwise control of our business. This control could have the effect of delaying or preventing a change in control or entrenching management or the Board of Directors, which could conflict with the interests of our other stockholders and, consequently, could adversely affect the market price of our common stock.
There is substantial doubt about the entity's ability to continue as a going concern.
The Company has consistently sustained losses since its inception. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year from the issuance of these financial statements. The Company's continuation as a going concern is dependent upon, among other things, its ability to increase revenues, adequately control operating expenses and receive debt and/or equity capital from third parties. No assurance can be given that the Company will be successful in these efforts. The Company intends to continue to address this condition by seeking to raise additional capital through the issuance of debt and/or the sale of equity until such time that ongoing revenues can sustain the business, at which time capitalization may be considered through other means.
Information technology dependency and security vulnerabilities could lead to reduced revenue, liability claims, or competitive harm.
The Company is increasingly dependent on sophisticated information technology and infrastructure. Any significant breakdown, intrusion, interruption or corruption of these systems or data breaches could have a material adverse effect on our business.
We use electronic information technology (IT) in our manufacturing processes and operations and other aspects of our business. Despite our implementation of security measures, our IT systems are vulnerable to disruptions from computer viruses, natural disasters, unauthorized access, cyber-attack and other similar disruptions. A material breach in the security of our IT systems could include the theft of our intellectual property or trade secrets. Such disruptions or security breaches could result in the theft, unauthorized use or publication of our intellectual property and/or confidential business information, harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives, or otherwise adversely affect our business. We have, from time to time, experienced incidents related to our IT systems, and expect that such incidents will continue, including malware and computer virus attacks, unauthorized access, systems failures and disruptions. We have measures and defenses in place against unauthorized access, but we may not be able to prevent, immediately detect, or remediate such events.
Business disruptions could affect our operating results
A significant portion of our development activities and certain other critical business operations are concentrated in a few geographic areas. A major earthquake, fire or other catastrophic event that results in the destruction or disruption of any of our critical facilities could severely affect our ability to conduct normal business operations and, as a result, our future financial results could be materially and adversely affected.
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If we cannot attract more customers to purchase our products, we may not be able to increase or sustain our revenues.
Our future success will depend on our ability to attract additional customers. The growth of our customer base could be adversely affected by:
• customer unwillingness to implement our products and services;
• any delays or difficulties that we may incur in completing the development and introduction of our products or product enhancements or service enhancements;
• the overall satisfaction of our customers;
• new product and service introductions by our competitors;
• any failure of our products to perform as expected; or
• any difficulty we may incur in meeting customers' expectations.
Fluctuations in the economy affect the telecommunications industry, including broadband and Internet, and may decrease demand for various products and services. Such a decrease may have an adverse effect on the demand in the fiber optic sector and negatively impact the growth of our customer base.
Foreign Currency
We transact business in various foreign currencies including the Euro. In general, the functional currency of a foreign operation is the local country's currency. Consequently, revenues and expenses of operations outside the United States are translated into US Dollars using the weighted-average exchange rates on the period end date and assets and liabilities of operations outside the United States are translated into US Dollars using the change rate on the balance sheet dates. The effects of foreign currency translation adjustments are included in the stockholders' equity as a component of the AOCL in the accompanying financial statements.
Internal Controls
We have determined that our internal controls are ineffective due to the small staff of the company. Although we have implemented internal systems and controls to minimize the potential for risk and business loss, a breakdown of internal controls could affect our ability to conduct normal business operations and, as a result, our future financial results could be materially and adversely affected.
Risks Relating to Ownership of Our Securities
Our stock price may be volatile, which may result in losses to our shareholders.
The stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies listed on the OTCPK quotation system in which shares of our common stock are listed have been volatile in the past and have experienced sharp share price and trading volume changes. The trading price of our common stock is likely to be volatile and could fluctuate widely in response to many factors, including the following, some of which are beyond our control:
• variations in our operating results;
• changes in expectations of our future financial performance, including financial estimates by securities analysts and investors;
• changes in operating and stock price performance of other companies in our industry;
• additions or departures of key personnel; and
• future sales of our common stock.
Domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock.
Our common shares may become thinly traded and you may be unable to sell at or near ask prices, or at all.
We cannot predict the extent to which an active public market for trading our common stock will be sustained. The trading price of our common shares has historically been sporadically or "thinly-traded" meaning that the number of persons interested in purchasing our common shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stockbrokers, institutional investors and others in the investment community who generate or influence sales volume. Even if we came to the attention of such persons, those persons tend to be risk-averse and may be reluctant to follow, purchase, or recommend the purchase of shares of an unproven company such as ours until such time as we become more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot provide any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.
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The market price for our common stock is particularly volatile given our status as a relatively small company, which could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.
Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks can be negatively affected from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
We do not anticipate paying any cash dividends to our common shareholders.
We presently do not anticipate that we will pay dividends on any of our common stock in the foreseeable future. If payment of dividends does occur at some point in the future, it would be contingent upon our revenues and earnings, if any, capital requirements, and general financial condition. The payment of any common stock dividends will be within the discretion of our Board of Directors. We presently intend to retain any earnings after paying the interest for the preferred stock, if any, to implement our business plan; accordingly, we do not anticipate the declaration of any dividends for common stock in the foreseeable future.
Volatility in our common share price may subject us to securities litigation.
The market for our common stock is characterized by significant price volatility as compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources.
The elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights of our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.
Our Articles of Incorporation contain a specific provision that eliminates the liability of our directors and officers for monetary damages to our company and shareholders. Further, we are prepared to give such indemnification to our directors and officers to the extent provided for by Nevada law. We may also have contractual indemnification obligations under our employment agreements with our officers. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.
Our business is subject to changing regulations related to corporate governance and public disclosure that have increased both our costs and the risk of noncompliance.
Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the United States Security & Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), have issued requirements and regulations and continue to develop additional regulations and requirements in response to corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our efforts to comply with these regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue-generating activities to compliance activities. Because new and modified laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practice.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
To date, the Company has not identified any cybersecurity incidents which have materially affected, or are reasonably likely to materially affect, the Company's business strategy, results of operations or financial condition. The Company has not implemented any specific policies with respect to monitoring and managing cybersecurity threats. Moreover, the Company is aware of the evolution of cybersecurity risks and is taking proactive steps by keeping up to date our information systems and educating our personnel about these risks.
The Company recognizes the importance of developing, implementing, and maintaining cybersecurity measures to safeguard its information systems and protect the confidentiality, integrity, and availability of the data. The Company will be looking to adopt cybersecurity processes, technologies and controls to aid in its efforts to assess, prevent, identify and manage such risks.
ITEM 2. PROPERTIES
The Company does not own any real property, nor have any long term lease obligations.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, or proceeding by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or our subsidiary, threatened against or affecting our Company, our common stock, our subsidiary or of our companies or our subsidiary's officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR COMMON EQUITY
Market Information
Our Common Stock is quoted under the ticker symbol "HMMR" on the OTC Pink marketplace.
On February 3, 2025, the last reported sales price per share of our Common Stock on the OTC Pink was $0.0235.
Security Holders
As of February 3, 2025, we had 380 record holders of our Common Stock.
Dividends
We have not paid any cash dividends to our stockholders. The declaration of any future cash dividends is at the discretion of our Board and depends upon our earnings, if any, our capital requirements and financial position, and general economic conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Recent Sales of Unregistered Securities
None.
ITEM 6. [Reserved]
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Results of Operations
For the Year Ended July 31, 2024 Compared to the Year Ended July 31, 2023
| 2024 | 2023 | $ Change | % Change | |||||||||
| Revenues | $ | 3,279,946 | $ | 3,256,611 | $ | 23,335 | 0.7% | |||||
| Cost of sales | 2,398,667 | 2,426,456 | (27,789 | ) | (1.1)% | |||||||
| Selling, general and administrative expenses | 1,541,011 | 1,359,339 | 181,672 | 13.4% | ||||||||
| Depreciation and amortization expense | 731,581 | 717,860 | 13,721 | 1.9% | ||||||||
| Total operating expenses | $ | 4,671,259 | $ | 4,503,655 | $ | 167,604 | 3.7% |
Net revenues for the year ended July 31, 2024 and 2023 were $3,279,946 and $3,256,611 respectively, an increase of approximately $23,335 or 0.7%. The increase was primarily due to the expansion of the Company's Over-the-Top ("OTT") business segment which includes its SMS messaging and hosting business units.
During the year ended July 31, 2024, the Company incurred total operating expenses of $4,671,259 compared with $4,503,655, an increase of approximately $167,604 or 3.7%, for the comparable period ended July 31, 2023. The increase in expenses is due to the expenses associated with the Company's diversification into the financial services markets and increased expenses associated with the expansion of the telecommunications business segment.
The Company recorded depreciation and amortization expense of $731,581 and $717,860 during the year ended July 31, 2024 and 2023, respectively. During the year ended July 31, 2024 and 2023, interest expense was $86,043 and $20,618 respectively.
10
| 2024 | 2023 | $ Change | % Change | |||||||||
| Other income (expense) | ||||||||||||
| Other income | $ | 293,753 | $ | 262,259 | $ | 31,494 | 12.0% | |||||
| Interest expense | (86,043 | ) | (20,618 | ) | (65,425 | ) | 317.3% | |||||
| Warrant financing expenses | (164,525 | ) | (145,725 | ) | (18,800 | ) | 12.9% | |||||
| Financing expenses | (36,617 | ) | (255,532 | ) | 218,915 | (85.7)% | ||||||
| Warrant adjustment to fair value | 177,750 | 18,000 | 159,750 | 887.5% | ||||||||
| Other expenses | (26,018 | ) | (175,559 | ) | 149,541 | (85.2)% | ||||||
| Total other income (expense) | $ | 158,300 | $ | (317,175 | ) | $ | 475,475 | (149.9)% |
During the year ended July 31, 2024, the Company incurred total other income of $158,300 primarily consisting of interest expense, warrant financing expenses, financing expense, and other expenses of $86,043, $164,525, $36,617, and $26,018, respectively. These expenses are partially offset by other income in the twelve months ended July 31, 2024 of $293,753, which represents income from previously written-down customer accounts receivable and gain in fair value of warrant liability of $177,750. During the year ended July 31, 2023 the Company incurred total other expenses of $317,175 consisting of interest expense, warrant financing expenses, financing expense, and other expenses of $20,618, $145,725, $255,532 and $175,559, respectively. These expenses are partially offset by other income of $262,259 and a gain on fair value of warrant liability of $18,000.
During the twelve months ended July 31, 2024 the Company recorded a net loss from continuing operations of $1,233,013, compared to a loss of $1,564,219 in the same twelve-month period ended July 31, 2023. The decrease in loss is due to a large decrease in the Company's total other expenses and selling, general, and administrative expenses year over year.
Liquidity and Capital Resources
We have financed our operations since inception primarily through notes payable from related parties, which have been disclosed herein under Related Party Transactions. The Company had cash and cash equivalents of $74,133 and $66,688 as of July 31, 2024 and 2023, respectively.
See the analysis below of the cash flow statement for further details pertaining to liquidity.
We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors have included in their report on our audited financial statements for the fiscal years ended July 31, 2024 and 2023 an explanatory paragraph regarding factors that raise substantial doubt that we will be able to continue as a going concern.
The Company is at risk of remaining a going concern. Its ability to remain a going concern is dependent upon whether the Company can raise debt and/or equity capital from third party sources for both working capital and business development needs until such time as the Company may be substantially sustained as a going concern through cash flow from operations.
| 2024 | 2023 | $ Change | |||||||
| Net cash used in operating activities - continuing operations | $ | (760,238 | ) | $ | (866,756 | ) | $ | 106,518 | |
| Net cash used in operating activities - discontinued operations | - | 230,050 | (230,050 | ) | |||||
| Net cash used in investing activities | (19,719 | ) | (12,650 | ) | (7,069 | ) | |||
| Net cash provided by financing activities | 787,402 | 233,134 | 554,268 | ||||||
| Net increase (decrease) in cash and cash equivalents | $ | 7,445 | $ | (416,222 | ) | $ | 423,667 |
Cash Flow from Operating Activities
During the year ended July 31, 2024 the Company's total cash increased by $7,445, compared to a decrease in cash of $416,222 in the period ended July 31, 2023. Cash flow used in operating activities was $760,238, compared to $636,706 in the period ended July 31, 2023. The increase in cash was partially due to a decrease in net loss in the period as well as decreases in accounts payables, an increase in commitment shares issued, and decreases in deferred revenues, partially offset by a decrease in non-cash interest expense.
Cash Flow from Investing Activities
During the twelve months ended July 31, 2024, the Company's investing activities used $19,719, compared to $12,650 used in investing activities during the twelve months ended July 31, 2023. The increase was primarily due to an increase in the purchases of property and equipment as well as an increase in capitalized intangible assets during the period ended July 31, 2024.
Cash Flow from Financing Activities
During the year ended July 31, 2024, cash flow provided by financing activities was $787,402 compared with $233,134 provided during the year ended July 31, 2023. The increase is primarily attributable to greater borrowings of notes payable and convertible notes payable - related parties during the period. During the year ended July 31, 2024, the Company received approximately $492,474 more in proceeds from convertible notes payable - related parties as compared to the year ended July 31, 2023.
11
Going Concern
As at July 31, 2024, substantial doubt existed as to the Company's ability to continue as a going concern as the Company has earned only minimal revenue, has no certainty of earning additional revenues in the future, has a working capital deficit and an overall accumulated deficit since inception. The Company will require additional financing to continue operations either from management, existing shareholders, or new shareholders through equity financing and/or sources of debt financing. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Future Financings
We will continue to rely on equity sales of our common shares in order to continue to fund business operations. Issuances of additional shares may result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of equity securities or arrange for debt or other financing in amounts sufficient to fund our operations and other development activities.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The preparation of financial statements in accordance with GAAP requires application of management's subjective judgments, often requiring estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our actual results may differ substantially from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in "Note 3 - Summary of Significant Accounting Policies," to our consolidated financial statements included in Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K, we believe that the following accounting policies require the application of significant judgments and estimates.
Warrant Fair Value
Our warrant fair value estimates are based on the Black Scholes model using quoted market prices and estimated volatility factors based on historical prices of the Company's common stock.
Intangible Assets
Our intangible assets, composed of intellectual property and customer contracts, were obtained through the Company's January 2022 acquisition of Telecom Financial Services, Ltd. ("TFS"). A valuation specialist was contracted to determine a purchase price allocation for the $4,230,000 paid for TFS. Ultimately, it was determined that the technology platform is valued at approximately $3,867,222 and the customer contract at approximately $367,778. These assets have useful lives of between 5 and 7 years and are amortized on a straight-line basis. Periodically, the Company assesses its intangible assets for impairment.
Recently Issued Accounting Pronouncements
In the period from July 2023 through July 2024, the FASB has not issued any additional accounting standards updates that have a significant impact on the Company. Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
12
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
July 31, 2024 and 2023
13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Hammer Fiber Optics Holdings Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Hammer Fiber Optics Holdings Corp. (“the Company”) as of July 31, 2024 and 2023, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended July 31, 2024, 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 July 31, 2024 and 2023 and the results of its operations and its cash flows for each of the years in the two-year period ended July 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company has consistently sustained losses since its inception. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 4. 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 audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the 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 audits 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 audits provide a reasonable basis for our opinion.
Emphasis of a Matter - Restatement of Previously Issued Financial Statements
As discussed in Note 5 to the financial statements, the Company has restated its previously issued financial statements for the year ended July 31, 2023, as the Company performed an evaluation of its accounting in relation to intangible assets subject to amortization, and updated the allowance for uncollectable accounts to confirm to the guidance in ASU No. 2016-13. Our opinion on the financial statements as of July 31, 2023 is not modified with respect to this matter.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
We have served as the Company's auditor since 2022.
February 4, 2025
F-1
HAMMER TECHNOLOGY HOLDINGS CORP.
CONSOLIDATED BALANCE SHEETS
| July 31, | July 31, | |||||||
| 2024 | 2023 | |||||||
| (as restated) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Security deposits | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Notes payable | ||||||||
| Convertible notes payable | ||||||||
| Convertible notes payable - related parties | ||||||||
| Warrant liabilities | ||||||||
| Unissued Stock | ||||||||
| Deferred revenue | ||||||||
| Current liabilities from discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders' Equity | ||||||||
| Common stock, $ |
||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total Stockholder's Equity | ( |
) | ||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-2
HAMMER TECHNOLOGY HOLDINGS CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
| For the Years Ended | ||||||
| July 31, | ||||||
| 2024 | 2023 | |||||
| (as restated) | ||||||
| Revenues | $ | $ | ||||
| Cost of sales | ||||||
| Gross margin | ||||||
| Selling, general and administrative expenses | ||||||
| Depreciation expense | ||||||
| Total operating expenses | ||||||
| Loss from operations | ( |
) | ( |
) | ||
| Other income (expense) | ||||||
| Other income | ||||||
| Interest expense | ( |
) | ( |
) | ||
| Warrant financing expense | ( |
) | ( |
) | ||
| Financing expenses | ( |
) | ( |
) | ||
| Change in fair value of warrant liabilities | ||||||
| Other expenses | ( |
) | ( |
) | ||
| Total other income (expense) | ( |
) | ||||
| Income (loss) before discontinued operations | ( |
) | ( |
) | ||
| Income (loss) from discontinued operations | ( |
) | ||||
| Net loss | $ | ( |
) | $ | ( |
) |
| Weighted average number of common shares outstanding - basic and diluted | ||||||
| Basic and diluted loss per share | ||||||
| Continuing operations | $ | ( |
) | $ | ( |
) |
| Discontinued operations | $ | $ | ( |
) | ||
| Total | $ | ( |
) | $ | ( |
) |
The accompanying notes are an integral part of these consolidated financial statements.
F-3
HAMMER TECHNOLOGY HOLDINGS CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the years ended July 31, 2024 and 2023
| Additional | Total | ||||||||||||||||||||
| Common Stock | Treasury Stock | Paid-in | Accumulated | Stockholders' | |||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | |||||||||||||||
| Balance, July 31, 2022 (as restated) | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Conversion shares issued | |||||||||||||||||||||
| Net loss for the year | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Balance, July 31, 2023 (as restated) | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||
| Commitment shares issued | |||||||||||||||||||||
| Net loss for the year | - | - | - | - | - | ( |
) | ( |
) | ||||||||||||
| Balance, July 31, 2024 | $ | $ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
HAMMER TECHNOLOGY HOLDINGS CORP.
CONSOLIDATED STATEMENT CASH FLOWS
| For the Years Ended | ||||||
| July 31, | ||||||
| 2024 | 2023 | |||||
| (as restated) | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
| Net loss | $ | ( |
) | $ | ( |
) |
| Loss from discontinued operations | ||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
| Depreciation expense | ||||||
| Warrant adjustment to Fair Value | ( |
) | ( |
) | ||
| Commitment shares issued | ||||||
| Noncash interest and financing expense | ||||||
| Write-down of intangible assets | ||||||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | ( |
) | ||||
| Security deposits | ||||||
| Prepaid expenses | ( |
) | ||||
| Accounts payable | ( |
) | ( |
) | ||
| Deferred revenue | ( |
) | ( |
) | ||
| Net cash provided by (used in) operating activities continuing operations | ( |
) | ( |
) | ||
| Net cash provided by (used in) operating activities- discontinued operations | ||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchase of property and equipment | ( |
) | ( |
) | ||
| Net cash provided by (used in) investing activities- continuing operations | ( |
) | ( |
) | ||
| Net cash provided by (used in) investing activities- discontinued operations | ||||||
| Net cash used investing activities | ( |
) | ( |
) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Repayment of notes payable | ( |
) | ( |
) | ||
| Proceeds from notes payable | ||||||
| Net cash provided by (used in) financing activities- continuing operations | ||||||
| Net cash provided by (used in) financing activities- discontinued operations | ||||||
| Net cash provided by financing activities | ||||||
| Effect of foreign currency on cash | ||||||
| Net increase (decrease) in cash | ( |
) | ||||
| Cash and cash equivalent, beginning of period | ||||||
| Cash and cash equivalent, end of period | $ | $ | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES: | ||||||
| Cash paid for interest | $ | $ | ||||
| Cash paid for taxes | $ | $ | ||||
| Commitment shares issued | $ | $ | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
| HAMMER TECHNOLOGY HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS July 31, 2024 |
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Hammer Technology Holdings Corp (OTCPK:HMMR) is a company focused on sustainable shareholder value investing in both financial services technology and wireless telecommunications infrastructure.
Hammer's financial technologies business is focused on providing digital stored value technology via its HammerPay mobile payments platform to enable digital commerce between consumers and branded merchants across the developing world, ensuring Swift, Safe and Secure encrypted remittances and banking transactions.
Hammer's "Everything Wireless" go to market strategy for its telecommunications business includes the development of high speed fixed wireless service for residential, small business and enterprise clients using its wireless fiber platform, Hammer Wireless AIR®, mobility networks including 4G/LTE, Over-the-Top services such as voice, SMS and collaboration services and hosting services.
NOTE 2 - CORPORATE HISTORY AND BACKGROUND ON MERGER
The Company was originally incorporated in the State of Nevada on September 23, 2010, under the name Recursos Montana S.A. The Company's principal activity was an exploration stage company engaged in the acquisition of mineral properties then owned by the Company.
On February 2, 2015, the Company entered into a Share Exchange Agreement with Tanaris Power Holdings, Inc., whereby the Company acquired
On April 25, 2016, Tanaris Power Holdings, Inc., a Nevada corporation entered into s Share Exchange Agreement (the "Share Exchange Agreement") with Hammer Fiber Optics Investments, Ltd., a Delaware corporation ("HFOI"), and the controlling stockholders of HFOI (the "HFOI Shareholders"). Pursuant to the Share Exchange Agreement, the Company acquired
On April 13, 2016, the Board of Directors (BOD) approved a Plan of Merger (the "Plan of Merger") under Nevada Revised Statuses (NRS) Section 92A.180 to merge (the "Merger") with our wholly-owned subsidiary HFO Holdings, a Nevada corporation, to effect a name change from Tanaris Power Holdings Inc. to Hammer Fiber Optics Holdings Corp. The Plan of Merger also provides for a
On May 3, 2016, the FINRA approved the merger with the wholly-owned subsidiary, HMMR Fiber Optics Holdings Corp. ("HFO Holdings"). Accordingly, thereafter, the Company's name was changed and the shares of common stock began trading under new ticker symbol "HMMR" as of May 27, 2016. The merger was effective on July 19, 2016.
In 2016 Hammer Fiber Optics Investments Ltd deployed its first beta network in Atlantic County, New Jersey. The network used a spectrum license agreement from Straightpath Communications, LLC. On January 17, 2018 Verizon Communications, LLC purchased Straightpath Communications, LLC and on July14 2018, Verizon terminated the spectrum license agreement effective October 31, 2018 despite communications that it would continue to honor the agreement. On October 31, 2018 the Company ceased operations of the network in Atlantic County and subsequently classified the subsidiary as a discontinued operation.
On November 1, 2018, the Company acquired Open Data Centers, LLC, 1stPoint Communications, LLC and its subsidiaries. 1stPoint and its subsidiaries possess CLEC licenses in Florida, New York State, and a nationwide CMRS (Commercial Mobile Radio Services) license. The companies operate data center facilities in Piscataway, New Jersey and Homewood, Alabama. On December 17, 2018, the Company closed the acquisition of Endstream Communications, LLC, a wholesale voice operator in the United States.
F-6
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 2 - CORPORATE HISTORY AND BACKGROUND ON MERGER (CONTINUED)
On January 29, 2019 our board of directors approved a stock purchase agreement with American Network, Inc to acquire all of its equity. The acquisition of American Network, Inc closed on September 1, 2019.
As of December 30, 2020 our board of directors approved the discontinuation of the operations of Open Data Centers LLC. The operations of Open Data Centers, LLC were discontinued effective December 30, 2020 and the Company shut down its operations in its Piscataway, NJ data center.
As of April 30, 2020 our board of directors approved the discontinuation of the operations of Open Data Centers LLC. The operations of Open Data Centers, LLC were discontinued effective April 30, 2020 and the Company shut down its operations in its Piscataway, NJ data center.
On October 25, 2021 our board of directors approved a share exchange agreement with Telecom Financial Services Limited ("TFS") for the acquisition one hundred percent (
On July 31, 2023 our board of directors approved the discontinuation of the operations of Hammer Wireless (SL) Limited, the company's data communications service in Sierra Leone. The operations were discontinued in March 2020 and all assets have been written down.
On August 7, 2024, the Company authorized and executed a Purchase Agreement with Viper Networks, Inc. with the intention to sell the Company's telecommunications assets to Viper. The assets include 1st Point Communications LCC, and all its subsidiaries, Endstream Communications LLC, American Networks Inc., and
With the divestiture of the telecommunications assets, the Company has begun to concentrate its efforts on its fintech initiatives. HammerPay is a scalable, mobile-first financial services technology platform featuring an advanced digital wallet and neo-banking system, designed for global deployment in both developed and emerging markets.
On July 31, 2024, the Board approved a resolution to amend the Articles of Incorporation to change the Company's name to Hammer Technology Holdings Corp. The Board believes that the name change better reflects the nature of the Company's ongoing business operations. The majority vote of shareholders approved the name change by written consent in lieu of a meeting on September 1, 2024.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents include cash in banks, money market funds and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.
Property and equipment
Property and equipment is stated at cost less accumulated depreciation. Depreciation is recorded on a over the useful lives of the assets. For furniture and fixtures, the useful life is
F-7
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
Impairment of long-lived assets
The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate 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 the assets to future undiscounted cash flows to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company has not recognized any related impairment losses.
Intangible Assets
Our intangible assets with finite lives, including customer lists and internal-use software, are amortized over their estimated useful lives. We assess all amortizable intangible assets and other long-lived assets for impairment whenever circumstances or changes suggest the asset's carrying amount may not be recoverable. If impairment indicators are present, we evaluate recoverability by comparing the carrying amount of the asset group to its anticipated net undiscounted cash flows. Should these cash flows be less than the carrying amount, we proceed to determine the asset's fair value and record any necessary impairment. Each year, we also re-evaluate the useful life of these intangible assets to decide if adjustments to their remaining useful lives are warranted based on current events and conditions.
The Company did not recognize any intangible asset impairment charges during the years ended July 31, 2024 or 2023.
As of July 31, 2024, the Company had a total of $
As of July 31, 2023, the Company had a total of $
Revenue recognition
The Company accounts for revenues under Accounting Standards Update (ASU) 2014-09, "Revenue from Contracts with Customers" (Topic 606), which we adopted on August 1, 2018, using the modified retrospective approach. This standard update, along with related subsequently issued updates, clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP. 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. Amounts invoiced or collected in advance of product delivery or providing services are recorded as unearned revenue or customer deposits. The company accrues for sales returns, bad debts, and other allowances based on its historical experience. The Company's revenues are derived from its subsidiaries, 1stPoint Communications, LLC, Endstream Communications, LLC and Shelcomm, Inc. 1stPoint's and Shelcomm's revenues are derived from retail web and voice hosting services as well as carrier hosting services. These are contracted agreements which are billed monthly, and revenues are recognized in the period.
In some cases customers sign longer term agreements (up to two years) and prepay for those services. Revenues are recognized in the period the services are delivered. Endstream's revenue is derived from post-paid and pre-paid wholesale voice services and billed on a usage basis. Revenues are recognized in the period in which the services are delivered.
Accounts Receivable
On August 1, 2023, the Company adopted ASC 326, "Financial Instruments - Credit Losses". In accordance with ASC 326, an allowance is maintained for estimated forward-looking losses resulting from the possible inability of customers to make the required payments (current expected losses). The amount of the allowance is determined principally on the basis of past collection experience and known financial factors regarding specific customers.
F-8
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Management periodically assesses the Company's accounts receivable and, if necessary, establishes an allowance for estimated uncollectible amounts. Any required allowance is based on specific analysis of past due accounts and also considers historical trends of write-offs. As of July 31, 2024 and 2023, the Company's allowance for estimated uncollectible amounts was $
Income taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, "Accounting for Income Taxes". The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. As of July 31, 2023, the Company did not have any amounts recorded pertaining to uncertain tax positions.
Fair value measurements
The Company adopted the provisions of ASC Topic 820, "Fair Value Measurements and Disclosures", which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
Level 1 - quoted prices in active markets for identical assets or liabilities
Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable Level 3 - inputs that are unobservable (for example cash flow modeling inputs based on assumptions) The Company has no assets or liabilities valued at fair value on a recurring basis.
Level 3 - Unobservable inputs reflecting management's assumptions about the inputs used in pricing the asset or liability. Financial assets and liabilities (including warrants) approximate fair value.
F-9
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
|
Fair Value Measurements at July 31, 2024 using: |
||||||||||||
|
July 31, |
Quoted Prices |
Significant |
Significant |
|||||||||
| Warrant Liabilities | $ | |||||||||||
| Fair Value Measurements at July 31, 2023 using: | ||||||||||||
| July 31, 2023 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||
| Warrant Liabilities | $ | |||||||||||
The warrant liabilities are measured at fair value using quoted market prices and estimated volatility factors based on historical prices for the Company's common stock and are classified within Level 3 of the valuation hierarchy.
The following table provides a summary of changes in fair value of the Company's Level 3 financial liabilities as of July 31, 2024 and 2023:
| For the Year Ended | ||||||
| July 31, 2024 | July 31, 2023 | |||||
| Beginning Balance | $ | $ | ||||
| Change in fair value of warrant liabilities | ( |
) | ( |
) | ||
| Balance as of July 31, | $ | $ | ||||
The below table shows the Black-Scholes option-pricing model inputs used by the Company to value the derivative liability at each measurement date:
| July 31, 2024 | July 31, 2023 | ||
| Stock Price | $ |
$ |
|
| Risk-free interest rates | |||
| Expected life (in years) | |||
| Expected volatility | |||
| Dividend yield |
Consolidation of financial statements
Hammer Technology Holdings Corp. is the parent company and sole shareholder of Hammer Wireless Corporation and its subsidiaries, 1stPoint Communications, LLC and its subsidiaries (which includes Shelcomm, Inc), Endstream Communications, LLC, American Network Inc. and HammerPay [USA], Ltd. The financial statements for Hammer Technology Holdings Corp. and its wholly-owned subsidiaries are reported on a consolidated basis. All significant intercompany accounts and transactions have been eliminated. Its subsidiaries, Hammer Fiber Optics Investments, Ltd., Hammer Wireless - SL, Ltd and its former subsidiary Open Data Centers, LLC, are discontinued and are considered discontinued operations. Open Data Centers, LLC was dissolved on December 30, 2020.
F-10
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign currency translation and other comprehensive loss
We transact business in various foreign currencies including the Euro and the Leone. In general, The functional currency of Hammer Wireless - SL, Ltd., the Company's Sierra Leone subsidiary, is the Sierra Leonean Leone. Consequently, revenues and expenses of operations outside the United States are translated into USD Dollars using the weighted-average exchange rates on the period end date and assets and liabilities of operations outside the United States are translated into US Dollars using the change rate on the balance sheet dates. The effects of foreign currency translation adjustments amounted to approximately $
Prior period reclassifications
We have reclassified certain amounts in prior periods to conform with current year's presentation. Notes payable, convertible notes payable, and convertible notes payable - related parties which were reported within loans payable at July 31, 2023 have been reclassified into their own lines within the consolidated balance sheet.
Basic and diluted loss per share
The basic earnings (loss) per share are calculated by dividing the Company's net income available to common shareholders by the weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.
The following table sets forth the number of potential shares of common stock that have been excluded from basic net loss per share because their effect was anti-dilutive for the years ended:
| July 31, 2024 |
|
July 31, 2023 |
||||
| Warrants | ||||||
| Convertible Promissory Notes | ||||||
| Convertible Promissory Notes - Related Parties | ||||||
| Total |
F-11
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent accounting pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which significantly changes how entities will measure credit losses for most financial assets, including accounts receivable. ASU No. 2016-13 will replace today's "incurred loss" approach with an "expected loss" model, under which companies will recognize allowances based on expected rather than incurred losses. On November 15, 2019, the FASB delayed the effective date of Topic 326 for certain small public companies and other private companies until fiscal years beginning after December 15, 2022, for SEC filers that are eligible to be smaller reporting companies under the SEC's definition, as well as private companies and not-for-profit entities. In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The guidance was issued as improvements to ASU No. 2016-13 described above. The vintage disclosure changes require an entity to disclose current-period gross write-offs by year of origination for financing receivables. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. On August 1, 2023, the Company adopted ASC 326, "Financial Instruments - Credit Losses". the adoption did not have a material impact on Company's consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, "Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)" ("ASU 2020-06"). The purpose of ASU 2020-06 is to address issues identified as a result of the complexity associated with applying generally accepted accounting principles ("GAAP") for certain financial instruments with characteristics of liabilities and equity. The amendments in ASU 2020-06 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted but no earlier than fiscal years beginning after December 15, 2020. The Company adopted ASU 2020-06 on August 1, 2023, and the impact was considered immaterial on Company's consolidated financial statements.
Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (CODM). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for us for fiscal year ending July 31, 2025 and interim periods beginning in October 2025, with early adoption permitted. We expect this ASU to only impact our disclosures, which will be made on a retrospective basis, with no impacts to our results of operations, cash flows and financial condition.
Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on the rate reconciliation and income taxes paid. This ASU requires disclosure, on an annual basis, a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, the ASU requires disclosure of income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The new standard is effective for the Company for 2025, with early adoption permitted. An entity may apply the amendments in this ASU prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or may apply the amendments retrospectively by providing the revised disclosures for all periods presented. We expect this ASU to only impact our disclosures with no impacts to our results of operations, cash flows, and financial condition.
Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on our consolidated financial statements and related disclosures.
F-12
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 4 - GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has consistently sustained losses since its inception. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year from the issuance of these financial statements. The Company's continuation as a going concern is dependent upon, among other things, its ability to increase revenues, adequately control operating expenses and receive debt and/or equity capital from third parties. No assurance can be given that the Company will be successful in these efforts.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Company intends to continue to address this condition by seeking to raise additional capital through the issuance of debt and/or the sale of equity until such time that ongoing revenues can sustain the business, at which time capitalization may be considered through other means.
Subsequent to the Company's filing of its Annual Report on Form 10-K for the year ended July 31, 2023, with the Securities and Exchange Commission on February 16, 2024 and amended on May 8, 2024, the Company performed an evaluation of its accounting in relation to intangible assets subject to amortization. Management determined that the Original and Amended Form 10-K do not give effect to certain expenses identified. Accordingly, the Company restates its consolidated financial statements in this Form 10-K as outlined further below. Upon review of the Company's previously filed 10-K, the following errors were discovered and recorded:
1. In accordance with ASU No. 2016-13, the Company has re-evaluated its measurement of credit losses pertaining to its accounts receivable and noted that its allowance for uncollectable accounts should be increased by $
2. The Company evaluated its intangible assets with indefinite lives as of July 31, 2024 and deemed it appropriate to impair all assets relating to the telecommunications industry that would be divested following the agreement with Viper Networks, as detailed in Note 2 and Note 18. The Balance Sheet has been updated to properly reflect such impairment as of July 31, 2023. There has been no effect on the Statement of Operations, Statement of Changes in Stockholder Equity (Deficit), or the Statement of Cash Flows for the year ended July 31, 2023.
3. Amortization expense associated with two intangible assets, software and customer contracts, had not been amortized in accordance with ASC 350-30-35. The Statement of Operations and the Statement of Cash Flows for the period ended July 31, 2023 have been updated to properly reflect the amortization expense of intangible assets.
F-13
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated balance sheets for the year ended July 31, 2023:
| July 31, | July 31, | |||||||||
| 2023 | Adjustments | 2023 | ||||||||
| (as restated) | ||||||||||
| ASSETS | ||||||||||
| Current Assets | ||||||||||
| Cash and cash equivalents | $ | $ | $ | |||||||
| Accounts receivable, net | ( |
) | (1) | |||||||
| Security deposits | ||||||||||
| Prepaid expenses | ||||||||||
| Total current assets | ( |
) | ||||||||
| Property and equipment, net | ||||||||||
| Intangible assets, net | ( |
) | (2,3) | |||||||
| Total assets | $ | $ | ( |
) | $ | |||||
| Current Liabilities | ||||||||||
| Accounts payable and accrued expenses | $ | $ | $ | |||||||
| Notes payable | ||||||||||
| Convertible notes payable | ||||||||||
| Convertible notes payable - related parties | ||||||||||
| Warrant liabilities | ||||||||||
| Unissued Stock | ||||||||||
| Deferred revenue | ||||||||||
| Current liabilities from discontinued operations | ||||||||||
| Total current liabilities | ||||||||||
| Total liabilities | $ | $ | $ | |||||||
| Commitments and contingencies | ||||||||||
| Stockholders' Equity | ||||||||||
| Common stock, $0.001 par value, 250,000,000 shares authorized 63,155,947 and 62,205,947 shares issued; 61,402,612 and 60,452,612 shares outstanding at July 31, 2024 and July 31, 2023, respectively | $ | $ | $ | |||||||
| Additional paid-in capital | ||||||||||
| Accumulated deficit | ( |
) | ( |
) | (1,2,3) | ( |
) | |||
| Total Stockholder's Equity | ( |
) | ||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ( |
) | $ | |||||
F-14
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated statement of operations for the year ended July 31, 2023:
| For the Year Ended | ||||||||||
| July 31, 2023 | Adjustments | July 31, 2023 | ||||||||
| (As Filed) | (As Amended) | |||||||||
| Revenues | $ | $ | $ | |||||||
| Costs and expenses: | ||||||||||
| Cost of sales | ||||||||||
| Selling, general and administrative expenses | ||||||||||
| Depreciation expense | (3) | |||||||||
| Total operating expenses | ||||||||||
| Operating loss | ( |
) | ( |
) | ( |
) | ||||
| Other income (expense) | ||||||||||
| Other income | ||||||||||
| Interest expense | ( |
) | ( |
) | ||||||
|
Warrant adjustment to fair value |
( |
) | ( |
) | ||||||
|
Financing expenses |
( |
) | ( |
) | ||||||
|
Change in fair value of warrant liabilities |
||||||||||
| Other expenses | ( |
) | ( |
) | ||||||
| Total other expenses | ( |
) | ( |
) | ||||||
| Income (loss) Before Discontinued Operations | ( |
) | ( |
) | (3) | ( |
) | |||
| Income (loss) From Discontinued Operations | ( |
) | ( |
) | ||||||
| Net loss | $ | ( |
) | $ | ( |
) | $ | ( |
) | |
| Weighted average number of common shares outstanding - basic and diluted | - | |||||||||
| Loss per share- basic and diluted | ||||||||||
| Continuing operations | ( |
) | - | ( |
) | |||||
| Discontinued operations | ( |
) | - | ( |
) | |||||
| Total | $ | ( |
) | $ | - | $ | ( |
) | ||
F-15
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated statements of cash flows for the year ended July 31, 2023:
| July 31, | July 31, | |||||||||
| 2023 | Adjustments | 2023 | ||||||||
| (As Filed) | (As Restated) | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||
| Net Loss | $ | ( |
) | $ | ( |
) | (3) | $ | ( |
) |
| Loss from discontinued operations | ||||||||||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||
| Depreciation expense | (3) | |||||||||
| Warrant adjustment to fair value | ( |
) | ( |
) | ||||||
| Noncash interest expense | ||||||||||
| Write-down of intangible assets | ||||||||||
| Changes in operating assets and liabilities: | - | |||||||||
| Accounts receivable | ( |
) | ( |
) | ||||||
| Security deposits | ||||||||||
| Prepaid expenses | ( |
) | ( |
) | ||||||
| Accounts payable | ( |
) | ( |
) | ||||||
| Deferred revenue | ( |
) | ( |
) | ||||||
| Net cash used in operating activities - continuing operations | ( |
) | ( |
) | ||||||
| Net cash provided by (used in) operating activities - discontinued operations | ||||||||||
| Net cash used in operating activities | ( |
) | ( |
) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||
| Purchase of property and equipment | ( |
) | ( |
) | ||||||
| Net cash used in operating activities - continuing operations | ( |
) | ( |
) | ||||||
| Net cash used in operating activities - discontinued operations | ||||||||||
| Net cash used in investing activities | ( |
) | ( |
) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||
| Repayment of notes payable | ( |
) | ( |
) | ||||||
| Proceeds from notes payable | ||||||||||
| Net cash provided by financing activities - continuing operations | ||||||||||
| Net cash provided by financing activities - discontinued operations | ||||||||||
| Net cash used in financing activities | ||||||||||
| Effect of foreign currency on cash | ||||||||||
| Net increase (decrease) in cash | ( |
) | ( |
) | ||||||
| Cash, beginning of period | ||||||||||
| Cash, end of period | $ | $ | ||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES: | ||||||||||
| Cash paid for interest | $ | $ | $ | |||||||
| Cash paid for taxes | $ | $ | $ | |||||||
| Shares issued for debt conversion | $ | $ | $ |
The specific explanations for the items noted above in the restated financial statements are as follows:
1. Per review of its accounts receivable balance, the Company has deemed it appropriate to reserve a total of $
2. Following a divestiture of the telecommunications subsidiaries, as described in Note 18, the Company impaired all intangible assets with indefinite lives that contributed to the Company's conduction of business in this sector as of July 31, 2022.
3. After reexamination of the useful lives of the Company's intangible assets, it has been determined that a portion of such assets are subject to amortization and should be segregated and such amortization expensed.
F-16
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 6 - DISCONTINUED OPERATIONS
Hammer Fiber Optics Investment Ltd ceased operations in the Atlantic County geographical market on October 31, 2018 when Verizon Communications, LLC terminated the spectrum lease agreement. The operations of Hammer Fiber Optics Investments, Ltd were classified as a discontinued operation. Reporting of the discontinued operation is in accordance with Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.
Open Data Centers, LLC ceased operations at its sole location in Piscataway, NJ on May 1, 2020. The operations of Open Data Centers, LLC were classified as a discontinued operation. Reporting of the discontinued operation is in accordance with Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.
As of July 31, 2024 and 2023, there were $
NOTE 7 - PROPERTY AND EQUIPMENT
As of July 31, 2024 and 2023, property and equipment consisted of the following:
| July 31, | July 31, | ||||||||
| 2024 | 2023 | Life | |||||||
| Computer, Telecom equipment & Software | $ | $ | |||||||
| Less: Accumulated depreciation | ( |
) | ( |
) | |||||
| Total | $ | $ |
NOTE 8 - INDEFINITE LIVED INTANGIBLE ASSETS
As of July 31, 2024 and July 31, 2023, respectively, the Company had $
Other Intangible Assets
The following table displays the composition of Other intangible assets, net as well as the respective amortization period:
| 2024 | 2023 | ||||||||||||||||||
| At July 31, | Useful Life |
Gross Amount |
Accumulated Amortization |
Net Amount |
Gross Amount |
Accumulated Amortization |
Net Amount |
||||||||||||
| Customer contracts | $ | $ | $ | $ | $ | $ | |||||||||||||
| Software | |||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||
The amortization expense for Other intangible assets was as follows:
| Years | |||
| 2024 | $ | ||
| 2023 | |||
| 2022 |
F-17
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
Estimate annual amortization expense for Other intangible assets is as follows:
| Years | |||
| 2025 | $ | ||
| 2026 | |||
| 2027 | |||
| 2028 | |||
| 2029 |
NOTE 9 - NOTES PAYABLE
On April 1, 2024, 1stPoint Communications entered into a financing agreement with a financial institution in the amount of $
On March 20, 2023, 1stPoint Communications entered into a financing agreement with a financial institution in the amount of $
On January 5, 2022, the Company entered into a convertible note with a related party in the amount of $
During the fiscal year 2022, the Company entered into a non-interest bearing loan with a financial institution in the amount of $
On February 26, 2021, Endstream Communications entered into a financing agreement with a financial institution in the amount of $
As of July 31, 2024 and 2023, notes payable consisted of the following:
| July 31, 2024 | July 31, 2023 | |||||
| Notes payable | $ | $ | ||||
| Less: current portion, net | ( |
) | ( |
) | ||
| Long-term notes payable, net | $ | $ |
F-18
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 10 - RELATED PARTY CONVERTIBLE DEBT
On August 24, 2019, the Company entered into a convertible note with two related parties (who were former partners in 1stPoint Communications, LLC) in the amounts of $
On March 24, 2020, the Company entered into a convertible note with the Chief Financial Officer in the amount of $
On April 20, 2020, the Company entered into a convertible note with the Chief Financial Officer in the amount of $
On September 1, 2020, the Company entered into a promissory note for the sum of $
On February 26, 2021, the Company entered into a convertible note with a related party in the amount of $
As of July 31, 2024 and 2023, all of the related party payables are reported as current liabilities in the Consolidated Balance Sheet and all interest and maturity dates have been waived by the holders of all promissory notes from all related parties.
All related party convertible notes, with the exception of the August 22, 2019, September 1, 2020, and January 5, 2022 notes, have conversion terms of a 20% discount to market on the date of the proposed conversion, at the option of the Company or lender.
The August 22, 2019, September 1, 2020, and January 5, 2022 notes have no conversion price explicitly stated.
As of July 31, 2024 and 2023, related parties convertible debt consisted of the following:
| July 31, 2024 | July 31, 2023 | |||||
| Convertible notes payable - related parties | $ | $ | ||||
| Less: current portion, net | ( |
) | ( |
) | ||
| Long-term convertible notes payable - related parties, net | $ | $ |
NOTE 11 - CONVERTIBLE DEBT
On February 11, 2022, the Company entered into a Securities Purchase Agreement (the "Mast SPA") by and between the Company and Mast Hill Fund, L.P. ("Mast"). Pursuant to the terms of the Mast SPA, the Company agreed to sell to Mast and Mast agreed to purchase from the Company, a promissory note in the aggregate principal amount of $
The Company entered into the First Amendment to the Mast Note as of March 6, 2023, through which both parties agreed to increase the principal balance of the note by $
F-19
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 11 - CONVERTIBLE DEBT (CONTINUED)
Pursuant to the terms of the Mast SPA, the Company also agreed to issue (i) a common stock purchase warrant to purchase
On April 4, 2024, the Company entered into the Second Amendment to the Mast Note, effectively increasing the principal balance of the note by $
The Mast Note bears interest at a rate of
The foregoing description of the Mast SPA, the Mast Note and the Mast Warrants does not purport to be complete and is qualified in its entirety by reference to the Mast SPA, the Mast Note, the First Mast Warrant and the Second Mast Warrant, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to Form 8-K filed on February 23, 2022.
On February 17, 2022, the Company entered into a Securities Purchase Agreement (the "Talos SPA") by and between the Company and Talos Victory Fund, LLC ("Talos"). Pursuant to the terms of the Talos SPA, the Company agreed to sell to Talos, and Talos agreed to purchase from the Company, a promissory note in the aggregate principal amount of $
As of July 31, 2024 and 2023, convertible debt consisted of the following:
| July 31, 2024 | July 31, 2023 | |||||
| Convertible debt | $ | $ | ||||
| Original issue discount | $ | $ | ||||
| Less: current portion, net | ( |
) | ( |
) | ||
| Long-term convertible debt, net | $ | $ |
NOTE 12 - INCOME TAXES
The difference between the actual income tax rate versus the tax computed at the Federal Statutory Rate follows:
| July 31, 2024 |
July 31, 2023 |
|||||||||
| Federal rate | % | % | ||||||||
| State net of federal | % | % | ||||||||
| Non-taxable change in fair value of warrant | - |
% | % | |||||||
| Other permanent items | - |
% | % | |||||||
| Valuation allowance | ( |
) | % | ( |
) | % | ||||
| Effective income tax rate | % | % | ||||||||
The Company did not have any material uncertain tax positions. The Company’s policy is to recognize interest and penalties accrued related to unrecognized benefits as a component income tax expense (benefit). The Company did not recognize any interest or penalties, nor did it have any interest or penalties accrued as of July 31, 2024 and July 31, 2023.
Deferred income tax assets and (liabilities) consist of the following:
| July 31, 2024 | July 31, 2023 | ||||||
| Deferred tax assets (liabilities) | |||||||
| Net operating loss carryforward | $ | $ | |||||
| Intangibles | |||||||
| Depreciation | |||||||
| Total deferred tax assets | |||||||
| Valuation allowance | ( |
) | ( |
) | |||
| Net deferred taxes | $ | $ | |||||
The Company has approximately $
The Company has approximately $
Internal Revenue Code Section 382 limits the ability to utilize net operating losses if a 50% change in ownership occurs over a three-year period. Such limitation of the net operating losses may have occurred, but we have not analyzed it at this time as the deferred tax asset is fully reserved.
During the twelve months ended July 31, 2023, the valuation allowance increased by $
The tax periods ending July 31, 2021 through 2023 are open for examination.
F-20
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 13 - STOCKHOLDERS' EQUITY
Common Stock
On April 4, 2024, the Company entered into the Second Amendment to the Mast Note, which included the issuance of
On March 6, 2023, Mast Hill amended the terms of its promissory note, which included the issuance of
On March 23, 2023, Mast Hill converted the promissory convertible note into
Treasury Stock
The balance of Company Treasury Stock was unchanged during the period.
NOTE 14 - COMMITMENTS AND LEASES
Hammer does not currently have any material long-term lease obligations.
NOTE 15 - CLAIMS
From time to time, the Company may become subject to various legal proceedings that are incidental to the ordinary conduct of its business. Although the Company cannot accurately predict the amount of any liability that may ultimately arise with respect to any of these matters, it makes provision for potential liabilities when it deems them probable and reasonably estimable. These provisions are based on current information and legal advice and may be adjusted from time to time according to developments. The following parties have filed claims against Hammer Fiber Optics Investments Ltd and are not secured:
| Calvi Electric v. Hammer Fiber Optics Inv, Ltd. | $ | ||
| Horizon Blue Cross v. Hammer Fiber Optics Inv, Ltd. | $ |
In the matter of Cross River Fiber vs. Hammer Fiber Optics Investments, Ltd., the related party has paid its obligations and the matter is now considered closed. The claims by Calvi Electric and Horizon Blue Cross have not advanced.
NOTE 16 - WARRANTS
On February 11, 2022, the Company issued a purchase warrant to Mast Hill Fund, L.P. for
On February 17, 2022, the Company issued a purchase warrant to Talos Victory Fund, LLC for
On February 17, 2022, the Company issued a purchase warrant to Talos Victory Fund, LLC for
F-21
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 16 - WARRANTS (CONTINUED)
The Black Scholes model was used to determine the fair price of the warrants, including the use of the share price, exercise price, term, volatility, risk free interest rate and the dividend rate. The warrants were priced in each quarter and the carrying cost of the warrant adjusted in accordance with the model.
| Weighted | |||||||||
| Weighted | Average | ||||||||
| Average | Contractual | ||||||||
| Number of | Exercise | Term | |||||||
| Warrants | Price | (Years) | |||||||
| Balance outstanding at July 31, 2022 | |||||||||
| Granted | $ | ||||||||
| Exercised | - | ||||||||
| Expired/Canceled | - | ||||||||
| Balance outstanding at July 31, 2023 | $ | ||||||||
| Granted | - | ||||||||
| Exercised | - | ||||||||
| Expired/Canceled | - | ||||||||
| Balance outstanding at July 31, 2024 | $ | ||||||||
| Exercisable at July 31, 2024 | $ |
The fair values of warrants granted during the years ended July 31, 2024 and 2023 were estimated using Black-Scholes option-pricing model with the following assumptions:
| July 31, | |||
| 2024 | 2023 | ||
| Exercise Price | $ |
$ |
|
| Risk-free interest rates | |||
| Expected life (in years) | |||
| Expected volatility | |||
| Dividend yield | |||
NOTE 17 - OTHER INCOME (EXPENSE) AND DISCONTINUED AND CONTINUING OPERATIONS
Discontinued Operations
During the fiscal year ending July 31, 2023, the Company recognized losses from the discontinued operations of two entities, Hammer Fiber Optics Investments, Ltd. and Hammer Wireless [SL] Ltd.
The remaining assets of the operations of Hammer Fiber Optics Investments, Ltd in Atlantic County, NJ have been written down and considered a loss from discontinued operations. The loss from discontinued operations was $
The remaining assets of the operations of Hammer Wireless [SL] Ltd in Sierra Leone have been written down and considered a loss from discontinued operations. The loss from discontinued operations was $
Other Income
Management evaluated the deferred revenue of the 1stPoint Communications, LLC business unit and determined that certain revenues had not been reflected in prior periods due to changes in the underlying systems relating to its web hosting business. As a result, management adjusted the deferred revenue from prior periods as Other Income. Adjustments to the periods were considered revenues. The Other Income totaled approximately $
F-22
HAMMER TECHNOLOGY HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2024
NOTE 17 - OTHER INCOME (EXPENSE) AND DISCONTINUED AND CONTINUING OPERATIONS (CONTINUED)
On October 4, 2022, Talos Fund exercised its right to convert the principal and accrued interest from its promissory note in the amount of $
On March 23, 2023 Mast Hill exercised its rights to convert interest expense and transactions fees in the amount of $
Financing Expenses
During the fiscal year ended July 31, 2024, the Company recognized financing expenses associated with notes payable to Synergy Finance of $
During the fiscal years ended July 31, 2024 and 2023, the Company recognized $
Other Expenses
During the fiscal year ended July 31, 2024, the Company recognized a loss on the writedown of assets in association with the discontinuation of the Hammer Wireless SL business unit. 1stPoint and Endstream recognized a loss of $
During the fiscal year ended July 31 ,2023, the Company recognized a loss of $
NOTE 18 - SUBSEQUENT EVENTS
The Company has completed an evaluation of all subsequent events through February 4, 2025, the date the financial statements were issued. Except as described below, the Company has concluded that no subsequent event has occurred that requires disclosure.
Management has reviewed the subsequent events and there is no material impact on the current financial statements or the valuation of the business.
On August 7, 2024, the Company authorized and executed a Purchase Agreement with Viper Networks Inc. with the intention to sell the Company's telecommunication assets to Viper. The assets include 1st Point Communications LLC., and all its subsidiaries, Endstream Communications LLC, American Networks Inc., and
On August 29, 2024, the Company entered into and closed a loan agreement with one of our members of the Board of Directors, pursuant to which the Board Member loaned the Company an aggregate principal amount of $
On September 1, 2024, the Company obtained shareholder approval for the Purchase Agreement with Viper Networks Inc. and to change the name of the reporting entity, Hammer Fiber Optics Holdings Corp., to Hammer Technologies Holdings Corp.
F-23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL STATEMENTS
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act) that are designed to reasonably ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 15d-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
At the end of the period covered by this Quarterly Report, we conducted an evaluation under the supervision and with the participation of our Principal Officer and Principal Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon the foregoing, our Principal Executive Officer and Principal Financial Officer concluded that, as of July 31, 2024, the disclosure controls and procedures of our Company were not effective.
Material Weakness and Correction Action
Our management assessed the effectiveness of our internal control over financial reporting as of July 31, 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework (2013).
A material weakness in internal controls is a deficiency in internal control, or combination of control deficiencies, that adversely affects our ability to initiate, authorize, record, process, or report external financial data reliably in accordance with GAAP such that there is more than a remote likelihood that a material misstatement of our annual or interim financial statements that is more than inconsequential will not be prevented or detected. In the course of making our assessment of the effectiveness of internal controls over financial reporting, we identified a material weakness in our internal control over financial reporting. Specifically, this is due to an inherent staffing limitation to properly segregate duties and provide adequate monitoring during the process leading to and including the preparation of the consolidated financial statements.
During the fiscal year 2024, we engaged an outsourced firm with a panel of CPA consultants in 2024 to assist in building internal controls and preparing financial reports, and to establish best practices and help us document and implement all the checks and balances needed for all financial areas.
Limitations on Effectiveness of Controls and Procedures
Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. 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.
14
Attestation Report of the Independent Registered Public Accounting Firm
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our management's report was not subject to attestation by our independent registered public accounting firm pursuant to the Dodd-Frank Act that permanently exempted smaller reporting companies from the auditor attestation requirement.
Changes in Internal Control over Financial Reporting
During the fiscal year 2024, we engaged an outsourced firm with a panel of CPA consultants in 2024 to assist in building internal controls and preparing financial reports, and to establish best practices and help us document and implement all the checks and balances needed for all financial areas.
Except as listed above, there were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
15
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Identification of Executive Officers and Directors of the Company
| Name | Age | Positions |
| Michael Cothill | 66 | Principal Executive Officer Director |
| Mark Stogdill | 43 | Principal Financial Officer Director |
| Michael Sevell | 69 | Director |
Term of Office
Each director of the Company serves for a term of one year and until his successor is elected and qualified at the next Annual Shareholders' Meeting, or until his death, resignation or removal. Each officer of the Company serves for a term of one year and until his successor is elected and qualified at a meeting of the Board of Directors.
Family Relationships
None.
Risk Oversight
Our board of directors takes a company-wide approach to risk management. Our board of directors determines the appropriate risk level for us generally, assesses the specific risks faced by us and reviews the steps taken by management to manage those risks. While our board of directors has ultimate oversight responsibility for the risk management process given that no board committees have yet been formed. Our board of directors will be responsible for overseeing the management of risks associated with the independence of our board of directors.
Until our board of directors has established a compensation committee, it remains responsible for, among other things, overseeing the management of risks relating to our executive compensation plans and arrangements, and the incentives created by the compensation awards is administered. Until our board of directors has established an audit committee, it will oversee, among other things, our corporate accounting and financial reporting process and oversees the audit of our financial statements and the effectiveness of our internal control over financial reporting. Until our board of directors has established a nominating committee, it will be responsible for among other things, making recommendations regarding candidates for directorships, reviewing developments in corporate governance practices and developing a set of corporate governance guidelines.
Code of Ethics
The Company has not adopted a Code of Ethics.
Nominations to the Board of Directors
Our directors take a critical role in guiding our strategic direction and oversee the management of the Company. Our board of directors' candidates are considered based upon various criteria, such as their broad-based business and professional skills and experiences, a global business and social perspective, concern for the long-term interests of the shareholders, diversity, and personal integrity and judgment. In addition, directors must have time available to devote to our board of directors' activities and to enhance their knowledge of our business. Accordingly, we seek to attract and retain highly qualified directors who have sufficient time to attend to their substantial duties and responsibilities to our Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Exchange Act, our directors and certain of our officers, and persons holding more than 10 percent of our Common Stock are required to file forms reporting their beneficial ownership of our Common Stock and subsequent changes in that ownership with the United States Securities and Exchange Commission.
During the fiscal year ended July 31, 2024, we do not believe any reports were required to be filed by such persons pursuant to Section 16(a).
16
Involvement in Certain Legal Proceedings
During the past ten years no director, executive officer, promoter or control person of the Company has been involved in the following:
(1) A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
(i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
(4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
(5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
(7) Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
(i) Any Federal or State securities or commodities law or regulation; or
(ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
(iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
17
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our executive officers for the fiscal years ended July 31, 2024 and 2023.
| SUMMARY COMPENSATION TABLE | ||||
| Name and Principal Position | Fiscal Year | Salary ($) | All Other Compensation ($) | Total ($) |
| Michael P. Cothill | 2024 | NIL | NIL | NIL |
| Executive Director & Executive Chairman | 2023 | NIL | NIL | NIL |
| Mark Stogdill1 | 2024 | NIL | NIL | NIL |
| Principal Financial Officer & Director | 2023 | NIL | NIL | NIL |
| Erik Levitt1 | 2024 | NIL | NIL | NIL |
| Principal Financial Officer & Director | 2023 | NIL | NIL | NIL |
1 As of August 7, 2024, Erik Levitt tendered his resignation as Principal Financial Officer and as a director of the Company. The Board of Directors appointed Mark Stogdill to the position of Principal Financial Officer and Secretary of the Company.
Equity Incentive Plan
None.
Option Grants
We have not granted any options or stock appreciation rights to our named executive officers or directors since inception. We do not have any stock option plans.
Management Agreements
None.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
Compensation Committee
We do not currently have a compensation committee of the board of directors or a committee performing similar functions. The board of directors as a whole participates in the consideration of executive officer and director compensation.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding our current executive officers and directors as of February 4, 2025:
18
| Name and Address of Beneficial Owner Directors and Officers: | Age | Class | Shares Held or Controlled | Percentage of Class 1 |
| Michael Cothill 2 Principal Executive Officer & Director 6151 Lake Osprey Drive Sarasota, FL 34240 | 66 | Common | 4,350,000 | 6.89% |
| Mark Stogdill 3 Principal Financial Officer & Director 6151 Lake Osprey Drive Sarasota, FL 34240 | 43 | Common | 4,545,340 | 7.20% |
| Michael Sevell 4 Director 6151 Lake Osprey Drive Sarasota, FL 34240 | 69 | Common | 8,065,236 | 12.77% |
| All executive officers and directors as a group (3 people) | Common | 16,960,576 | 26.86% |
1. The number and percentage of shares beneficially owned is determined under rules promulgated by the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The entities or persons named in the table have sole voting and investment power with respect to all shares of common stock shown that are beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.
2. Michael Cothill's ownership of 4,350,000 shares represents his indirect ownership of 4,350,000 shares owned by Ambleside Trust, for which he has sole voting and dispositive control.
3. Mark Stogdill's ownership of 4,545,340 shares represents his indirect ownership of 4,545,340 shares owned by Arradis Enterprises, LLC, a limited liability company for which he has sole voting and dispositive control.
4. Michael Sevell's ownership of 8,065,236 shares is composed of: (a) 5,872,736 shares owned directly by Michael Sevell; and (b) 2,192,500 shares representing his indirect ownership of 2,192,500 shares owned by Forefront Investors, LLC., a limited liability company for which he has sole voting and dispositive control.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
None of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 10% of the Company's outstanding shares of its common stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past two fiscal years, or in any proposed transaction, which has materially affected or will affect the Company other than as disclosed at Note 10 to the financial statements.
On August 29, 2024, Hammer Technology Holdings Corp. (the "Company") entered into and closed a loan agreement (the "Loan") with one of our members of the Board of Directors (the "Board Member"), pursuant to which the Board Member loaned the Company an aggregate principal amount of $791,546. The Loan has an interest rate of 6%. The Loan has a six month maturity date and the principal and accrued interest are due in full on March 1, 2025. The Company used the proceeds of the Loan to pay off in full satisfaction the promissory note the Company previously issued to Mast Hill Fund L.P.
With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manner:
- Disclosing such transactions in reports where required;
- Disclosing in any and all filings with the SEC, where required;
- Obtaining disinterested directors consent; and
- Obtaining shareholder consent where required.
Director Independence
For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCPK on which shares of the Company's Common Stock are quoted does not have any director independence requirements. The NASDAQ definition of "Independent Director" means a person other than an Executive Officer or employee or any other individual having a relationship, which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Under the definitions outlined it is our opinion that Michael Sevell and Mark Stogdill are independent directors.
Review, Approval or Ratification of Transactions with Related Persons
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
19
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The company employs Pre-Approval Policies and Procedures Prior to engaging our accountants to perform a particular service, our board of directors obtains an estimate for the service to be performed. All of the services described above were approved by the board of directors in accordance with its procedures.
Below is the aggregate amount of fees billed for professional services rendered by our principal accountants with respect to our last two fiscal years:
| 2024 | 2023 | |||||
| Audit fees (1) | $ | 55,000 | $ | 33,500 | ||
| Audit related fees (2) | - | - | ||||
| Tax fees (3) | - | - | ||||
| All other fees | - | - | ||||
| Total | $ | 55,000 | $ | 33,500 |
(1) | Audit fees - these fees relate to the audit of our annual consolidated financial statements and the review of our interim quarterly consolidated financial statements. |
(2) | Audit-related fees - these fees relate primarily to the auditors' review of our registration statements and audit related consulting. |
(3) | Tax fees - no fees of this sort were billed by our independent registered public accounting firm during 2024 and 2023 fiscal years. |
All Other Fees
We did not incur any other fees related to services rendered by our independent registered public accounting firm for the fiscal years ended July 31, 2024 and 2023.
The SEC requires that before our independent registered public accounting firm is engaged by us to render any auditing or permitted non-audit related service, the engagement be either: (i) approved by our audit committee or (ii) entered into pursuant to pre-approval policies and procedures established by the audit committee, provided that the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.
Pre-Approval Policies and Procedures
We do not have an audit committee. Our Board pre-approves all services provided by our independent registered public accounting firm. All of the above services and fees during the fiscal years ended July 31, 2024 and 2023 were reviewed and approved by our Board before the respective services were rendered.
Maintaining Principal Accountant's Independence
Our Board of Directors has considered whether the provision of the services described herein are compatible with maintaining the principal accountant's independence and believes that such services do not compromise that independence.
20
ITEM 15. EXHIBITS
*In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.
**Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
21
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HAMMER TECHNOLOGY HOLDINGS CORP | |
| Date: February 4, 2025 | /s/ Michael Cothill |
| Michael P. Cothill | |
| Principal Executive Officer | |
| Date: February 4, 2025 | /s/ Mark Stogdill |
| Mark Stogdill | |
| Principal Financial Officer |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.
| HAMMER TECHNOLOGY HOLDINGS CORP | |
| Date: February 4, 2025 | /s/ Michael Cothill |
| Michael P. Cothill | |
| Principal Executive Officer | |
| Date: February 4, 2025 | /s/ Mark Stogdill |
| Mark Stogdill | |
| Principal Financial Officer | |
| Date: February 4, 2025 | /s/ Michael Sevell |
Michael Sevell | |
Director |
22
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, Michael P. Cothill, certify that:
1. I have reviewed this Annual Report on Form 10-K of the Registrant for the period ended July 31, 2024.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4. As the Registrant's certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
5. As the Registrant's certifying officer, I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant 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: February 4, 2025
Hammer Technology Holdings Corp.
By: /s/ Michael P. Cothill
Name: Michael P. Cothill
Title: Principal Executive Officer
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002
I, Mark Stogdill, certify that:
1. I have reviewed this Annual Report on Form 10-K of the Registrant for the period ended July 31, 2024.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4. As the Registrant's certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and
5. As the Registrant's certifying officer, I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant 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: February 4, 2025
Hammer Technology Holdings Corp.
By: /s/ Mark Stogdill
Name: Mark Stogdill
Title: Principal Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael P. Cothill, the Principal Executive Officer of Hammer Technology Holdings Corp., certify, under the standards set forth and solely for the purposes of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Annual Report on Form 10-K of the Registrant for the period ended July 31, 2024, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date: February 4, 2025
Hammer Technology Holdings Corp.
By: /s/ Michael P. Cothill
Name: Michael P. Cothill
Title: Principal Executive Officer
A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Mark Stogdill, the Principal Financial Officer of Hammer Technology Holdings Corp., certify, under the standards set forth and solely for the purposes of 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Annual Report on Form 10-K of the Registrant for the period ended July 31, 2024, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Date: February 4, 2025
Hammer Technology Holdings Corp.
By: /s/ Mark Stogdill
Name: Mark Stogdill
Title: Principal Financial Officer
A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.