Quantum X Inc 10-K for FY2024
Quantum X Inc. (QUTX)
About this 10-K
Quantum X Inc filed this 10-K on April 14, 2025, covering the fiscal year ended December 31, 2024 (FY2024).
Headline figures
Fiscal year ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $709.53K
- down 9.4% from $783.49K a year earlier
- Net loss
- $2.43M
- compared with a net loss of $8.16M a year earlier
- Diluted EPS
- $0.00
- compared with -$0.56 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the fiscal year ended
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or Other Jurisdiction of | (I.R.S. Employer | |||
| Incorporation or Organization) | Identification No.) | |||
| (Address of Principal Executive Offices) | (Zip Code) | |||
(
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨
Indicate by check mark whether the issuer
(1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§ 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).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
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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 ¨ | Accelerated filer ¨ | |
| Smaller reporting company | ||
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No
Securities registered under Section 12(b) of the Act:
| Title of each class | Name of each exchange on which registered |
| N/A | N/A |
Securities registered under Section 12(g) of the Act:
(Title of class)
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). ☐
State the aggregate market value of the
voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold,
or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed
second fiscal quarter. $
As of April 11, 2025 the registrant had outstanding shares of Common Stock.
Documents incorporated by reference: None.
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TABLE OF CONTENTS
| PART I | Page | |
| Item 1. | Business | 5 |
| Item 1A. | Risk Factors | 5 |
| Item 1B. | Unresolved Staff Comments | 14 |
| Item 1C. | Cybersecurity | 14 |
| Item 2. | Properties | 14 |
| Item 3. | Legal Proceedings | 14 |
| Item 4. | Mine Safety Disclosures | 15 |
| PART II | ||
| Item 5. | Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 15 |
| Item 6. | [Reserved] | 16 |
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 25 |
| Item 8. | Financial Statements and Supplementary Data | 25 |
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 27 |
| Item 9A. | Controls and Procedures | 27 |
| Item 9B. | Other Information | 27 |
| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 28 |
| PART III | ||
| Item 10. | Directors, Executive Officers and Corporate Governance | 28 |
| Item 11. | Executive Compensation | 31 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 33 |
| Item 13. | Certain Relationships and Related Transactions and Director Independence | 34 |
| Item 14. | Principal Accountant Fees and Services | 35 |
| PART IV | ||
| Item 15. | Exhibits, Financial Statement Schedules | 36 |
| Item 16. | Form 10-K Summary | 38 |
| Signatures | 38 |
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-K contains "forward-looking statements" that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the risks described in this Form 10-K and other filings we make with the Securities and Exchange Commission. Although we believe the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made. We do not intend to update any of the forward-looking statements after the date of this report to conform these statements to actual results or to changes in our expectations, except as required by law.
The following discussion and analysis of financial condition and results of operations is based upon, and should be read in conjunction with our audited financial statements and related notes thereto included elsewhere in this Form 10-K.
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PART I
ITEM 1. BUSINESS
Our Business
Overview
The Company is focused exclusively on the grocery market through its on-demand branch of its grocery businesses: Cuore Food Services. The branch uses industry standard warehouse storage space and inventory. The Company’s inventory is updated continuously and generally consists of produce, meats, pantry items, bakery & pastry goods, gluten-free goods, and organic items, acquired from various different suppliers in Canada and internationally, with whom the Company and its principals have cultivated long-term relationships.
In January 2025, the Company announced its plans to strategically reposition for future growth outside of the wholesale food distribution branch and is taking steps to ensure a smooth and efficient transition away from the legacy business.
In January 2025, the Company also announce its new business in the artisan crafted denim and premium combed Pima cotton yarns space in cooperation with Videlia Mills.
On November 16, 2016, the Company changed the name of its wholly owned subsidiary from I8 Interactive to Two Hands Canada Corporation.
The Company received approval from the Canadian Securities Exchange (the "CSE") to list its common shares (the "Common Shares") on the CSE. Trading of the Common Shares in the capital of the Company commenced on August 5, 2022, under the symbol "TWOH".
Cuore Food Services
Cuore Food Services is the Company’s wholesale food distribution branch. Cuore Food Services uses inventory from the Company’s warehouse as well as inventory it acquires on an ad hoc basis, and focuses on bulk delivery of goods to food service business such as restaurants, hotels, event planning/hosting businesses.
Research and Development
We did not incur any research and development costs during the fiscal year ended December 31, 2024 and 2023.
Customers
The Company plans to continue to expand it reach to additional customers and geographies across Canada and continue to enhance its product offering with fresh, natural and organic foods. The Company believes its value proposition has broad appeal with value-minded customers across all income levels, demographics and geographies. The Company believes that its sustained focus on delivering ever-changing value deals will generate strong customer loyalty and brand affinity. The Company believes that its broad customer appeal supports new store growth opportunities, and it plans to continue to expand its reach to additional customers and geographies across Canada.
Competition
The Company competes with other wholesalers within the food service market segment, facing challenges from entities with significant resources for expansion. These competitors leverage their financial strength, technological advancements, marketing strategies, skilled personnel, and established brand recognition.
Manufacturing and Product Sourcing
Most supplies used are readily available from any number of our local and international suppliers, at competitive prices. Delivery of the product will vary depending on the area serviced and the number of orders per day.
Management's Plan of Operation
The Company is focused exclusively on the grocery market through its on-demand grocery business: Cuore Food Services.
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Products and Services
The Company plans to continue to expand its reach to additional customers and geographies across Canada and continue to enhance its product offering with fresh, natural and organic foods.
Operations and Logistics
The company plans to expand storage and warehousing, expand warehouse staff, add more delivery trucks and expand the delivery area.
Sales and Marketing
In carrying on with its business, the Company is exposed to a variety of risks, including the risks described elsewhere in this Form 10-K. The Company can neither predict nor identify all such risks nor can it accurately predict the impact, if any, of such risks on its business, operations or the extent to which one or more risks or events may materially change future results of financial position from those reported or projected in any forward looking statements. Accordingly, the Company cautions the reader not to rely on reported financial information and forward-looking statements to predict actual future results. This Form 10-K and the accompanying financial information should be read in conjunction with this statement concerning risks and uncertainties. Some of the risks, uncertainties and events that may affect the Company, its business, operations, and results, are given in this section. However, the list of risk factors below is not exhaustive and the factors and uncertainties that may impact on the Company are not limited to those stated below. Those listed and other risks not specifically referred to may in the future materially affect the Company’s financial performance, and accordingly an investment in the Company at this time involves a high degree of risk, should be considered highly speculative in nature, and should be considered only by those who are able to bear the economic risk of their investment for an indefinite period.
The Company’s ability to generate revenue and achieve positive cash flow in the future depends upon various factors, including the level of market acceptance of its products, the degree of competition encountered by the Company, technology risks, general economic conditions, and regulatory requirements. Moreover, it is also possible that new competitors will enter the marketplace. The Company's future performance depends in part upon attracting and retaining key technical, sales and management personnel. There can be no assurance that the Company can retain these personnel. As such, these new competitors and the loss of the services of the Company's key employees could potentially have a material adverse effect on the Company's business, operating results and financial condition.
The following are certain risk factors relating to the business carried on by the Company which prospective investors should carefully consider before deciding whether to purchase Company Shares. The Company’s business is subject to risk factors that are both specific and general in nature and which individually, or in combination, may affect the future operating performance of the Company’s business and the value of an investment in the Company. The Company will face a number of challenges in the development of its business. Readers should carefully consider all such risks, including those set out in the discussion below. The following is a description of the principal risk factors affecting the Company that will, in turn, affect the Company.
Description of Risk Factors
Risks Related to the Company’s Business
Competition to the Company
The Company’s business operates in a dynamic and competitive market. Other food distribution companies, along with non-traditional competitors, such as mass merchandisers, warehouse clubs, and online retailers, represent a competitive risk to the Company’s ability to attract customers and operate profitably in its markets.
A significant risk to the Company is the potential for reduced revenues and profit margins as a result of increased competition. A failure to maintain geographic diversification to reduce the effects of localized competition could have an adverse impact on the Company’s operating margins and results of operations. The consolidation of industry competitors may also lead to increased competition and loss of market share.
The Company has expressed substantial doubt about its ability to continue as a going concern.
As of December 31, 2024, the Company had cash of $1,733 and total liabilities of $3,665,969. During the year ended December 31, 2024, the Company incurred a net loss of $2,433,970 and used cash in operating activities of $250,503, and on December 31, 2024, had a shareholders’ deficit of $3,568,234. The Company is currently funding its initial operations by way of loans from its Chief Executive Officer and others and through the issuance of Common Shares in exchange for services. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The Company’s independent registered public accounting firm, in their report on the Company’s financial statements for the year ending December 31, 2024, have included an explanatory paragraph regarding the Company’s ability to continue as a going concern.
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If the Company is unable to raise enough capital or obtain additional financing, it may not be able to fulfill its business plan.
On December 31, 2024, the Company only had $1,733 cash on hand. To date, the Company has funded its operations by way of cash advances from its Chief Executive Officer, noteholders, shareholders and others on a “as-needed” basis. As such, the Company’s operating capital is currently limited to the personal resources of its Chief Executive Officer, noteholders, shareholders and others. If the Company is unsuccessful at achieving a sufficient amount of net proceeds, it will continue to rely on loans from its Chief Executive Officer, noteholders, shareholders and others although they are under no obligation to loan any money to the Company. the Company may also raise capital in the future by relying on loans from third party lending sources. However, the Company believes it will be difficult to secure capital in the future because it has no assets to secure debt and there is currently no active trading market for its securities. The Company’s inability to obtain financing or generate sufficient cash from operations could require it to reduce or eliminate expenditures for developing products and services, or otherwise curtail or discontinue its operations, which could have a material adverse effect on the Company’s business, financial condition and results of operations. Furthermore, to the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing shareholders. If the Company raises additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of its Common Shares and the terms of such debt could impose restrictions on its operations.
The Company’s business could fail if its principal executive officer, Emil Assentato, is unable or unwilling to devote a sufficient amount of time to its business.
The responsibility of developing the Company’s core business, securing the financing necessary to fully execute its business plan and fulfilling the reporting requirements of a public company all fall upon the principal executive officer, In the event Mr. Assentato is unable or unwilling to fulfill any aspect of his duties, the Company may experience a shortfall or complete lack of revenue resulting in little or no profits and the eventual closure of its business, whereby you may lose your entire investment. The loss of Mr. Assentato would have a material adverse effect on the Company’s business.
The Company may fail to attract, train and retain skilled and qualified employees, which could impair its ability to generate revenue, effectively service its clients and execute its growth strategy.
The Company’s business depends in large part upon its ability to attract and retain sufficient numbers of highly qualified individuals. The Company competes for such qualified personnel with other companies and such competition is intense. Personnel with the requisites skills and qualifications may be in short supply or generally unavailable. If the Company is unable to recruit and retain a sufficient number of qualified employees, the Company’s ability to maintain and grow its business and to effectively service its clients could be limited and the Company’s future revenue and results of operations could be materially and adversely affected. Furthermore, to the extent that the Company is unable to make necessary permanent hires to appropriately service its clients, the Company could be required to engage larger numbers of contracted personnel, which could reduce its profit margins.
If the Company cannot attract customers, it will not generate revenues and its business will fail.
The Company has not generated any profit. The Company may not be able to successfully attract or maintain customers, resulting in its business failing. If the Company’s business fails, you will lose all or part of your investment.
The Company may encounter difficulties managing its planned growth, which would adversely affect its business and could result in increasing costs as well as a decrease in the Company’s stock price.
The Company intends to establish a customer base and develop new products for them. To manage the Company’s anticipated growth, the Company must continue to improve its operational and financial systems and expand, train, retain and manage its employee base to meet new opportunities. Because of the registration of the Company’s securities, it is subject to reporting and disclosure obligations, and the Company anticipates that it will hire additional finance and administrative personnel to address these obligations. In addition, the anticipated growth of the Company’s business will place a significant strain on its existing managerial and financial resources. If the Company cannot effectively manage its growth, its business may be harmed.
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Material weaknesses in the Company’s internal control over financial reporting may adversely affect its Common Shares.
As an SEC reporting company, the Company is subject to the reporting requirements of the Exchange Act and governance requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The Exchange Act requires that the Company file annual, quarterly and current reports with respect to its business and financial condition, proxy statement, and other information. The Sarbanes-Oxley Act requires, among other things, that the Company establish and maintain effective disclosure controls and procedures and internal controls and procedures for financial reporting. Section 404 of the Sarbanes-Oxley Act requires that the Company include a report of management on its internal control over financial reporting in the Company’s annual report on Form 10-K. That report must contain an assessment by management of the effectiveness of the Company’s internal control over financial reporting and must include disclosure of any material weaknesses in internal control over financial reporting that the Company has identified. Effective internal control is necessary for the Company to provide reliable financial reports and prevent fraud. If the Company cannot provide reliable financial reports or prevent fraud, the Company may not be able to manage its business as effectively as it would if an effective control environment existed, and the Company’s business and reputation with investors may be harmed. As a result, the Company’s small size and any current internal control deficiencies may adversely affect its financial condition, results of operation and access to capital. The Company has not performed an in-depth analysis to determine if historical un-discovered failures of internal controls exist and may in the future discover areas of its internal control that need improvement. Any inability to report and file its financial results accurately and timely could harm the Company’s reputation and adversely impact the trading price of its Common Shares.
Failure to protect the Company’s proprietary technology and intellectual property rights could substantially harm its business and results of operations.
The Company’s success depends to a significant degree on its ability to protect its proprietary technology, methodologies, know-how and brand. The Company will rely on a combination of contractual restrictions, and other intellectual property laws and confidentiality procedures to establish and protect its proprietary rights. However, the steps the Company will take to protect its intellectual property may be inadequate. The Company will not be able to protect its intellectual property if it is unable to enforce its rights or if it does not detect unauthorized use of the Company’s intellectual property. If the Company fails to protect its intellectual property rights adequately, its competitors may gain access to the Company’s technology and its business may be harmed. In addition, defending its intellectual property rights might entail significant expense. The Company may be unable to prevent third parties from acquiring domain names or trademarks that are similar to, infringe upon, or diminish the value of the Company’s trademarks and other proprietary rights.
As the Company grows its business, the Company’s plan is to enter into confidentiality and invention assignment agreements with its employees and consultants and enter into confidentiality agreements with other parties. No assurance can be given that these agreements will be effective in controlling access to and distribution of the Company’s proprietary information. Further, these agreements may not prevent the Company’s competitors from independently developing technologies that are substantially equivalent or superior to it products.
In order to protect the Company’s intellectual property rights, it may be required to spend significant resources to monitor and protect its intellectual property rights. Litigation may be necessary in the future to enforce the Company’s intellectual property rights and to protect its trade secrets. Litigation brought to protect and enforce the Company’s intellectual property rights could be costly, time-consuming, and distracting to management, and could result in the impairment or loss of portions of the Company’s intellectual property. Further, the Company’s efforts to enforce its intellectual property rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of the Company’s intellectual property rights. The Company’s inability to protect its proprietary technology against unauthorized copying or use, as well as any costly litigation or diversion of its management’s attention and resources, could delay further sales or the implementation of the Company’s products, impair the functionality of its products, delay introductions of new products, result in the Company substituting inferior or more costly technologies into its products, or injure the Company’s reputation.
Product Safety and Security
The Company is subject to potential liabilities connected with its business operations, including potential liabilities and expenses associated with product defects, food safety and product handling, and related services. Such liabilities may arise in relation to the storage, distribution, display and dispensing of products. A large majority of the Company’s sales are generated from food products, and it could be vulnerable in the event of a significant outbreak of food-borne illness or increased public health concerns in connection with certain food products. Such an event could materially affect the Company’s financial performance.
Supply Chain Disruptions Including Impacts of Climate Change
The Company is exposed to potential supply chain disruptions and errors that could result in obsolete merchandise or an excess or shortage of merchandise in its retail store network. The Company’s distribution and supply chain could be negatively impacted by over reliance on key vendors, consolidation of facilities, disruptions due to severe weather conditions, natural disasters, climate change driven disruptions or other catastrophic events, and failure to manage costs and inventories. A failure to develop competitive new products, deliver high-quality products and implement and maintain effective supplier selection and procurement practices could adversely affect the Company’s ability to deliver desired products to customers and adversely affect the Company’s ability to attract and retain customers, decreasing competitive advantage. A failure to maintain an efficient supply and logistics chain may adversely affect the Company’s ability to sustain and meet growth objectives and maintain margins.
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Business Continuity
The Company may be subject to unexpected or critical events and natural hazards, including severe weather events, interruption of utilities and infrastructure or occurrence of pandemics, which could cause sudden or complete cessation of its day-to-day operations. The Company is currently preparing for future waves of COVID-19 along with other pandemics that could occur. However, no such plan can eliminate the risks associated with events of this magnitude. Any failure to respond effectively or appropriately to such events could adversely affect the Company’s operations, reputation and financial results.
Ethical Business Conduct
Any failure of the Company to adhere to its policies, law or ethical business practices could significantly affect its reputation and brands and could therefore negatively impact the Company’s financial performance. The Company’s framework for managing ethical business conduct includes the adoption of a code of business conduct and ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions and are required to acknowledge and agree to on a regular basis. There can be no assurance that these measures will be effective to prevent violations of law or unethical business practices.
The Company could incur substantial costs as a result of any claim of infringement of another party’s intellectual property rights.
In recent years, there has been significant litigation involving patents and other intellectual property rights in the software industry. Companies providing software are increasingly bringing and becoming subject to suits alleging infringement of proprietary rights, particularly patent rights, and the Company faces a higher risk of being the subject of intellectual property infringement claims. The Company does not currently have a patent portfolio, which could prevent it from deterring patent infringement claims through its own patent portfolio, and the Company’s competitors and others may now and in the future have significantly larger and more mature patent portfolios than the Company has. The risk of patent litigation has been amplified by the increase in the number of a type of patent holder, which the Company refers to as a non-practicing entity, whose sole business is to assert such claims and against whom its own intellectual property portfolio may provide little deterrent value. The Company could incur substantial costs in prosecuting or defending any intellectual property litigation. If the Company sues to enforce its rights or is sued by a third party that claims that the Company’s solution infringes its rights, the litigation could be expensive and could divert its management resources. As of the date of this form 10-K, the Company has not received any written notice of an infringement claim, invitation to license, or other intellectual property infringement action.
Any intellectual property litigation to which the Company might become a party, or for which it is required to provide indemnification, may require the Company to do one or more of the following:
| ● | Cease selling or using products that incorporate the intellectual property that the Company allegedly infringe; |
| ● | Make substantial payments for legal fees, settlement payments or other costs or damages; |
| ● | Obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology; or |
| ● | Redesign the allegedly infringing products to avoid infringement, which could be costly, time-consuming or impossible. |
If the Company is required to make substantial payments or undertake any of the other actions noted above as a result of any intellectual property infringement claims against it or any obligation to indemnify its customers for such claims, such payments or actions could harm the Company’s business.
The Company’s failure to protect personal information adequately and breaches in cyber security and data protection could have an adverse effect on its business.
A wide variety of provincial, state, national, and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data. These data protection and privacy-related laws and regulations are evolving and being tested in courts and may result in ever-increasing regulatory and public scrutiny as well as escalating levels of enforcement and sanctions. Any actual or perceived loss, improper retention or misuse of certain information or alleged violations of laws and regulations relating to privacy, data protection and data security, and any relevant claims, could result in enforcement action against the Company, including fines, imprisonment of company officials and public censure, claims for damages by customers and other affected individuals, damage to the Company’s reputation and loss of goodwill (both in relation to existing customers and prospective customers), any of which could have an adverse effect on the Company’s operations, financial performance, and business. Evolving and changing definitions of personal data and personal information, within the European Union, the United States, and elsewhere, especially relating to classification of IP addresses, machine identification, location data, and other information, may limit or inhibit the Company’s ability to operate or expand its business, including limiting strategic partnerships that may involve the sharing of data. Any perception of privacy or security concerns or an inability to comply with applicable laws, regulations, policies, industry standards, contractual obligations or other legal obligations, even if unfounded, may result in additional cost and liability to the Company, harm its reputation and inhibit adoption of its products by current and future customers, and adversely affect the Company’s business, financial condition, and operating results.
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The Company has implemented and maintained security measures intended to protect personally identifiable information. However, the Company’s security measures remain vulnerable to various threats posed by hackers and criminals. If the Company’s security measures are overcome and any personally identifiable information that the Company collect or store becomes subject to unauthorized access, it may be required to comply with costly and burdensome breach notification obligations. The Company may also be subject to investigations, enforcement actions and private lawsuits. In addition, any data security incident is likely to generate negative publicity and have a negative effect on the Company’s business.
Limitations of Director Liability and Indemnification of Directors and Officers and Employees.
The Company’s certificate of incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except for liability for any:
| ● | Breach of their duty of loyalty to the Company or its shareholders; |
| ● | Act or omission not in good faith or that involves intentional misconduct or a knowing violation of law; |
| ● | Unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or |
| ● | Transactions for which the directors derived an improper personal benefit. |
These limitations of liability do not apply to liabilities arising under the federal or state securities laws and do not affect the availability of equitable remedies such as injunctive relief or rescission. The Company’s bylaws provide that it will indemnify its directors, officers and employees to the fullest extent permitted by law. The Company’s bylaws also provide that the Company is obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding. The Company believes that these bylaw provisions are necessary to attract and retain qualified persons as directors and officers. The limitation of liability in the Company’s certificate of incorporation and bylaws may discourage shareholders from bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if successful, might provide a benefit to the Company and its shareholders. The Company’s results of operations and financial condition may be harmed to the extent it pays the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Limitation on remedies and indemnification.
The Company’s certificate of incorporation, as amended from time to time, provides that officers, directors, employees and other agents and their affiliates shall only be liable to the Company and its shareholders for losses, judgments, liabilities and expenses that result from the fraud or other breach of fiduciary obligations. Additionally, the Company intends to enter into corporate indemnification agreements with each of its officers and directors consistent with industry practice. Thus, certain alleged errors or omissions might not be actionable by the Company. The Company’s governing instruments also provide that, under the broadest circumstances allowed under law, the Company must indemnify its officers, directors, employees and other agents and their affiliates for losses, judgments, liabilities, expenses and amounts paid in settlement of any claims sustained by them in connection with the Company, including liabilities under applicable securities laws.
Uncertainty of Use of Available Funds
Although the Company has set out its intended use of available funds, these intended uses are estimates only and subject to change. While management does not contemplate any material variation, management does retain broad discretion in the application of such proceeds. The failure by the Company to apply these funds effectively could have a material adverse effect on the Company's business, including the Company's ability to achieve its stated business objectives.
Legal, Taxation and Accounting
Changes to any of the various federal and provincial laws, rules and regulations related to the Company’s business could have a material impact on its financial results. Compliance with any proposed changes could also result in significant cost to the Company. Failure to fully comply with various laws and rules and regulations may expose the Company to proceedings which may materially affect its performance.
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Similarly, income tax regulations and/or accounting pronouncements may be changed in ways which could negatively affect the Company. The Company mitigates the risk of non-compliance with the various laws and rules and regulations by monitoring for newly adopted activities, improving technology systems and controls, improving internal controls to detect and prevent errors and overall application of more scrutiny to ensure compliance. In the ordinary course of business, the Company is subject to ongoing audits by tax authorities. While the Company believes that its tax filing positions are appropriate and supportable, from time to time certain matters are reviewed and challenged by the tax authorities.
Dependence on key management personnel and outside contractors
The Company heavily relies on its officers and directors, as well as its professional advisors. The loss of their services may have a material adverse effect on the Company and its future prospects. There can be no assurance that any one or all of the officers and directors of, and contractors engaged by, the Company will continue in the employ of, or in a consulting capacity to, the Company or that they will not set up competing businesses or accept positions with competitors.
The Company is dependent upon the continued support and involvement of a number of key management personnel and outside contractors. Investors must be willing to rely to a significant extent on management’s discretion and judgment, as well as the expertise and competence of outside contractors. The Company does not have in place formal programs for succession and training of management. The loss of one or more of these key employees or contractors, if not replaced, could adversely affect the Company’s business, results of operations and financial condition.
The number of persons skilled in handling food allergies and common food service practices is limited and competition for such persons can be high. As the Company’s business activity grows, the Company will require additional qualified personnel, key financial and administrative personnel as well as additional staff. There is no assurance that the Company will be successful in attracting, training and retaining qualified personnel as competition for persons with these skill sets increases. If the Company is not successful in attracting, training and retaining qualified personnel, the efficiency of its store operations could be impaired, which could have an adverse impact on its results of operations and financial condition.
Risks Related to the Company’s Common Shares
The Company has the ability to issue additional shares of its Common Shares and shares of preferred stock without asking for shareholder approval, which could cause investments to be diluted.
The Company’s certificate of incorporation authorizes the Board of Directors to issue up to twelve billion Common Shares and up to one million shares of “blank check” preferred stock. The power of the Board of Directors to issue Common Shares, preferred stock or warrants or options to purchase Common Shares or preferred stock is generally not subject to shareholder approval. Accordingly, any additional issuance of the Company’s Common Shares, or preferred stock that may be convertible into Common Shares, may have the effect of diluting an investment, and the new securities may have rights, preferences and privileges senior to those of the Company’s Common Shares.
Substantial sales of the Company’s stock may impact on the market price of its Common Shares.
Future sales of substantial amounts of the Company’s Common Shares, including shares that it may issue upon exercise of options and warrants, could adversely affect the market price of the Company’s Common Shares. Further, if the Company raises additional funds through the issuance of Common Shares or securities convertible into or exercisable for Common Shares, the percentage ownership of the Company’s shareholders will be reduced, and the price of its Common Shares may fall.
The Company’s Common Shares is thinly traded, and investors may be unable to sell some or all of their shares at the price they would like, or at all, and sales of large blocks of shares may depress the price of the Company’s Common Shares.
The Company’s Common Shares has historically been sporadically or thinly-traded, meaning that the number of persons interested in purchasing shares of the Company’s Common Shares at prevailing prices at any given time may be relatively small or nonexistent. As a consequence, there may be periods of several days or more when trading activity in shares of its Common Shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price.
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This could lead to wide fluctuations in the Company’s share price. Investors may be unable to sell their Common Shares at or above their purchase price, which may result in substantial losses. Also, as a consequence of this lack of liquidity, the trading of relatively small quantities of shares by the Company’s shareholders may disproportionately influence the price of shares of the Company’s Common Shares in either direction. The price of shares of the Company’s Common Shares could, for example, decline precipitously in the event a large number of shares of its Common Shares are sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price.
The Company does not intend to pay any cash dividends on its Common Shares in the near future, so its shareholders will not be able to receive a return on their shares unless they sell their shares.
The Company intends to retain any future earnings to finance the development and expansion of its business. The Company does not anticipate paying any cash dividends on its Common Shares in the foreseeable future. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend. Unless the Company pays dividends, the Company’s shareholders will not be able to receive a return on their shares unless they sell such shares.
Penny stock rules may make buying or selling the Company’s securities difficult which may make its stock less liquid and make it harder for investors to buy and sell the Company’s shares.
Trading in the Company’s securities is subject to the SEC’s penny stock rules and it is anticipated that trading in the Company’s securities will continue to be subject to the penny stock rules for the foreseeable future. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends the Company’s securities to persons other than prior customers and accredited investors must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by these requirements may discourage broker-dealers from recommending transactions in the Company’s securities, which could severely limit the liquidity of the Company’s securities and consequently adversely affect the market price for its securities.
The Financial Industry Regulatory Authority (FINRA) sales practice requirements may also limit a shareholder’s ability to buy and sell the Company’s Common Shares.
In addition to the penny stock rules described above, the Financial Industry Regulatory Authority (FINRA) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy the Company’s Common Shares, which may limit your ability to buy and sell the Company’s Common Shares and have an adverse effect on the market for shares of its Common Shares.
The preparation of the Company’s consolidated financial statements involves the use of estimates, judgments and assumptions, and the Company’s consolidated financial statements may be materially affected if such estimates, judgments or assumptions prove to be inaccurate.
Financial statements prepared in accordance with accounting principles generally accepted in the U.S. GAAP typically require the use of estimates, judgments and assumptions that affect the reported amounts. Often, different estimates, judgments and assumptions could reasonably be used that would have a material effect on such financial statements, and changes in these estimates, judgments and assumptions may occur from period to period over time. Significant areas of accounting requiring the application of management’s judgment include, but are not limited to, determining the fair value of assets and the timing and amount of cash flows from assets. These estimates, judgments and assumptions are inherently uncertain and, if the Company’s estimates were to prove to be wrong, the Company would face the risk that charges to income or other financial statement changes or adjustments would be required. Any such charges or changes could harm the Company’s business, including its financial condition and results of operations and the price of its securities.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of the accounting estimates, judgments and assumptions that the Company believes are the most critical to an understanding of its consolidated financial statements and its business.
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If securities industry analysts do not publish research reports on the Company, or publish unfavorable reports on the Company, then the market price and market trading volume of the Company’s Common Shares could be negatively affected.
Any trading market for the Company’s Common Shares will be influenced in part by any research reports that securities industry analysts publish about it. The Company does not currently have and may never obtain research coverage by securities industry analysts. If no securities industry analysts commence coverage of the Company, the market price and market trading volume of its Common Shares could be negatively affected. In the event the Company are covered by analysts, and one or more of such analysts downgrade the Company’s securities, or otherwise reports on it unfavorably, or discontinues coverage or us, the market price and market trading volume of the Company’s Common Shares could be negatively affected.
The Company’s stock price is likely to be highly volatile because of several factors, including a limited public float.
The market price of the Company’s Common Shares has been volatile in the past and the market price of its Common Shares is likely to be highly volatile in the future. You may not be able to resell shares of the Company’s Common Shares following periods of volatility because of the market’s adverse reaction to volatility.
Other factors that could cause such volatility may include, among other things:
| ● | Actual or anticipated fluctuations in the Company’s operating results; |
| ● | The absence of securities analysts covering the Company and distributing research and recommendations about the Company; |
| ● | The Company may have a low trading volume for a number of reasons, including that a large portion of its stock is closely held; |
| ● | Overall stock market fluctuations; |
| ● | Announcements concerning the Company’s business or those of its competitors; |
| ● | Actual or perceived limitations on the Company’s ability to raise capital when the Company requires it, and to raise such capital on favorable terms; |
| ● | Conditions or trends in the industry; |
| ● | Litigation; |
| ● | Changes in market valuations of other similar companies; |
| ● | Future sales of Common Shares; |
| ● | Departure of key personnel or failure to hire key personnel; and |
| ● | General market conditions. |
Any of these factors could have a significant and adverse impact on the market price of the Company’s Common Shares and/or warrants. In addition, the stock market in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of the Company’s Common Shares and/or warrants, regardless of its actual operating performance.
SRAX may sell a large number of shares, resulting in a substantial diminution to the value of shares held by existing shareholders.
Pursuant to the non-redeemable convertible notes and Series C Convertible Preferred Stock, the Company is prohibited from delivering a conversion notice to SRAX to the extent that the issuance of shares would cause SRAX to beneficially own more than 4.99% of the Company’s then-outstanding Common Shares. These restrictions; however, do not prevent SRAX from selling Common Shares received in connection with the non-redeemable convertible notes and Series C Convertible Preferred Stock and then receiving additional Common Shares in connection with a subsequent issuance. In this way, SRAX could sell more than 4.99% of the outstanding Common Shares in a relatively short time frame while never holding more than 4.99% at any one time. As a result, existing shareholders and new investors could experience substantial diminution in the value of their Common Shares. Additionally, the Company does not have the right to control the timing and amount of any sales by SRAX of the shares issued under the non-redeemable convertible notes and Series C Convertible Preferred Stock.
Certain provisions of the General Corporation Law of the State of Delaware may have anti-takeover effects, which may make an acquisition of the Company by another company more difficult.
The Company is subject to the provisions of Section 203 of the General Corporation Law of the State of Delaware, which prohibits a Delaware corporation from engaging in any business combination, including mergers and asset sales, with an interested shareholder (generally, a 15% or greater shareholder) for a period of three years after the date of the transaction in which the person became an interested shareholder, unless the business combination is approved in a prescribed manner. The operation of Section 203 may have anti-takeover effects, which could delay, defer or prevent a takeover attempt that a holder of the Company’s Common Shares might consider in its best interest.
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Provisions of the Company’s certificate of incorporation and bylaws may delay or prevent a takeover which may not be in the best interests of the Company’s shareholders.
Provisions of the Company’s certificate of incorporation and its bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of the Company’s shareholders may be called, and may delay, defer or prevent a takeover attempt. Further, the Company’s certificate of incorporation, as amended, authorizes the issuance of up to one million (1,000,000) shares of preferred stock with such rights and preferences as may be determined from time to time by the Company’s board of directors in their sole discretion. The Company’s board of directors may, without shareholder approval, issue series of preferred stock with dividends, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of the Company’s Common Shares.
Substantial Number of Authorized but Unissued Shares
The Company has twelve billion (12,000,000,000) Common Shares that may be issued by the Board without further action or approval of the Company's shareholders. 5,469,037,729 of those Common Shares are currently issued and outstanding. While the Board is required to fulfill its fiduciary obligations in connection with the issuance of such shares, the shares may be issued in transactions with which not all shareholders agree, and the issuance of such shares will cause dilution to the ownership interests of the Company's shareholders.
Dilution
Future sales or issuances of equity securities could decrease the value of the Common Shares, dilute shareholders' voting power and reduce future potential earnings per Common Share. The Company intends to sell additional equity securities in subsequent offerings (including through the sale of securities convertible into Common Shares) and may issue additional equity securities to finance its operations, development, acquisition or other projects. Substantial additional financing may be required by the Company. The Company cannot predict the size of future sales and issuances of equity securities or the effect, if any, that future sales and issuances of equity securities will have on the market price of the Common Shares. Sales or issuances of a substantial number of equity securities, or the perception that such sales could occur, may adversely affect prevailing market prices for the Common Shares. With any additional sale or issuance of equity securities, investors will suffer dilution of their voting power and may experience dilution in the Company’s earnings per Common Share.
As a result of any of these factors, the market price of the Common Shares at any given point in time may not accurately reflect the long-term value of the Company. Securities class-action litigation often has been brought against companies following periods of volatility in the market price of their securities. The Company may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management's attention and resources.
Equity Compensation
The Company has historically, to a significant extent, compensated employees, contractors and service providers with equity compensation to the extent practicable. The Company may face difficulties in the future engaging service providers, consultants or employees who are willing to be compensated with equity of the Company rather than cash, which could result in a material adverse impact on the Company and its business in the future. Additionally, compensation in the form of equity of the Company will result in current shareholders of the Company suffering dilution of their voting power, and experiencing potential dilution in the Company’s earnings per Common Share.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 1C. CYBERSECURITY
We recognize the importance of identifying, assessing and managing material risks associated with cybersecurity threats, as such term is defined in Item 106(a) of Regulation S-K. These risks include, among other things: operational risks, intellectual property theft, fraud, extortion, harm to employees or customers and violation of data privacy or security laws.
We believe we maintain an
information technology and cybersecurity program appropriate for a company our size, taking into account our operations and risks. We
are committed to cybersecurity and vigilantly protecting all our resources and information from unauthorized access.
ITEM 2. PROPERTIES.
Our executive offices are located at 141 Piping Rock Road, Locust Valley, New York 11560. We are currently not paying rent for these offices.
We believe that these facilities are adequate for our current and near-term future needs.
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ITEM 3. LEGAL PROCEEDINGS
We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to temporary employee staffing business. These matters may include product liability, intellectual property, employment, personal injury cause by our employees, and other general claims. We will accrue contingent liabilities when it is probable that a liability has been incurred and the amount can be reasonably estimated. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
ITEM 4. MINE SAFETY DISCLOSURE.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AN ISSUER PURCHASES OF EQUITY SECURITIES.
Market
Our common stock currently trades on the OTC Pinks under the symbol “TWOH” and the closing bid price of our common stock on April 11, 2025 was $0.0048. Our common stock currently trades on a sporadic and limited basis.
Record Holders
The number of record holders of our common stock as of April 11, 2025 was approximately 23, not including nominees of beneficial owners.
Cash Dividends
As of the date of this Report, we have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our Board of Directors and will depend upon our earnings, if any, our capital requirements and financial position, the general economic conditions, and other pertinent 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.
Transfer Agent
The transfer agent and registrar for our common stock and Series A Convertible Preferred Stock is Transhare Corporation. The transfer agent’s address is 17755 US Highway 19 N Ste 140, Clearwater, FL 33764 and its telephone number is (303) 662-1112.
Options and Warrants
On October 1, 2021, the Board of Directors approved the 2021 Stock Incentive Plan (the “2021 Plan”) to attract and retain the best available personnel, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company's business. Pursuant to the 2020 Plan, the Board may grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units. to eligible persons. The maximum aggregate number of shares of common stock with respect to which awards granted under the Plan shall not exceed 200,000,000. At December 31, 2024, there are 0 shares of common stock available under the 2021 Plan.
Anti-takeover Provisions
Summarized in the following paragraphs are provisions included in our Certificate of Incorporation, as amended, and our Bylaws that may have the effect of discouraging, delaying or preventing a change in control or an unsolicited acquisition proposal that a stockholder might consider favorable, including a proposal that might result in the payment of a premium over the market price for the shares held by our stockholders.
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| · |
Effects of authorized but unissued common stock and blank check preferred stock. One of the effects of the existence of authorized but unissued common stock and undesignated preferred stock may be to enable our Board to make more difficult or to discourage an attempt to obtain control of our company by means of a merger, tender offer, proxy contest or otherwise, and thereby to protect the continuity of management. If the Board were to determine that a takeover proposal was not in our best interest, such shares could be issued by the Board without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of the takeover transaction by diluting the voting or other rights of the proposed acquirer or insurgent stockholder group, by putting a substantial voting block in institutional or other hands that might undertake to support the position of the incumbent board of directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise.
In addition, our Certificate of Incorporation, as amended, grants our Board broad power to establish the rights and preferences of authorized and unissued shares of additional series of preferred stock. The creation and issuance of one or more additional series of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance also may adversely affect the rights and powers, including voting rights, of those holders and may have the effect of delaying, deterring or preventing a change in control of our company. |
| · | Cumulative Voting. Our Certificate of Incorporation, as amended, does not provide for cumulative voting in the election of directors which would allow holders of less than a majority of the voting stock to elect some directors. |
| · | Vacancies. Section 223 of the Delaware General Corporation Law and our bylaws provide that all vacancies, including newly created directorships, may be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum. |
| · | Special Meeting of Stockholders. A special meeting of stockholders may be called by our Board or the Chairman of our Board and must be called by our Secretary at the request in writing of holders of record of a majority of our outstanding capital stock entitled to vote. The requirement that a majority of our outstanding capital stock is required to call a special meeting means that small stockholders will not have the power to call a special meeting to, for example, elect new directors. |
| · | Bylaws. Our bylaws authorize the board of directors to adopt, repeal, alter or amend our bylaws without shareholder approval. |
| · | Removal. Except as otherwise provided, a director may be removed from office with or without cause at any special meeting of stockholders by the affirmative vote of at least a majority of the voting power and outstanding stock entitled to vote. |
RECENT SALES OF UNREGISTERED SECURITIES
During the quarter ended December 31, 2024, the Company issued the following unregistered securities.
|
Issued 2,259,632,600 shares of common stock, with a fair value of $225,963, for the settlement of non-redeemable convertible notes.
Issued 1,156,998,300 shares of common stock, with a fair value of $115,700, for the settlement of promissory notes.
Issued 32,000,000 shares of common stock for the conversion of 80 shares of Series C Convertible Preferred Stock.
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ITEM 6. [RESERVED].
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Company is focused exclusively on the grocery market through its on-demand branch of its grocery businesses: Cuore Food Services. The branch uses industry standard warehouse storage space and inventory. The Company’s inventory is updated continuously and generally consists of produce, meats, pantry items, bakery & pastry goods, gluten-free goods, and organic items, acquired from various different suppliers in Canada and internationally, with whom the Company and its principals have cultivated long-term relationships.
On November 16, 2016, the Company changed the name of its wholly owned subsidiary from I8 Interactive to Two Hands Canada Corporation.
The Company received approval from the Canadian Securities Exchange (the "CSE") to list its common shares (the "Common Shares") on the CSE. Trading of the Common Shares in the capital of the Company commenced on August 5, 2022, under the symbol "TWOH".
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Cuore Food Services
Cuore Food Services is the Company’s wholesale food distribution branch. Cuore Food Services uses inventory from the Company’s warehouse as well as inventory it acquires on an ad hoc basis, and focuses on bulk delivery of goods to food service business such as restaurants, hotels, event planning/hosting businesses.
Management's Plan of Operation
The Company is focused exclusively on the grocery market through its on-demand grocery business: Cuore Food Services.
In January 2025, the Company announced its plans to strategically reposition for future growth outside of the wholesale food distribution branch and is taking steps to ensure a smooth and efficient transition away from the legacy business.
In January 2025, the Company also announce its new business in the artisan crafted denim and premium combed Pima cotton yarns space in cooperation with Videlia Mills.
Products and Services
The Company plans to continue expanding its reach to additional customers and geographies across Canada while enhancing its product line with a focus on Italian staples, including pasta, oils, olives, and canned tomatoes.
Operations and Logistics
The company plans to expand storage and warehousing, expand warehouse staff, add more delivery trucks and expand the delivery area.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Financial Statements and accompanying notes. Estimates are used for, but not limited to, the accounting for the allowance for doubtful accounts, inventories, impairment of long-term assets, stock-based compensation, derivatives, income taxes and loss contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.
We believe the following critical accounting policies, among others, may be impacted significantly by judgment, assumptions and estimates used in the preparation of the Financial Statements:
NET LOSS PER SHARE
Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the period increased to include the number of additional common shares that would have been outstanding if potentially dilutive securities had been issued. Dilutive net loss per share for common stock is calculated utilizing the if-converted method which assumes the conversion of all Series C Stock to common stock. On December 31, 2024 and 2023, we excluded the common stock issuable upon conversion of non-redeemable convertible notes, and Series C Stock of 1,167,136,632 shares and 5,056,999,100 shares, respectively, as their effect would have been anti-dilutive.
STOCK-BASED COMPENSATION
The Company accounts for stock incentive awards issued to employees and non-employees in accordance with FASB ASC 718, Stock Compensation. Accordingly, stock-based compensation is measured at the grant date, based on the fair value of the award. Stock-based awards to employees are recognized as an expense over the requisite service period, or upon the occurrence of certain vesting events. Additionally, stock-based awards to non-employees are expensed over the period in which the related services are rendered.
REVENUE RECOGNITION
In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. We recognize revenue for the sale of our products upon delivery to a customer.
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RECENT ACCOUNTING PRONOUNCEMENTS
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2023, which means it will be effective for our fiscal year beginning January 1, 2024. The Company recognizes there will be an impact on how conversions are calculated which may require recognition of gains or losses. The Company adopted ASU 2020-06 during the year ended December 31, 2024. See Note 5. Line of Credit for further detail.
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. The Company adopted this new standard on January 1, 2024 and the adoption did not have a material impact on the consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the provisions of the amendments and the impact on its financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
COMPARISON OF RESULTS FOR THE YEARS ENDED DECEMBER 31, 2024 and 2023
Sales, Cost of goods sold, Gross profit:
| Year ended December 31, | Change | |||||||||||||||
2024 $ | 2023 $ | $ | % | |||||||||||||
| Sales | 709,526 | 783,489 | (73,963 | ) | (9 | ) | ||||||||||
| Cost of goods sold | 657,718 | 721,377 | (63,659 | ) | (9 | ) | ||||||||||
| Gross profit | 51,808 | 62,112 | (10,304 | ) | (17 | ) | ||||||||||
| Gross profit % | 7.3 | % | 7.9 | % | ||||||||||||
Breakdown of sales by branch:
| Year ended December 31, | Change | |||||||||||||||
2024 $ | 2023 $ | $ | % | |||||||||||||
| gocart.city – online delivery | — | 28,673 | (28,673 | ) | (100 | ) | ||||||||||
| Grocery Originals and Cuore Food Service – retail and wholesale distribution | 709,526 | 754,816 | (45,290 | ) | (6 | ) | ||||||||||
| Total sales | 709,526 | 783,489 | (73,963 | ) | (9 | ) | ||||||||||
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The gocart.city grocery delivery application was released in early June 2020 and gocart.city wholesale commenced sale of dry goods and produce to other businesses in July 2020. Our revenue from gocart.city – online delivery was primarily due to the recognition of revenue from expired grocery vouchers. gocart.city – online delivery was sold on May 1, 2023.
The gross margin percentage decreased from 2023 to 2024 due the inventory valuation allowance of $39,774 at December 31, 2024.
Operating expenses:
| Year ended December 31, | Change | |||||||||||||||
2024 $ | 2023 $ | $ | % | |||||||||||||
| Salaries and benefits | 633,478 | 712,588 | (79,110 | ) | (11 | ) | ||||||||||
| Occupancy expense | 34,520 | 50,691 | (16,171 | ) | (32 | ) | ||||||||||
| Advertising and travel | (25,229 | ) | 80,926 | (106,155 | ) | (131 | ) | |||||||||
| Auto expenses | 16,167 | 25,268 | (9,101 | ) | (36 | ) | ||||||||||
| Consulting | 309,650 | 292,791 | 16,859 | 6 | ||||||||||||
| Depreciation and Amortization | 11,356 | 12,662 | (1,306 | ) | (10 | ) | ||||||||||
| Bad debt | 35,843 | (24,868 | ) | 60,711 | (244 | ) | ||||||||||
| Office and general expenses | 62,348 | 68,240 | (5,892 | ) | (9 | ) | ||||||||||
| Professional fees | 131,067 | 113,392 | 17,675 | 16 | ||||||||||||
| Freight and delivery | 7,945 | 9,609 | (1,664 | ) | (17 | ) | ||||||||||
| Total operating expenses | 1,217,145 | 1,341,299 | (124,154 | ) | (9 | ) | ||||||||||
Our total operating expenses for the year ended December 31, 2024 was $1,217,145, compared to $1,341,299, for the year ended December 31, 2023, respectively. The decrease in total operating expense is primarily due to decrease in salaries and benefits and a $60,000 recovery on a service contract. The recovery $60,000 is classified as advertising and travel.
Salaries and benefits for the year ended December 31, 2024 and 2023, comprise primarily of salary due to Nadav Elituv, our former Chief Executive Officer, of $600,000 and $600,000, respectively. Salaries and benefits decreased due to the Company using more contractors and fewer employees during 2024. Expense related to contractors are classified as consulting.
Advertising and travel expense decreased due to a $60,000 recovery of an accrued liability recorded at December 31, 2023 for a service contract.
Bad debt increased due to slower recovery of accounts receivable as the Company transitions away from the wholesale food distribution business.
For the year ended December 31, 2024, consulting comprises primarily of (i) $210,182 for consulting fees payable under a consulting agreement with 2130555 Ontario Limited, a Company controlled by Nadav Elituv and (ii) $99,468 paid to contractors to manage our grocery business.
For the year ended December 31, 2023, consulting comprises primarily stock-based compensation expense (i) $0 for the expenditure of advertising credits with SRAX, Inc. (ii) $204,433 for consulting fees and (iii) $88,358 paid to contractors to manage our grocery business.
On January 1, 2024, entered into a consulting agreement to pay 2130555 Ontario Limited, a Company controlled by Nadav Elituv, a monthly consulting fee of CAD $24,000 per month for services for the period from January 1, 2024 to December 31, 2024.
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Other income (expense):
| Year ended December 31, | Change | |||||||||||||||
2024 $ | 2023 $ | $ | % | |||||||||||||
| Amortization of debt discount and interest expense | (174,898 | ) | (159,335 | ) | (15,563 | ) | 10 | |||||||||
| Loss on settlement of non-redeemable convertible notes and promissory notes | (1,093,735 | ) | (6,775,835 | ) | 5,682,100 | (84 | ) | |||||||||
| Gain on disposition | — | 50,695 | (50,695 | ) | (100 | ) | ||||||||||
| Total other income (expenses) | (1,268,633 | ) | (6,884,475 | ) | 5,615,842 | (82 | ) | |||||||||
Amortization of debt discount and interest expense for the year ended December 31, 2024 was $174,898, compared to $159,335 for the year ended December 31, 2023. Amortization of debt discount and interest expense relates to the issuance of non-redeemable convertible notes and promissory notes.
During the years ended December 31, 2024 and 2023, the Company elected to convert $405,495 and $118,647 of principal and interest of a non-redeemable convertible note into 4,054,949,100 and 16,920,700 shares of common stock of the Company resulting in a loss on settlement of debt of $641,562 and $6,775,835, respectively.
On December 30, 2024, the Company exchanged promissory notes, accrued and other liabilities with a carrying value of $1,628,843 for new promissory notes with principal of $2,081,016 resulting in loss on settlement of promissory notes of $452,173.
During the year ended December 31, 2023 the Company received net proceeds from the sale of gocart.city assets of $64,250 (CAD $86,742). The net proceeds comprise of the settlement $127,594 (CAD $172,261) of accounts payable and $63,344 (CAD $85,519) of account receivable with the Purchaser resulting in a gain of $50,695 (CAD $68,442).
Net loss for the period:
| Year ended December 31, | Change | |||||||||||||||
2024 $ | 2023 $ | $ | % | |||||||||||||
| Net loss for the period | (2,433,970 | ) | (8,163,662 | ) | 5,729,692 | (70) | ||||||||||
Our net loss for the year ended December 31, 2024 was $2,433,970, compared to $8,163,662 for the year ended December 31, 2023, respectively. Our losses during the years ended December 31, 2024 and 2023 are primarily due to costs associated with professional fees, compensation due to our CEO, interest expense and loss on settlement of non-redeemable convertible notes and promissory notes.
QUARTERLY RESULTS OF OPERATIONS
The following is a summary of selected quarterly information that has been derived from the financial statements of the Company. This summary should be read in conjunction with the consolidated financial statements of the Company.
| Quarter Ended | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||||||||||||
| Sales | $ | 140,258 | $ | 179,502 | $ | 226,289 | $ | 163,477 | $ | 198,266 | $ | 212,453 | $ | 197,324 | $ | 175,446 | ||||||||||||||||
| Gross profit | $ | (34,216 | ) | $ | 26,025 | $ | 45,010 | $ | 14,989 | ($ | 20,815 | ) | $ | 55,262 | $ | 12,216 | $ | 15,449 | ||||||||||||||
| Operating expenses | $ | (299,791 | ) | $ | (300,665 | ) | $ | (311,499 | ) | $ | (305,190 | ) | $ | (391,043 | ) | $ | (307,223 | ) | $ | (277,327 | ) | $ | (365,706 | ) | ||||||||
| Other income (expense) | $ | (489,659 | ) | $ | (58,477 | ) | $ | (228,552 | ) | $ | (491,945 | ) | $ | (6,151,405 | ) | $ | (313,869 | ) | $ | (263,974 | ) | $ | (155,227 | ) | ||||||||
| Net loss for the period | $ | (823,666 | ) | $ | (333,117 | ) | $ | (495,041 | ) | $ | (782,146 | ) | $ | (6,563,263 | ) | $ | (565,830 | ) | $ | (529,085 | ) | $ | (505,484 | ) | ||||||||
| Basic net income (loss) per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.17 | ) | $ | 1.33 | $ | (0.00 | ) | $ | (0.00 | ) | |||||||||
| Diluted net loss per share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.17 | ) | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||
| 20 |
LIQUIDITY AND CAPITAL RESOURCES
For the years ended December 31, 2024
Cash flows used in operating activities
| Year ended December 31, | Change | |||||||||||||||
2024 $ | 2023 $ | $ | % | |||||||||||||
| Net cash used in operating activities | (250,503 | ) | (451,932 | ) | (201,429) | (45) | ||||||||||
Our net cash used in operating activities for the year ended December 31, 2024 and 2023 is $250,503 and $451,952, respectively. Our net loss for the year ended December 31, 2024 of $2,423,602 was the main contributing factor for our negative cash flow. We were able to mostly offset the cash used in operating activities by using our stock to pay for expenses such as, amortization of debt discount of $174,898 and loss on debt settlement of $1,093,735.
Cash flows used in investing activities
| Year ended December 31, | Change | |||||||||||||||
2024 $ | 2023 $ |
$ |
% | |||||||||||||
| Net cash used in investing activities | — | — | — | — | ||||||||||||
Cash flows from financing activities
| Year ended December 31, | Change | |||||||||||||||
2024 $ | 2023 $ | $ | % | |||||||||||||
| Net cash from financing activities | 228,750 | 458,630 | (229,880) | (50) | ||||||||||||
Our net cash provided by financing activities for the year ended December 31, 2024 and 2023 is $228,750 and $458,630, respectively.
During the year ended December 31, 2024, the Company received $211,100 (CAD $289,259) in cash from its line of credit with The Cellular Connection Ltd. dated April 14, 2022, and cash advances from related party of $62,928. The cash advances are non-interest bearing, unsecured and have no specific terms of repayment.
As of December 31, 2024, we had cash of $1,733, working capital (deficiency) of $(3,580,522) and total liabilities of $3,665,969.
Our working capital as of December 31, 2024 and 2023 is as follows:
| December 31, 2024 | December 31, 2023 | |||||||
| Current assets | $ | 85,447 | $ | 169,481 | ||||
| Current liabilities | 3,665,969 | 2,158,619 | ||||||
| Working capital (Deficiency) | $ | (3,580,522 | ) | $ | (1,989,138 | ) | ||
| 21 |
The Company is continuing to focus improving cash flows from operations by reducing incentives to customers, by making purchases from different suppliers, accelerating the collection of accounts receivable, reducing expenses, managing accounts payable balances and by paying our officers, directors, consultants and staff with our stock.
The Company’s financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. During the year ended December 31, 2024, the Company incurred a net loss of $2,433,970 and used cash in operating activities of $250,503, and on December 31, 2024, had stockholders’ deficit of $3,568,234 and an accumulated deficit of $94,520,148. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The Company’s independent registered public accounting firm, in their report on the Company’s financial statements for the year ended December 31, 2024, contains an explanatory paragraph regarding the Company’s ability to continue as a going concern. The Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty should we be unable to continue as a going concern.
Over the next 12 months we expect to spend approximately $300,000 in cash for operations, legal, accounting and related services and to implement our business plan. We hope to be able to compensate our independent contractors with stock-based compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts.
| Cash Required to Implement of Business Plan | ||||
| General and Administration | $ | 300,000 | ||
| Total Estimated Cash Expenditures | $ | 300,000 | ||
On April 14, 2022, the Company entered into a binding Line of Credit with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to up to CAD $0 (CAD $750,000 available on the Line of Credit less CAD $1,069,595 of funds drawn and outstanding on December 31, 2024) in principal. Commencing in 2025, the Lender has indicated that they are no longer willing to continue to advance cash under this Line of Credit.
We expect to be able to secure additional capital through advances from our Chief Executive Officer in order to pay expenses such as organizational costs, filing fees, accounting fees and legal fees, however, we do not have any written or oral agreements with any other third parties which require them to fund our operations. We are currently in discussions with investors for private loans and an equity line of credit. Although there can be no assurances that we will be able to obtain such funds in the future, the Company has been able to secure financing to continue operations since its inception on April 3, 2009. We are currently quoted on OTC Pink.. If we need additional capital in the next twelve months and if we cannot raise such capital on acceptable terms, we may have to curtail our operations or terminate our business entirely.
The inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures for developing products and services, or otherwise curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, to the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of our common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuing stock in lieu of cash, which may also result in dilution to existing stockholders.
Our common stock started trading over the counter and has been quoted on the Over-The Counter Bulletin Board since February 17, 2011. The stock currently trades under the symbol “TWOH.OB.”
| 22 |
Commitments for future capital expenditures at December 31, 2024 is as follows:
| Payments Due by Period | ||||||||||||||||||||
| Contractual obligations | Total $ | Less than 1 year $ | 1 - 3 years $ | 4 – 5 years $ | After 5 years $ | |||||||||||||||
| Accounts payable and accrued liabilities | 528,643 | 528,643 | — | — | — | |||||||||||||||
| Debt | 3,031,063 | 3,031,063 | — | — | — | |||||||||||||||
| Non-redeemable convertible notes | 100,000 | 100,000 | — | — | — | |||||||||||||||
| Operating leases(1) | 6,263 | 6,263 | — | — | — | |||||||||||||||
| Total contractual obligations | 3,665,969 | 3,665,969 | — | — | — | |||||||||||||||
Notes:
| (1) | Leases for retail space, equipment and warehousing is currently month to month. Deliveries are currently outsourced. |
OPERATING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS
On April 14, 2022, the Company entered into a binding Line of Credit with The Cellular Connection Ltd. Pursuant to the Line of Credit, the Company can borrow from the Lender up to up to CAD $0 (CAD $750,000 available on the Line of Credit less CAD $1,069,595 of funds drawn and outstanding on December 31, 2024) in principal. Commencing in 2025, the Lender has indicated that they are no longer willing to continue to advance cash under this Line of Credit.
We expect to be able to secure additional capital through advances from our Chief Executive Officer in order to pay expenses such as organizational costs, filing fees, accounting fees and legal fees, however, we do not have any written or oral agreements with any other third parties which require them to fund our operations. We are currently in discussions with investors for private loans and an equity line of credit. Although there can be no assurances that we will be able to obtain such funds in the future, the Company has been able to secure financing to continue operations since its inception on April 3, 2009. We are currently quoted on OTC Pink. If we need additional capital in the next twelve months and if we cannot raise such capital on acceptable terms, we may have to curtail our operations or terminate our business entirely.
Our common stock started trading over the counter and has been quoted on the Over-The Counter Bulletin Board since February 17, 2011. The stock currently trades under the symbol “TWOH.OB.”
RELATED PARTY TRANSACTIONS
Years ended December 31, 2024 and 2023
Due to Related Party
As of December 31, 2023, advances and accrued salary of $883,534 were due to Nadav Elituv, the Company's former Chief Executive Officer. The balance is non-interest bearing, unsecured and have no specified terms of repayment.
During the year ended December 31, 2024, the Company issued advances due to related party for $62,928 for expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $45,278 in cash. On February 26, 2024, the Company issued common stock to settle due to related party with a carrying value of $296,000 (Note 11). On December 30, 2024, the Company issued a New Promissory Note (see Note 7) to settle accrued salary of $1,392,859 due to Nadav Elituv.
During the year ended December 31, 2023, the Company issued advances due to related party for $108,383 for expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $34,246 in cash. In addition, the Company accrued salary of $808,076 due to Nadav Elituv for the year ended December 31, 2023. On February 2, 2023, the Company issued common stock to settle due to related party with a carrying value of $188,871 (Note 11).
During the years ended December 31, 2024 and 2023, the Company paid Linus Creative Services, a business controlled by Bradley Southam, a former director of the Company, $0 and $2,714, respectively, for advertising services.
| 23 |
Promissory Notes – Related Party
As of December 31, 2024 and 2023, promissory note – related party of $0 and $0, respectively, were outstanding. The promissory notes – related party bear interest of 10% per annum, are unsecured, mature on December 31, 2025 and are due to 2130555 Ontario Limited, a Company controlled by Nadav Elituv, the Company's former Chief Executive Officer. On February 2, 2023, the Company issued common stock to settle promissory note – related party and interest with a carrying value of $85,922.
On December 30, 2024, the Company agreed to settle accrued liabilities due to Nadav Elituv, the Company's former Chief Executive Officer, totaling $1,392,859 for a New Promissory Note with carrying value of $1,700,000 resulting in a loss of extinguishment of $307,289.
Our policy with regard to transactions with related persons or entities is that such transactions must be on terms no less favorable than could be obtained from non-related persons.
The above related party transactions are not necessarily indicative of the amounts that would have been incurred had a comparable transaction been entered into with an independent party. The terms of these transactions were more favorable than would have been attained if the transactions were negotiated at arm's length.
PROPOSED TRANSACTIONS
The Company is not anticipating any transactions.
CHANGES IN ACCOUNTING POLICIES INCLUDING INITIAL ADOPTION
Refer to Note 2 in the consolidated financial statements for the year ended December 31, 2024 for information on accounting policies.
FINANCIAL INSTRUMENTS
The main risks of the Company’s financial instrument are exposed to are credit risk, market risk, foreign exchange risk, and liquidity risk.
Credit risk
The Company’s credit risk is primarily attributable to trade receivables. Trade receivables comprise amounts due from other businesses from the sale of groceries and dry goods. The Company mitigates credit risk through approvals, limits and monitoring. The amounts disclosed in the consolidated balance sheet are net of allowances for expected credit losses, estimated by the Company’s management based on past experience and specific circumstances of the customer. The Company manages credit risk for cash by placing deposits at major Canadian financial institutions.
Market risk
Market risk is the risk that changes in market prices and interest rates will affect the Company’s net earnings or the value of financial instruments. These risks are generally outside the control of the Company. The objective of the Company is to mitigate market risk exposures within acceptable limits, while maximizing returns. The Company’s market risk consists of risks from changes in foreign exchange rates, interest rates and market prices that affect its financial liabilities, financial assets and future transactions.
Refer to Note 2 in the consolidated financial statements for the year ended December 31, 2024 and Note 2 in the consolidated financial statements for the year ended December 31, 2024 for information on market risk.
Foreign Exchange risk
Our revenue is derived from operations in Canada. Our consolidated financial statements are presented in U.S. dollars and our liabilities other than trade payables are primarily due in U.S. dollars. The revenue we earn in Canadian dollars is adversely impacted by the increase in the value of the U.S. dollar relative to the Canadian dollar.
Liquidity risk
Liquidity risk relates to the risk the Company will encounter difficulty in meeting its obligations associated with financial liabilities. The financial liabilities on our consolidated balance sheets consist of accounts payable and accrued liabilities, due to related party, notes payable, convertible notes, net, derivative liabilities, promissory notes, promissory notes – related party and non-redeemable convertible notes, Management monitors cash flow requirements and future cash flow forecasts to ensure it has access to funds through its existing cash and from operations to meet operational and financial obligations. The Company believes it has sufficient liquidity to meet its cash requirements for the next twelve months.
| 24 |
OUTSTANDING SHARE DATA
As of April 11, 2025, the following securities were outstanding:
Common stock: 5,469,037,729 shares
OFF-BALANCE SHEET TRANSACTIONS
We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a Smaller Reporting Company, as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and related notes are included as part of this Annual Report.
| 25 |
TWO HANDS CORPORATION
INDEX
December 31, 2024 and 2023
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | F-1 |
| CONSOLIDATED FINANCIAL STATEMENTS | |
| Consolidated Balance Sheets | F-2 |
| Consolidated Statements of Operations and Comprehensive Income (Loss) | F-3 |
| Consolidated Statement of Stockholders' Deficit | F-4 |
| Consolidated Statements of Cash Flows | F-6 |
| Notes to Consolidated Financial Statements | F-7 |
| 26 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Two Hands Corporation:
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Two Hands Corporation (“the Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive income (loss), stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2024 and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 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 December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Explanatory Paragraph Regarding Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company incurred a net loss and has a stockholders’ deficit, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
/s/
We have served as the Company’s auditor since 2017.
April 14, 2025
| F-1 |
| TWO HANDS CORPORATION |
| CONSOLIDATED BALANCE SHEETS |
| December 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| VAT taxes receivable | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Due to related party | ||||||||
| Notes payable | ||||||||
| Line of credit | ||||||||
| Promissory notes | ||||||||
| Non-redeemable convertible notes, net - related party | ||||||||
| Current portion of operating lease right-of-use liability | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities | ||||||||
| Promissory notes | ||||||||
| Non-redeemable convertible notes, net | ||||||||
| Operating lease right-of-use liability, net of current portion | ||||||||
| Total long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Temporary equity | ||||||||
| Series A convertible preferred stock; $ par value; shares designated, shares issued and outstanding | ||||||||
| Series B convertible preferred stock; $ par value; shares designated, shares issued and outstanding | ||||||||
| Series C convertible preferred stock; $ par value; shares designated, shares and shares issued and outstanding, respectively | ||||||||
| Series D convertible preferred stock; $ par value; shares designated, shares issued and outstanding | ||||||||
| Series E convertible preferred stock; $ par value; shares designated, shares issued and outstanding | ||||||||
| Total temporary equity | ||||||||
| Stockholder's deficit | ||||||||
| Preferred stock; $ par value; shares authorized, issued and outstanding | ||||||||
| Common stock; $ par value; shares authorized, and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders' deficit | $ | $ | ||||||
| The accompanying footnotes are an integral part of these consolidated financial statements. | ||||||||
| F-2 |
| TWO HANDS CORPORATION |
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) |
| For the year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Sales | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense) | ||||||||
| Amortization of debt discount and interest expense | ( | ) | ( | ) | ||||
| Gain on disposition | ||||||||
| Loss on settlement of non-redeemable convertible notes and promissory notes | ( | ) | ( | ) | ||||
| Total other income (expense) | ( | ) | ( | ) | ||||
| Net loss attributed to Two Hands Corporation | ( | ) | ( | ) | ||||
| Add: deemed contribution - Series A Stock modification | ||||||||
| Add: deemed contribution - Series C Stock modification | ||||||||
| Net loss attributed to Two Hands Corporation common stockholders | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income (loss) | ||||||||
| Foreign currency translation adjustment | ( | ) | ||||||
| Total other comprehensive income (loss) | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Loss per common share - basic and diluted | $ | ) | $ | ) | ||||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||
| The accompanying footnotes are an integral part of these consolidated financial statements. | ||||||||
| F-3 |
| TWO HANDS CORPORATION |
| CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT |
| For the year ended December 31, 2024 and 2023 |
| Common Stock | Common Stock to be | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders' | |||||||||||||||||||||||
| Shares | Amount | Issued | Capital | Income | Deficit | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Stock issued for conversion of non-redeemable convertible notes | ||||||||||||||||||||||||||||
| Stock issued for settlement of debt - related party | ||||||||||||||||||||||||||||
| Stock issued for settlement of promissory notes | ||||||||||||||||||||||||||||
| Stock issued for the conversion of Series C convertible preferred stock | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| F-4 |
| Common Stock | Common Stock to be | Additional Paid-in | Accumulated Other Comprehensive | Accumulated | Total Stockholders' | |||||||||||||||||||||||
| Shares | Amount | Issued | Capital | Income | Deficit | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| Rounding on reverse stock split | ||||||||||||||||||||||||||||
| Stock issued for conversion of non-redeemable convertible notes | ||||||||||||||||||||||||||||
| Stock issued for settlement of debt - related party | ||||||||||||||||||||||||||||
| Stock issued for the conversion of Series A convertible preferred stock | ||||||||||||||||||||||||||||
| Stock issued for the conversion of Series B convertible preferred stock | ||||||||||||||||||||||||||||
| Stock issued for the conversion of Series C convertible preferred stock | ||||||||||||||||||||||||||||
| Stock issued to settle stock to be issued | ( | ) | ||||||||||||||||||||||||||
| Deemed contribution - Series A Stock modification | — | |||||||||||||||||||||||||||
| Deemed contribution - Series C Stock modification | — | |||||||||||||||||||||||||||
| Foreign exchange loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||
| The accompanying footnotes are an integral part of these consolidated financial statements. | ||||||||||||||||||||||||||||
| F-5 |
| TWO HANDS CORPORATION |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| For the year ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities | ||||||||
| Depreciation and amortization | ||||||||
| Bad debt | ( | ) | ||||||
| Gain on disposition | ( | ) | ||||||
| Amortization of debt discount | ||||||||
| Loss on settlement of non-redeemable convertible notes | ||||||||
| Change in operating assets and liabilities | ||||||||
| Accounts and taxes receivable | ( | ) | ( | ) | ||||
| Prepaid expense | ( | ) | ||||||
| Inventory | ||||||||
| Deferred revenue | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Operating lease right-of-use liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Net cash used in investing activities | ||||||||
| Cash flow from financing activities | ||||||||
| Expenses paid for by related party | ||||||||
| Repayment of advances to related party | ( | ) | ( | ) | ||||
| Proceeds from notes payable | ||||||||
| Repayment of notes payable | ( | ) | ||||||
| Proceeds from line of credit | ||||||||
| Net cash provided by financing activities | ||||||||
| Change in foreign exchange | ( | ) | ||||||
| Net change in cash | ( | ) | ||||||
| Cash, beginning of the period | ||||||||
| Cash, end of the period | $ | $ | ||||||
| Cash paid during the period | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Stock issued for settlement of debt - related party | $ | $ | ||||||
| Stock issued for settlement of promissory notes | $ | $ | ||||||
| Stock issued for settlement of promissory notes - related party | $ | $ | ||||||
| Stock issued to settle non-redeemable convertible notes | $ | $ | ||||||
| Issue of new promissory notes to settle promissory notes, accrued expenses and other liabilities | $ | $ | ||||||
| Deemed contribution - Series A Stock Modification | $ | $ | ||||||
| Deemed contribution - Series C Stock Modification | $ | $ | ||||||
| The accompanying footnotes are an integral part of these consolidated financial statements. | ||||||||
| F-6 |
Two Hands Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2024 and 2024
NOTE 1 - NATURE OF OPERATIONS
Two Hands Corporation (the "Company") was incorporated in the state of Delaware on April 3, 2009 and on July 26, 2016, changed its name from Innovative Product Opportunities Inc. to Two Hands Corporation.
The Two Hands co-parenting application launched on July 2018 and the Two Hands Gone application launched In February 2019. The Company ceased work on these applications in 2021.
The gocart.city online consumer grocery delivery application was released in early June 2020 and Cuore Food Services commenced sale of dry goods and produce to other businesses in July 2020.
In July 2021, the Company made the strategic decision to focus exclusively on the grocery market through three on-demand branches of its grocery businesses: gocart.city, Grocery Originals, and Cuore Food Services.
| i) | gocart.city is the Company’s online delivery marketplace, allowing consumers to shop online and have their groceries delivered. |
| ii) | Grocery Originals is the Company’s brick-and-mortar grocery store located in Mississauga Ontario at the site of the Company’s warehouse. |
| iii) | Cuore Food Services is the Company’s wholesale food distribution branch. |
On May 1, 2024, the Company entered into an asset sale agreement with a non-related private corporation (“Purchaser”) whereby the Company sold the assets of gocart.city. The sale included the e-commerce site, branding, supporting components of the Grocery Originals store and inventory. The ongoing sales and client base gocart.city and Grocery Originals was transferred as part of the asset sale. After May 1, 2024, the Company continued the business of Cuore Food Services.
In January 2025, the Company announced its plans to strategically reposition for future growth outside of the wholesale food distribution branch and is taking steps to ensure a smooth and efficient transition away from the legacy business.
In January 2025, the Company also announce its new business in the artisan crafted denim and premium combed Pima cotton yarns space in cooperation with Videlia Mills.
The operations of the business are carried on by Two Hands Canada Corporation, a wholly-owned subsidiary of the Company, incorporated under the laws of Canada on February 7, 2014.
The Company received approval from the Canadian Securities Exchange (the "CSE") to list its common shares (the "Common Shares") on the CSE. Trading of the Common Shares in the capital of the Company commenced on August 5, 2022, under the symbol "TWOH".
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements present the balance sheets and statements of operations, stockholders' equity and cash flows of the Company. These financial statements are presented in United States dollars and have been prepared in accordance with accounting principles generally accepted in the United States.
GOING CONCERN
The Company's financial statements are prepared in
accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and
the liquidation of liabilities in the normal course of business. During the year ended December 31, 2024, the Company incurred a net loss
of $
| F-7 |
classifications of liabilities that might result from this uncertainty. We are currently funding our operations by way of cash advances from our Chief Executive Officer, note holders, shareholders and others; however, we do not have any oral or written agreements with them or others to loan or advance funds to us. There can be no assurances that we will be able to receive loans or advances from them or other persons in the future.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Two Hands Canada Corporation. All intercompany transactions and balances have been eliminated in consolidation.
USE OF ESTIMATES AND ASSUMPTIONS
Preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
CONCENTRATIONS
The following table summarizes accounts receivable and revenue concentrations:
| Schedule of accounts receivable and revenue concentrations | ||||||||
| Accounts receivable on December 31, 2024 | Revenue for the year ended December 31, 2024 | |||||||
| Customer #1 | % | |||||||
| Customer #2 | % | |||||||
| Total concentration | % | % | ||||||
The following table summarizes accounts payable and purchases concentrations:
| Accounts payable on December 31, 2024 | Purchases for the year ended December 31, 2024 | |||||||
| Supplier #1 | % | % | ||||||
| Supplier #2 | % | |||||||
| Supplier #3 | % | |||||||
| Supplier #4 | % | |||||||
| Supplier #5 | % | |||||||
| Total concentration | % | % | ||||||
CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
ACCOUNTS RECEIVABLE
Trade accounts receivable is recorded at the invoiced amount and do not bear interest. The Company grants credit to its customers with defined payment terms, performs ongoing evaluations of the credit worthiness of its customers and generally does not require collateral. Accounts receivables are carried at their outstanding principal amounts, less an anticipated amount for discounts and an allowance for expected credit losses, which management believes is sufficient to cover potential credit losses based on historical experience and periodic evaluation of the financial condition of the Company's customers. Estimated credit losses consider relevant information about past events, current conditions and reasonable and supporting forecasts that affect the collectability of financial assets.
The allowance for doubtful accounts on December 31,
2024 and 2023 is $
| F-8 |
INVENTORY
Inventory consisting of groceries and dry goods are
measured at the lower of cost and net realizable value. Cost is determined pursuant to the first-in first out(“FIFO”) method.
The cost of inventory includes the purchase price, shipping and handling costs incurred to bring the inventories to their present location
and condition. Inventory with a short shelf life that is not utilized within the planned period are immediately expensed in the statement
of operations. Estimated gross profit rates are used to determine the cost of goods sold in the interim periods, unless physical inventory
counts are performed. Any significant adjustment that results from the reconciliation with physical inventory counts is disclosed. On
December 31, 2024 and 2023, the inventory valuation allowance was $
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred, while renewals and betterments that materially extend the life of an asset are capitalized.
The costs of assets sold, retired, or otherwise disposed of, and the related allowance for depreciation, are eliminated from the accounts, and any resulting gain or loss is recognized in the results from operations. Depreciation is provided over the estimated useful lives of the assets, which are as follows:
Computer equipment
In the year of acquisition, one half the normal rate of depreciation is provided.
REVENUE RECOGNITION
In accordance with ASC 606, revenue is recognized when a customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods or services. The provisions of ASC 606 include a five-step process by which we determine revenue recognition, depicting the transfer of goods or services to customers in amounts reflecting the payment to which we expect to be entitled in exchange for those goods or services. ASC 606 requires us to apply the following steps: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, we satisfy the performance obligation. We recognize revenue for the sale of our products upon delivery to a customer.
During the year ended December 31, 2024 and 2023,
the Company had revenue of $
LEASES
Under ASC 842, a right-of-use asset and lease liability is recorded for all leases and the statement of operations reflects the lease expense for operating leases and amortization/interest expense for financing leases.
The Company does not apply the recognition requirements in the standard to a lease that at commencement date has a lease term of twelve months or less and does not contain a purchase option that it is reasonably certain to exercise and to not separate lease and related non-lease components. Options to extend the leases are not included in the minimum lease terms unless they are reasonably certain to be exercised.
The Company leases an automobile under a non-cancelable operating lease. Right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
DEBT DISCOUNT AND DEBT ISSUANCE COSTS
Debt discounts and debt issuance costs incurred in connection with the issuance of convertible notes are capitalized and amortized to interest expense based on the related debt agreements using the effective interest rate method. Unamortized discounts are netted against convertible notes.
| F-9 |
INCOME TAXES
The Company accounts for income taxes in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("FASB ASC") 740, Income Taxes. Under the assets and liability method of FASB ASC 740, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.
Basic net income (loss) per share includes no dilution and is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding for the period increased to include the number of additional common shares that would have been outstanding if potentially dilutive securities had been issued. Dilutive net loss per share for common stock is calculated utilizing the if-converted method which assumes the conversion non-redeemable convertible notes and the line of credit. On December 31, 2024 and 2024, we excluded the common stock issuable upon conversion of non-redeemable convertible notes, and Series C Stock of shares and shares, respectively, as their effect would have been anti-dilutive.
FOREIGN CURRENCY TRANSLATION
The consolidated financial statements are presented in United States dollars. The functional currency of the consolidated entities are determined by evaluating the economic environment of each entity. The functional currency of Two Hands Corporation is the United States dollar. Foreign exchange translation adjustments are reported as gains or losses resulting from foreign currency transactions and are included in the results of operations.
Two Hands Canada Corporation maintains its accounts in the Canadian dollar. Assets and liabilities are translated to United States dollars at year-end exchange rates. Income and expenses are transaction at averages exchange rate during the year. Foreign currency transaction adjustments are reported as other comprehensive income, a component of equity in the consolidated.
The Company accounts for stock incentive awards issued to employees and non-employees in accordance with FASB ASC 718, Stock Compensation. Accordingly, stock-based compensation is measured at the grant date, based on the fair value of the award. Stock-based awards to employees are recognized as an expense over the requisite service period, or upon the occurrence of certain vesting events. Additionally, stock-based awards to non-employees are expensed over the period in which the related services are rendered.
FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC Topic 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.
Included in the ASC Topic 820 framework is a three level valuation inputs hierarchy with Level 1 being inputs and transactions that can be effectively fully observed by market participants spanning to Level 3 where estimates are unobservable by market participants outside of the Company and must be estimated using assumptions developed by the Company. The Company discloses the lowest level input significant to each category of asset or liability valued within the scope of ASC Topic 820 and the valuation method as exchange, income or use. The Company uses inputs which are as observable as possible and the methods most applicable to the specific situation of each company or valued item.
The Company’s financial instruments such as cash, accounts payable and accrued liabilities, non-redeemable convertible notes, notes payable and due to related parties are reported at cost, which approximates fair value due to the short-term nature of these financial instruments.
RECENT ACCOUNTING PRONOUNCEMENTS
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This update amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity's own equity and improves and amends the related EPS guidance for both Subtopics. This standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2023, which means it will be effective for our fiscal year beginning January 1, 2024. The Company recognizes there will be an impact on how conversions are calculated which may require recognition of gains or losses. The Company adopted ASU 2020-06 during the year ended December 31, 2024. See Note 5. Line of Credit for further detail.
| F-10 |
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal year beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. The Company adopted this new standard on January 1, 2024 and the adoption did not have a material impact on the consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the provisions of the amendments and the impact on its financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.
NOTE 3 – NON-REDEEMABLE CONVERTIBLE NOTES
Non-redeemable convertible notes
| F-11 |
Non-redeemable convertible notes – related party
On December 30, 2024, Jordan Turk and the Company
agreed to exchange $
Also, on December 30, 2024, Jordan Turk entered into
an agreement to assign the remaining outstanding principal and interest of the original Note with a carrying value of $
The consolidated statement of operations includes
interest expense of $
NOTE 4 – LEASES
The Company entered into an operating lease agreement
on October 14, 2021 for an automobile, resulting in the recording of an initial liability and corresponding right-of-use asset of $
The Company’s operating lease expires in 2025. The following shows future lease payments for the remaining periods under operating lease at December 31, 2024:
| Schedule of operating lease liability | ||||
| Periods ending December 31, | Operating Lease Commitments | |||
| 2024 | $ | |||
| 2025 | ||||
| Total operating lease commitments | ||||
| Less: imputed interest | ( | ) | ||
| Total right-of-use liability | $ | |||
| F-12 |
The Company’s discounted current right-of-use
lease liability and discounted non-current right-of-use lease liability on December 31, 2024 is $
Operating leases expense for the years ended December
31, 2024 and 2023 is $
NOTE 5 – LINE OF CREDIT
On April 14, 2022, the Company
entered into a binding Grid Promissory Note and Credit Facility Agreement (the “Line of Credit”) with The Cellular Connection
Ltd. (the “Lender”). Pursuant to the Line of Credit, the Company can borrow from the Lender up to CAD $
On December 30, 2024, the Company
and the Lender agreed to amend (the “Amendment”) to the terms of the Line of Credit. The Amendment cancels the right of the
Company, at its option, to convert outstanding principal and interest into shares of common stock of the Company after twelve months from
the first advance at a conversion price of $0.10 per share. The Amendment grants the right of the Lender, at its option, to convert outstanding
principal or interest into shares of common stock of the Company at a conversion price of $
Any conversion is subject to a restriction on the Lender never holding more than 4.99% of the Company’s Common Shares.
As of December 31, 2024 and
2023, the Line of Credit of $
NOTE 6 – NOTES PAYABLE
As of December 31, 2024 and 2023, notes payable due
to Piero Manzini, Nadav Elituv, the former CEO of the Company, and The Cellular Connection Limited, a corporation controlled by Stuart
Turk, totaling $
NOTE 7 – PROMISSORY NOTES
Promissory Notes
On September 9, 2024, the Company issued promissory
notes with principal of $
During the year ended December 31, 2024, the Company
elected to settle $
On December 30, 2024, the Company exchanged Promissory
Notes comprising principal and interest of $
On December 30, 2024, Jordan Turk and the Company
agreed to exchange $
| F-13 |
On December 30, 2024, Jordan Turk and the Company
agreed to exchange $
As of December 31, 2024 and 2023, promissory notes
of $
New Promissory Notes are unsecured, bear interest
of
Promissory Notes – Related Party
As of December 31, 2024 and 2023, promissory note
– related party of $
On December 30, 2024, the Company agreed to settle
accrued liabilities due to Nadav Elituv, the Company's former Chief Executive Officer, totaling $
NOTE 8 – RELATED PARTY TRANSACTIONS
As of December 31, 2023, advances and accrued salary
of $
During the year ended December 31, 2024, the Company
issued advances due to related party for $
During the year ended December 31, 2023, the Company
issued advances due to related party for $
During the years ended December 31, 2024 and 2023,
the Company paid Linus Creative Services, a business controlled by Bradley Southam, a former director of the Company, $
Employment Agreements
On January 15, 2023, the Company executed an employment
agreement for the period from January 1, 2023 to December 31, 2023 with Nadav Elituv, the former Chief Executive Officer of the Company
whereby the Company shall pay an annual salary of $
On March 17, 2024, the Company executed an employment
agreement for the period from January 1, 2024 to December 31, 2024 with Nadav Elituv, the former Chief Executive Officer of the Company
whereby the Company shall pay an annual salary of $
On July 1, 2023, entered into a consulting agreement
to pay 2130555 Ontario Limited, a Company controlled by Nadav Elituv, a monthly consulting fee of CAD $
On January 1, 2024, entered into a consulting agreement
to pay 2130555 Ontario Limited, a Company controlled by Nadav Elituv, a monthly consulting fee of CAD $
| F-14 |
NOTE 9 - INCOME TAXES
A reconciliation of the provision for income taxes at the United States federal statutory rate compared to the Company’s income tax
expense as reported is as follows:
| Schedule of reconciliation of provision for income tax expenses (recovery) | ||||||||
| 2024 | 2023 | |||||||
| Net loss before income taxes per consolidated financial statements | $ | ( | ) | $ | ( | ) | ||
| Income tax rate | % | % | ||||||
| Income tax recovery | ( | ) | ( | ) | ||||
| Non-deductible share-based payments | ||||||||
| Non-deductible interest | ||||||||
| Loss on settlement of debt | ||||||||
| Initial derivative expense | ||||||||
| Change in fair value of derivative expense | ||||||||
| Valuation allowance change | ||||||||
| Income tax expense (recovery) | $ | $ | ||||||
The significant component of deferred income tax assets on December 31, 2024 and 2023 is as follows:
| Schedule of significant component of deferred income tax assets | ||||||||
| 2024 | 2023 | |||||||
| Net operating loss carry-forward | $ | $ | ||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred income tax asset | $ | $ | ||||||
The amount taken into income as deferred income tax assets must reflect that portion of the income tax loss carry forwards that is more likely-than-not to be realized from future operations. The Company has chosen to provide a full valuation allowance against all available income tax loss carry forwards. The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change and which cause a change in management’s judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.
As of December 31, 2024 and 2023 the Company has no unrecognized income tax benefits. The Company’s policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as tax expense. No interest or penalties have been recorded during the years ended December 31, 2024 and 2023 and no interest or penalties have been accrued as of December 31, 2024 and 2023. As of December 31, 2024 and 2023, the Company did not have any amounts recorded pertaining to uncertain tax positions.
The tax years from 2009 and forward remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities.
NOTE 10 – PREFERRED STOCK
On August 6, 2013, the Company filed a Certificate
of Designation with the Delaware Secretary of State thereby designating two hundred thousand () shares as Series A Convertible
Preferred Stock (“Series A Stock”). Each share of Series A Stock is convertible into one thousand (1,000) shares of common
stock of the Company.
On December 12, 2019, the Company filed a Certificate
of Designation with the Delaware Secretary of State thereby designating one hundred thousand () shares as Series B Convertible
Preferred Stock (“Series B Stock”). After a one year holding period,
On October 7, 2020, the Company filed a Certificate
of Designation with the Delaware Secretary of State thereby designating five thousand () shares as Series C Convertible Preferred
Stock, par value $ per share (“Series C Stock”).
| F-15 |
On September 1, 2021, the Company filed a Certificate
of Designation with the Delaware Secretary of State thereby designating two hundred thousand () shares as Series D Convertible
Preferred Stock, par value $ per share (“Series D Stock”).
On June 30, 2022, the Company made an amendment to
the Certificate of Designation of its Series C Stock which lowered the fixed conversion price from $
On October 4,
2022, the Company filed a Certificate of Designation with the Delaware Secretary of State that had the effect of designating shares
of preferred stock as Series E Convertible Preferred Stock (“Series E Stock”). Series E Stock are non-voting, have a par value
of $
On September 29, 2023, a 1 for
On October 10, 2024, the Company elected to convert shares of Series C Convertible Preferred Stock into shares of common stock of the issuer in accordance with the original terms of the Series C Convertible Preferred Stock.
Series A Stock, Series B Stock, Series C Stock, Series D Stock and Series E Stock has been classified as temporary equity (outside of permanent equity) on the consolidated balance sheet on December 31, 2024 and 2023, since share settlement is not within the control of the Company.
NOTE 11 - STOCKHOLDERS' EQUITY
The Company is authorized to issue an aggregate of common shares with a par value of $ per share and shares of preferred stock with a par value of $ per share.
On August 22, 2023, pursuant to stockholder consent,
our Board of Directors authorized an amendment (the "Amendment") to our Certificate of Incorporation, as amended, to effect
a reverse stock split of the issued and outstanding shares of our common stock, par value $, on a
During the year ended December 31, 2024, the Company
elected to convert $
During the year ended December 31, 2024, the Company
elected to settle $
On February 26, 2024, the Company agreed to issue
shares of common stock with a fair value of $109,600 to settle accrued salary and expenses of $
On October 10, 2024, the Company elected to convert shares of Series C Convertible Preferred Stock into shares of common stock of the issuer in accordance with the original terms of the Series C Convertible Preferred Stock.
| F-16 |
For the year ended December 31, 2023, the Company
elected to convert $
On February 2, 2023, the Company agreed to issue
shares of common stock with a fair value of $
On February 2, 2023, the Company agreed to issue
shares of common stock with a fair value of $
On March 3, 2023, the Holder of Series B Stock elected
to convert shares of Series B Stock into shares of common stock resulting in a $
On May 12, 2023, the Company issued shares of common
stock to satisfy an obligation for common stock to be issued with a carrying value of $
On May 16, 2023, the Holder of Series B Stock elected
to convert shares of Series B Stock into shares of common stock resulting in a $
On June 30, 2023, shares of Series C Stock
automatically converted into shares of common stock in accordance with the Certificate of Designation resulting in a $
On September 29, 2023, the holder of Series A Stock elected to convert shares of Series A Stock into shares of common stock.
| F-17 |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
We have had no changes in or disagreements with our accountants. None of our principal independent accountants have resigned or declined to stand for re-election.
ITEM 9A(T). CONTROLS AND PROCEDURES.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being December 31, 2024. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this annual report for the reasons discussed below.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO-2013). As a result of this assessment, management concluded that, as of December 31, 2024, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2024: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting, which are included within disclosure controls and procedures, that occurred during our fiscal quarter ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION.
During the quarter ended December 31, 2024, no director or Section 16 officer
| 27 |
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Insider Trading Policy. We have
Our bylaws state the number of directors of the Company shall be determined by resolution of the Board of Directors. The Board of Directors currently consists of three (3) directors who are expected to hold office until our nest meeting of the shareholders. Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his successor is elected and qualified, or his earlier death, resignation or removal. Officers are elected by and serve at the discretion of the Board of Directors.
The following table sets forth information regarding our executive officers, directors and significant employees, including their ages as of the date of this Report:
The names of our director and executive officers as of the date of this Report, their respective ages, positions, and biographies are set forth below. Our executive officers are appointed by, and serve at the discretion of, our board of directors.
| Name | Age | Position(s) | ||||
| Emil Assentato (1) | 75 | Chief Executive Officer, President, Treasurer, Secretary and Director (Principal Executive Officer) | ||||
| Matthew Stark (1) | 37 |
Chief Financial Officer and Director (Principal Financial and Accounting Officer) | ||||
| Craig Marshak (1) | 63 | Director | ||||
(1) Members of the Audit Committee
Professional Experience
The biographies of each executive officer below contain information regarding the person’s service as an executive officer, business experience, director positions held currently or at any time during the last five years, and information regarding involvement in certain legal or administrative proceedings, if applicable.
A description of the principal occupation for the past five years and summary of the experience of the directors and officers of the Company is as follows:
Emil Assentato, Chief Executive Officer, President, Treasurer, Secretary and Director
Emil Assentato has been the Chief Executive Officer, President, Treasurer, Secretary and a Director of the Company since December 30, 2024. Emil Assentato spent most of his significant career working for Compaigine Financier Tradition, a publicly owned company on the Geneva Exchange under the symbol CFT, in its wholly owned subsidiary Tradition North America, from August 1, 1986 through June 30, 2017. This journey included the following positions within his scope at Tradition: CEO from 1991 through 2014: Chairman 2014 through 2017; President Tradition Government Securities 1994 through 2014: Chairman and CEO of Tradition Securities and Derivatives, Inc, Chairman and CEO from 2008 through 2013: Initiated Tradition’s advance in South America establishing offices in Argentina (1995), Chile(2004), Columbia (2004), Mexico (2004) and briefly in Brazil all in the early 2000’s: Chairman, Standard Credit Group, LLC 2008 through 2013: Director, StreamingEdge, Inc. 2008 through 2014, Inc.: Main Board Executive Compaignie Financier Tradition (CFT) 2002 through 2017. Along the way Mr. Assentato occupied the following positions of which some are still active: Chairman Currency Mountain Holdings Ltd Malta 2010 through present: Chairman Triton Capital Markets Ltd, Malta 2010 through present: Chairman TraderMade Ltd UK 2015-present: FXDD LLC 2002 through 2015 Chairman: Nukkleus, Inc. (Nasdaq: NUKK) 2016 through July 2024, Chairman and CEO of Nukkleus Inc. Notable career accomplishments included the first individual to execute an over-the-counter peer-peer Euro Dollar Future in North America 1982: among the first to execute a peer-peer interest rate swap in 1982: including the above started other desks at the forefront of financial product innovation brokering Lesser Developed Country debt desk 1989: among the first to initiate Credit Derivative Desk in the mid 1990’s. Mr. Assentato was early in recognizing the importance of Crypto as a medium for payment solutions through Nukkleus Inc. and was early in the development of retail FX (FXDD) in 2002: Mr. Assentato holds a Bachelor of Scient degree in Economics with a minor in Philosophy from Hofstra University 1971 and received honorable discharge from the US Navy in 1972.
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Matthew Stark, Chief Financial Officer and Director
Matthew Stark has been the Chief Financial Officer and a Director of the Company since February 20, 2025. Mr. Stark brings 15 years’ experience of accounting and financial reporting within the financial services industry, including foreign exchange trading, FINRA-regulated broker-dealer services, and cross-border payment services. He was employed with FXDD for 12 years, having an instrumental role in all corporate accounting operations, with a heavy focus on the external audits and regulatory requirements of FXDD and their global subsidiaries. Mr. Stark joined Nukkleus, Inc. (Nasdaq: NUKK) in 2022 and currently serves as their Corporate Controller. After receiving his Bachelor's degree in Business Administration in 2010, Mr. Stark graduated from Pace University in 2015 with his Master’s degree in Accounting.
Craig Marshak, Director
Craig Marshak has been a Director of the Company since January 3, 2025. Mr. Marshak has been a Managing Director at Clear Think Capital since joining the firm in March 2021. From 2018 to 2021, he served as Senior Advisor to SHR Ventures LLC, the family office of Stanley Hutton Rumbough, whose grandfather founded E.F. Hutton. During this time, he co-founded Moringa Acquisition, a NASDAQ-listed SPAC, where he serves as Vice Chairman and Co-Founder. Since 2002, Mr. Marshak has been a Principal at Israel Venture Partners (israelventurepartners.com), a platform focused on identifying and investing in Israeli technology and healthcare companies. Mr. Marshak began his investment banking career at Morgan Stanley in the Merchant Banking department before moving to Corporate Finance and Mergers & Acquisitions at Wertheim Schroder and later Schroders in London, England. He went on to establish the London office of Robertson Stephens and, from 1998 to 2001, was Co-Head of the Nomura Technology Merchant Banking Group in London, specializing in high-growth companies in the Israeli and Silicon Valley sectors.
His expertise includes advising on multi-billion-dollar restructuring assignments, such as the privatization of Israel Chemicals from Israeli government ownership, the restructuring of Koor Industries (formerly one of Israel’s largest conglomerates), and the landmark restructuring of Manville Corporation. Mr. Marshak and his team at Schroders led the entirety of the Manville engagement, which was one of the most complex restructurings of its era. Mr. Marshak graduated summa cum laude and Phi Beta Kappa with an A.B. degree from Duke University. He was awarded the Roger Alan Opel Scholarship to the London School of Economics and later earned a J.D. from Harvard Law School.
Family Relationships
There are no family relationships between any of our officers and directors.
Significant Employees
We do not have any significant employees other than our current executive officers named in this Report.
Involvement in Certain Legal Proceedings
Our directors and executive officers have not been personally involved in any of the following events during the past ten years:
| ● | any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; | |
| ● | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
| ● | being subject to 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 his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; | |
| ● | being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; | |
| ● | being 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 any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | |
| ● | being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
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Conflicts of Interest
Investors should be aware of the following potential conflicts of interest:
| ● | None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities. |
Board Leadership Structure and the Board’s Role in Risk Oversight
The Board of Directors currently does not have an independent Chairman. Our Chief Executive Officer acts as the Chairman of the Board. The Board determined that in the best interest of the Company the most effective leadership structure at this time is not to separate the roles of Chairman and Chief Executive Officer. A combined structure provides the Company with a single leader who represents the Company to our stockholders, regulators, business partners and other stakeholders, among other reasons set forth below. Should the Board conclude otherwise, the Board will separate the roles and appoint an independent Chairman.
| ● | This structure creates efficiency in the preparation of the meeting agendas and related Board materials as the Company’s Chief Executive Officer works directly with those individuals preparing the necessary Board materials and is more connected to the overall daily operations of the Company. Agendas are also prepared with the permitted input of the full Board of Directors allowing for any concerns or risks of any individual director to be discussed as deemed appropriate. The Board believes that the Company has benefited from this structure, and Mr. Assentato’s continuation in the combined role of the Chairman and Chief Executive Officer is in the best interest of the stockholders. |
| ● | The Company believes that the combined structure is necessary and allows for efficient and effective oversight, given the Company’s relatively small size, its corporate strategy and focus. |
The Board of Directors does not have a specific role in risk oversight of the Company. The Chairman, President and Chief Executive Officer and other executive officers and employees of the Company provide the Board of Directors with information regarding the Company’s risks.
Independent Directors
Our Board of Directors has determined that Craig Marshall is an “independent director” within the meaning of NASDAQ Marketplace Rule 5605(a)(2). As of April 11, 2025 our common stock is quoted on the OTC Pinks tier of the OTC Markets.
Committees of the Board
The Board of Directors has the responsibility for establishing broad corporate policies and reviewing our overall performance rather than day-to-day operations. The Board's primary responsibility is to oversee the management of our company and, in so doing, serve the best interests of our company and our stockholders. Our full Board of Directors performs all of the functions normally designated to a Compensation Committee and Nominating Committee.
Audit Committee
The primary function of the Audit Committee is to assist the Board in its oversight responsibilities of the integrity of the Company’s financial statements; the Company’s compliance with legal and regulatory requirements as they relate to the Company’s financial statements; the qualifications, independence and performance of the Company’s external auditor; the enterprise risk management process; internal control over financial reporting and disclosure controls and procedures; the performance of the Company’s internal audit function; and performing additional duties set out or otherwise delegated to the Audit Committee by the Board.
On October 26, 2021, the Company’s Board of Directors established an Audit Committee and adopted an Audit Committee Charter. The Company’s Board of Directors appointed Nadav Elituv, Ryan Wilson and Bradley Southam to serve as members of the Audit Committee until the Company’s next annual meeting of shareholders. The Audit Committee does not have a member who would qualify as an “audit committee financial expert” within the definition of Item 407(d)(5)(ii) of Regulation S-K.
Procedure of Nominating Directors
There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors.
The Board of Directors will consider candidates
for director positions that are recommended by any of our stockholders. The recommended candidate should be submitted to us in
writing addressed to 141 Piping Rock Road
Locust Valley, New York 11560.. The recommendation shall include the following
information: name of candidate; address, phone, and fax number of candidate; a statement signed by the candidate certifying that the
candidate wishes to be considered for nomination to our Board of Directors and stating why the candidate believes that he or she
meets the director qualification criteria and would otherwise be a valuable addition to our Board of Directors; a summary of the
candidate's work experience for the prior five years and the number of shares of our stock beneficially owned by the candidate.
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The Board will evaluate the recommended candidate and will determine whether or not to proceed with the candidate in accordance with our procedures. We reserve the right to change our procedures at any time to comply with the requirements of applicable laws.
Code of Ethics
We have adopted a code of ethics that applies
to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar
functions. We will provide a copy of our Code of Ethics to any person, free of charge, upon written request to Emil Assentato at Two Hands
Corporation, 141 Piping Rock Road,
Locust Valley, New York 11560.
ITEM 11. EXECUTIVE COMPENSATION.
EXECUTIVE COMPENSATION
Summary Compensation Table
| Name & Principal Position | Year | Salary ($) |
Bonus ($) |
Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) |
|
Emil Assentato, Principal Executive Officer, President, and Director |
2024 | $ - | $ - | $ - | $ - | $- | $ - | $ - | $ - |
| 2023 | $ - | $ - | $ - | $ - | $- | $ - | $ - | $ - | |
| Matthew Stark, Chief Financial Officer and Director | 2024 | $ - | $ - | $ - | $ - | $- | $ - | $ - | $ - |
| 2023 | $ - | $ - | $ - | $ - | $- | $ - | $ - | $ - | |
| Andrew Kucharchuk, former Chief Financial Officer and Director | 2024 | $ - | $ - | $ - | $ - | $- | $ - | $ - | $ - |
| 2023 | $ - | $ - | $ - | $ - | $- | $ - | $ - | $ - | |
|
Nadav Elituv, former Principal Executive Officer, President, Chairman and Director |
2024 | $ 809,038 | $ - | $- | $ - | $- | $ - | $ - | $ 809,038 |
| 2023 | $ 808,076 | $ - | $- | $ - | $- | $ - | $ - | $ 808,076 | |
| Steven Gryfe, former Chief Financial Officer | 2024 | $ - | $ - | $ - | $ - | $- | $ - | $ - | $ - |
| 2023 | $ - | $ - | $ - | $ - | $- | $ - | $ - | $ - |
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No shares of common stock of the Company have been sold by the Officers other than reported on Form 4, Statement of Changes of Beneficial Ownership of Securities, filed with the Securities Exchange Commission and remain in book-entry held by the Company’s transfer agent.
Stock Option Grants
We have not granted any stock options to the executive officers or directors since our inception.
Outstanding Equity Awards at Fiscal Year-End
On December 31, 2024, there were no unexercised options and no equity incentive plan awards for each name executive officer.
We do not have any qualified or non-qualified defined benefit plans or nonqualified defined contribution plans or other deferred compensation plans. There are no contracts, agreements, plans or arrangements that provide for payment to our named executive officer following or in connection with the resignation, retirement or termination of the named executive officer, a change in control of our Company, or a change in the named executive officer's responsibilities following a change in control.
Employment Agreements
On January 15, 2023, the Company executed an employment agreement for the period from January 1, 2023 to December 31, 2023 with Nadav Elituv, the former Chief Executive Officer of the Company whereby the Company shall pay an annual salary of $600,000 from available funds.
On March 17, 2024, the Company executed an employment agreement for the period from January 1, 2024 to December 31, 2024 with Nadav Elituv, the former Chief Executive Officer of the Company whereby the Company shall pay an annual salary of $600,000 from available funds.
On July 1, 2023, entered into a consulting agreement to pay 2130555 Ontario Limited, a Company controlled by Nadav Elituv, a monthly consulting fee of CAD $24,000 per month for services for the period from July 1, 2023 to December 31, 2023.
On January 1, 2024, entered into a consulting agreement to pay 2130555 Ontario Limited, a Company controlled by Nadav Elituv, a monthly consulting fee of CAD $24,000 per month for services for the period from January 1, 2024 to December 31, 2024.
COMPENSATION OF DIRECTORS
The following table summarizes compensation paid to all of our directors who were not our named executive officers during the fiscal year ended December 31, 2024:
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| Name | Fees Earned of Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | |||||||||||||||
| Craig Marshak, Director | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Ryan Wilson, former Director | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Bradley Southam, former Director | $ | — | $ | — | $ | — | $ | — | $ | — |
During the years ended December 31, 2024 and 2023, the Company paid Linus Creative Services, a business controlled by Bradley Southam, a former director of the Company, $0 and $2,714, respectively, for advertising services.
DIRECTOR COMPENSATION
We did not provide any cash compensation to the directors for their service as directors during the last fiscal year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 2024, Emil Assentato, Nadav Elituv, Ryan Wilson, Bradley Southam and Brandon Milner served as our directors. We do not have a separately standing compensation committee and our board of directors did not perform similar functions as there was no executive compensation paid from our inception on April 3, 2009 through the end of our most recently completed fiscal year ended December 31, 2024. Our board of directors performs the functions of a compensation committee, however as of the date of this Report, the board of directors have not have any set compensation.
During the fiscal year ended December 31, 2024, none of our executive officers:
| · | served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire the board of directors) of another entity, one of whose executive officers served as a member of our board of directors; |
| · | served as a director of another entity, one of whose executive officers served as a member of our board of directors; or served as a member of the compensation committee (or other board committee performing equivalent functions or, in the absence of any such committee, the entire the board of directors) of another entity, one of whose executive officers served as a member of our board of directors. |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 11, 2025, as to shares of our shares of common stock beneficially owned by: (1) each person who is known by us to own beneficially more than 5% of our shares of common stock, (2) our named executive officer listed in the summary compensation table, (3) each of our directors and (4) all of our directors and executive officers as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
| Common Stock | ||||
| Name and Address of Beneficial Owner (1) | Beneficially Owned |
Approximate Percentage of Issued and Outstanding Common Stock(6) | ||
| Emil Assentato (2) | 3,000,000,000 | 54.9% | ||
| Craig Marshak (3) | 0 | 0.00% | ||
| Matthew Stark (4) | 0 | 0.00% | ||
| All Directors and Officers as a Group | 3,000,000,000 | 54.9% | ||
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Notes:
| (1) | Unless otherwise noted, the business address of each of the following is 141 Piping Rock Road, New York, New York, 10128. | |
|
(2) |
Effective December 30, 2024, Emil Assentato was appointed as a member of the Board and as Chief Executive Officer, President, Chief Financial Officer, Treasurer and Secretary of the Company. On January 3, 2025, Mr. Assentato resigned as Chief Financial Officer of the Company.
| |
| (3) | On January 3, 2025, Craig Marshak was appointed as a member of the Board. | |
| (4) | On February 20, 2025, Matthew Stark was appointed as Chief Financial Officer of the Company and as a member of the Board. |
| (5) | Based on 5,469,037,729 shares of common stock outstanding as of April 11, 2025 and shares of common stock that the reporting person has the right to acquire within 60 days from the date thereof. |
Securities Authorized for Issuance Under Equity Compensation Plans
On October 1, 2021, the Board of Directors approved the 2021 Stock Incentive Plan (the “2021 Plan”) to attract and retain the best available personnel, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company's business. Pursuant to the 2020 Plan, the Board may grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted shares and restricted share units. to eligible persons. The maximum aggregate number of shares of common stock with respect to which awards granted under the Plan shall not exceed 200,000,000. At December 31, 2024, there are 0 shares of common stock available under the 2021 Plan.
Disclosure of Commission Position of Indemnification for Securities Act Liabilities
In accordance with the provisions in our articles of incorporation, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law.
Insofar as indemnification for liabilities arising under the U.S. Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the U.S. Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the U.S. Securities Act and will be governed by the final adjudication of such issue.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Our Policy Concerning Transactions with Related Persons
Under Item 404 of SEC Regulation S-K, a related person transaction is any actual or proposed transaction, arrangement or relationship or series of similar transactions, arrangements or relationships, including those involving indebtedness not in the ordinary course of business, to which we or our subsidiaries were or are a party, or in which we or our subsidiaries were or are a participant, in which the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years and in which any of our directors, nominees for director, executive officers, beneficial owners of more than 5% of any class of our voting securities (a “significant shareholder”), or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest.
We recognize that transactions between us and any of our Directors or Executives or with a third party in which one of our officers, directors or significant shareholders has an interest can present potential or actual conflicts of interest and create the appearance that our decisions are based on considerations other than the best interests of our Company and stockholders.
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The Board of Directors is charged with responsibility for reviewing, approving and overseeing any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K), including the propriety and ethical implications of any such transactions, as reported or disclosed to the Committee by the independent auditors, employees, officers, members of the Board of Directors or otherwise, and to determine whether the terms of the transaction are not less favorable to us than could be obtained from an unaffiliated party.
Transactions
As of December 31, 2024 and 2023, advances and accrued salary of $0 and $883,534, respectively, were due to Nadav Elituv, the Company's former Chief Executive Officer. The balance is non-interest bearing, unsecured and have no specified terms of repayment.
During the year ended December 31, 2024, the Company issued advances due to related party for $62,928 for expenses paid on behalf of the Company and advances due to related party were repaid by the Company with $45,278 in cash.
On February 26, 2024, the Company agreed to issue 8,000,000 shares of common stock with a fair value of $109,600 to settle accrued salary and expenses of $296,000 (CAD $400,000) due to Nadav Elituv, the former Chief Executive Officer of the Company resulting an increase in additional paid-in capital of $186,400.
On December 30, 2024, the Company agreed to settle accrued liabilities due to Nadav Elituv, the Company's former Chief Executive Officer, totaling $1,392,859 for a New Promissory Note with carrying value of $1,700,000 resulting in a loss of extinguishment of $307,341.
Our policy with regard to transactions with related persons or entities is that such transactions must be on terms no less favorable than could be obtained from non-related persons.
The above related party transactions are not necessarily indicative of the amounts that would have been incurred had a comparable transaction been entered into with an independent party. The terms of these transactions were more favorable than would have been attained if the transactions were negotiated at arm's length.
Director Independence
Our Board of Directors has determined that Craig Marshall is an “independent director” within the meaning of NASDAQ Marketplace Rule 5605(a)(2). As of the of this Report, our common stock is quoted on the OTC Pinks tier of the OTC Markets.
Indemnification
In accordance with the provisions in our Certificate of Incorporation, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Act”) may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Fees related to services performed by Sadler, Gibb & Associates, LLC for the years ended December 31, 2024 and 2023 were as follows:
| 2024 | 2023 | |||||||
| Audit Fees | $ | 76,000 | $ | 70,177 | ||||
| Audit-Related Fees | 0 | 0 | ||||||
| Tax Fees | 0 | 0 | ||||||
| All Other Fees | 0 | 0 | ||||||
| Total | $ | 76,000 | $ | 70,177 | ||||
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Pre-Approval Policies
The Board's policy is to pre-approve all audit services and all non-audit services before they commence, including the fees and terms thereof, to be provided by our independent auditor. All of the services provided during the fiscal year ended December 31, 2024 were pre-approved. No audit, review or attest services were approved in accordance with Section 2-01(c)(7)(i)(C) of Regulation S-X during the fiscal year ended December 31, 2024.
During the approval process, the Board considered the impact of the types of services and the related fees on the independence of the independent registered public accounting firm. The services and fees were deemed compatible with the maintenance of that firm's independence, including compliance with rules and regulations of the SEC. Throughout the year, the Board will review any revisions to the estimates of audit fees initially estimated for the engagement.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
a. The following documents are filed as part of this annual report on Form 10-K:
1. FINANCIAL STATEMENTS
The following documents are filed in Part II, Item 8 of this annual report on Form 10-K:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets on December 31, 2024 and 2023
Consolidated Statements of Operations for the years ended December 31, 2024 and 2023
Consolidated Statement of Stockholders' Deficit for the years ended December 31, 2024 and 2023
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023
Notes to Consolidated Financial Statements
2. FINANCIAL STATEMENT SCHEDULES
All financial statement schedules have been omitted as they are not required, not applicable, or the required information is otherwise included.
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3. EXHIBITS
The exhibits listed below are filed with or incorporated by reference in this annual report on Form 10-K.
| Incorporated by reference | ||||||
| Exhibit | Exhibit Description | Filed herewith | Form | Period ending | Exhibit | Filing date |
| 3.1 | Certificate of Incorporation, dated April 3, 2009 | S-1 | 3.1 | 6/22/2010 | ||
| 3.2 | Bylaws, dated April 3, 2009 | S-1 | 3.2 | 6/22/2010 | ||
| 3.3 | Certificate of Amendment to the Certificate of Incorporation, dated August 8, 2013 | 10-Q | 6/30/2013 | 3.3 | 8/14/2013 | |
| 3.4 | Certificate of Amendment to the Certificate of Incorporation, dated July 27, 2016 | 8-K | 9/1/2016 | 3.1 | 9/1/2016 | |
| 3.5 | Certificate of Amendment to the Certificate of Incorporation, dated August 27, 2018 | 8-K | 9/10/2018 | 3.1 | 9/10/2018 | |
| 3.6 | Certificate of Amendment to the Certificate of Incorporation, dated November 18, 2019 | 8-K | 12/12/2019 | 3.1 | 12/12/2019 | |
| 3.7 | Certificate of Amendment to the Certificate of Incorporation, dated July 16, 2021 | 8-K | 7/16/2021 | 3.1 | 7/22/2021 | |
| 3.8 | Certificate of Amendment to the Certificate of Incorporation, dated January 3, 2022 | 8-K | 1/3/2022 | 3.1 | 1/6/2022 | |
| 3.9 | Certificate of Amendment to the Certificate of Incorporation, As Amended, dated March 21, 2022 |
8-K | 4/25/2022 | 3.1 | 4/26/2022 | |
| 3.10 | Certificate of Amendment to the Certificate of Incorporation, As Amended, filed with the Delaware Secretary of State on August 22, 2023. |
8-K | 9/8/2023 | 3.1 | 9/11/2023 | |
| 4.1 | Specimen Stock Certificate | S-1 | 4.1 | 6/22/2010 | ||
| 4.2 | Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock, dated August 6, 2013 | 10-Q | 6/30/2013 | 4.2 | 8/14/2013 | |
| 4.3 | Certificate of Designation of Preferences, Rights and Limitations of Series B Convertible Preferred Stock, dated December 12, 2019 | 8-K
|
12/12/2019
|
3.1
|
12/19/2019
| |
| 4.4 | Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated October 7, 2020 | 8-K | 10/07/2020 | 3.1 | 10/08/2020 | |
| 4.5 | Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated June 24, 2021 | 8-K | 6/24/2021 | 3.1 | 7/1/2021 | |
| 4.6 | Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock, dated September 1, 2021 | 8-K | 9/1/2021 | 3.1 | 9/1/2021 | |
| 4.7 | Amended and Restated Designation of Series A Convertible Preferred Stock of Two Hands Corporation, dated April 21, 2022 | 8-K | 4/21/2022 | 3.1 | 4/26/2022 | |
| 4.8 | Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock, dated July 5, 2022 | 10-Q | 6/30/2022 | 4.8 | 8/15/2022 | |
| 4.9 | Certificate of Designation, Preference and Rights of Series E Preferred Stock, dated October 3, 2022 | 8-K | 10/4/2022 | 3.1 | 10/11/2022 | |
| 10.1 | Innovative Product Opportunities Inc. Trust Agreement | S-1 | 10.1 | 6/22/2010 | ||
| 10.2 | Side Letter Agreement, The Cellular Connection Ltd., dated January 8, 2018 | 10-K | 12/31/2017 | 10.2 | 3/29/2018 | |
| 10.3 | Side Letter Agreement, Stuart Turk, dated January 8, 2018 | 10-K | 12/31/2017 | 10.3 | 3/29/2018 | |
| 10.4 | Side Letter Agreement, Jordan Turk, dated April 12, 2018 | 10-Q | 3/31/2018 | 10.4 | 5/21/2018 | |
| 10.5 | Side Letter Agreement, Jordan Turk, dated May 10, 2018 | 10-Q | 3/31/2018 | 10.5 | 5/21/2018 | |
| 10.6 | Side Letter Agreement, Jordan Turk, dated September 13, 2018 | 10-K | 12/31/2018
|
10.6 | 4/1/2019 | |
| 10.7 | Side Letter Agreement, The Cellular Connection Ltd., dated January 31, 2019 | 10-K | 12/31/2018 | 10.7 | 4/1/2019 | |
| 10.8 | Side Letter Agreement, Stuart Turk, dated January 31, 2019 | 10-K | 12/31/2018 | 10.8 | 4/1/2019 | |
| 19.1 | Insider Trading Policy | X | ||||
| 31.1 | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 32.1* | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 32.2* | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | X | ||||
| 101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data Files as its XBRL tags are embedded within the Inline XBRL document | X | ||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Definition | X | ||||
| 104 | Cover page formatted as Inline XBRL and contained in Exhibit 101 | X | ||||
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.
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ITEM 16. FORM 10-K SUMMARY. None
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.
| TWO HANDS CORPORATION | |
| Dated: April 14, 2025 |
By: /s/ Emil Assentato Name: Emil Assentato Title: President, Chief Executive Officer and Director (Principal Executive Officer) |
|
By: /s/ Matthew Stark Name: Matthew Stark Title: Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in their capacities and on the date indicated.
| SIGNATURE | TITLE | DATE |
|
By: /s/ Emil Assentato Emil Assentato |
President, Chief Executive Officer and Director (Principal Executive Officer) |
April 14, 2025 |
|
By: /s/ Matthew Stark Matthew Stark |
Chief Financial Officer and Director (Principal Financial and Accounting Officer) |
April 14, 2025 |
|
By: /s/ Craig Marshak Craig Marshak |
Director | April 14, 2025 |
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Exhibit 19.1
TWO HANDS CORPORATION
INSIDER TRADING POLICY
and Guidelines with Respect to
Certain Transactions in Company Securities
In order to take an active role in the prevention of insider trading violations by its directors, officers and other employees, as well as by other related individuals, Two Hands Corporation (the “Company”) has adopted the policies and procedures described in this Insider Trading Policy (the “Policy”).
Applicability of Policy
This Policy applies to all transactions in the Company’s securities, including common stock, preferred stock, options for common stock and any other securities the Company may issue from time to time, such as subscription rights, warrants and convertible debentures, as well as to derivative securities relating to the Company’s stock, whether or not issued by the Company, such as exchange-traded options. It applies to all directors, officers and all other employees of, or consultants or contractors to, the Company, as well as family members of such persons, and others, in each case where such persons have or may have access to Material Nonpublic Information (as defined below). This group of people, members of their immediate families, and members of their households are sometimes referred to in this Policy as “Insiders.” This Policy also applies to any person who receives Material Nonpublic Information from any Insider.
Any person who possesses Material Nonpublic Information regarding the Company is an Insider for so long as the information is not publicly known. Any employee can be an Insider from time to time, and would be subject to this Policy.
Compliance Officer
The Company has appointed Matthew Stark, as the Company’s Insider Trading Compliance Officer. Please contact him (or anyone that he has designated to field questions) with questions as to any of the matters discussed in this Policy.
Statement of Policy
General Policy
It is the policy of the Company to oppose the unauthorized disclosure of any nonpublic information acquired in the work-place and the misuse of Material Nonpublic Information in securities trading.
Specific Policies
1. Trading on Material Nonpublic Information. No director, officer or other employee of, or consultant or contractor to, the Company, and no member of the immediate family or household of any such person, shall engage in any transaction involving a purchase or sale of the Company’s securities, including any offer to purchase or offer to sell, during any period commencing with the date that he or she possesses Material Nonpublic Information concerning the Company, and ending at the open of business on the second full Trading Day following the date of public disclosure of that information, or at such time as such nonpublic information is no longer material. As used herein, the term “Trading Day” shall mean a day on which national stock exchanges are open for trading. A Trading Day begins at the time trading begins on such day. This restriction on trading does not apply to transactions made under a trading plan that has been adopted pursuant to Rule 10b5-1(c) promulgated under the Securities Exchange Act of 1934, as amended, and that has been approved in writing by the Company (an “approved Rule 10b5-1 trading plan”).
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2. Tipping. No Insider shall disclose (“tip”) Material Nonpublic Information to any other person (including family members) where such information may be used by such person to his or her profit by trading in the securities of companies to which such information relates, nor shall such Insider or related person make recommendations or express opinions on the basis of Material Nonpublic Information as to trading in the Company’s securities.
3. Confidentiality of Nonpublic Information. Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information is forbidden. In the event any director, officer or other employee receives any inquiry from outside the Company, such as a stock analyst, for information (particularly financial results and/or projections) that may be Material Nonpublic Information, the inquiry should be referred to the Company’s Compliance Officer, who is responsible for coordinating and overseeing the release of such information to the investing public, analysts and others in compliance with applicable laws and regulations.
4. Blackout Period. All Section 16 Persons and Designated Insiders (contact the Insider Trading Compliance Officer if you are unsure whether you fall into either of these categories) must refrain from engaging in transactions involving a purchase or sale of the Company’s securities, including any offer to purchase or offer to sell, during the period in any fiscal quarter commencing three weeks prior to the end of the fiscal quarter and ending at the open of market on the third full Trading Day following the date of public disclosure of the financial results for the prior fiscal quarter or year (the “Blackout Period”).
5. Prohibition Against Margining of Company Securities. No Section 16 Person of the Company shall margin, or make any offer to margin, any of the Company’s securities as collateral to purchase the Company’s securities or the securities of any other issuer. Notwithstanding the previous sentence, this paragraph is not meant to, and shall not be construed so as to, affect the ability of any Section 16 Person of the Company, from using his or her securities as collateral to securitize a bona fide loan.
6. Prohibition Against Short Sales. No Section 16 Person or other employee of the Company shall, directly or indirectly, sell any equity security of the Company if the person selling the security or his principal (1) does not own the security sold, or (2) if owning the security, does not deliver it against such sale (a “short sale against the box”) within 20 days thereafter, or does not within five days after such sale deposit it in the mails or other usual channels of transportation. Generally, a short sale, as defined in this Policy, means any transaction whereby one may benefit from a decline in the Company’s stock price. While employees who are not executive officers or directors are not prohibited by law from engaging in short sales of the Company’s securities, the Company believes it is inappropriate for employees to engage in such transactions.
7. Prohibition Against Trading in Derivative Securities. No Section 16 Person or other employee of the Company shall purchase or sell, or make any offer to purchase or offer to sell, derivative securities relating to the Company’s securities, whether or not issued by the Company, such as exchange traded options to purchase or sell the Company’s securities (so called “puts” and “calls”). This paragraph is not meant to, and shall not be construed as to, affect the ability of the Company to grant options to officers, directors and employees under employee benefit plans or agreements adopted by the Board of Directors or the ability of officers, directors and employees to exercise such options and sell the underlying common stock, provided that any such sale is otherwise in accordance with this Policy.
8. Prohibition Against Internet Disclosure. It is inappropriate for any unauthorized person to disclose Company information on the Internet and more specifically in forums (chat rooms) where companies and their prospects are discussed. Examples of such forums include but are not limited to Yahoo! Finance, Silicon Investor and Motley Fool. The posts in these forums are typically made by unsophisticated investors who are sometimes poorly informed, and generally are carelessly stated or, in some cases, malicious or manipulative and intended to benefit their own stock positions. Accordingly, no director, officer, employee, consultant or contractor or other party related to the Company may discuss the Company or Company-related information in such a forum regardless of the situation. Despite any inaccuracies that may exist (and often there are many), posts in these forums can result in the disclosure of material non-public information and may bring significant legal and financial risk to the Company and are therefore prohibited, without exception. Any post that is made
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by any person with access to Material Nonpublic Information, or information supplied by any such person for someone else to post, will be treated as a violation of this Policy.
Potential Criminal and Civil Liability and/or Disciplinary Action
1. Liability for Insider Trading. Pursuant to federal and state securities laws, Insiders may be subject to criminal and civil fines and penalties as well as imprisonment for engaging in transactions in the Company’s securities at a time when they have knowledge of Material Nonpublic Information regarding the Company.
2. Liability for Tipping. Insiders may also be liable for improper transactions by any person (commonly referred to as a “tippee”) to whom they have disclosed Material Nonpublic Information regarding the Company or to whom they have made recommendations or expressed opinions on the basis of such information as to trading in the Company’s securities. The Securities and Exchange Commission (the “SEC”) has imposed large penalties even when the disclosing person did not profit from the trading. The SEC, the stock exchanges and the Financial Industry Regulatory Authority use sophisticated electronic surveillance techniques to uncover insider trading.
3. Possible Disciplinary Actions. Employees of the Company who violate this Policy shall also be subject to disciplinary action by the Company, which may include ineligibility for future participation in the Company’s equity incentive plans or termination of employment.
Trading Guidelines and Requirements
4. Recommended Trading Window. The “Trading Window” is that period of a fiscal quarter during which the Section 16 Persons and Designated Insiders of the Company are not precluded (assuming they do not possess Material Nonpublic Information) from trading in the Company’s securities as described in Paragraph 2 below.
The safest period for trading in the Company’s securities, assuming the absence of Material Nonpublic Information, is generally the first 20 days of the Trading Window. However, even during the Trading Window any person possessing Material Nonpublic Information concerning the Company should not engage in any transactions in the Company’s securities until such information has been known publicly for at least one full Trading Day. This trading restriction does not apply to transactions made under an approved Rule 10b5-1 trading plan. Each person is individually responsible at all times for compliance with the prohibitions against insider trading.
5. Blackout Period and Trading Window. The Blackout Period is a particularly sensitive period of time for transactions in the Company’s stock from the perspective of compliance with applicable securities laws. This sensitivity is due to the fact that directors, officers and certain other employees will, during that period, often possess Material Nonpublic Information about the expected financial results for the quarter. All Section 16 Persons and Designated Insiders of the Company are prohibited from trading during the Blackout Period.
The prohibition against trading during the Blackout Period encompasses the fulfillment of “limit orders” by any broker for a Section 16 Person or Designated Insider, and the brokers with whom any such limit order is placed must be so instructed at the time it is placed.
From time to time, the Company may also prohibit Section 16 Persons and other employees, consultants or contractors from trading in the Company’s securities because of developments known to such persons in the Company and not yet disclosed to the public. In this event, such persons may not engage in any transaction involving the purchase or sale of the Company’s securities during such period and should not disclose that fact to others.
Any employee or other person possessing Material Nonpublic Information concerning the Company should not engage in any transactions in the Company’s securities until such information has been known publicly for at least one full Trading Day, whether or not it is during the Trading Window or the Company has recommended suspension of trading to that person. This trading restriction does not apply to transactions made under an approved Rule 10b5-1 trading plan. Trading in the Company’s securities during the Trading Window should not be considered a “safe harbor,” and all Section 16 Persons, employees and other persons should use good judgment at all times.
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6. Pre-clearance of Trades. The Company has determined that all Section 16 Persons and Designated Insiders of the Company should refrain from trading in the Company’s securities, even during the Trading Window, without first complying with the Company’s “pre-clearance” process. Each Section 16 Person and Designated Insider should contact the Company’s Insider Trading Compliance Officer prior to commencing any trade in the Company’s securities. The Company may also find it necessary, from time to time, to require compliance with the pre-clearance process from certain other employees who have access to Material Nonpublic Information. A Section 16 Person or Designated Insider wishing to trade pursuant to an approved Rule 10b5-1 trading plan need not seek pre-clearance from the Company’s Insider Trading Compliance Officer before each such trade takes place; however, such person must obtain Company approval of the proposed Rule 10b5-1 trading plan before adopting it.
7. Individual Responsibility. Every person subject to this Policy has the individual responsibility to comply with this Policy against insider trading, and appropriate judgment should be exercised in connection with any trade in the Company’s securities. An Insider may, from time to time, have to forego a proposed transaction in the Company’s securities even if he or she planned to make the transaction before learning of Material Nonpublic Information and even though the Insider believes he or she may suffer an economic loss or forego anticipated profit by waiting.
Applicability of Policy to Inside Information Regarding Other Companies
This Policy and the restrictions and guidelines described herein also apply to Material Nonpublic Information relating to other companies, including the Company’s customers, vendors or suppliers (“business partners”), when that information is obtained in the course of employment with, or other services performed for, the Company. Civil and criminal penalties, and termination of employment, may result from trading on inside information regarding the Company’s business partners. All directors, officers and other employees should treat Material Nonpublic Information about the Company’s business partners with the same care required for information related directly to the Company.
Definition of Material Nonpublic Information
It is not possible to define all categories of material information. However, information should be regarded as material if there is a reasonable likelihood that it would be considered important to an investor in making an investment decision regarding the purchase or sale of the Company’s securities. In this regard, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered material. Examples of such information include:
Financial Related Events
| ● | Financial results | |
| ● | Projections of future earnings or losses | |
| ● | Stock splits | |
| ● | New equity or debt offerings | |
| ● | Impending bankruptcy or financial liquidity problems | |
| ● | Creation of a material direct or contingent financial obligation |
| 4 |
Corporate Developments
| ● | Pending or proposed merger or acquisition | |
| ● | Disposition or acquisition of significant assets | |
| ● | Significant litigation exposure due to actual or threatened litigation | |
| ● | Major changes in senior management | |
| ● | Material agreement not in the ordinary course of business (or termination thereof) |
Nonpublic information is information that has not been previously disclosed to the general public and is otherwise not available to the general public. Either positive or negative information may be material.
Certain Exceptions
For purposes of this Policy, the Company considers that the exercise of stock options for cash under the Company’s stock option plans or the purchase of shares under the Company’s employee stock purchase plan (but not the sale of any such shares) is exempt from this Policy, since the other party to the transaction is the Company itself and the price does not vary with the market but is fixed by the terms of the option agreement or the plan.
Additional Information - Directors and Officers
Directors and officers of the Company must also comply with the reporting obligations and limitations on short-swing transactions set forth in Section 16 of the Exchange Act. The practical effect of these provisions is that officers and directors who purchase and sell the Company’s securities within a six-month period must disgorge all profits to the Company whether or not they had knowledge of any Material Nonpublic Information. Under these provisions, and so long as certain other criteria are met, neither the receipt of an option under the Company’s option plans, nor the exercise of that option, nor the purchase of stock under the Company’s employee stock purchase plan is deemed a purchase under Section 16(b); however, the sale of any such shares is a sale under Section 16. Moreover, pursuant to Section 16(c) of the Exchange Act (as well as this Policy), no Section 16 Persons or any other employee may make a short sale of the Company’s stock. The Company has provided, or will provide, separate memoranda and other appropriate materials to its officers and directors regarding compliance with Section 16 and its related rules.
Persons subject to the reporting requirements of Section 16 must file their statements of change in ownership on Form 4 before the end of the second business day following such change in ownership. These reports will be made available on our corporate website and a publicly accessible Internet site maintained by the SEC.
Inquiries
Please direct your questions as to any of the matters discussed in this Policy to the Company’s Insider Trading Compliance Officer.
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EXHIBIT 31.1
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Emil Assentato, certify that:
1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2024, of Two Hands Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under our supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report
is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles,
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during
the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
April 14, 2025
/s/ Emil Assentato
Emil Assentato
Chief Executive Officer
(Principal Executive Officer)
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EXHIBIT 31.2
RULE 13a-14(a)/15d-14(a) CERTIFICATION
I, Matthew Stark, certify that:
1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2024, of Two Hands Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements were made,
not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing 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.
5. The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or
persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
April 14, 2025
/s/ Matthew Stark
Matthew Stark
Chief Financial Officer
(Principal Financial and Accounting Officer)
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Two Hands Corporation (the “Company”) on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, Emil Assentato, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
April 14, 2025
/s/ Emil Assentato
Emil Assentato
Chief Executive Officer
(Principal Executive Officer)
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or
otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been
provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or
its staff upon request.
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EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Two Hands Corporation (the “Company”) on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (the “Report”), I, Matthew Stark, Treasurer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
April 14, 2025
/s/ Matthew Stark
Matthew Stark
Chief Financial Officer
(Principal Financial and Accounting Officer)
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or
otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been
provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or
its staff upon request.
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