XESP 10-K
Electronic Servitor Publication Network, Inc. (XESP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended:
or
For the transition period from __________ to __________
Commission File No.
(Exact name of registrant as specified in its charter)
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
Issuer’s telephone number: (
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Exchange Act: Common Stock, $.0001 par value per share
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 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☐
Indicate by check mark whether the registrant has
submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of
this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are
registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included
in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that require a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10(D)-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act). Yes ☐
The aggregate market value of the voting stock held
by non-affiliates of the registrant as of June 28, 2024 was approximately $
At June 11, 2026, there were shares of the registrant’s common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Throughout this report, unless otherwise designated, the terms “we,” “us,” “our,” “the Company,” “our company” and “XESP” refer to Electronic Servitor Publication Network Inc. All amounts in this report are in U.S. Dollars, unless otherwise indicated.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains “forward-looking statements.” The use of words such as “anticipates,” “estimates,” “expects,” “intends,” “plans” and “believes,” among others, generally identify forward-looking statements. These forward-looking statements are based on our management’s expectations and assumptions about future events as of the date of this Annual Report on Form 10-K, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements include statements about our expectations, beliefs or intentions regarding our product offerings, business, financial condition, results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These forward-looking statements are only predictions and reflect our views as of the date they are made with respect to future events and financial performance. We undertake no obligation to update, and we do not have a policy of updating or revising, these forward-looking statements.
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PART I
ITEM 1. BUSINESS.
THE BUSINESS
Corporate History and General Information
Electronic Servitor Publication Network, Inc. was incorporated on May 17, 2017, under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.
The Company's corporate offices are located at 107 Chestnut St., Suite 100, Stillwater, MN 55082-5542. The Company's email website is http://www.xespn.com. The Company’s telephone number is (833) 991-0800.
As of July 17, 2024, the Company’s common stock is listed on the OTCQB Expert Market under the stock ticker symbol XESP.
Background
Although the Company is no longer classified as a development-stage company, it has limited operating history and is expected to experience losses in the near term. The Company’s independent auditors have issued a report raising substantial doubt about the Company’s ability to continue as a going concern.
Description of Business
The Company is a digital engagement company providing growth for B2B companies through its digital activation and engagement solutions for multiple verticals. The Company’s managed service product is powered by a sophisticated tech stack — the Digital Engagement Engine. The Company’s technology provides intelligent interaction management, dynamic content provisioning, and a logic-driven workflow that creates relevant digital experiences that accelerate an audience from awareness to action — driving growth for client companies.
Intellectual Property
The purchase of the assets of PhiTech Management, LLC, a digital activation and engagement technology company, gives the Company ownership of its proprietary Digital Engagement Engine, a sophisticated tech stack built on microservices architecture designed to help companies enhance the reach and lift of their content to targeted and new audiences. We believe this transaction allows the Company to further automate and enhance the technology while bringing increased value, efficiencies, and growth to customers.
The merger with Pointward Inc., a Delaware intellectual property holding company, provides the Company with models, methods, protocols, tools, and technologies designed to identify audience segments and engage each segment with customized content to create relevant, one-to-one digital relationship pathways.
We believe that these synergistic transactions allow the Company to pursue almost limitless business verticals.
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The Company will use, or intends to employ in the performance of its material contracts, intellectual property rights in relation to the design and development of its digital activation and engagement technology. The Company’s intellectual property rights can be categorized broadly as proprietary know-how, technical databases and trade secrets, comprising concept designs, and economic models.
The Company may apply for patents for components of its intellectual property for its platform and other technologies. The Company cannot assure that any patents we seek will be granted.
The Company’s intellectual property has been developed by its employees and is protected under employee agreements confirming that the rights in the inventions and developments made by the employees are its property. Confidential information is protected by nondisclosure agreements that the Company entered into with our prospective partners or other third parties with which we do business.
The Company has not received any notification from third parties that its processes or designs infringe any third-party rights, and it is not aware of any valid and enforceable third-party intellectual property rights that infringe its intellectual property rights.
Notwithstanding the foregoing, the Company does not currently hold any other intellectual property or trade secret protection on any other aspects of its business. The Company currently plans on attempting to obtain patents, copyright, trademarks and/or service marks on its products; provided, there can be no assurance that the Company can obtain effective protection against unauthorized duplication or the introduction of substantially similar products.
The Company’s Services
The Company provides B2B companies with a fully managed service designed to enhance and continually expand their digital presence and to create meaningful and lasting connections with their target audiences. The Company’s managed service is a turn-key arrangement whereby the Company’s team fully manages the implementation and ongoing provision of the services, allowing companies to grow their revenues with no additional infrastructure investment for a nominal cost that is less than half of industry norms for bringing new products/services to market. The managed service also provides companies with opportunities to reduce or redeploy personnel.
Employees
The Company currently has two employees.
Property
The Company’s corporate offices are located at 107 Chestnut St., Suite 100, Stillwater, MN 55082-5542.
Legal Matters
As previously disclosed, on November 4, 2021, a lawsuit captioned CAMRON ELIZABETH v. MARK PALUMBO et al., Case No. CVPS2106116 was filed in the Superior Court of California, County of Riverside against the Company and certain of the former company’s (CannAssist International Corp.) executive officers (collectively, the “Defendants”). On April 30, 2024, a Final Statement of Decision was issued pursuant to which the Defendants were found liable. The Company still believes that the lawsuit is without merit and intends to appeal the lawsuit vigorously; however, there can be no assurance regarding the ultimate outcome of this appeal. Furthermore, the Company and Mark Palumbo, the Company’s former Chief Executive Officer, had entered into an indemnification agreement pursuant to which Mr. Palumbo agreed to indemnify the Company for all costs and expenses related to this matter, including, without limitation, costs arising from any judgment against the Company.
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On May 30, 2024, the Company filed suit against BF Borgers CPA PC and its owner (“BF Borgers”) in a class action lawsuit captioned Electronic Servitor Publication Network, Inc. v. BF Borgers CPA PC. et al. (the “Class Action Lawsuit”). In August 2025, the Company and BF Borgers agreed to a settlement and the Class Action Lawsuit was subsequently dismissed.
Other than as disclosed above, we know of no other material, existing or pending legal proceedings against the Company, nor is it involved as a plaintiff in any material proceeding or pending litigation during the period of this report. Other than as disclosed above, we know of no other proceedings in which our directors, officers or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest during the period of this report.
THE COMPANY
Corporate History and General Information
Electronic Servitor Publication Network Inc. was incorporated on May 17, 2017, under the laws of the State of Delaware. The Company's corporate offices are located at 107 Chestnut St., Suite 100, Stillwater, MN 55082-5542. The Company's email website is http://www.xespn.com. The Company’s telephone number is (833) 991-0800. The Company’s common stock trades on the OTCQB Expert Market under the stock ticker symbol XESP.
Neither the Company nor its predecessors have filed for bankruptcy, receivership or any similar proceedings nor are in the process of filing for bankruptcy, receivership or any similar proceedings.
Property
All operations occur at Company’s corporate facilities in Minneapolis, MN, located at:
107 Chestnut St., Suite 100
Stillwater, MN 55082-5542
or in remote offices of the employees.
At this time management permits the Company to use these premises free of charge.
Intellectual Property
The purchase of the assets of PhiTech Management, LLC, a digital activation and engagement technology company, gives the Company ownership of its proprietary Digital Engagement Engine, a sophisticated tech stack built on microservices architecture designed to help companies enhance the reach and lift of their content to targeted and new audiences. We believe this transaction allows the Company to further automate and enhance the technology while bringing increased value, efficiencies, and growth to customers.
The merger with Pointward Inc., a Delaware intellectual property holding company, provides the Company with models, methods, protocols, tools, and technologies designed to identify audience segments and engage each segment with customized content to create relevant, one-to-one digital relationship pathways.
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We believe that these synergistic transactions allow the Company to pursue almost limitless business verticals.
The Company will use, or intends to employ in the performance of its material contracts, intellectual property rights in relation to the design and development of its digital activation and engagement technology. The Company’s intellectual property rights can be categorized broadly as proprietary know-how, technical databases and trade secrets, comprising concept designs, and economic models.
The Company may apply for patents for components of its intellectual property for its platform and other technologies. The Company cannot assure that any patents we seek will be granted.
The Company’s intellectual property has been developed by its employees and is protected under employee agreements confirming that the rights in the inventions and developments made by the employees are its property. Confidential information is protected by nondisclosure agreements that the Company entered into with our prospective partners or other third parties with which we do business.
The Company has not received any notification from third parties that its processes or designs infringe any third-party rights, and it is not aware of any valid and enforceable third-party intellectual property rights that infringe its intellectual property rights.
Notwithstanding the foregoing, the Company does not currently hold any other intellectual property or trade secret protection on any other aspects of its business. The Company currently plans on attempting to obtain patents, copyright, trademarks and/or service marks on its products; provided, there can be no assurance that the Company can obtain effective protection against unauthorized duplication or the introduction of substantially similar products.
Employees
Currently, the Company has two employees.
Subsidiaries
The Company currently does not have any subsidiaries.
Jumpstart Our Business Startups Act
In April, 2012, the Jumpstart Our Business Startups Act (“JOBS Act”) was enacted into law. The JOBS Act provides, among other things:
Exemptions for emerging growth companies from certain financial disclosure and governance requirements for up to five years and provides a new form of financing to small companies;
Amendments to certain provisions of the federal securities laws to simplify the sale of securities and increase the threshold number of record holders required to trigger the reporting requirements of the Securities Exchange Act of 1934;
Relaxation of the general solicitation and general advertising prohibition for Rule 506 offerings;
Adoption of a new exemption for public offerings of securities in amounts not exceeding $50 million; and
Exemption from registration by a non-reporting company of offers and sales of securities of up to $1,000,000 that comply with rules to be adopted by the SEC pursuant to Section 4(6) of the Securities Act and exemption of such sales from state law registration, documentation or offering requirements.
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In general, under the JOBS Act a company is an emerging growth company if its initial public offering (“IPO”) of common equity securities was effected after December 8, 2011 and the company had less than $1 billion of total annual gross revenues during its last completed fiscal year. A company will no longer qualify as an emerging growth company after the earliest of
(i) the completion of the fiscal year in which the company has total annual gross revenues of $1 billion or more,
(ii) the completion of the fiscal year of the fifth anniversary of the company’s IPO;
(iii) the company’s issuance of more than $1 billion in nonconvertible debt in the prior three-year period, or
(iv) the company becoming a “larger accelerated filer” as defined under the Securities Exchange Act of 1934.
The JOBS Act provides additional new guidelines and exemptions for non-reporting companies and for non-public offerings. Those exemptions that impact the Company are discussed below.
Financial Disclosure. The financial disclosure in a registration statement filed by an emerging growth company pursuant to the Securities Act of 1933 will differ from registration statements filed by other companies as follows:
(i) audited financial statements required for only two fiscal years;
(ii) selected financial data required for only the fiscal years that were audited;
(iii) executive compensation only needs to be presented in the limited format now required for smaller reporting companies.
(A smaller reporting company is one with a public float of less than $75 million as of the last day of its most recently completed second fiscal quarter)
However, the requirements for financial disclosure provided by Regulation S-K promulgated by the Rules and Regulations of the SEC already provide certain of these exemptions for smaller reporting companies. The Company is a smaller reporting company. Currently a smaller reporting company is not required to file as part of its registration statement selected financial data and only needs audited financial statements for its two most current fiscal years and no tabular disclosure of contractual obligations.
The JOBS Act also exempts the Company’s independent registered public accounting firm from complying with any rules adopted by the Public Company Accounting Oversight Board (“PCAOB”) after the date of the JOBS Act’s enactment, except as otherwise required by SEC rule.
The JOBS Act also exempts an emerging growth company from any requirement adopted by the PCAOB for mandatory rotation of the Company’s accounting firm or for a supplemental auditor report about the audit.
Internal Control Attestation. The JOBS Act also provides an exemption from the requirement of the Company’s independent registered public accounting firm to file a report on the Company’s internal control over financial reporting, although management of the Company is still required to file its report on the adequacy of the Company’s internal control over financial reporting.
Section 102(a) of the JOBS Act exempts emerging growth companies from the requirements in §14A(e) of the Securities Exchange Act of 1934 for companies with a class of securities registered under the 1934 Act to hold shareholder votes for executive compensation and golden parachutes.
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Other Items of the JOBS Act. The JOBS Act also provides that an emerging growth company can communicate with potential investors that are qualified institutional buyers or institutions that are accredited to determine interest in a contemplated offering either prior to or after the date of filing the respective registration statement. The Act also permits research reports by a broker or dealer about an emerging growth company regardless if such report provides sufficient information for an investment decision. In addition, the JOBS Act precludes the SEC and FINRA from adopting certain restrictive rules or regulations regarding brokers, dealers and potential investors, communications with management and distribution of a research reports on the emerging growth company IPO.
Section 106 of the JOBS Act permits emerging growth companies to submit 1933 Act registration statements on a confidential basis provided that the registration statement and all amendments are publicly filed at least 21 days before the issuer conducts any road show. This is intended to allow the emerging growth company to explore the IPO option without disclosing to the market the fact that it is seeking to go public or disclosing the information contained in its registration statement until the company is ready to conduct a roadshow.
Election to Opt Out of Transition Period. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a 1933 Act registration statement declared effective or do not have a class of securities registered under the 1934 Act) are required to comply with the new or revised financial accounting standard.
The JOBS Act provides a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of the transition period.
Reports to Security Holders
In July 2017, the Company (as Iris Grove Acquisition Corporation) filed a Form 10-12G general registration of securities pursuant to the Exchange Act and is a reporting company pursuant such Act and files with the SEC quarterly and annual reports and management shareholding information. The Company will voluntarily send a copy of the annual report, including audited financial statements, to any registered shareholder who requests the same.
The Company’s documents filed with the SEC may be inspected at the Commission’s principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the SEC, 100 F Street N.E., Washington, D.C. 20549. Call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the Commission. All of the Company’s filings may be located under the CIK number 0001709542.
ITEM 1A. RISK FACTORS.
As a “smaller reporting company,” we have elected not to provide the disclosure required by this item.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
Not applicable.
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ITEM 1C. CYBERSECURITY.
Cybersecurity Risk Management and Strategy Disclosure
Risk Management and Strategy
Overview of Cybersecurity Risk Management Processes
The Company is an early-stage digital engagement company with two employees and limited operating history. In light of the Company’s current stage of development, size, and the scope of its operations, the Company has not implemented a formal, stand-alone cybersecurity risk management program or a dedicated cybersecurity framework. The Company does not currently employ a Chief Information Security Officer or other dedicated cybersecurity personnel.
Notwithstanding the absence
of a formal program, the Company is mindful of the cybersecurity risks inherent in operating a digital technology business. The Company’s
primary technology asset is the Digital Engagement Engine, a proprietary platform built on microservices architecture that is used to
provide digital activation and engagement solutions to its business-to-business clients.
Integration into Overall Risk Management
The Company does not currently maintain a formal enterprise risk management (“ERM”) framework or system. Because the Company’s overall risk management approach is informal and conducted at the executive level given its size, cybersecurity risk considerations are similarly addressed at that level and are not separately integrated into a distinct ERM process. Management considers cybersecurity risks as part of its broader assessment of operational risks facing the Company.
Third-Party Assessors and Consultants
The Company does not currently engage outside assessors, consultants, auditors, or other third parties specifically to assess, test, or otherwise assist with the management of cybersecurity risks. The Company has not obtained a third-party cybersecurity audit or assessment. As the Company’s operations and resources grow, the Company intends to evaluate whether to engage qualified third-party cybersecurity professionals.
Third-Party Service Provider Risks
The Company’s operations depend in part on third-party service providers for cloud-based infrastructure, software, and related technology services. The Company does not currently have formal processes specifically designed to oversee and assess cybersecurity risks associated with its third-party service providers. The Company relies principally on the representations, security practices, and contractual commitments of its third-party vendors with respect to the security of data and systems managed by such vendors. The Company intends to evaluate and, where appropriate, implement vendor security review practices as its business develops.
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Material Impact of Cybersecurity Risks and Incidents
Governance
Board of Directors Oversight
Given the Company’s size and the absence of board-level committees, cybersecurity risk information is communicated to the sole Director through the Company’s executive management team on an informal basis as circumstances warrant. The sole Director reviews and considers cybersecurity risks as part of his broader oversight of the Company’s operational risks and strategic direction.
Management’s Role in Cybersecurity Risk Assessment and Management
Neither Mr. Hager nor Mr. Spruce holds formal cybersecurity certifications or has dedicated cybersecurity training. Their oversight of cybersecurity risk is conducted in the context of their broader operational and executive responsibilities. The Company does not have management-level committees or positions dedicated exclusively to cybersecurity risk.
Because the Company’s Board of Directors consists solely of Mr. Spruce, who also serves as Chief Operations Officer, the reporting of cybersecurity risk information from management to the Board of Directors occurs within the same person. Mr. Spruce, in his management capacity, monitors operational risks as they arise and, in his capacity as sole Director, exercises board-level oversight of those risks, including any cybersecurity risks or incidents that may be identified.
The Company has not established formal processes for the prevention, detection, mitigation, or remediation of cybersecurity incidents. In the event a potential cybersecurity incident is identified, the Company’s executive officers would assess the nature, scope, and severity of the incident and determine appropriate responsive measures. The Company intends to develop more formalized cybersecurity incident response procedures as its operations and resources develop.
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ITEM 2. PROPERTIES.
All operations will occur at Company’s corporate facilities in Minneapolis, MN, located at:
400 1st Ave N., Ste. 100
Minneapolis, MN 55401
or in remote offices of the employees.
Management permits the Company to use these premises at no cost to the Company. Currently, this space is sufficient to meet our needs, however, once we expand our business to a significant degree, we will have to find a larger space. We do not foresee any significant difficulties in obtaining any required additional space. We do not currently own any real property.
ITEM 3. LEGAL PROCEEDINGS.
As previously disclosed, on November 4, 2021, a lawsuit captioned CAMRON ELIZABETH v. MARK PALUMBO et al., Case No. CVPS2106116 was filed in the Superior Court of California, County of Riverside against the Company and certain of the former company’s (CannAssist International Corp.) executive officers (collectively, the “Defendants”). On April 30, 2024, a Final Statement of Decision was issued pursuant to which the Defendants were found liable. The Company still believes that the lawsuit is without merit and intends to appeal the lawsuit vigorously; however, there can be no assurance regarding the ultimate outcome of this appeal. Furthermore, the Company and Mark Palumbo, the Company’s former Chief Executive Officer, had entered into an indemnification agreement pursuant to which Mr. Palumbo agreed to indemnify the Company for all costs and expenses related to this matter, including, without limitation, costs arising from any judgment against the Company.
On May 30, 2024, the Company filed suit against BF Borgers CPA PC and its owner (“BF Borgers”) in a class action lawsuit captioned Electronic Servitor Publication Network, Inc. v. BF Borgers CPA PC. et al. (the “Class Action Lawsuit”). In August 2025, the Company and BF Borgers agreed to a settlement and the Class Action Lawsuit was subsequently dismissed.
Other than as disclosed above, we know of no other material, existing or pending legal proceedings against the Company, nor is it involved as a plaintiff in any material proceeding or pending litigation during the period of this report. Other than as disclosed above, we know of no other proceedings in which our directors, officers or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest during the period of this report.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
As of July 17, 2024, our common stock is listed on the OTC Expert Market under the symbol “XESP.” The OTC Expert Market serves broker-dealer pricing and investor best execution needs. Quotations in Expert Market securities are restricted from public quoting and, as such, there is currently no public market for the Company’s securities.
At such time as it qualifies, the Company may choose to apply for quotation of its securities on the OTC Bulletin Board. The OTC Bulletin Board is a dealer-driven quotation service. Unlike the Nasdaq Stock Market, companies cannot directly apply to be quoted on the OTC Bulletin Board, only market makers can initiate quotes, and quoted companies do not have to meet any quantitative financial requirements. Any equity security of a reporting company not listed on the Nasdaq Stock Market or on a national securities exchange is eligible.
As such time as it qualifies, the Company may choose to apply for quotation of its securities on the Nasdaq Capital Market. In general, there is greatest liquidity for traded securities on the Nasdaq Capital Market and less on the OTC Bulletin Board. It is not possible to predict where, if at all, the securities of the Company will be traded following a business combination.
Prior to July 17, 2024, our common stock traded on the OTCQB® Venture Market under the symbol “XESP.” Unlike the Nasdaq Stock Market, companies cannot directly apply to be quoted on the OTCQB® Venture Market, only market makers can initiate quotes, and quoted companies do not have to meet any quantitative financial requirements. Any equity security of a reporting company not listed on the Nasdaq Stock Market or on a national securities exchange is eligible.
The following quotations reflect the high and low bids for our common shares based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
The high and low bid prices of our common stock for the periods indicated below are as follows:
| OTCQB® Venture Market (1) (2) | ||
| Quarter Ended | High | Low |
| March 31, 2023 | $0.06 | $0.05 |
| June 30, 2023 | $0.07 | $0.05 |
| September 30, 2023 | $0.07 | $0.06 |
| December 31, 2023 | $0.22 | $0.06 |
| March 31, 2024 | $0.55 | $0.11 |
| June 30, 2024 | $0.21 | $0.13 |
| September 30, 2024 | $0.21 | $0.08 |
| December 31, 2024 | N/A | N/A |
| (1) | Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions. | |
| (2) | The source of these quotations is OTCMarkets.com. |
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Stockholders
As of December 31, 2024, there were approximately 93 stockholders.
Dividends
We have not paid, nor declared, any cash dividends since our inception and do not intend to declare or pay any such dividends in the foreseeable future. Our ability to pay cash dividends is subject to limitations imposed by state law.
Securities Authorized for Issuance Under Equity Compensation Plans
The 2023 Equity Incentive Plan (the “2023 Equity Incentive Plan”) was approved by the Board on September 22, 2023 and our stockholders on September 27, 2023. Up to 30,000,000 shares of the Company’s common stock may be issued under the 2023 Equity Incentive Plan. Accordingly, the 2023 Equity Incentive Plan is currently in effect and issuances have been made thereunder as described herein. The purposes of the 2023 Equity Incentive Plan are to attract and retain the best available team for positions of substantial responsibility, to provide additional incentive to employees, directors, and consultants, and to enhance the visibility of the Company in the industry and promote the success of the Company’s business, including the growth in value of the Company’s equity and enhancement of long-term stockholder return. The 2023 Equity Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, to our employees and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units to our employees, directors, and consultants. The Company granted the following:
Peter Hager
On October 12, 2023, the Company entered into a revised Stock Option Grant and Agreement with Peter Hager, President and Chief Executive Officer (the “Hager Employment Agreement and Grant”), in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Hager Employment Agreement and Grant supersedes his previous stock option grant and agreement dated February 1, 2023. Pursuant to the terms of the Hager Employment Agreement and Grant, the Company agreed to issue Peter Hager options to purchase 6,400,000 shares of the Company’s common stock, with 1,900,000 of the shares vesting on October 12, 2023 and one-ninth (1/9th) of the remaining shares vesting on the first day of each fiscal quarter thereafter, subject to Peter Hager continuing to be a service provider through each such date.
Thomas Spruce
On October 12, 2023, the Company entered into a new Employment Agreement and Stock Option Grant and Agreement with Thomas Spruce, Chief Operations Officer and sole Director (the “Spruce Employment Agreement and Grant”), in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Spruce Employment Agreement and Grant supersedes his previous employment agreement and stock option grant and agreement, each dated February 1, 2023. Thomas Spruce’s new employment agreement provides a 36-month term of employment from October 12, 2023, under the same compensation terms as the previous Agreement, except that the number of Stock Options granted increased from 500,000 per year to 1,200,000 per year in line with Mr. Spruce’s responsibilities in moving the Company from start-up to being fully operational. Pursuant to the terms of the Spruce Employment Agreement and Grant, the Company agreed to issue Thomas Spruce options to purchase 4,850,000 shares of the Company’s common stock, with 1,550,000 of the shares vesting on October 12, 2023 and one-eleventh (1/11th) of the remaining shares vesting on the first day of each fiscal quarter thereafter, subject to Thomas Spruce continuing to be a service provider through each such date.
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Jim Kellogg
On October 12, 2023, the Company entered into a new Employment Agreement and Stock Option Grant and Agreement with Jim Kellogg, Chief Financial Officer (the “Kellogg Employment Agreement and Grant”), in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Kellogg Employment Agreement and Grant supersedes his previous employment agreement and stock option grant and agreement dated November 16, 2022. Jim Kellogg’s new employment agreement provides a 36-month term of employment from October 12, 2023, under the same compensation terms as the previous Agreement, except that the number of Stock Options granted increased from 300,000 per year to 400,000 per year. Pursuant to the terms of the Kellogg Employment Agreement and Grant, the Company agreed to issue Jim Kellogg options to purchase 1,500,000 shares of the Company’s common stock, with 300,000 of the shares vesting on October 12, 2023 and one-twelfth (1/12th) of the remaining shares vesting on the first day of each fiscal quarter beginning on January 1, 2024, subject to Jim Kellogg continuing to be a service provider through each such date. Jim Kellogg resigned as the Chief Financial Officer of the Company effective as of May 10, 2024 and forfeited all options previously granted to him.
Gregory Shockey
On October 12, 2023, the Company entered into a revised Stock Option Grant and Stock Option Agreement with Greg Shockey (the “Shockey Grant and Agreement”), in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Shockey Grant and Agreement supersedes his previous stock option grant and stock option agreement dated April 12, 2023. Pursuant to the terms of the Shockey Grant and Agreement, the Company agreed to issue Greg Shockey options to purchase 3,840,000 shares of the Company’s common stock, with 1,140,000 of the shares vesting on October 12, 2023 and one-ninth (1/9th) of the remaining shares vesting on the first day of each fiscal quarter thereafter, subject to Greg Shockey continuing to be a service provider through each such date.
Elliot Freier
On September 28, 2023, the Company agreed to issue Elliot Freier, a consultant for the Company, 400,000 shares of the Company’s common stock pursuant to the terms of a Restricted Stock Agreement by and between the Company and Eliot Freier, in accordance with the terms of the Company’s 2023 Equity Incentive Plan.
Laurence Eric Swann
On September 29, 2023, the Company agreed to issue Laurence Eric Swann, a consultant for the Company, 3,660,000 shares of the Company’s common stock pursuant to the terms of a Restricted Stock Agreement by and between the Company and Laurence Eric Swann, in accordance with the terms of the Company’s 2023 Equity Incentive Plan. Management believes that Mr. Swann’s business and financial consulting services will allow the Company to leverage its new intellectual property.
Recent Sales of Unregistered Securities
None.
ITEM 6. [RESERVED]
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with our audited financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed elsewhere in this report.
Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues, gross margin and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity, and financing sources. This forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include those relating to our liquidity requirements, the continued growth of the Company’s industry, the success of our product development, marketing and sales activities, vigorous competition in the construction industry, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), domestic or global economic conditions, the inherent uncertainty and costs of prolonged arbitration or litigation, and changes in federal or state tax laws or the administration of such laws.
Overview
Electronic Servitor Publication Network Inc. was incorporated on May 17, 2017 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company is a digital engagement company providing growth for B2B companies through its digital activation and engagement solutions for multiple verticals. The Company’s managed service product is powered by a sophisticated tech stack — the Digital Engagement Engine. The Company’s technology provides intelligent interaction management, dynamic content provisioning, and a logic-driven workflow that creates relevant digital experiences that accelerate an audience from awareness to action — driving growth for client companies.
The Company’s corporate offices are located at 107 Chestnut Street East, Ste. 100, Stillwater, MN 55082-5524. The Company’s website is www.electronicservitor.com. The Company’s telephone number is (833) 991-0800.
The Company’s common stock is listed on the OTC Expert Market under the stock ticker symbol XESP.
The Company anticipates that it would need approximately $1,500,000 over the next 12 months to continue as a going concern, satisfy its capital commitments and continue its operations in accordance with its current business plan. In addition to revenues generated from sales, the Chief Executive Officer and several shareholders may fund the Company’s operations, if needed, during the next 12 months or until the Company can generate an ongoing source of capital sufficient to independently continue its operations.
For the period ended December 31, 2024, the Company’s independent auditors issued a report raising substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon financial support from its principal stockholders, its ability to obtain necessary equity financing, or its ability to sell its services to generate consistent profitability.
Revenues and Losses
During the year ended December 31, 2024, the Company posted revenues of $105,000. For that same year ended, total operating expenses were $714,512, consisting of general and administrative expenses of $103,824, professional fees of $51,300 and stock-based compensation fees of $559,388. Loss from operations and before other expenses and income taxes totaled $609,512. Other expenses consisted of $25,004 in interest expense. After income tax expense of $0, the Company generated a net loss from continuing operations of $634,516, and a total net loss of $634,516.
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Liquidity and Capital Resources
As of December 31, 2024, the Company had total assets of $54,557.
Since its inception, the Company has devoted most of its efforts to business planning, research and development, recruiting management and staff and raising capital. Accordingly, the Company was considered to be in the development stage until it recently began formal operations. The Company generated limited revenues since its inception and there is no assurance of future revenues.
The Company’s proposed activities will necessitate significant uses of capital beyond 2024.
There is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its business plans and proposed operations unless it obtains additional financing or otherwise is able to generate revenues and profits. The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans. In the interim, the Company plans to rely on its primary shareholder to continue his commitment to fund the Company’s continuing operating requirements. Management anticipates a total capital raise of $1,500,000 over the course of the following four consecutive quarters through private placements; provided, however, that the Company will require a minimum of $1,500,000 for the next 12 months to fund its operations, which will be used to fund expenses related to Platform Finalization Costs, Initial Marketing, Furniture, Fixtures, and Equipment, Working Capital, Professional Fees and Licensure and Miscellaneous Development Costs. Management believes that this capital would allow the Company to meet its operating cash requirements and would facilitate the Company’s business of selling and distributing its products. Management also believes that the acquisition of such assets would generate revenue to cover overhead cost and general liabilities of the Company and allow the Company to achieve overall sustainable profitability.
Discussion of the Year Ended December 31, 2024, as compared to the Year Ended December 31, 2023
For the year ended December 31, 2024 had revenue of $105,000. For the year ended December 31, 2023 had revenue of $60,000.
During the year ended December 31, 2024, the Company posted operating expenses from continuing operations of $ 714,512, consisting of general and administrative expenses of $103,824, professional fees of $51,300 and stock-based compensation of $559,388. For the year ended December 31, 2023, the Company posted operating expenses from continuing operations of $872,950, consisting of general and administrative expenses of $174,577, professional fees of $85,721 and stock-based compensation of $612,652.
During the year ended December 31, 2024, the Company posted a net loss of $634,516 from continuing operations for a total net loss for the year of $634,516, compared to a net loss of $830,602 from continuing operations for a total net loss for the year of $830,602 for the year ended December 31, 2023.
During the year ended December 31, 2024, the Company generated $33,876 in cash provided by operating activities, used $7,750 cash in financing activities, and the Company did not use or generate any cash in investing activities. During the year ended December 31, 2024, the Company generated $33,876 in cash provided by operating activities, used $7,750 in cash in financing activities, and the Company did not use or generate any cash in investing activities.
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Plan of Operations
Over the next five years, XESP will continue to expand its operations via several different facets of operation. Foremost, the Company will continue to expand its relationships with B2B companies in a broad range of industries. XESP will seek to leverage its successes in managing single growth objectives to manage multiple growth objectives for existing client companies. Also, XESP will continue to expand its Channel Partner program and will establish an Affiliate Referral program.
There is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital, or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. Accordingly, given the Company’s limited cash and cash equivalents on hand, the Company will be unable to implement its business plans and proposed operations unless it obtains additional financing or otherwise is able to generate revenues and profits. The Company may raise additional capital through sales of debt or equity, obtain loan financing or develop and consummate other alternative financial plans. In the interim, the Company plans to rely on its primary shareholder to continue his commitment to fund the Company’s continuing operating requirements. Management anticipates a total capital raise of $1,500,000 over the course of the following four consecutive quarters through private placements; provided, however, that the Company will require a minimum of $1,500,000 for the next 12 months to fund its operations, which will be used to fund expenses related to Platform Finalization Costs, Initial Marketing, Furniture, Fixtures, and Equipment, Working Capital, Professional Fees and Licensure and Miscellaneous Development Costs. Management believes that this capital would allow the Company to meet its operating cash requirements and would facilitate the Company’s business of selling and distributing its products. Management also believes that the acquisition of such assets would generate revenue to cover overhead cost and general liabilities of the Company and allow the Company to achieve overall sustainable profitability.
Equipment Financing
The Company has no existing equipment financing arrangements.
Revenue
The Company has developed a technology platform that is specifically designed for digital activation and engagement. The platform’s functionality will allow its clients to better engage with their audiences on a global level. The platform will also provide in depth engagement analytics.
Managed Service: XESP bills clients a one-time Onboarding Fee and an ongoing Quarterly Management Fee. Services provided include codifying client business rules and objectives, operating principles, and target audience identification, providing a Gap Analysis, and providing ongoing consultative information on content provisioning, audience capture, audience activation, etc.
Gain Share: In addition to XESP’s Onboarding and Quarterly Management Fees, XESP earns a share of increased client revenues for the targeted service or product.
Channel Partners: XESP bills Channel Partners an ongoing Quarterly Fee. Channel Partners are service entities that promote and utilize XESP technologies as an extension of their services to their clients. Channel partners invoice their clients and manage the relationships.
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Alternative Financial Planning
As of December 31, 2024, the Company had cash available of $54,557.
Management anticipates a total capital raise of $1,500,000 over the course of the following four consecutive quarters through private placements. Other than as stated herein, the Company has no alternative financial plans at the moment. If the Company is not able to successfully raise monies as needed through a private placement or other securities offering (including, but not limited to, a primary public offering of securities), the Company’s ability to operate effectively will be severely jeopardized.
The Company does not anticipate that it will generate revenue sufficient to cover its planned operating expenses, and the Company must obtain additional financing in order to develop and implement its business plan and proposed operations. If the Company is not successful in generating sufficient revenues and/or obtaining additional funding to develop its business plan and proposed operations, this could have a material adverse effect on its business, results of operations liquidity and financial condition.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
Refer to Note 2 of our financial statements contained elsewhere in this Form 10-K for a summary of our critical accounting policies and recently adopted and issued accounting standards.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a “smaller reporting company”, we have elected not to provide the disclosure required by this item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The required financial statements are included following the signature page of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
As previously disclosed, the Company had dismissed BF Borgers CPA PC (“Borgers”) as its independent registered accounting firm, effective as of May 6, 2024, because it was no longer authorized to perform audits for the Company.
As previously disclosed, on July 8, 2025, the Company engaged LAO Professionals, Certified Public Accountants, as its independent registered public accounting firm.
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ITEM 9A. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our prior principal executive and financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended, the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial officer concluded that our disclosure controls and procedures as of the end of the period covered by this report (based on the evaluation of these controls and procedures required by Rule 15d-15(b) of the Exchange Act) were not effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and (ii) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of the end of the period covered by the Report, we had failed to adequately invest in personnel and systems to accumulate, record and properly report on our results of operations.
We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of our company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Management assessed our internal control over financial reporting as of December 31, 2024, the end of our fiscal year. Management based its assessment on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO 2013 Criteria). Management’s assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.
Based on our assessment, management has concluded that our internal control over financial reporting was not effective, as of the end of the fiscal year, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles, due to the material weaknesses set forth below.
The following is a summary of our material weaknesses as of December 31, 2024:
Lack of Thorough Controls and Segregation of Duties
The Company has not designed nor maintained effective controls over review of financial information, including cut-off, and there is also a lack of segregation of duties with regard to key treasury and accounting functions. These items contribute to a material weakness in internal control over financial reporting. The Company needs to develop an appropriate control environment, perform a risk assessment, develop control activities, and information, as well as monitoring activities, which we hope to implement over the next 12 months.
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This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.
Inherent Limitations on Effectiveness of Controls
Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rule 15d-15(f) of the Exchange Act) that occurred during the year ended December 31, 2024, that 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,
The Company is an early-stage company with two employees. The Company’s Board of Directors consists of a sole Director, Thomas Spruce, who also serves as the Company’s Chief Operations Officer, Chief Financial Officer, and Secretary. The Company does not have a compensation committee, an audit committee, or any other board committee. Given the very limited number of the Company’s directors, officers, and employees, and the early stage of the Company’s development and governance infrastructure, the Company has determined that adoption of a formal written insider trading policy is not practicable or necessary at this time.
The Company’s directors and officers are nonetheless subject to, and are expected to comply with, all applicable insider trading laws and regulations under the Securities Exchange Act of 1934, as amended, including Section 10(b) thereof and Rule 10b-5 promulgated thereunder, as well as the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company’s executive officers are advised by the Company’s legal counsel with respect to their obligations under applicable securities laws, including restrictions on trading while in possession of material nonpublic information.
The Company anticipates that it will adopt written insider trading policies and procedures when it increases the number of its directors, officers, or employees, or when its governance infrastructure otherwise develops to a level at which such a policy is appropriate and practicable. In the interim, the Company will continue to monitor applicable legal and regulatory requirements and will adopt such policies as required or as otherwise deemed appropriate by the Board of Directors.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The following table sets forth information regarding the members of the Company’s board of directors and its executive officers:
| Name | Age | Position | Year Commenced | |||
| Peter Hager | 55 | Chief Executive Officer and President | 2023 | |||
| Thomas Spruce | 69 | Chief Operations Officer, Chief Financial Officer, Secretary, and sole Director | 2022 |
Peter Hager
Chief Executive Officer and President
Peter Hager, age 55, is a seasoned business executive with 30 years of cross industry leadership experience in executive management, sales, marketing, and technology. He has a track record of success in providing services to Fortune 500 companies, such as United Health Group, Boston Scientific, Johnson & Johnson, Medtronic, Wells Fargo, 3M, Target, Cargill, Land O’ Lakes, and General Mills. Since 2003, Peter Hager served in various roles including as President, CEO, and Chairman of Pointward, Inc. which is a MedTech Customer Engagement Agency. Mr. Hager has also served as past or current director and founding member for multiple technology, professional services, and MedTech organizations, including PhiTech Management, iSight Therapeutics, TeamNet Systems, and Bluestem Technologies. Mr. Hager holds a Bachelor of Arts degree in economics and psychology from Macalester College in Saint Paul, Minnesota.
Thomas Spruce
Chief Operating Officer, Secretary, Chief Financial Officer and sole Director
Thomas Spruce, age 69, is the Chief Operations Officer, Secretary, and sole Director. Mr. Spruce has decades of experience in large corporations, small companies, and start-ups in a variety of sales management, operations management, business development, and consulting roles with product and service businesses. From 2008 to the present, Mr. Spruce has served as the President and CEO of His Speed, Inc., a company that specializes in business management, development, and consulting. Prior to 2008, Mr. Spruce served in management positions at the Principle Pharmacy Group, MediqPRN/Hill-Rom and Owen Healthcare/Cardinal Health, where he managed sales, operations management, business transition, integrated sales, and enterprise account management. Mr. Spruce has a Bachelor of Sciences in Pharmacy from the University of Arkansas, is a Board Member at The Victory Way, has served as Board Chairman of the Dean’s Advisory Council- Western University School of Pharmacy and was a Fellow at the American College of Healthcare Executives.
Director Independence
The Board of Directors has determined that it does not have any independent directors as that term is defined by NASDAQ Marketplace Rule 5605(a)(2). In assessing the independence of the directors, the Board considers any transactions, relationships and arrangements between our Company and our independent directors or their affiliated companies. This review is based primarily on responses of the directors to questions in a director and officer questionnaire regarding employment, business, familial, compensation and other relationships with our Company or our management.
Director Compensation
Aside from stock options disclosed above, directors do not receive any compensation for serving on the Board of Directors.
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Committees and Terms
The Board of Directors has not established any committees. The Company will notify its shareholders for an annual shareholder meeting and that they may present proposals for inclusion in the Company’s proxy statement to be mailed in connection with any such annual meeting; such proposals must be received by the Company at least 90 days prior to the meeting. No other specific policy has been adopted in regard to the inclusion of shareholder nominations to the Board of Directors.
Legal Proceedings
As previously disclosed, on November 4, 2021, a lawsuit captioned CAMRON ELIZABETH v. MARK PALUMBO et al., Case No. CVPS2106116 was filed in the Superior Court of California, County of Riverside against the Company and certain of the former company’s (CannAssist International Corp.) executive officers (collectively, the “Defendants”). On April 30, 2024, a Final Statement of Decision was issued pursuant to which the Defendants were found liable. The Company still believes that the lawsuit is without merit and intends to appeal the lawsuit vigorously; however, there can be no assurance regarding the ultimate outcome of this appeal. Furthermore, the Company and Mark Palumbo, the Company’s former Chief Executive Officer, had entered into an indemnification agreement pursuant to which Mr. Palumbo agreed to indemnify the Company for all costs and expenses related to this matter, including, without limitation, costs arising from any judgment against the Company.
On May 30, 2024, the Company filed suit against BF Borgers CPA PC and its owner (“BF Borgers”) in a class action lawsuit captioned Electronic Servitor Publication Network, Inc. v. BF Borgers CPA PC. et al. (the “Class Action Lawsuit”). In August 2025, the Company and BF Borgers agreed to a settlement and the Class Action Lawsuit was subsequently dismissed.
Other than as disclosed above, we know of no other material, existing or pending legal proceedings against the Company, nor is it involved as a plaintiff in any material proceeding or pending litigation during the period of this report. Other than as disclosed above, we know of no other proceedings in which our directors, officers or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest during the period of this report.
Code of Ethics
Our Board of Directors has not adopted a code of ethics. We anticipate that we will adopt a code of ethics when we increase either the number of our Directors or the number of our employees.
Indemnification of Officers, Directors, Employees and Agents
The Certificate of Incorporation and bylaws of the Company provide that the Company shall, to the fullest extent permitted by applicable law, as amended from time to time, indemnify all directors of the Company, as well as any officers or employees of the Company to whom the Company has agreed to grant indemnification.
Section 145 of the Delaware General Corporation Law empowers a corporation to indemnify its directors and officers and to purchase insurance with respect to liability arising out of their capacity or status as directors and officers provided that this provision shall not eliminate or limit the liability of a director (I) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) arising under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.
The Delaware General Corporation Law provides further that the indemnification permitted thereunder shall not be deemed exclusive of any other rights to which the directors and officers may be entitled under the corporation's by-laws, any agreement, vote of shareholders or otherwise.
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The effect of the foregoing is to require the Company to indemnify the officers and directors of the Company for any claim arising against such persons in their official capacities if such person acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
Identification of Significant Employees
The Company currently has two employees, not including independent consultants.
Involvement in Certain Legal Proceedings
None of our current directors or executive officers have, during the past ten years:
| · | Been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); | |
| · | Had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; | |
| · | Been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; | |
| · | Been found by a court of competent jurisdiction in a civil action or by 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; | |
| · | Been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), 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 including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | |
| · | Been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26)), any | |
| · | Registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Except as set forth in our discussion below in “Certain Relationships and Related Transactions, none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
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Committees of the Board
Our Company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our Company have a written nominating, compensation or audit committee charter. Our Directors believe that it is not necessary to have such committees, at this time, because the Board of Directors can adequately perform the functions of such committees.
Our Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for Directors. The Board of Directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our President and Director, at the address appearing on the first page of this filing.
Risk Oversight
Effective risk oversight is an important priority of the Board of Directors. Because risks are considered in virtually every business decision, the Board of Directors discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors’ approach to risk oversight includes understanding the critical risks in the Company’s business and strategy, evaluating the Company’s risk management processes, allocating responsibilities for risk oversight among the full Board of Directors, and fostering an appropriate culture of integrity and compliance with legal responsibilities.
Corporate Governance
The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the SEC and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations. The Company has not formally adopted a written code of business conduct and ethics that governs the Company’s employees, officers and Directors as the Company is not required to do so.
In lieu of an Audit Committee, the Company’s Board of Directors is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company’s financial statements and other services provided by the Company’s independent public accountants. The Board of Directors reviews the Company’s internal accounting controls, practices and policies.
Code of Ethics
Our Board of Directors has not adopted a code of ethics. We anticipate that we will adopt a code of ethics when we increase either the number of our Directors or the number of our employees.
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ITEM 11. EXECUTIVE COMPENSATION.
At December 31, 2024, the Company had not paid cash compensation to any executive officer or director; provided, however, the Company entered into the following agreements with executive officers and directors of the Company as follows:
Any stock-incentive based agreement entered into by and between the Company and its employees, directors, and consultants after September 27, 2023, was pursuant to the Company’s 2023 Equity Incentive Plan.
Peter Hager
On February 1, 2023, Peter Hager was appointed as the Company’s President and Chief Executive Officer. Per the terms of the employment agreement, Mr. Hager was granted options to purchase 6,400,000 restricted shares of the Company’s common stock, at the commencement of his initial term of services, for an exercise price $0.06 per share, vesting in installments of 500,000 shares per fiscal quarter with the first vesting date of April 1, 2023 and 1,000,000 options to purchase restricted shares of the Company’s common stock, at the commencement of his first renewal term of service.
On October 12, 2023, the Company entered into a revised Stock Option Grant and Agreement with Peter Hager, President and Chief Executive Officer (the “Hager Grant and Agreement”), in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Hager Grant and Agreement supersedes his previous stock option grant and agreement dated February 1, 2023. Pursuant to the terms of the Hager Grant and Agreement, the Company agreed to issue Peter Hager options to purchase 6,400,000 shares of the Company’s common stock, with 1,900,000 of the shares vesting on October 12, 2023 and one-ninth (1/9th) of the remaining shares vesting on the first day of each fiscal quarter thereafter, subject to Peter Hager continuing to be a service provider through each such date.
Thomas Spruce
On February 1, 2023, Thomas Spruce was appointed as the Company’s Secretary and Chief Operations Officer. Per the terms of the employment agreement, Mr. Spruce was granted options to purchase 1,750,000 restricted shares of the Company’s common stock, at the commencement of his initial term of services, for an exercise price $0.06 per share, vesting with respect to the first 250,000 shares on February 1, 2023 and vesting with respect to the remaining 1,500,000 shares in installments of 125,000 shares per fiscal quarter with the first vesting date of April 1, 2023 and 250,000 options to purchase restricted shares of the Company’s common stock, at the commencement of his first renewal term of service.
On October 12, 2023, the Company entered into the Spruce Employment Agreement and Grant with Thomas Spruce, Chief Operations Officer and sole Director, in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Spruce Employment Agreement and Grant supersedes his previous employment agreement and stock option grant and agreement, each dated February 1, 2023. Thomas Spruce’s new employment agreement provides a 36-month term of employment from October 12, 2023, under the same compensation terms as the previous Agreement, except that the number of Stock Options granted increased from 500,000 per year to 1,200,000 per year in line with Mr. Spruce’s responsibilities in moving the Company from start-up to being fully operational. Pursuant to the terms of the Spruce Employment Agreement and Grant, the Company agreed to issue Thomas Spruce options to purchase 4,850,000 shares of the Company’s common stock, with 1,550,000 of the shares vesting on October 12, 2023 and one-eleventh (1/11th) of the remaining shares vesting on the first day of each fiscal quarter thereafter, subject to Thomas Spruce continuing to be a service provider through each such date.
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Jim Kellogg
On November 16, 2022, the Company entered into an Employment Agreement with Jim Kellogg, an officer of the Company. The agreement has a term of 1 year and automatically renews for additional 6-month terms unless earlier terminated earlier. This agreement is terminable by each of the parties upon written notice. Under this agreement, the Company pays a base salary of $1.00 per year and the Company issued options to purchase 300,000 restricted shares of the Company’s common stock at a strike price of $0.10 per share, vesting with respect to 25% of the shares after 3 months of continuous service after November 16, 2022 and with respect to 25% of the shares every 3 months thereafter. The options have an expiry date of 10 years from the date of grant.
On October 12, 2023, the Company entered into the Kellogg Employment Agreement and Grant with Jim Kellogg, Chief Financial Officer, in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Kellogg Employment Agreement and Grant supersedes his previous Employment Agreement and Stock Option Grant and Agreement dated November 16, 2022. The new Employment Agreement provides a 36-month term of employment from October 12, 2023, under the same compensation terms as the previous Agreement, except that the number of Stock Options granted increased from 300,000 per year to 400,000 per year. Pursuant to the terms of the Kellogg Employment Agreement and Grant, the Company agreed to issue Jim Kellogg options to purchase 1,500,000 shares of the Company’s common stock, with 300,000 of the shares vesting on October 12, 2023 and one-twelfth (1/12th) of the remaining shares vesting on the first day of each fiscal quarter beginning on January 1, 2024, subject to Jim Kellogg continuing to be a service provider through each such date. Jim Kellogg resigned as the Chief Financial Officer of the Company effective as of May 10, 2024 and forfeited all options previously granted to him.
The Company may choose to pay additional salary or fees to its executive management in the future. Other than the foregoing, there have been no changes in the Company’s compensation policy since the end of the Company’s last fiscal year.
Narrative Disclosure to Summary Compensation Table
Other than as disclosed above, there are no other employment agreements between the Company and its executive officers. The compensation discussed herein addresses all compensation awarded to, earned by, or paid to our named executive officers. There are no other stock option plans, retirement, pension, or profit-sharing plans for the benefit of our officers and directors other than as described herein.
Outstanding Equity Awards at Fiscal Year-End
The aforementioned equity awards were outstanding as of fiscal year-end.
Policies and Practices Regarding the Timing of Equity Award Grants
Award Timing Disclosure
The following disclosure is provided pursuant to Item 402(x) of Regulation S-K, which requires issuers to describe their policies and practices regarding the timing of equity award grants in relation to the disclosure of material nonpublic information (“MNPI”).
Narrative Disclosure
Determination of Grant Timing by the Board of
Directors. The Company’s Board of Directors, which currently consists of a sole Director, is responsible for all
executive compensation decisions, including the timing and terms of any equity award grants to named executive officers. The Company has
not established a formal written policy governing the timing of option or other equity award grants. The sole Director
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Consideration of Material Nonpublic Information. Because the Company does not have a compensation committee, the sole Director exercises the functions that would otherwise be performed by such a committee. The Company does not have a formal written policy requiring the sole Director to take MNPI into account when determining the timing or terms of equity award grants. Notwithstanding the absence of a formal policy, the Company is committed to compliance with applicable securities laws, including the prohibition on insider trading. The sole Director, in his capacity as the officer responsible for grant decisions, endeavors not to grant equity awards at times when he is in possession of MNPI that has not been publicly disclosed, and endeavors to ensure that grant terms are established without reference to, and are not intended to be affected by, any such information. To the extent practicable, the Company intends that future equity award decisions will take into account any restrictions imposed by applicable insider trading laws and regulations.
Timing of MNPI Disclosure. The Company has not timed, and does not intend to time, the disclosure of MNPI for the purpose of affecting the value of executive compensation, including equity awards. The Company’s disclosure practices are governed by its obligations under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission thereunder, and are not coordinated with the timing of equity award grants.
Tabular Disclosure of Awards Granted in Proximity to MNPI Disclosures
The table below sets forth information regarding options granted to each named executive officer during the fiscal year ended December 31, 2024 that were granted during the period commencing four business days before, and ending one business day after, the filing of a periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of a current report on Form 8-K that disclosed MNPI (excluding any Form 8-K filed pursuant to Item 5.02(e) disclosing the new material option award itself), in each case as required by Item 402(x)(2) of Regulation S-K.
| Name and Principal Position | Grant Date | Number of Securities Underlying Awards (#) |
Exercise Price of Award ($/Sh) |
Grant Date Fair Value of Award ($) |
Percentage Change in Closing Price of Securities from Trading Day before Disclosure to Trading Day After Disclosure (%) |
Filing Date of Related Periodic / Current Report | Type of Report Filed |
| Peter Hager, President and Chief Executive Officer | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Thomas Spruce, Chief Operations Officer, Chief Financial Officer, Secretary and Director | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Jim Kellogg, Former Chief Financial Officer (resigned May 10, 2024) | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
* No options or other equity awards were granted to any named executive officer during the fiscal year ended December 31, 2024. Accordingly, no tabular disclosure of such awards is required for the fiscal year ended December 31, 2024.
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Committees of the Board
Our Company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our Company have a written nominating, compensation or audit committee charter. Our sole Director believes that it is not necessary to have such committees, at this time, because he can adequately perform the functions of such committees.
Our Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for Directors. The sole Director believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our President and Director, at the address appearing on the first page of this filing.
Risk Oversight
Effective risk oversight is an important priority of the Company. Because risks are considered in virtually every business decision, the Director’s approach to risk oversight includes understanding the critical risks in the Company’s business and strategy, evaluating the Company’s risk management processes, allocating responsibilities for risk oversight among the future full Board of Directors, and fostering an appropriate culture of integrity and compliance with legal responsibilities.
Corporate Governance
The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the SEC and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations. The Company has not formally adopted a written code of business conduct and ethics that governs the Company’s employees, officers and Directors as the Company is not required to do so.
In lieu of an Audit Committee, the Company’s sole Director is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company’s financial statements and other services provided by the Company’s independent public accountants. The Company’s sole Director reviews the Company’s internal accounting controls, practices and policies.
Code of Ethics
The Company has not adopted a code of ethics. We anticipate that we will adopt a code of ethics when we increase either the number of our Directors or the number of our employees.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act may require our executive officers and Directors, and persons who own more than ten percent of our common stock to file reports of ownership and change in ownership with the SEC and the exchange on which the common stock is listed for trading. Executive officers, Directors and more than ten percent (10%) stockholders are required by regulations promulgated under the Exchange Act to furnish us with copies of all Section 16(a) reports filed. Based solely on our review of copies of the Section 16(a) reports filed for the fiscal year ended December 31, 2024, we believe that our executive officers, Directors and ten percent (10%) stockholders complied with all reporting requirements applicable to them.
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Director Compensation
Our sole Director does not currently receive any consideration for his services as a Director. The Company reserves the right in the future to award future members of the Board of Directors cash or stock-based consideration for their services to the Company, which awards, if granted shall be in the sole determination of the Board of Directors.
Executive Compensation Philosophy
Our sole Director determines the compensation given to our executive officers in his sole determination. Our sole Director also reserves the right to pay our executives a salary, and/or issue them shares of common stock issued in consideration for services rendered and/or to award incentive bonuses which are linked to our performance, as well as to the individual executive officer’s performance. This package may also include long-term stock-based compensation to certain executives, which is intended to align the performance of our executives with our long-term business strategies. Additionally, our sole Director reserves the right to grant stock options in the future, if he, in his sole determination, believes such grants would be in the best interests of the Company.
Incentive Bonus
The Board of Directors may grant incentive bonuses to our executive officers in its sole discretion, if the Board of Directors believes such bonuses are in the Company’s best interest, after analyzing our current business objectives and growth, if any, and the amount of revenue we are able to generate each month, which revenue is a direct result of the actions and ability of such executives.
Long-term, Stock Based Compensation
In order to attract, retain and motivate executive talent necessary to support the Company’s long-term business strategy we may award certain executives with long-term, stock-based compensation in the future, in the sole discretion of our sole Director, which we do not currently have any immediate plans to award other than as described herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth information as of the date of this prospectus regarding the beneficial ownership of the Company’s common stock by each of its executive officers and directors, individually and as a group and by each person who beneficially owns in excess of five percent of the common stock after giving effect to any exercise of warrants or options held by that person.
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COMMON STOCK
| Common Shares Beneficially Owned |
||||||||
| Name of Beneficial Owner | No. of Shares | Percentage of Class (1) |
||||||
| Peter Hager (2) (3) (4) | 7,782,000 | 14.78% | ||||||
| President and Chief Executive Officer | ||||||||
| Thomas Spruce (2) (5) (6) (7) | 15,000 | 0.02% | ||||||
| Chief Operations Officer, Chief Financial Officer, Secretary and Director | ||||||||
| Jim Kellogg (2) (8) | 0 | 0.00% | ||||||
| Former Chief Financial Officer | ||||||||
| Phitech Management LLC (2) (9) | 0 | 0.00% | ||||||
| >5% Common Stock Shareholder | ||||||||
| Eric Swann (10) (11) | 4,060,000 | 7.71% | ||||||
| >5% Common Stock Shareholder | ||||||||
| Greg Shockey (12) (13) (14) | 8,950,000 | 17.00% | ||||||
| >5% Common Stock Shareholder | ||||||||
| Mark Palumbo (15) (16) | 2,300,000 | 4.37% | ||||||
| >5% Common Stock Shareholder | ||||||||
| Marla Palumbo (15) (16) | 1,200,000 | 2.28% | ||||||
| >5% Common Stock Shareholder | ||||||||
| Calisota Tech LLC (3) (5) | 7,782,000 | 14.79% | ||||||
| >5% Common Stock Shareholder | ||||||||
| Spruce Solutions LLC (3) (8) | 500,000 | .95% | ||||||
| Held by Affiliate | ||||||||
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| (1) | Based on 52,628,001 common stock shares issued and outstanding as of December 31, 2024. |
| (2) | This individual and/or entity’s address is 107 Chestnut St., Suite 100, Stillwater, MN 55082-5542. |
| (3) | This individual owns options to purchase 6,400,000 shares of the common stock of the Company at a strike price of $0.07 per share. The options have an expiry date of 10 years from the date of grant and are subject to certain vesting conditions related to length of service. |
| (4) | Peter Hager owns Calisota Tech LLC. Calisota Tech LLC is also owned by Jonathan Sweetser, a consultant of the Company. |
| (5) | These shares are owned by the Spruce Family Trust, which is controlled by Mr. Spruce. |
| (6) | This individual owns options to purchase 4,850,000 shares of the common stock of the Company at a strike price of $0.07 per share. The options have an expiry date of 10 years from the date of grant and are subject to certain vesting conditions related to length of service. |
| (7) | Thomas Spruce owns Spruce Solutions LLC. |
| (8) | This individual’s service ended on May 10, 2024. |
| (9) | Peter Hager is the controlling affiliate of this entity. |
| (10) | Eric Swann is a consultant of the Company. Although he is not considered an affiliate of the Company, for purposes of this table only, his address is 107 Chestnut St., Suite 100, Stillwater, MN 55082-5542. |
| (11) | The Company agreed to issue this individual 3,660,000 shares of common stock of the Company pursuant to the terms of a Restricted Stock Award Agreement dated September 29, 2023. The shares were issued on a vesting schedule and are subject to certain vesting conditions related to length of service. |
| (12) | Greg Shockey is a consultant of the Company. |
| (13) | Greg Shockey is the controlling affiliate of Forty 7 Select Holdings LLC. |
| (14) | This individual owns options to purchase 3,840,000 shares of the common stock of the Company at a strike price of $0.07 per share. The options have an expiry date of 10 years from the date of grant and are subject to certain vesting conditions related to length of service. |
| (15) | This individual’s address is 855 South Mission Avenue, Suite #K400, Fallbrook, CA 92028. |
| (16) | This individual is married to Marla Palumbo. Marla Palumbo is the holder of 1,200,000 shares of the Company’s common stock. |
| (17) | This individual is married to Mark Palumbo. Marla Palumbo is the holder of 1,200,000 shares of the Company’s common stock. |
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SERIES A PREFERRED STOCK
| Series A Preferred Shares Owned | Percentage of Class (1) | |||||||
| Forty 7 Select Holdings LLC (1) (2) (3) (4) | 1,000 | 100% | ||||||
| >5% Series A Preferred Stock Shareholder | ||||||||
| (1) | Based on 1,000 Series A Preferred Stock shares outstanding. |
| (2) | Consists of 1,000 shares of Series A Preferred Stock, purchased at par value, which, voting together as a class, have the right to vote 60% of the Company’s voting shares on any and all shareholder matters (the “Majority Voting Rights”). Additionally, the Company shall not adopt any amendments to the Company’s Bylaws, Articles of Incorporation, as amended, make any changes to the Certificate of Designations establishing the Series A Preferred Stock, or effect any reclassification of the Series A Preferred Stock, without the affirmative vote of at least a majority of the outstanding shares of Series A Preferred Stock. However, the Company may, by any means authorized by law and without any vote of the holders of shares of Series A Preferred Stock, make technical, corrective, administrative or similar changes to such Certificate of Designations that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of Series A Preferred Stock. Other than the Majority Voting Rights, the Series A Preferred Stock does not have any other dividend, liquidation, conversion, or redemption rights, whatsoever. |
| (3) | This entity’s address is 31878 Del Obispo 118-331, San Juan Capistrano, CA 92675. |
| (4) | Greg Shockey is the controlling affiliate of this entity. Greg Shockey is also a consultant of the Company. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE.
Other than those agreements detailed in Item 11 for Executive Compensation, the Company has also entered into the following transactions with related parties in the year ended December 31, 2024:
Forty 7 Select Holdings LLC (“Forty 7”) has advanced the Company funds, to pay for general operating expenses. Forty 7 is controlled by Greg Shockey, an existing shareholder of the Company. As of December 31, 2024, the balance due to Forty 7 is $15,000.
On January 10, 2023, the Company issued a note payable for $15,000 to Forty 7. The note matured on July 10, 2023, and bears interest at 8.5% per annum. As of December 31, 2024, there is $2,526 of interest accrued on this note. This note is currently in default.
On December 22, 2023, the Company entered into the following transactions:
| 1) | An Asset Purchase Agreement (the “Asset Purchase Agreement”) with Phitech Management, LLC, a limited liability company organized under the laws of Minnesota (“Phitech”); and | |
| 2) | An Agreement and Plan of Merger (the “Merger Agreement”) with Pointward Inc., a corporation organized under the laws of Delaware (“Pointward”). |
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Asset Purchase Agreement
Pursuant to the terms of the Asset Purchase Agreement dated December 22, 2023, the Company has agreed to pay an aggregate purchase price of $2,500,000, plus the assumption of the assumed liabilities as defined in such Asset Purchase Agreement, for Phitech’s assets, including its proprietary technology; and, upon consummation of the transaction, the Company shall cancel 10,000,000 shares of the Company’s common stock held by Phitech, representing 100% of Phitech’s ownership of the Company, and such shares shall be returned to the Company’s treasury.
Agreement and Plan of Merger
Following consummation of the Asset Purchase Agreement on December 22, 2023, the Company entered into a Merger Agreement with Pointward. Pursuant to the terms of the Merger Agreement, the Company shall be the surviving corporation and all the outstanding capital stock of Pointward was converted into shares of the Company’s common stock. Accordingly, the Company issued 39,252,000 shares of the Company’s common stock to the former holders of Pointward and the former stockholders of Pointward (not including any ownership of the Company’s capital stock held by such persons prior to the Merger) hold approximately 72% of the outstanding shares of the Company’s capital stock.
As former stockholders of Pointward, Peter Hager, Eric Swann, Greg Shockey, and Thomas Spruce received shares of the Company’s capital stock. Peter Hager is the Company’s Chief Executive Officer. Eric Swann and Greg Shockey are consultants of the Company. Thomas Spruce is the Company’s Chief Operations Officer and director.
Peter Hager, our CEO, controls both Phitech and Pointward and as a result the transaction with Pointward has been accounted for as a common control merger. As a result, the assets and liabilities assumed were recorded on the Company’s financial statements at their respective carry-over basis. Under ASC 805, “Business Combinations,” the Company recorded the common control merger as of the earliest date presented in these financial statements, or December 31, 2023.
Our officers and director are now and may in the future become a stockholder, officer or director of other companies that may be engaged in business activities similar to those conducted by us. Accordingly, direct conflicts of interest may arise in the future with respect to such individuals acting on our behalf or other entities. Moreover, additional conflicts of interest may arise with respect to opportunities which come to the attention of such individual in the performance of his duties or otherwise. Although we do not currently have a right of first refusal pertaining to opportunities that come to management’s attention insofar as such opportunities may relate to our business operations, we have established a conflict-of-interest policy intended to ensure timely disclosure and avoidance of activities and relationships that conflict with the interests of the Company.
Our officers and director are subject to the restriction that all opportunities contemplated by our business plan which come to their attention, either in the performance of their duties or in any other manner, will be considered opportunities of, and be made available to our Company. A breach of this requirement will be a breach of the fiduciary duties of the officer or director.
All future affiliated transactions will be made or entered into on terms that are no less favorable to us than those that can be obtained from any unaffiliated third party. To the extent possible, a majority of the independent, disinterested members of our board of directors will approve future affiliated transactions.
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Review, Approval and Ratification of Related Party Transactions
Given our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described above, with our executive officers, Directors and significant stockholders. However, all of the transactions described above were approved and ratified by our Board of Directors. In connection with the approval of the transactions described above, our Board of Directors, took into account several factors, including their fiduciary duties to the Company; the relationships of the related parties described above to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; whether comparable products or services were available; and the terms the Company could receive from an unrelated third party.
We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional Directors, so that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof. With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manner:
| · | Disclosing such transactions in reports where required; | |
| · | Disclosing in any and all filings with the SEC, where required; | |
| · | Obtaining disinterested directors consent; and | |
| · | Obtaining shareholder consent where required. |
Director Independence
Quotations for the Company’s common stock are entered on the Over-the-Counter Bulletin Board inter-dealer quotation system, which does not have director independence requirements. For purposes of determining director independence, the Company applied the definitions set out in NASDAQ Rule 4200(a)(15). Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. As a result, the Company does not have any independent directors. Our sole director, Thomas Spruce, is also an executive officer of the Company.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of our annual financial statement and review of financial statements included in our 10-Q reports and services normally provided by the accountant in connection with statutory and regulatory filings or engagements were $38,500 for fiscal year ended December 31, 2024, and $44,000 for fiscal year ended December 31, 2023.
Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of our financial statements that are not reported above were nil for fiscal years ended December 31, 2024 and 2023, respectively.
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Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were nil for fiscal years ended December 31, 2024 and 2023, respectively.
All Other Fees
The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported above were nil for fiscal years ended December 31, 2024 and 2023, respectively.
Audit Committee
As of the date of this Annual Report, the Company did not have a standing audit committee serving, and as a result our board of directors performs the duties of an audit committee. Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures.
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PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
| (a) | Financial Statements Index |
The following financial statements are filed with this report:
Report of Independent Registered Public Accounting Firm
Balance Sheets at December 31, 2024 and 2023
Statements of Operations for the years ended December 31, 2024 and December 31, 2023
Statements of Cash Flows for the years ended December 31, 2024 and December 31, 2023
EXHIBITS
| 36 |
| * | Filed herewith. |
| 37 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned in Minneapolis, MN, thereunto duly authorized, on June 11, 2026.
| ELECTRONIC SERVITOR PUBLICATION NETWORK INC. | ||
| By: | /s/ Peter Hager | |
| Title: Chief Executive Officer (Principal Executive Officer) | ||
| By: | /s/ Thomas Spruce | |
| Title: Chief Financial Officer (Principal Financial Officer) | ||
| By: | /s/ Thomas Spruce | |
| Title: Chief Financial Officer (Principal Accounting Officer) | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on June 11, 2026.
| By: | /s/ Peter Hager | |
| Title: | Chief Executive Officer (Principal Executive Officer) | |
| By: | /s/ Thomas Spruce | |
| Title: | Chief Financial Officer (Principal Financial Officer) | |
| By: | /s/ Thomas Spruce | |
| Title: | Chief Financial Officer (Principal Accounting Officer) |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons, constituting all of the members of the board of directors, in the capacities and on the dates indicated.
| Signature | Capacity | Date | ||
| /s/ Thomas Spruce | Director | June 11, 2026 |
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT
We will furnish to the Securities and Exchange Commission, at the same time that it is sent to stockholders, any proxy or information statement that we send to our stockholders in connection with any annual stockholders’ meeting.
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ELECTRONIC SERVITOR PUBLICATION NETWORK, INC.
INDEX TO FINANCIAL STATEMENTS
| F-1 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Electronic Servitor Publication Network, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Electronic Servitor Publication Network, Inc. (the ‘Company’) as of December 31, 2024, and 2023, and the related statements of operations, changes in stockholders’ deficit and cash flows for each of the two years ended December 31, 2024, and 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and 2023, and the results of its operations and its cash flows for each of the two years ended December 31, 2024, and 2023, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3, the Company suffered an accumulated deficit of $(7,829,199). These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regards to these matters are also described in Note 3 to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
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. Communication of critical audit matters does not alter in any way our opinion on the financial statements taken as a whole and we are not, by communicating the critical audit matters, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.
/S/ Lateef Awojobi
(PCAOB ID 7057)
We have served as the Company’s auditor since 2025.
June 10, 2026
| F-2 |
ELECTRONIC SERVITOR PUBLICATION NETWORK, INC.
BALANCE SHEETS
| December 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accruals | $ | $ | ||||||
| Loans payable | ||||||||
| Note payable | ||||||||
| Due to a related party | ||||||||
| Total current liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ Deficit: | ||||||||
| Preferred stock, $ par value shares authorized; shares issued and outstanding | – | – | ||||||
| Series A Preferred stock, $ par value shares authorized; shares issued and outstanding | – | – | ||||||
| Common Stock, $ par value, shares authorized; and shares issued and outstanding, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-3 |
ELECTRONIC SERVITOR PUBLICATION NETWORK, INC.
STATEMENTS OF OPERATIONS
| For the Years Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenue | $ | $ | ||||||
| Operating expenses: | ||||||||
| General and administrative | ||||||||
| Professional fees | ||||||||
| Stock based compensation | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other expense: | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other expense | ( | ) | ( | ) | ||||
| Loss before provision for income taxes | ( | ) | ( | ) | ||||
| Provision for income taxes | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Loss per share, basic and diluted | $ | ) | $ | ) | ||||
| Weighted average shares outstanding, basic and diluted | ||||||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
ELECTRONIC SERVITOR PUBLICATION NETWORK, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT
For the Years Ended December 31, 2024 and 2023
| Additional | Total | |||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Accumulated | Stockholders' | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Stock option expense | – | – | ||||||||||||||||||||||||||
| Shares issued for services | – | |||||||||||||||||||||||||||
| Shares exchange for acquisition | – | ( | ) | |||||||||||||||||||||||||
| Shares cancelled | – | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||||||
| Stock option expense | – | – | ||||||||||||||||||||||||||
| Shares issued for services | – | |||||||||||||||||||||||||||
| Net loss | – | – | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
ELECTRONIC SERVITOR PUBLICATION NETWORK, INC.
STATEMENTS OF CASH FLOWS
| For the Years Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||
| Stock based compensation | ||||||||
| Common stock issued for services | ||||||||
| Changes in Operating Assets and Liabilities: | ||||||||
| Accounts payable and accruals | ||||||||
| Net cash provided (used) by operating activities | ( | ) | ||||||
| Cash flows from Investing activities: | ||||||||
| Cash flows from Financing activities: | ||||||||
| Proceeds from loans - related party | ||||||||
| Proceeds from loans payable | ||||||||
| Repayment of loans - related party | ( | ) | ( | ) | ||||
| Net cash (used) provided by financing activities | ( | ) | ||||||
| Net change in cash | ||||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| Cash Paid For: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
ELECTRONIC SERVITOR PUBLICATION NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 1 – DESCRIPTION OF BUSINESS AND HISTORY
Description of business
The Company was originally incorporated on May 17, 2017, under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. The Company’s common stock is listed on the OTC Expert Market under the stock ticker symbol “XESP.” The Company’s corporate office is located at 107 Chestnut St., Suite 100, Stillwater, MN 55082-5542. The URL of the Company’s website is https://www.electronicservitor.com.
The Company is a digital engagement company providing growth for B2B companies through its digital activation and engagement solutions for multiple verticals. The Company’s managed service product is powered by a sophisticated tech stack — the Digital Engagement Engine. The Company’s technology provides intelligent interaction management, dynamic content provisioning, and a logic-driven workflow that creates relevant digital experiences that accelerate an audience from awareness to action — driving growth for client companies.
On December 22, 2023, the Company entered into the following transactions:
| 1) | An Asset Purchase Agreement (the “Asset Purchase Agreement”) with Phitech Management, LLC, a limited liability company organized under the laws of Minnesota (“Phitech”); and | |
| 2) | An Agreement and Plan of Merger (the “Merger Agreement”) with Pointward Inc., a corporation organized under the laws of Delaware (“Pointward”). |
Pursuant to the terms of the
Asset Purchase Agreement, the Company has agreed to pay an aggregate purchase price of $
Pursuant to the terms of the Merger Agreement, the Company shall be the surviving corporation and all the outstanding capital stock of Pointward was converted into shares of the Company’s common stock. Accordingly, the Company issued shares of the Company’s common stock to the former holders of Pointward and the former stockholders of Pointward (not including any ownership of the Company’s capital stock held by such persons prior to the Merger) hold approximately 72% of the outstanding shares of the Company’s capital stock.
As a result of the transactions described above, the Company is strategically aligning its business to support its mission in becoming the premier content management and distribution platform for content providers in the global markets through the Company’s continued development and acquisitions of publication and monetization products, services, and technologies.
| F-7 |
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Concentrations of Credit Risk
The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in its accounts. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation insurable amount (“FDIC”).
Cash Equivalents
The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash equivalents. There were
Under ASC 260 “Earnings Per Share,” the Company presents basic and diluted earnings (loss) per share (“EPS”) amounts on the face of the statements of operations. Basic EPS is computed by dividing income (loss) available to common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) during the period. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period that they were outstanding. The computation of diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. As of December 31, 2024, there are potentially dilutive shares from warrants and potentially dilutive shares from vested options. As of December 31, 2023, there are potentially dilutive shares from warrants and potentially dilutive shares from vested options. Additionally, diluted amounts are not presented when the effect of the computations is anti-dilutive due to the losses incurred. Accordingly, there is no difference in the amounts presented for basic and diluted loss per share.
| F-8 |
Revenue Recognition
The Company recognizes revenue under ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following steps:
| · | Identification of a contract with a customer; | |
| · | Identification of the performance obligations in the contract; | |
| · | Determination of the transaction price; | |
| · | Allocation of the transaction price to the performance obligations in the contract; and | |
| · | Recognition of revenue when or as the performance obligations are satisfied. |
Revenue is recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.
Stock-based Compensation
In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 allows companies to account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. We adopted this ASU on January 1, 2019.
Fair value of financial instruments
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America under U.S. GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
| Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| Level 3: | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s
financial assets and liabilities, such as cash, accounts payable, accrued expenses and loans payable approximate their fair value
because of the short maturity of those instruments. The Company had
| F-9 |
Income Taxes
Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on matters that may, at least in part, be beyond the Company’s control, it is at least reasonably possible that management’s judgment about the need for a valuation allowance for deferred taxes could change in the near term.
Tax benefits are recognized only for tax
positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as
the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for
“unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that do not meet
these recognition and measurement standards. As of December 31, 2024 and 2023,
Operating Segments
Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the Chief Operating Decision Maker (“CODM”), or decision maker group, in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has operating segment generating revenue as of December 31, 2024.
Recently issued accounting pronouncements
The Company periodically reviews new accounting standards that are issued. Although some of these accounting standards may apply to the Company, the Company has not identified any new standards that it believes merit further discussion or change to adopted policies, and the Company expects that none will have a significant impact on its financial statements.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been
prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company has begun to recognize limited revenue and has an accumulated deficit of $
| F-10 |
NOTE 4 – NOTES PAYABLE
On May 19, 2022, the Company
issued a note payable for $
On May 20, 2022, the Company
issued a note payable for $
On June 10, 2022, the Company issued a note
payable to a third party for $
On October 18, 2022, the Company
issued a note payable for $
On January 6, 2023, the Company
issued a note payable for $
On March 13, 2023, the Company
issued a note payable for $
On May 11, 2023, the Company issued a note
payable to a third party for $
On May 15, 2023, the Company issued a note
payable for $
On September 1, 2023, the Company issued a note
payable to a third party for $
On September 6, 2023, the Company issued a note
payable for $
On September 15, 2023, the Company issued a note
payable for $
| F-11 |
NOTE 5 – RELATED PARTY TRANSACTIONS
Forty 7 Select Holdings LLC
(“Forty 7”) has advanced the Company funds, to pay for general operating expenses. Forty 7 is controlled by Greg Shockey,
an existing shareholder of the Company. As of December 31, 2024 and 2023, the balance due to Forty 7 is $
On January 10, 2023, the Company
issued a note payable for $
Refer to Note 7 for options to purchase shares of common stock issued to related parties.
On December 22, 2023, the Company entered into the following transactions:
| 1) | An Asset Purchase Agreement (the “Asset Purchase Agreement”) with Phitech Management, LLC, a limited liability company organized under the laws of Minnesota (“Phitech”); and | |
| 2) | An Agreement and Plan of Merger (the “Merger Agreement”) with Pointward Inc., a corporation organized under the laws of Delaware (“Pointward”). |
Asset Purchase Agreement
Pursuant to the terms of the
Asset Purchase Agreement dated December 22, 2023, the Company has agreed to pay an aggregate purchase price of $
Agreement and Plan of Merger
Following consummation of the Asset Purchase Agreement on December 22, 2023, the Company entered into a Merger Agreement with Pointward. Pursuant to the terms of the Merger Agreement, the Company shall be the surviving corporation and all the outstanding capital stock of Pointward was converted into shares of the Company’s common stock. Accordingly, the Company issued shares of the Company’s common stock to the former holders of Pointward and the former stockholders of Pointward (not including any ownership of the Company’s capital stock held by such persons prior to the Merger) hold approximately 72% of the outstanding shares of the Company’s capital stock.
As former stockholders of Pointward, Peter Hager, Eric Swann, Greg Shockey, and Thomas Spruce received shares of the Company’s capital stock. Peter Hager is the Company’s Chief Executive Officer. Eric Swann and Greg Shockey are consultants of the Company. Thomas Spruce is the Company’s Chief Financial Officer and Chief Operations Officer and director.
Peter Hager, our CEO, controls both Phitech and Pointward and as a result the transaction with Pointward has been accounted for as a common control merger. As a result, the assets and liabilities assumed were recorded on the Company’s financial statements at their respective carry-over basis. Under ASC 805, “Business Combinations,” the Company recorded the common control merger as of the earliest date presented in these financial statements, or December 31, 2023.
| F-12 |
NOTE 6 – PREFERRED STOCK
The Company has designated shares of Series A Preferred Stock. The shares of Series A Preferred Stock have a par value of $ per share. The Series A Preferred Shares do not have a dividend rate or liquidation preference and are not convertible into shares of common stock. Series A Preferred Stock, voting together as a class, have the right to vote 60% of the Company’s voting shares on any and all shareholder matters (the “Majority Voting Rights”). Additionally, the Company shall not adopt any amendments to the Company’s Bylaws, Articles of Incorporation, as amended, make any changes to the Certificate of Designations establishing the Series A Preferred Stock, or effect any reclassification of the Series A Preferred Stock, without the affirmative vote of at least a majority of the outstanding shares of Series A Preferred Stock. However, the Company may, by any means authorized by law and without any vote of the holders of shares of Series A Preferred Stock, make technical, corrective, administrative or similar changes to such Certificate of Designations that do not, individually or in the aggregate, adversely affect the rights or preferences of the holders of shares of Series A Preferred Stock. Other than the Majority Voting Rights, the Series A Preferred Stock does not have any other dividend, liquidation, conversion, or redemption rights, whatsoever.
NOTE 7 – OPTIONS
Greg Shockey
Effective April 12, 2022, the Company entered into an Advisory Agreement with Greg Shockey, an affiliate of the Company and service provider. Under this Advisory Agreement, the Company issued options to purchase restricted shares of the Company’s common stock at a strike price of $0.39 per share. The options vested over a period of one year and expire 10 years from the date of grant.
On February 1, 2023, the Company
entered into an Advisor Agreement with Greg Shockey, which supersedes his previous Advisor Agreement with the Company, whereby, in exchange
for business development and strategy consulting, investor relations, and facilitating meetings with targeted investors, as well as other
services, the Company agreed to issue Greg Shockey options to purchase restricted shares of common stock at signing and an additional
On October 12, 2023, the Company entered into a revised Stock Option Grant and Stock Option Agreement with Greg Shockey (the “Shockey Grant and Agreement”), in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Shockey Grant and Agreement supersedes his previous stock option grant and stock option agreement dated April 12, 2023. Pursuant to the terms of the Shockey Grant and Agreement, the Company agreed to issue Greg Shockey options to purchase shares of the Company’s common stock, with 1,140,000 of the shares vesting on October 12, 2023 and one-ninth (1/9th) of the remaining shares vesting on the first day of each fiscal quarter thereafter, subject to Greg Shockey continuing to be a service provider through each such date.
Danijella Dragas
Effective April 12, 2022, the Company entered into an Advisory Agreement with Danijella Dragas, a third-party service provider. Under this Advisory Agreement, the Company issued options to purchase restricted shares of the Company’s common stock at a strike price of $0.39 per share. The options vest over a period of 1 year contingent upon service and expire 10 years from the date of grant. On March 23, 2023, the Advisory Agreement was cancelled, thereby terminating Danijella Dragas and forfeiting 60,000 unvested options.
Thomas Spruce
In the first quarter of 2022, the Company entered into an Employment Agreement with Thomas Spruce, an officer and director of the Company. This Employment Agreement has a term of two years and automatically renews for an additional 6-month term unless terminated earlier. This agreement is terminable by each of the parties upon written notice. Under this Employment Agreement, the Company pays a base salary of $1.00 per year and issued options to purchase restricted shares of the Company’s common stock at a strike price of $0.39 per share. The options vest over a period of two years and expire 10 years from the date of grant.
| F-13 |
On May 27, 2022, the Company entered into an Addendum to Employment Agreement with Thomas Spruce, which granted Mr. Spruce options to purchase an additional restricted shares of the Company’s common stock at a strike price of $0.15 per share. The options vest immediately from the date of the grant and expire 10 years from the date of grant.
On February 1, 2023, Thomas
Spruce was appointed as the Company’s Secretary and Chief Operations Officer. Per the terms of the employment agreement, Mr. Spruce
was granted options to purchase restricted shares of the Company’s common stock, at the commencement of his initial term
of services, for an exercise price $
On October 12, 2023, the Company entered into a new Employment Agreement and Stock Option Grant and Agreement with Thomas Spruce, Chief Operations Officer and sole Director (the “Spruce Employment Agreement and Grant”), in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Spruce Employment Agreement and Grant supersedes his previous employment agreement and stock option grant and agreement, each dated February 1, 2023. Thomas Spruce’s new employment agreement provides a 36-month term of employment from October 12, 2023, under the same compensation terms as the previous Agreement, except that the number of Stock Options granted increased from 500,000 per year to 1,200,000 per year in line with Mr. Spruce’s responsibilities in moving the Company from start-up to being fully operational. Pursuant to the terms of the Spruce Employment Agreement and Grant, the Company agreed to issue Thomas Spruce options to purchase shares of the Company’s common stock, with 1,550,000 of the shares vesting on October 12, 2023 and one-eleventh (1/11th) of the remaining shares vesting on the first day of each fiscal quarter thereafter, subject to Thomas Spruce continuing to be a service provider through each such date.
Jim Kellogg
On November 16, 2022, the Company entered into an Employment Agreement with Jim Kellogg, which granted Mr. Kellogg options to purchase restricted shares of the Company’s common stock at a strike price of $0.10 per share. The options vest over a period of 1 year contingent upon service and expire 10 years from the date of grant.
On October 12, 2023, the Company entered into a new Employment Agreement and Stock Option Grant and Agreement with Jim Kellogg, Chief Financial Officer (the “Kellogg Employment Agreement and Grant”), in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Kellogg Employment Agreement and Grant supersedes his previous Employment Agreement and Stock Option Grant and Agreement dated November 16, 2022. The new Employment Agreement provides a 36-month term of employment from October 12, 2023, under the same compensation terms as the previous Agreement, except that the number of Stock Options granted increased from 300,000 per year to per year. Pursuant to the terms of the Kellogg Employment Agreement and Grant, the Company agreed to issue Jim Kellogg options to purchase shares of the Company’s common stock, with 300,000 of the shares vesting on October 12, 2023 and one-twelfth (1/12th) of the remaining shares vesting on the first day of each fiscal quarter beginning on January 1, 2024, subject to Jim Kellogg continuing to be a service provider through each such date.
Jim Kellogg resigned as the Chief Financial Officer of the Company effective as of May 10, 2024 and forfeited all options previously granted to him.
Peter Hager
On February 1, 2023, Peter Hager
was appointed as the Company’s President and Chief Executive Officer. Per the terms of the employment agreement, Mr. Hager
was granted options to purchase restricted shares of the Company’s common stock, at the commencement of his initial term
of services, for an exercise price $
| F-14 |
On October 12, 2023, the Company entered into a revised Stock Option Grant and Agreement with Peter Hager, President and Chief Executive Officer (the “Hager Grant and Agreement”), in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The Hager Grant and Agreement supersedes his previous Stock Option Grant and Agreement dated February 1, 2023. Pursuant to the terms of the Hager Grant and Agreement, the Company agreed to issue Peter Hager options to purchase shares of the Company’s common stock, with 1,900,000 of the shares vesting on October 12, 2023 and one-ninth (1/9th) of the remaining shares vesting on the first day of each fiscal quarter thereafter, subject to Peter Hager continuing to be a service provider through each such date.
The February 1, 2023 Options were issued with the following inputs:
| Options | ||||
| Share price | $ | |||
| Exercise Price | $ | |||
| Term | years | |||
| Volatility | % | |||
| Risk Free Interest Rate | % | |||
| Dividend rate | ||||
Effective September 28, 2023, the Company entered into an Advisory Agreement with Jonathan Sweetser, a third-party service provider. Under this Advisory Agreement, the Company issued options to purchase restricted shares of the Company’s common stock upon signing and 1,200,000 shares per year over the next three years. The options were issued at a strike price of $0.07 per share. The options vest over a period of 1 year contingent upon service and expire 10 years from the date of grant.
Effective September 28, 2023, the Company entered into an Advisory Agreement with Heather Rawls, a third-party service provider. Under this Advisory Agreement, the Company issued options to purchase restricted shares of the Company’s common stock at a strike price of $0.07 per share. The options vest over a period of 1 year contingent upon service and expire 10 years from the date of grant.
Options were issued with the following inputs:
| Options | ||||
| Share price | $ | |||
| Exercise Price | $ | |||
| Term | years | |||
| Volatility | % | |||
| Risk Free Interest Rate | % | |||
| Dividend rate | ||||
During the quarter ended September 30, 2023, the Company accounted for 300,000 options that were effective on November 16, 2022. The option has a strike price of $0.10 per share. The options vest over a period of 1 year contingent upon service and expire 10 years from the date of grant.
Options were issued with the following inputs:
| Options | ||||
| Share price | $ | |||
| Exercise Price | $ | |||
| Term | years | |||
| Volatility | % | |||
| Risk Free Interest Rate | % | |||
| Dividend rate | ||||
| F-15 |
A summary of the status of the Company’s outstanding stock options and changes during the year is presented below:
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contract Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2022 | $ | $ | ||||||||||||||
| Granted | $ | $ | – | |||||||||||||
| Cancelled | ( | ) | $ | – | – | $ | – | |||||||||
| Exercised | $ | – | – | $ | – | |||||||||||
| Outstanding at December 31, 2023 | $ | $ | ||||||||||||||
| Granted | $ | – | $ | – | ||||||||||||
| Cancelled | ( | ) | $ | – | – | $ | – | |||||||||
| Exercised | $ | – | – | $ | – | |||||||||||
| Outstanding at December 31, 2024 | $ | – | $ | |||||||||||||
| Exercisable at December 31, 2024 | $ | $ | ||||||||||||||
| Range of Exercise Prices |
Number Outstanding 12/31/2024 |
Weighted Average Remaining Contractual Life |
Weighted Average Exercise Price | |||
| $ – $ | years | $ |
NOTE 8 – WARRANTS
A summary of the status of the Company’s outstanding stock warrants and changes during the year is presented below:
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contract Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2022 | $ | $ | ||||||||||||||
| Granted | $ | – | $ | – | ||||||||||||
| Expired | – | $ | – | – | $ | – | ||||||||||
| Exercised | – | $ | – | – | $ | – | ||||||||||
| Exercisable at December 31, 2023 | $ | $ | ||||||||||||||
| Granted | $ | – | $ | – | ||||||||||||
| Expired | – | $ | – | – | $ | – | ||||||||||
| Exercised | – | $ | – | – | $ | – | ||||||||||
| Exercisable at December 31, 2024 | $ | $ | ||||||||||||||
| 16 |
NOTE 9 – INCOME TAX
The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as operating loss carryforwards. Deferred tax assets are reduced by a valuation allowance when management determines that it is more likely than not that some or all of the deferred tax assets will not be realized.
For the years ended December 31, 2024 and 2023, the Company incurred losses before income taxes and recorded no provision or benefit for federal or state income taxes. The Company's effective tax rate differed from the statutory federal rate primarily due to the establishment and maintenance of a full valuation allowance against deferred tax assets.
Income Tax Rate Reconciliation
| Schedule of income tax reconciliation | ||||||||||||||||
| 2024 | Rate | 2023 | Rate | |||||||||||||
| Expected federal tax benefit | $ | $ | ||||||||||||||
| Expected state tax benefit, net of federal effect | ||||||||||||||||
| Increase in valuation allowance | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax provision | $ | $ | ||||||||||||||
Deferred Tax Assets
| Schedule of deferred tax assets | ||||||||
| 2024 | 2023 | |||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Total deferred tax assets | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
At December 31, 2024 and 2023, the Company had
federal net operating loss carryforwards of approximately $
Management has evaluated the realizability of the deferred tax assets and has concluded that a full valuation allowance is required as of December 31, 2024 and 2023 because it is more likely than not that the deferred tax assets will not be realized through future taxable income.
The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2024 and 2023, the Company had no unrecognized tax benefits and had not accrued any interest or penalties related to uncertain tax positions. Tax years generally remain subject to examination by federal and state taxing authorities for all years since inception.
NOTE 10 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, Subsequent Events, management has performed an evaluation of subsequent events through the date that the financial statements were issued and has determined that there are no material subsequent events to disclose in these financial statements.
| F-17 |