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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/31/21 Altitude Int’l Holdings, Inc. 10-K 12/31/20 53:3.7M M2 Compliance LLC/FA |
Document/Exhibit Description Pages Size
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6: EX-31.2 Certification -- §302 - SOA'02 HTML 22K
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16: R2 Consolidated Balance Sheets HTML 84K
17: R3 Consolidated Balance Sheets (Parenthetical) HTML 33K
18: R4 Consolidated Statement of Operations HTML 62K
19: R5 Consolidated Statement of Changes in Stockholders' HTML 46K
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
COMMISSION FILE NUMBER: 000-55639
ALTITUDE INTERNATIONAL HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
| New York | 13-3778988 | |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
4500 SE Pine Valley Street
(Address of Principal Executive Offices)
772-323-0625
(Registrant’s telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $0.001 PAR VALUE PER SHARE
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [ ]
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 [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files ). Yes [X] No [ ]
Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition 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 [ ] | |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) |
Smaller reporting company [X] | |
| Emerging growth company [X] |
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 checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The aggregate market value of the voting and non-voting stock held by non-affiliates was approximately $392,560 as of June 30, 2020, based upon a bid price of $0.0302 per share for the registrant’s common stock on such date.
On March 22, 2021, a total of 58,621,681 shares of our common stock were issued, issuable, and outstanding.
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ALTITUDE INTERNATIONAL HOLDINGS, INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
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FORWARD LOOKING STATEMENT DISCLAIMER
THIS ANNUAL REPORT ON FORM 10-K CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO US THAT ARE BASED ON THE BELIEFS OF MANAGEMENT, AS WELL AS ASSUMPTIONS MADE BY AND INFORMATION CURRENTLY AVAILABLE TO US. WHEN USED IN THIS DOCUMENT, THE WORDS “ANTICIPATE,” “BELIEVE,” “ESTIMATE,” “SHOULD,” “PLAN,” AND “EXPECT” AND SIMILAR EXPRESSIONS, AS THEY RELATE TO US, ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS REFLECT OUR CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS, INCLUDING THOSE DESCRIBED IN THIS ANNUAL REPORT ON FORM 10-K. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED HEREIN AS ANTICIPATED, BELIEVED, ESTIMATED, PLANNED OR EXPECTED. WE DO NOT INTEND TO UPDATE THESE FORWARD-LOOKING STATEMENTS.
Description of Business
Altitude International Holdings, Inc. (the “Company,” “we,” “us,” “our,” or “Altitude-NY”), was incorporated in the State of New York on July 13, 1994 as “Titan Computer Services, Inc.”
On June 27, 2017, the Company entered into a Share Exchange Agreement (“Share Exchange”) with Altitude International, Inc, a Wisconsin corporation (“Altitude”). Altitude was incorporated on May 18, 2017, under the laws of the state of Wisconsin. Altitude specializes in creating properly engineered, membrane-based designs for simulated altitude training equipment. The product line ranges from personal at home use machines to fully integrated environmental rooms and chambers. The Company changed its name on June 4, 2018 to “Altitude International, Inc.” to reflect its current operations. Pursuant to the terms of the Share Exchange, the Company agreed to issue 6,102,000 shares of its common stock to the individual shareholders of Altitude on a pro rata basis in exchange for receive 100% of the shares of Altitude. Following the Share Exchange, Altitude is a wholly owned subsidiary of the Company.
On February 13, 2018, the majority of the shareholders of the Company approved the amendment to the Articles of Incorporation to change the Company’s name from “Titan Computer Services, Inc.” to “Altitude International, Inc.” The purpose of the name change was to help further our brand identity reflect the major focus of our business operations, the manufacturing and distribution of products in the athletic training industry, specifically altitude training. On February 14, 2020, the majority of shareholders of the Company and the Board of Directors authorized a change in the Company’s name to “Altitude International Holdings, Inc.” to reflect more diversified operations going forward. On August 21, 2020, the name change was effected with the State of New York.
On February 10, 2021, The Company filed with the State of New York to increase the authorized shares of common stock of the Company to 600,000,000 shares.
Corporate History
Following the Share Exchange, the Company, through its operating subsidiary, Altitude, specializes in creating uniquely engineered, membrane-based designs for simulated altitude training environments. The product line ranges from personal at home use machines to fully integrated environmental rooms and chambers. Through a license agreement with Sporting Edge UK, a brand well-established in the United Kingdom, the Company intends to expand its technology into the American marketplace, where the appetite for increasing performance in elite athletes, professional sports, equine sports, and universities and colleges is immense.
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Additionally, on April 24, 2020, the Company formed a wholly-owned subsidiary in Wisconsin called “Altitude Sports Management Corp.,” an entity that will providing fully integrated wealth, health, and career management services to its clients.
Further, on January 17, 2021, Altitude International Holdings, Inc. (the “Company” or “Altitude”) entered into a Letter of Intent (the “LOI”) with Breunich Holdings, Inc., a privately held Delaware corporation (“BHI”). The LOI sets forth the headline terms of a proposed Share Exchange of Altitude with BHI through which 100% of the BHI shares will be exchanged for up to 80% of then-issued and outstanding shares of Altitude.
Upon the terms and subject to the conditions set forth in the LOI, following the Share Exchange, (i) BHI and its subsidiaries will be wholly-owned subsidiaries of Altitude; (ii) BHI shareholders would own approximately 80% of the common shares of Altitude, and Altitude shareholders would own approximately 20% of the common shares of Altitude, with such percentages calculated on a fully diluted basis; and (iii) BHI has the right to appoint a majority of the directors of Altitude following the Share Exchange.
The completion of the Share Exchange would be subject to the satisfaction of specific conditions set forth in the LOI, including the completion of an audit of BHI and its subsidiaries and the parties first negotiating and executing a definitive Share Exchange agreement (the “Share Exchange Agreement”). These conditions may not ever be satisfied, the Company may never enter into a definitive Share Exchange Agreement with BHI, the Share Exchange with BHI may never be consummated, and even if it is, it may not be consummated on the terms described therein.
Competition
Currently, the membrane-based technology is not being well used in the United States. In North America, there exist some companies that provide altitude training masks, but the equipment is on a much smaller scale intended for personal use. This type of equipment employs PSA technology, which has reliability issues and a restricted altitude capacity.
There have been recent climate-controlled chamber successes in therapy and rehab environments. While used in the United States and North America, much of the membrane-based technology reflects continued use on a more personal basis. The impact of COVID-19 stalled most activities for much of 2020. In recent months, the Company has experienced a renewed interest in the university, college, military, and therapy sectors and professional sports teams.
Marketing and Customers
Our approach with major professional sports franchises has been an emphasis. Our recent sale to the Orlando Magic, the first sale in the NBA, and the past sales to the Miami Dolphins and Tulane University, corroborate our roll-out efforts for the U.S. professional market. We plan to market to franchise, college, military and therapy institutions interested in installing climate-controlled chambers in their performance facilities indicate renewed momentum for the 2021 season. Our outreach utilizes far-reaching relational capital as the point of entry for prospective targets. Our products and services support junior, adult, and professional individuals.
In December 2020, we brought on a new Chairman and CEO, Greg Breunich (“Breunich”). He has a notable career in training, education, and performance, having built IMG Academies from the ground up from 1978-2009 before establishing Club Med Academies located on Florida’s east coast. Breunich’ s initial plan is to add multiple related revenue streams to our business model, transitioning the existing business from a “one-off sale” operation to an entity with multiple year-on-year reoccurring related revenue streams. Breunich and Robert Kanuth, the former Chairman and CEO, reunited Greg Anthony, Professor Greg Whyte, and Dave Vincent to assist with ALTD’s new approach to growth. The team of Greg Breunich, Greg Anthony (former 11-year NBA player and current commentator for NBA TV and Turner Broadcast Network), and Professor Greg Whyte (arguably the foremost sports scientist and public figure on the topic of properly activated Altitude training) place ALTD in a formattable position to expand Altitudes climate-controlled environments in the US Market.
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Our select group of ambassadors has maintained and cultivated expanded customer interest during these challenging times. As the COVID-19 cloud lifts Altitude and the team remain optimistic. Interested parties appear to be prepared to move forward with Altitude system purchases. Our recent Orlando Magic purchase is evidence of this renewed momentum.
| ● | Robert Kanuth | Businessman and ex-Harvard basketball star |
| ● | Landon Adler | Ex-professional basketball player |
| ● | Jonathan Goldfarb | Ex world top-50 tennis player |
| ● | Ron Turner | Football coach from a famous coaching family |
| ● | Lesley Visser | Outstanding sportscaster and media icon |
| ● | Professor Greg Whyte | Internationally renowned Sports Physiologist |
Altitudes second demonstration facility to be installed and used at Club Med Academies will serve as headquarters for ALTD’s R&D center hosting junior, adult, professional individuals and teams on a daily year-round basis. Professor Greg Whyte will be on point guiding protocol enhancement and application at the center.
Principal Agreements Affecting Our Ordinary Business
Revised Sporting Edge UK Licensing Agreement
Altitude has a Revised Licensing Agreement with Sporting Edge UK that grants a license to Altitude to use Sporting Edge UK’s proprietary technology related to properly engineered, membrane-based designs for simulated altitude training equipment. The annual license fee under the revised agreement is $1.00 per year. The product line ranges from personal at home use machines to fully integrated environmental rooms and chambers. Altitude has the licensing rights to use all technology to manufacture the products and to sell them (directly or through distributors) in the following territories:
| ● | The Continent of North America, Central America, The Continent of South America. | |
| ● | Other territories as may be agreed from time to time, on a temporary or permanent basis. |
Business Strategy
Altitude will transition to a multi-discipline enterprise in 2021, blending income streams from performance-based education, sports, arts, science, and technology. The go-to-market method will be through packaged tuition-oriented services, chargeable support services, actual product system sales. The targeted consumer segments include but are not limited to juniors, adults, professionals. ALTD’s multi-discipline approach consists of wholly owned stand-alone academies, wellness, and manufacturing/assembly facilities. These operations generate reoccurring year-on-year revenue and represent best-in-class high-performance methodology/protocols for training, education, and therapy environments.
Industry Operating Environment
We believe the industry operating environment is ready for our products and our focus is climate-controlled rooms. The blended business approach that Altitude has adopted will substantiate our product in the marketplace through education and applied use of our systems and protocols. In the academies’ operations alone, participants attend from 40 nations around the world. Professional athletes and professional teams utilize the facilities from Europe, South America, and Asia.
Development
Altitude will be establishing its manufacturing in the United States, taking ownership of our cost to retail structure. Currently, “Made in the USA” carries weight worldwide at the consumer level.
The product designs licensed from Sporting Edge UK are proven and cover a wide range of room sizes. The only requirement is to change from metric to imperial sizes where necessary.
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There are three unique elements to the Altitude Systems:
| ● | Sophisticated Touch Screen control systems capable of integrating the control of simulated altitude, temperature and humidity. |
| ● | A unique design of Air Separation Unit with only a single active part that provides for ultra-reliable operation and a design life of greater than fifteen years. |
| ● | Proven training protocols that allow the desired training benefits to be achieved. |
We have included some photos of what our systems look like:
Manufacturing consists primarily of the assembly of components into unique licensed designs. In the coming months, a team from the U.K. will come to the States to assist with the setup of our existing manufacturing plant. Initial recruitment of technically capable persons will be necessary, followed by short training blocks to pass on the required skills.
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Competition
Currently, the membrane-based technology is not being well used in the United States. In North America, there exist some companies that provide altitude training masks, but the equipment is on a much smaller scale intended for personal use. This type of equipment employs PSA technology, which has reliability issues and a restricted altitude capacity. Environment Controlled Systems will ultimately be a must have and become a part of everyday training, rehab and regeneration. The market is not aware of this fact thus the significant upside opportunity for ALTD. As we enter the target market segments and expand the use of our systems the Altitude training will become part of the norm.
Intellectual Property
The Company does not own any patents directly but has access to the Sporting Edge UK intellectual property through the License Agreement.
Government Regulation
We are subject to local and international laws and regulations that relate directly or indirectly to our operations. We are also subject to common business and tax rules and regulations pertaining to the operation of our business. However, to our knowledge, there are no laws or regulations specifically directed to our industry and proposed business activities. While general laws about privacy are applicable, we only incorporate publicly available data in our databases.
Employees
We currently have five part-time employees.
As we are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information under this item; however, we believe this information may be of value to our shareholders for this filing. We reserve the right not to provide risk factors in our future filings. Our primary risk factors and other considerations include:
Risks Related to the Company
The Company operates in an environment that involves many risks and uncertainties. The risks and uncertainties described in this section are not the only risks and uncertainties that we face. Additional risks and uncertainties that presently are not considered material or are not known to us, and therefore are not mentioned herein, may impair our business operations. If any of the risks described actually occur, our business, operating results and financial position could be adversely affected.
An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations.
The occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, customers, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission.
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Our revenues and profitability can fluctuate from period to period and are often difficult to predict due to factors beyond our control.
Our results of operations in any particular period may not be indicative of results to be expected in future periods, and have historically been, and are expected to continue to be, subject to periodic fluctuations arising from a number of factors, including:
| ● | Introduction and market acceptance of new products and sales trends affecting specific existing products; | |
| ● | Variations in product selling prices and costs and the mix of products sold; | |
| ● | Size and timing of Retail customer orders, which, in turn, often depend upon the success of our customers’ businesses or specific products; | |
| ● | Changes in the market conditions for consumer fitness equipment; | |
| ● | Changes in macroeconomic factors; | |
| ● | Availability of consumer credit; | |
| ● | Timing and availability of products coming from our offshore contract manufacturing suppliers; | |
| ● | Seasonality of markets, which vary from quarter-to-quarter and are influenced by outside factors such as overall consumer confidence and the availability and cost of television advertising time; | |
| ● | Effectiveness of our media and advertising programs; | |
| ● | Customer consolidation in our Retail segment, or the bankruptcy of any of our larger Retail customers; | |
| ● | Restructuring charges; | |
| ● | Goodwill and other intangible asset impairment charges; and | |
| ● | Legal and contract settlement charges. |
These trends and factors could adversely affect our business, operating results, financial position and cash flows in any particular period.
Portions of our operating expenses and costs of goods sold are relatively fixed, and we may have limited ability to reduce expenses sufficiently in response to any revenue shortfalls.
Many of our operating expenses are relatively fixed. We may not be able to adjust our operating expenses or other costs sufficiently to adequately respond to any revenue shortfalls. If we are unable to reduce operating expenses or other costs quickly in response to any declines in revenue, it would negatively impact our operating results, financial condition and cash flows.
If we are unable to anticipate consumer preferences or to effectively develop, market and sell future products, our future revenues and operating results could be adversely affected.
Our future success depends on our ability to effectively develop, market and sell new products that respond to new and evolving consumer preferences. Accordingly, our revenues and operating results may be adversely affected if we are unable to develop or acquire rights to new products that satisfy consumer preferences. In addition, any new products that we market may not generate sufficient revenues to recoup their acquisition, development, production, marketing, selling and other costs.
Decline in consumer spending would likely negatively affect our product revenues and earnings.
Success of each of our products depends substantially on the amount of discretionary funds available to our customers, including universities, sports teams and gym owners. Global credit and financial markets have experienced extreme disruptions in the recent past, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that similar disruptions will not occur in the future. Deterioration in general economic conditions may depress consumer spending, especially spending for high-end athletic products such as ours. Poor economic conditions could in turn lead to substantial decreases in our net sales or have a material adverse effect on our operating results, financial position and cash flows.
Government regulatory actions could disrupt our marketing efforts and product sales.
Various international and U.S. federal, state and local governmental authorities, including the Federal Trade Commission, the Consumer Product Safety Commission and the Securities and Exchange Commission, regulate our product and marketing efforts. Our revenue and profitability could be significantly harmed if any of these authorities commence a regulatory enforcement action that interrupts our marketing efforts, results in a product recall or negative publicity, or requires changes in product design or marketing materials.
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Currency exchange rate fluctuations could result in higher costs, reduced margins or decreased international sales.
Some key components may be manufactured outside of the U.S. and, therefore, currency exchange rate fluctuations could result in higher costs for our products or could disrupt the business of independent manufacturers that produce our products, by making their purchases of raw materials more expensive and more difficult to finance. Our future financial results could be significantly affected by the value of the U.S. dollar in relation to the foreign currencies in which we, our customers or our suppliers conduct business. Past fluctuations in currency exchange rates versus the U.S. dollar have caused our costs for certain products to increase, reducing our margins and cash flows. Similar fluctuations and cost increases may occur in the future. If we are unable to increase our selling prices to offset such cost increases, or if such increases have a negative impact on sales of our products, our revenues and margins would be reduced, and our operating results and cash flows would be negatively impacted. In addition, a portion of our revenue may be derived from sales outside the U.S. in our territory including Canada, Central and South America. Currency rate fluctuations could make our products more expensive for foreign consumers and reduce our revenue, which would negatively affect our operating results and cash flows.
We may face competition from providers of comparable products in categories where our patent protection is limited or reduced due to patent expiration. Increased competition in those product categories could negatively affect our future revenues and operating results.
The patents that cover the production of hypoxic environments in room situations have all expired and so no general patent protection is available. However, under the terms of the license with SEUK, the Company will benefit from patents that have been filed that relate to improving membrane performance and improving the uniformity of climate in environmental chambers. These patents are pending in the UK.
We are subject to periodic litigation, product liability risk and other regulatory proceedings, which could result in unexpected expense of time and resources.
From time to time, we may be a defendant in lawsuits and regulatory actions relating to our business or the former operations of our discontinued Commercial business segment. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such proceedings. An unfavorable outcome could have a material adverse impact on our business, financial condition and results of operations. In addition, any significant litigation in the future, regardless of its merits, could divert management’s attention from our operations and may result in substantial legal costs.
We are subject to warranty claims for our products, which could result in unexpected expense.
Many of our products carry warranties for defects in quality and workmanship. We may experience significant expense as the result of product quality issues, product recalls or product liability claims which may have a material adverse effect on our business.
Disruption to our information and communication systems could result in interruptions to our business and potential implementation of new systems for critical business functions may heighten the risk of disruption.
Our business is reliant on information and communication technology, and a substantial portion of our revenues are generated with the support of information and communication systems. We also rely on information systems in all stages of our product cycle, from design to distribution, and we use such systems as a method of communication between employees, suppliers and customers. In addition, we use information systems to maintain our accounting records, assist in trade receivables collection and customer service efforts, and forecast operating results and cash flows.
System failures or service interruptions may occur as the result of many factors, including: computer viruses; hacking or other unlawful activities by third parties; disasters; equipment, hardware or software failures; ineffective design or implementation of new systems or systems upgrades; cable outages, extended power failures, or our inability or failure to properly protect, repair or maintain our communication and information systems. If we do not consider the potential impact of critical decisions related to systems or process design and implementation, this could lead to operational challenges and increased costs. Any of the factors could have a material adverse effect on our operating results, financial position and cash flows.
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System security risks, data protection breaches and cyber-attacks could disrupt our operations.
We manage and store various proprietary information and sensitive or confidential data relating to our business, including sensitive and personally identifiable information. Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us, or our customers, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us, our customers or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business. In addition, the cost and operational consequences of implementing further data protection measures could be significant.
Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms and other malicious software programs that attack or otherwise exploit any security vulnerabilities of our systems. In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of the system. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our revenue, manufacturing, distribution or other critical functions.
Risks Related to our Securities
Our Stock Price May be Volatile, which May Result in Losses to Our Shareholders.
The stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies listed on the OTCQB Market on which shares of our common stock are quoted, have been volatile in the past and have experienced sharp share price and trading volume changes. The trading price of our common stock is likely to be volatile and could fluctuate widely in response to many factors, including the following, some of which are beyond our control:
| ● | variations in our operating results; | |
| ● | changes in expectations of our future financial performance, including financial estimates by securities analysts and investors; | |
| ● | changes in operating and stock price performance of other companies in our industry; | |
| ● | additions or departures of key personnel; and | |
| ● | future sales of our common stock. |
Domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock.
Our Common Shares May Become Thinly Traded and You May be Unable to Sell at or Near Ask Prices, or at All.
We cannot predict the extent to which an active public market for trading our common stock will be sustained.
This situation is attributable to many factors, including the fact that we are a small company which is relatively unknown to stock analysts, stockbrokers, institutional investors and others in the investment community who generate or influence sales volume. Even if we came to the attention of such persons, those persons tend to be risk-averse and may be reluctant to follow, purchase, or recommend the purchase of shares of an unproven company such as ours until we become more seasoned and viable. Consequently, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.
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The market price for our common stock is particularly volatile given our status as a relatively small company, which could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.
Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be able to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
Because the SEC Imposes Additional Sales Practice Requirements on Brokers Who Deal in Shares of Penny Stocks, Some Brokers May be Unwilling to Trade Our Securities. This Means that You May have Difficulty Reselling Your Shares, which May Cause the Value of Your Investment to Decline.
Our shares are classified as penny stocks and are covered by Section 15(g) of the Exchange Act which imposes additional sales practice requirements on brokers-dealers who sell our securities. For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement prior from you to making a sale on your behalf. Because of the imposition of the foregoing additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock. This could prevent you from reselling your shares and may cause the value of your investment to decline.
Financial Industry Regulatory Authority (FINRA) Sales Practice Requirements May Limit Your Ability to Buy and Sell Our Common Stock, which Could Depress the Price of Our Shares.
FINRA rules require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.
Volatility in Our Common Share Price May Subject Us to Securities Litigation.
The market for our common stock is characterized by significant price volatility as compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.
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Our Business is Subject to Changing Regulations Related to Corporate Governance and Public Disclosure that have Increased Both Our Costs and the Risk of Noncompliance.
Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the SEC and FINRA, have issued requirements and regulations and continue to develop additional regulations and requirements in response to corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our efforts to comply with these regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue-generating activities to compliance activities. Because new and modified laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.
We Will Incur Increased Costs and Compliance Risks as a Result of Becoming a Public Company.
We will incur costs associated with our public company reporting requirements. We also anticipate that we will incur costs associated with recently adopted corporate governance requirements, including certain requirements under the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the SEC and FINRA. We expect these rules and regulations, in particular Section 404 of the Sarbanes-Oxley Act of 2002, to significantly increase our legal and financial compliance costs and to make some activities more time-consuming and costly. Like many smaller public companies, we face a significant impact from required compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires management of public companies to evaluate the effectiveness of internal control over financial reporting and the independent auditors to attest to the effectiveness of such internal controls and the evaluation performed by management. The SEC has adopted rules implementing Section 404 for public companies as well as disclosure requirements. The Public Company Accounting Oversight Board, or PCAOB, has adopted documentation and attestation standards that the independent auditors must follow in conducting its attestation under Section 404. We are currently preparing for compliance with Section 404; however, there can be no assurance that we will be able to effectively meet all of the requirements of Section 404 as currently known to us in the currently mandated timeframe. Any failure to implement effectively new or improved internal controls, or to resolve difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet reporting obligations or result in management being required to give a qualified assessment of our internal controls over financial reporting or our independent auditors providing an adverse opinion regarding management’s assessment. Any such result could cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price.
We also expect these new rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
Sales of Our Currently Issued and Outstanding Stock May Become Freely Tradable Pursuant to Rule 144 and May Dilute the Market for Your Shares and have a Depressive Effect on the Price of the Shares of Our Common Stock.
A majority of the outstanding shares of our common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”) (“Rule 144”). As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws. A sale under Rule 144 or under any other exemption from the Securities Act, if available, or pursuant to subsequent registrations of our shares of common stock, may have a depressive effect upon the price of our shares of common stock in any active market that may develop.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
We do not own any property, nor do we have any contracts or options to acquire any property in the future. Presently, we are operating out of our CEO’s office, which he allows us to use for no charge.
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From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We know of no existing or pending legal proceedings against us, nor are we involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
ITEM 4. Mine Safety Disclosure
Not Applicable.
ITEM 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
Prices for our common stock are quoted on OTC Markets under the symbol “ALTD.”
Classes of Stock
We have two classes of stock: common stock and preferred stock. There are 58,621,681 shares of our common stock were issued and outstanding as of March 22, 2021 and no shares of preferred stock issued and outstanding.
On February 10, 2021, the Company filed amended Articles of Incorporation with the State of New York to amend its authorized shares of common stock by an additional 530,000,000 whereas the total authorized is a total of 605,000,000 shares of capital stock consisting of (i) 600,000,000 shares of common stock, no par value, and (ii) 5,000,000 shares of preferred stock, no par value.
Security Holders
On March 19, 2021, there were approximately 91 record holders of our common stock.
Dividends
We have not paid dividends during the three most recently completed fiscal years and have no current plans to pay dividends on our common stock. We currently intend to retain all earnings, if any, for use in our business.
Recent Sales and Other Issuances of Our Equity Securities
On February 10, 2021, the Company issued shares of common stock to certain individuals for their service to the Company. Gregory C. Anthony was issued 5,000,000 restricted shares of common stock, Greg Whyte was issued 1,500,000 restricted shares of common stock, certain consultants were issued 140,000 restricted shares of common stock and its legal counsel was issued 37,500 restricted shares of common stock. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.
On February 10, 2021, the Company filed amended Articles of Incorporation with the State of New York to amend its authorized shares of common stock by an additional 530,000,000 whereas the total authorized is a total of 605,000,000 shares of capital stock consisting of (i) 600,000,000 shares of common stock, no par value, and (ii) 5,000,000 shares of preferred stock, no par value.
On February 8, 2021, Frost exercised 250,000 options at $0.077 per share for $19,250. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.
On March 9, 2021, Frost converted $90,708 of payable due to him in exchange for 181,417 shares of common stock of the Company. The issuance was made in reliance on the exemption from registration provided by Sections 3(a)(9) and 4(a)(2) of the Securities Act as the common stock was issued in exchange for debt securities of the Company held by the Investor, there was no additional consideration for the exchange, there was no remuneration for the solicitation of the exchange, there was no general solicitation, and the transactions did not involve a public offering.
Securities Authorized for Issuance Under Equity Compensation Plans
On February 13, 2018, the Company’s shareholders and Board of Directors approved the 2017 Incentive Stock Plan (the “Plan”). The Plan provides for the grant of two types of options: (1) Incentive Stock Options, which are options that meet the requirements of Section 422 of the Code, and (2) Non-statutory Options. Shareholder approval will make available a total of 3,000,000 shares of the Company’s authorized but unissued Common Stock for purchase upon exercise of options granted under the 2017 Incentive Stock Plan. The term of the 2017 Incentive Stock Plan is ten years, subject to earlier termination by the Board.
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Incentive Stock Options may be granted to employees of the Company or a related corporation. Non-Qualified Stock Options may be granted to employees of the Company, a related corporation, or affiliated companies. In any fiscal year, no employee may receive options to purchase more than $100,000 worth of shares of Common Stock and no option may be granted with an exercise price less than the fair market value measured on the date of the grant.
The 2017 Incentive Stock Plan will be administered by Board of Directors. The Board will have authority to construe, amend or terminate the 2017 Incentive Stock Plan. A written agreement will evidence each option and determine whether the option is an Incentive Stock Option or Non-Qualified Stock Option.
Options will expire no longer than 10 years from the date of grant; provided that no Incentive Stock Option granted to a greater-than-10% shareholder will expire later than 5 years from the date of grant. Vested options generally will terminate upon the first to occur of: (1) expiration of the option; (2) three months following the optionee’s termination of employment, other than as a result of death or disability; or (3) six months following the optionee’s death or cessation of employment by reason of disability.
Options granted under the 2017 Incentive Stock Plan will be no less than twenty percent (20%) of the shares covered thereby shall become exercisable annually unless the Board determines otherwise. The Committee may accelerate vesting. Upon a change in control, all options outstanding at the date thereof will become fully vested and exercisable. The purchase price of option shares must be paid by wire transfer, except to the extent another method is permitted by the Board.
There are currently no stock options currently issued and outstanding under the 2017 Plan, as all 250,000 remaining stock options issued and outstanding were exercised on February 8, 2021.
ITEM 6. Selected Financial Data
Not Applicable.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The statements contained in the following MD&A and elsewhere throughout this Quarterly Report on Form 10-K, including any documents incorporated by reference, that are not historical facts, including statements about our beliefs and expectations, are “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend” and similar words or expressions. In addition, any statements that refer to expectations, projections, or other characterizations of future events or circumstances are forward-looking statements.
These forward-looking statements, which reflect our management’s beliefs, objectives, and expectations as of the date hereof, are based on the best judgement of our management. All forward-looking statements speak only as of the date on which they are made. Such forward-looking statements are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially from those anticipated in such statements, including, without limitation, the following: economic, social and political conditions, global economic downturns resulting from extraordinary events such as the COVID-19 pandemic and other securities industry risks; interest rate risks; liquidity risks; credit risk with clients and counterparties; risk of liability for errors in clearing functions; systemic risk; systems failures, delays and capacity constraints; network security risks; competition; reliance on external service providers; new laws and regulations affecting our business; net capital requirements; extensive regulation, regulatory uncertainties and legal matters; failure to maintain relationships with employees, customers, business partners or governmental entities; the inability to achieve synergies or to implement integration plans and other consequences associated with risks and uncertainties detailed in our filings with the SEC, including our most recent filings on Forms 10-K and 10-Q.
We caution that the foregoing list of factors is not exclusive, and new factors may emerge, or changes to the foregoing factors may occur, that could impact our business. We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws.
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Certain information contained in this discussion and elsewhere in this report may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and is subject to the safe harbor created by that act. The safe harbor created by the Private Securities Litigation Reform Act will not apply to certain “forward looking statements” because we issued “penny stock” (as defined in Section 3(a)(51) of the Securities Exchange Act of 1934 and Rule 3(a)(51-1) under the Exchange Act) during the three year period preceding the date(s) on which those forward looking statements were first made, except to the extent otherwise specifically provided by rule, regulation or order of the Securities and Exchange Commission. We caution readers that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statements which may be deemed to have been made in this Report or which are otherwise made by or on our behalf. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “explore,” “consider,” “anticipate,” “intend,” “could,” “estimate,” “plan,” or “propose” or the negative variations of those words or comparable terminology are intended to identify forward-looking statements. Factors that may affect our results include, but are not limited to, the risks and uncertainties associated with:
| ● | Our ability to raise capital necessary to sustain our anticipated operations and implement our business plan, | |
| ● | Our ability to implement our business plan, | |
| ● | Our ability to generate sufficient cash to survive, | |
| ● | The degree and nature of our competition, | |
| ● | The lack of diversification of our business plan, | |
| ● | The general volatility of the capital markets and the establishment of a market for our shares, and | |
| ● | Disruption in the economic and financial conditions primarily from the impact of past terrorist attacks in the United States, threats of future attacks, police and military activities overseas and other disruptive worldwide political and economic events and environmental weather conditions. |
We are also subject to other risks detailed from time to time in our other filings with Securities and Exchange Commission and elsewhere in this report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
| ● | have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act; | |
| ● | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); | |
| ● | submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and | |
| ● | disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. |
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
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We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.
Plan of Operation
The 2021 operational plan consists of:
| 1. | Establishing the different classes associated with the expanded ALTD operations. The divisions to include: |
| ● | Altitude Chamber Technology Division |
| ● | Tennis, Golf, Basketball, and Academic Academies Division |
| ● | Soccer Academy Division |
| ● | Water Manufacturing/Technology Division |
| ● | Cleaning and Sanitation Division |
| ● | Altitude Wellness Division |
| 2. | Adopt a comprehensive branding, marketing, digital and social media strategy for the revenue lines above. |
| 3. | Update back-office administrative plan and adopt a staffing and management hierarchy for the multi-discipline operation. |
On February 17, 2021, Altitude International Holdings, Inc. entered into a Proposal for Services with Orlando Magic Ltd. through which the Company agreed to manufacture, install and commission an altitude chamber at the Orlando Magic Training Facility in Orlando, FL. On February 22, 2022, the Company entered into a Sponsorship Agreement with the Orlando Magic.
Commercial operations are centered in Florida.
No assurances can be given that any of these plans will come to fruition or that if implemented that they will necessarily yield positive results.
Off-balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Results of Operations
For the year ended December 31, 2020 compared to the period ended December 31, 2019
Revenues
We had $1,186 and $226,195 of revenue for the period ended December 31, 2020 and 2019, respectively. The Company had a decrease in revenue due to the effects of COVID-19.
Direct Costs of Revenue
Direct costs of revenue for the period ended December 31, 2020 and 2019 were $0 and $89,647, respectively.
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Operating Expenses
Operating expenses for the period ended December 31, 2020 and 2019 were $275,644 and $856,454, respectively. The decrease in expenses for 2020 compared to 2019 were comprised primarily of stock-based compensation of $13,168 compared to $452,261, respectively.
Other Income (Expenses)
Other expenses for the period ended December 31, 2020 and 2019 were $54,089 and $23,979, respectively.
Net Loss
Net loss for the period ended December 31, 2020 and 2019 was $328,547 and $743,886, respectively.
Liquidity and Capital Resources
We had a cash balance of $485 and negative working capital of $298,201 at December 31, 2020.
The Company’s anticipated capital requirements for the next 12 months will consist of expenses of being a public company and general and administrative expenses all of which we currently estimate will cost $325,000, excluding revenue related expenses and salaries. In the event there are unanticipated expenses and we need additional funds, we may seek to raise additional funding that we require in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund such additional expenses. We currently do not have any agreements, arrangements or understandings with any person or entity to obtain funds through bank loans, lines of credit or any other sources.
Going Concern
The Company has a net loss for the year ended December 31, 2020 of $328,547 and a working capital deficit as of December 31, 2020 of $298,201 and has cash used by operations of $86,571 for the year ended December 31, 2020. Without further funding, these conditions raise substantial doubt about the Company’s ability to continue as a going concern.
Sources and Uses of Cash
Operating activities during the period ended December 31, 2020 used $86,571 of net cash. Net cash used in investing activities was $0 for the period ended December 31, 2020. Net cash provided by financing activities of $78,789 was received from the issuance of common stock and shareholder advances during the period ended December 31, 2020. Operating activities during the period ended December 31, 2019 used $262,039 of net cash. Net cash used in investing activities was $0 for the period ended December 31, 2019. Net cash provided by financing activities of $267,872 was received from the issuance of common stock and shareholder advances during the period ended December 31, 2019.
The Company has been impacted by the COVID-19 pandemic, and some of its earlier plans to further diversify its operations and expand its operating subsidiaries have been paused due to the economic uncertainty.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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Critical Accounting Policies
Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, depreciable lives of the web site and property and equipment, valuation of warrant and beneficial conversion feature debt discounts, valuation of share-based payments and the valuation allowance on deferred tax assets.
Changes in Accounting Principles. No significant changes in accounting principles were adopted during fiscal 2020 and 2019.
Impairment of Long-Lived Assets. The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
Fair Value of Financial Instruments and Fair Value Measurements. The Company measures their financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses escrow liability and short-term loans the carrying amounts approximate fair value due to their short maturities.
We have adopted accounting guidance for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.
Revenue Recognition. Revenue is recognized in accordance with ASC 606. The Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company evaluates the goods or services promised within each contract related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
The Company recognizes revenue upon completion of our performance obligations or expiration of the contractual time to use services such as professional service hours purchased in bulk for a given time period.
Stock-Based Compensation. In June 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees except for certain circumstances. Any transition impact will be a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. This ASU is effective for the annual period beginning after December 15, 2018, including interim periods within that annual period and early adoption is permitted. We adopted this guidance on January 1, 2019 and the adoption of ASU No. 2018-07 did not have a material impact on our financial statements.
Inflation
In the opinion of management, inflation has not had a material effect on the Company’s financial condition or results of its operations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As the Company is a “smaller reporting company,” this item is inapplicable.
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ALTITUDE INTERNATIONAL HOLDINGS, INC.
Contents
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Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of Altitude International Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Altitude International Holdings, Inc. (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended, 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, 2020 and 2019, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ BF Borgers CPA PC
We have served as the Company’s auditor since 2019.
Lakewood, CO
5400 W Cedar Ave, Lakewood, CO 80226 PH: 303-953-1454 FAX: 720-251-8836
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ALTITUDE INTERNATIONAL HOLDINGS, INC.
(f/k/a Altitude International, Inc.)
and Subsidiaries
Consolidated Balance Sheets
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 485 | $ | 8,267 | ||||
| Prepaid expense | 3,000 | 10,121 | ||||||
| Total current assets | 3,485 | 18,388 | ||||||
| Fixed assets, net | - | 1,745 | ||||||
| Intangible assets, net | - | 10,753 | ||||||
| Total assets | $ | 3,485 | $ | 30,886 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Notes payable - related party | $ | 69,200 | $ | 253,558 | ||||
| Notes payable | 20,800 | - | ||||||
| Accounts payable and accrued expenses | 62,053 | 500 | ||||||
| Accounts payable and accrued expenses - related party | 113,422 | 139,098 | ||||||
| Stockholders’ advance | 36,211 | 36,211 | ||||||
| Deferred revenue | - | 1,189 | ||||||
| Total current liabilities | 301,686 | 430,556 | ||||||
| Total liabilities | 301,686 | 430,556 | ||||||
| Commitments and contingencies - Note 5 | ||||||||
| Stockholders’ deficit | ||||||||
| Preferred stock - no par value, 5,000,000 shares authorized, no shares issued and outstanding at December 31, 2020 and 2019, respectively | - | - | ||||||
| Common stock - no par value, 70,000,000 shares authorized, 51,537,764 and 36,075,995 shares issued, issuable, and outstanding at December 31, 2020 and 2019, respectively | 3,091,136 | 2,669,024 | ||||||
| Additional paid in capital | (175,279 | ) | (183,183 | ) | ||||
| Accumulated deficit | (3,214,058 | ) | (2,885,511 | ) | ||||
| Total stockholders’ deficit | (298,201 | ) | (399,670 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 3,485 | $ | 30,886 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
C:
| F-2 |
ALTITUDE INTERNATIONAL HOLDINGS, INC.
(f/k/a Altitude International, Inc.)
and Subsidiaries
Consolidated Statement of Operations
For the years ended December 31,
| 2020 | 2019 | |||||||
| Revenue | $ | 1,186 | $ | 226,195 | ||||
| Operating expenses | ||||||||
| Direct costs of revenue | - | 89,647 | ||||||
| Professional fees | 52,833 | 65,473 | ||||||
| Salary expenses | 125,000 | 118,600 | ||||||
| Stock-based compensation | 13,168 | 452,261 | ||||||
| Impairment expense | 10,141 |
- |
||||||
| Other general and administrative expenses | 74,502 | 220,121 | ||||||
| Total operating expenses | 275,644 | 946,102 | ||||||
| Loss from operations | (274,458 | ) | (719,907 | ) | ||||
| Other income (expenses) | ||||||||
| Loss on conversion of debt to common stock | (39,734 | ) | (1,300 | ) | ||||
| Interest expense | (14,355 | ) | (22,679 | ) | ||||
| Total other income (expenses) | (54,089 | ) | (23,979 | ) | ||||
| Net loss | $ | (328,547 | ) | $ | (743,886 | ) | ||
| Earnings per share - basic and fully diluted | $ | (0.01 | ) | $ | (0.02 | ) | ||
| Weighted average number of shares of common stock - basic and fully diluted | 45,323,448 | 31,284,406 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
C:
| F-3 |
ALTITUDE INTERNATIONAL HOLDINGS, INC.
(f/k/a Altitude International, Inc.)
and Subsidiaries
Consolidated Statement of Changes in Stockholders’ Deficit
| Common Stock | Additional | |||||||||||||||||||
| No | Paid in | Accumulated | ||||||||||||||||||
| Shares | Par Value | Capital | Deficit | Total | ||||||||||||||||
| Balance, December 31, 2018 | 24,271,159 | $ | 1,785,369 | $ | (149,769 | ) | $ | (2,141,625 | ) | $ | (506,025 | ) | ||||||||
| Issuance of common stock for services | 6,183,334 | 444,796 | - | - | 444,796 | |||||||||||||||
| Conversion of debt to common stock | 5,621,502 | 438,859 | (46,190 | ) | - | 392,669 | ||||||||||||||
| Amortization of stock options | - | - | 12,776 | - | 12,776 | |||||||||||||||
| Net loss for the period ended December 31, 2019 | - | - | - | (743,886 | ) | (743,886 | ) | |||||||||||||
| Balance, December 31, 2019 | 36,075,995 | $ | 2,669,024 | $ | (183,183 | ) | $ | (2,885,511 | ) | $ | (399,670 | ) | ||||||||
| Balance, December 31, 2019 | 36,075,995 | $ | 2,669,024 | $ | (183,183 | ) | $ | (2,885,511 | ) | $ | (399,670 | ) | ||||||||
| Issuance of common stock for services | 75,000 | 5,264 | - | - | 5,264 | |||||||||||||||
| Conversion of debt to common stock | 15,336,769 | 416,848 | - | - | 416,848 | |||||||||||||||
| Amortization of stock options | - | - | 7,904 | - | 7,904 | |||||||||||||||
| Net loss for the period ended December 31, 2020 | - | - | - | (328,547 | ) | (328,547 | ) | |||||||||||||
| Balance, December 31, 2020 | 51,487,764 | $ | 3,091,136 | $ | (175,279 | ) | $ | (3,214,058 | ) | $ | (298,201 | ) | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
C:
| F-4 |
ALTITUDE INTERNATIONAL HOLDINGS, INC.
(f/k/a Altitude International, Inc.)
and Subsidiaries
Consolidated Statements of Cash Flows
For the years ended December 31,
| 2020 | 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (328,547 | ) | $ | (743,886 | ) | ||
| Adjustments to reconcile net loss to net cash used in operations: | ||||||||
| Depreciation expense | 1,745 | 3,484 | ||||||
| Amortization expense | 612 | 612 | ||||||
| Loss from conversion of debt into common stock | 39,734 | 1,300 | ||||||
| Impairment expense | 10,141 | - | ||||||
| Stock-based compensation | 13,168 | 452,261 | ||||||
| Change in assets and liabilities: | ||||||||
| Prepaid expense | 7,121 | (4,569 | ) | |||||
| Accounts payable and accrued expenses | 61,551 | (6,500 | ) | |||||
| Accounts payable and accrued expenses - related party | 109,093 | 102,969 | ||||||
| Deferred revenue | (1,189 | ) | (67,710 | ) | ||||
| Net cash used in operating activities | (86,571 | ) | (262,039 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from related party loans and advances | 57,989 | 267,872 | ||||||
| Proceeds from loan | 20,800 | - | ||||||
| Net cash provided by financing activities | 78,789 | 267,872 | ||||||
| Net increase (decrease) in cash | (7,782 | ) | 5,833 | |||||
| Cash at beginning of period | 8,267 | 2,434 | ||||||
| Cash at end of period | $ | 485 | $ | 8,267 | ||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for taxes | $ | - | $ | - | ||||
| Non-cash investing and financing activities: | ||||||||
| Conversion of related party debt to common stock | $ | 416,848 | $ | 393,928 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
C:
| F-5 |
ALTITUDE INTERNATIONALHOLDINGS, INC.
and Subsidiary
Notes to the Consolidated Financial Statements
NOTE 1 – NATURE OF OPERATIONS
Company Background
Altitude International Holdings, Inc. (f/k/a Altitude International, Inc., the “Company,” “we,” “us,” “our,” or “Altitude-NY”), was incorporated in the State of New York on July 13, 1994 as “Titan Computer Services, Inc.”
On June 27, 2017, the Company successfully closed a Share Exchange transaction (the “Share Exchange”) with the shareholders of Altitude International, Inc. (“Altitude”), a Wisconsin corporation. Altitude was incorporated on May 18, 2017 under the laws of the state of Wisconsin and has been operating as a wholly owned subsidiary of Altitude-NY since the Share Exchange. Altitude operates through Northern, Central, and South America sales to execute the current business plan of athletic training industry, specifically altitude training. Our objective is to be recognized as one of the upper tier specialty altitude training equipment providers in the Americas.
On February 13, 2018, the majority of the shareholders of the Company approved the amendment to the Articles of Incorporation to change the Company’s name from “Titan Computer Services, Inc.” to “Altitude International, Inc.” The purpose of the name change was to help further our brand identity and will reflect the major focus of our business operations, the manufacturing and distribution of products in the athletic training industry, specifically altitude training.
On February 14, 2020, the majority of shareholders of the Company and the Board of Directors authorized a change in the Company’s name to “Altitude International Holdings, Inc.” to reflect more diversified operations going forward. The Articles of Amendment finalizing this name change have not yet been filed by the Company.
On April 24, 2020, the Company formed a wholly owned subsidiary in Wisconsin called “Altitude Sports Management Corp.,” an entity that will providing fully integrated wealth, health, and career management services to its clients.
On August 21, 2020, the Company filed with the State of New York to change the name from Altitude International, Inc. to Altitude International Holdings, Inc.
On February 10, 2021, The Company filed with the State of New York to increase the authorized shares of common stock of the Company to 600,000,000 shares.
Nature of Operations
The product designs to be licensed from Sporting Edge UK, Ltd (“Sporting Edge UK”) are proven and cover a wide range of room sizes. The only requirement is to change from metric to imperial sizes where necessary.
There are three unique elements to the Altitude product:
| ● | Sophisticated Touch Screen control systems capable of integrating the control of simulated altitude, temperature and humidity. |
| ● | A unique design of Air Separation Unit with only a single active part that provides for ultra-reliable operation and a design life of greater than fifteen years. |
| ● | Proven training protocols that allow the desired training benefits to be achieved. |
Altitude International Holdings, Inc.
Altitude International Holdings, Inc. (“Altitude”) was incorporated on May 18, 2017 under the laws of the state of Wisconsin with 100,000,000 authorized common stock with $0.001 par value. On May 18, 2017, 6,102,000 shares of common stock at $0.001 (par) were issued as founder shares, valued at a total of $6,102 to 15 individuals. These shares were issued for future potential services from these various individuals and as of the date of this issuance, no value was placed on these future potential services and were therefore recorded at par value as stock-based compensation to the founders.
C:
| F-6 |
On June 27, 2017, after the closing of certain Stock Purchase Agreements, in private sale transaction and the Share Exchange Agreement, a change of control of the Company occurred and the new operational focus of the Company commenced. See Notes 6 and 8.
Altitude will operate through Northern, Central, and South America to execute the current business plan of athletic training industry, specifically altitude training. Our objective is to be recognized as one of the upper tier specialty altitude training equipment providers.
Changes in Management and the Board of Directors
On January 25, 2019, Robert Kanuth was appointed as the Company’s new CEO and David Vincent resigned as CEO and was appointed as the Company’s Chief Technology Officer.
On June 27, 2019, Greg Anthony and Peter Sandore were elected to serve on the Board of Directors.
On August 20, 2019, Dave Vincent resigned as a director and CTO of the Company.
On September 19, 2019, Greg Anthony was appointed as President of the Company.
On July 6, 2020, Greg Whyte resigned as a director of the Company.
On July 28, 2020, Peter Sandore resigned as director of the Company.
On December 20, 2020, Greg Whyte, David Vincent, and Greg Breunich were appointed as directors of the Company to fill the vacancies left upon the resignation of its former directors.
On January 6, 2021, Robert Kanuth, Chief Executive Officer, Chief Financial Officer, and a member of the Board of Directors resigned as Chief Executive Officer and Chief Financial Officer of the Company. He also resigned as Chairman of the Board of Directors but remains a member of the Board of Directors of the Company.
On January 6, 2021, Greg Breunich was appointed Chief Executive Officer, Chief Financial Officer, and Chairman of the Board of Directors of the Company.
On February 2, 2021, Greg Anthony was appointed Chief Communications Officer and Company Spokesperson of the Company.
On March 19, 2021, Joseph B. Frost resigned as a director and officer of the Company.
On March 24, 2021, Gabe Jaramillo was appointed as Executive Vice President and Director of Tennis Training. On March 26, 2021, Mr. Jaramillo was appointed to the Board of Directors of the Company.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company follows the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America and has a year-end of December 31.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
C:
| F-7 |
The consolidated financial statements of the Company for the years ended December 31, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the requirements for reporting on Form 10-K and Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.
Going Concern and Liquidity
We have incurred recurring losses since inception and expect to continue to incur losses as a result of legal and professional fees and our corporate general and administrative expenses. At December 31, 2020, we had $485 in cash. Our net losses incurred for the year ended December 31, 2020 were $328,547 and working capital deficit was $298,201 at December 31, 2020. As a result, there is substantial doubt about our ability to continue as a going concern. In the event that we are unable to generate sufficient cash from our operating activities or raise additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition and long-term prospects. The Company expects to seek to obtain additional funding through increased revenues and future financings. There can be no assurance as to the availability or terms upon which such financing and capital might be available. The accompany financial statements have been prepared assuming that the Company will continues as a going concern.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Altitude. All significant intercompany balances and transactions have been eliminated in the consolidation. The consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles (“GAAP”) and stated in United States dollars, have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent 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.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.
Property, Plant and Equipment
Property and equipment are stated at cost, net of accumulated depreciation. Expenditures that extend the life, increase the capacity, or improve the efficiency of property and equipment are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation is recognized using the straight-line method over the following approximate useful lives:
Machinery and equipment
3-5 Years
Intangible Assets
Costs incurred to file patent applications and acquired intangibles are capitalized when the Company believes that there is a high likelihood that the patent will be issued and there will be future economic benefit associated with the patent. These costs will be amortized on a straight-line basis over a 20-year life from the date of patent filing. All costs associated with abandoned patent applications are expensed. In addition, the Company will review the carrying value of patents for indicators of impairment on a periodic basis and if it determines that the carrying value is impaired, it values the patent at fair value.
C:
| F-8 |
Impairment of Long-Lived Assets
The Company’s long-lived assets and other assets (consisting of property and equipment) are reviewed for impairment in accordance with the guidance of the FASB ASC Topic 360-10, Property, Plant, and Equipment. Long lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by that asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.
Revenue Recognition
Our sales are generated primarily from contracts with customers for the design, development, manufacture, and installation of simulated altitude athletic equipment. We provide our products under fixed-price contracts. Under fixed-price contracts, we agree to perform the specified work for a pre-determined price. To the extent our actual costs vary from the estimates upon which the price was negotiated, we will generate more or less profit or could incur a loss.
We account for a contract after it has been approved by all parties to the arrangement, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.
We evaluate the products or services promised in each contract at inception to determine whether the contract should be accounted for as having one or more performance obligations. The products and services in our contracts are typically not distinct from one another due to their complex relationships, customization, and the significant contract management functions required to perform under the contract. Accordingly, our contracts are typically accounted for as one performance obligation.
We determine the transaction price for each contract based on the consideration we expect to receive for the products or services being provided under the contract.
We recognize revenue as performance obligations are satisfied and the customer obtains control of the products and services. In determining when performance obligations are satisfied, we consider factors such as contract terms, payment terms and whether there is an alternative future use of the product or service. Substantially all of our revenue is recognized over time as we perform under the contract because if our customer were to terminate the contract for reasons other than our non-performance, we would have the right to recover damages which would include, among other potential damages, the right to payment for our work performed to date plus a reasonable profit to deliver products or services that do not have an alternative use to us.
For performance obligations recognized over time, revenue is recognized based on the extent of progress towards completion of the performance obligation, generally using the percentage-of-completion cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer as we incur costs on our contracts. Under the percentage-of-completion cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs to complete the performance obligation.
C:
| F-9 |
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. In June 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees except for certain circumstances. Any transition impact will be a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. This ASU is effective for the annual period beginning after December 15, 2018, including interim periods within that annual period and early adoption is permitted. We adopted this guidance on January 1, 2019 and the adoption of ASU No. 2018-07 did not have a material impact on our financial statements. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.
Fair Value of Financial Instruments
The book values of cash, prepaid expenses, and accounts payable approximate their respective fair values due to the short-term nature of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs).
The hierarchy consists of three levels
| ● | Level one — Quoted market prices in active markets for identical assets or liabilities; | |
| ● | Level two — Inputs other than level one inputs that are either directly or indirectly observable; and | |
| ● | Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. |
Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.
Earnings (Loss) Per Share
Basic earnings (loss) per share are computed by dividing the net income by the weighted-average number of shares of common stock and common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later.
Income Taxes
The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carryforwards and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered or settled.
The effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
C:
| F-10 |
Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the Company will be able to sustain a position taken on an income tax return. The Company has no liability for uncertain tax positions as of December 31, 2020. Interest and penalties in any, related to unrecognized tax benefits would be recognized as interest expense. The Company does not have any accrued interest or penalties associated with unrecognized tax benefits, nor was any significant interest expense recognized during the year ended December 31, 2020.
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options, which simplifies accounting for convertible instruments. The new guidance eliminates two of the three models in ASC 470-20 that require separating embedded conversion features from convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share calculation. The guidance is effective for fiscal years beginning after December 15, 2021. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.
Recently Issued Accounting Standards: Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
NOTE 3 – FIXED ASSETS
The Company has fixed assets related to office equipment. The depreciation of the equipment is over a three-year period. As of December 31, 2020, and December 31, 2019, the Company had fixed assets, net of accumulated depreciation, of $0 and $1,745, respectively. The fixed assets are as follows:
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Office equipment | $ | 10,455 | $ | 10,455 | ||||
| Total fixed assets | 10,455 | 10,455 | ||||||
| Less: Accumulated depreciation | 10,455 | 8,710 | ||||||
| Fixed assets, net | $ | - | $ | 1,745 | ||||
Depreciation of the office equipment for the year ended December 31, 2020 was $1,745.
NOTE 4 – INTANGIBLE ASSETS - TRADEMARK
The Company has intangible assets related to a trademark. The amortization of the intangible asset is over a twenty-year period. As of December 31, 2020, and December 31, 2019, the Company had intangible assets, net of accumulated amortization, of $0 and $10,753, respectively. The intangible assets are as follows:
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Trademark | $ | 12,284 | $ | 12,284 | ||||
| Total intangible assets | 12,284 | 12,284 | ||||||
| Less: Accumulated amortization | 2,143 | 1,531 | ||||||
| Less: Impairment expense | 10,141 | - | ||||||
| Intangible assets, net | $ | - | $ | 10,753 | ||||
Amortization expense of the trademark for the year ended December 31, 2020 was $612. At December 31, 2020, the Company determined that the trademark should be fully impaired.
C:
| F-11 |
NOTE 5 – NOTES PAYABLE
| Note payable | ||||||||||||||||||||||||
| December 31, 2020 | December 31, 2019 | |||||||||||||||||||||||
| Accrued | Accrued | |||||||||||||||||||||||
| Principal | Interest | Total | Principal | Interest | Total | |||||||||||||||||||
| Joseph B. Frost | $ | 40,000 | $ | 22,723 | $ | 62,723 | $ | 40,000 | $ | 14,707 | $ | 54,707 | ||||||||||||
| Joseph B. Frost | 500 | 86 | 586 | 500 | 46 | 546 | ||||||||||||||||||
| Joseph B. Frost | 10,000 | 4,853 | 14,853 | 10,000 | 2,849 | 12,849 | ||||||||||||||||||
| Joseph B. Frost | 13,000 | 6,231 | 19,231 | 13,000 | 3,626 | 16,626 | ||||||||||||||||||
| Robert Kanuth | - | - | - | 6,514 | 350 | 6,864 | ||||||||||||||||||
| Robert Kanuth | - | - | - | 6,544 | 318 | 6,862 | ||||||||||||||||||
| Robert Kanuth | - | - | - | 10,000 | 232 | 10,232 | ||||||||||||||||||
| Robert Kanuth | - | - | - | - | 96 | 96 | ||||||||||||||||||
| Robert Kanuth | - | - | - | - | 691 | 691 | ||||||||||||||||||
| Robert Kanuth | - | - | - | - | 176 | 176 | ||||||||||||||||||
| Robert Kanuth | - | - | - | 20,000 | 513 | 20,513 | ||||||||||||||||||
| Robert Kanuth | - | - | - | 10,000 | 307 | 10,307 | ||||||||||||||||||
| Robert Kanuth | - | - | - | 30,000 | 500 | 30,500 | ||||||||||||||||||
| Robert Kanuth | - | - | - | 8,000 | 109 | 8,109 | ||||||||||||||||||
| Robert Kanuth | - | - | - | 70,000 | 825 | 70,825 | ||||||||||||||||||
| Robert Kanuth | - | - | - | 9,000 | 73 | 9,073 | ||||||||||||||||||
| Robert Kanuth | - | - | - | 20,000 | 68 | 20,068 | ||||||||||||||||||
| Robert Kanuth | 1,500 | 88 | 1,588 | - | - | - | ||||||||||||||||||
| Robert Kanuth | 4,200 | 240 | 4,440 | - | - | - | ||||||||||||||||||
| Total | $ | 69,200 | $ | 34,221 | $ | 103,421 | $ | 253,558 | $ | 25,486 | $ | 279,044 | ||||||||||||
On March 2, 2018, Frost, then a director, loaned the Company $40,000 in the form of a promissory note. The note bears interest of 20% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. As of December 31, 2020, this note is in default and the accrued interest was $22,423, and the principal balance was $40,000. See Note 10.
On July 30, 2018, Frost, then a director, loaned the Company $10,000 in the form of a promissory note. The note bears interest of 20% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. As of December 31, 2020, the accrued interest was $4,853, the principal balance was $10,000, and the note is in default. See Note 10.
On August 10, 2018, Frost, a director, loaned the Company $13,000 in the form of a promissory note. The note bears interest of 20% and has the term of six months, at which time all principal and interest will be paid in a balloon payment. As of December 31, 2020, this note is in default and the accrued interest was $6,231, the principal balance was $13,000, and the note is in default. See Note 10.
On November 5, 2018, Frost, a director, loaned the Company $500 in the form of a promissory note. The note bears interest of 8% and has the term of six months, at which time all principal and interest will be paid in a balloon payment. As of December 31, 2020, the accrued interest was $86, and the principal balance was $500. See Note 10.
On January 24, 2019, Kanuth, an officer and director, loaned the Company $11,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On July 15, 2019, the principal of $11,000 and accrued interest of $319 was converted into common stock of the Company. On April 7, 2020, the accrued interest balance was converted into common stock of the Company (see Note 8).
C:
| F-12 |
On February 4, 2019, Kanuth, an officer and director, loaned the Company $13,197 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On July 15, 2019, the principal of $13,197 was converted into common stock of the Company. On April 7, 2020, the accrued interest balance was converted into common stock of the Company (see Note 8).
On February 4, 2019, Kanuth, an officer and director, loaned the Company $5,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On July 15, 2019, the principal of $5,000 was converted into common stock of the Company. On April 7, 2020, the accrued interest balance was converted into common stock of the Company (see Note 8).
On April 30, 2019, Kanuth, an officer and director, loaned the Company $6,514 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On May 23, 2019, Kanuth, an officer and director, loaned the Company $6,544 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On August 13, 2019, Kanuth, an officer and director, loaned the Company $10,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On September 5, 2019, Kanuth, an officer and director, loaned the Company $20,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On September 16, 2019, Kanuth, an officer and director, loaned the Company $10,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On October 16, 2019, Kanuth, an officer and director, loaned the Company $30,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On October 31, 2019, Kanuth, an officer and director, loaned the Company $8,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On November 8, 2019, Kanuth, an officer and director, loaned the Company $70,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On November 25, 2019, Kanuth, an officer and director, loaned the Company $9,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On December 17, 2019, Kanuth, an officer and director, loaned the Company $20,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On January 3, 2020, Kanuth, an officer and director, loaned the Company $10,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On February 8, 2020, Kanuth, an officer and director, loaned the Company $4,860 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On February 26, 2020, Kanuth, an officer and director, loaned the Company $10,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
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| F-13 |
On March 18, 2020, Kanuth, an officer and director, loaned the Company $30,000 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On March 31, 2020, Kanuth, an officer and director, loaned the Company $3,129 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. On April 7, 2020, the balance was converted into common stock of the Company (see Note 8).
On April 9, 2020, Kanuth, an officer and director, loaned the Company $1,500 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. As of December 31, 2020, the principal balance was $1,500 and the accrued interest was $88.
On April 15, 2020, Kanuth, an officer and director, loaned the Company $4,200 in the form of a promissory note. The note bears interest of 8% and has the term of one year, at which time all principal and interest will be paid in a balloon payment. As of December 31, 2020, the principal balance was $4,200 and the accrued interest was $240.
On May 5, 2020, the Company received $20,800 in the form of a loan through the CARES Act Paycheck Protection Program. The balance at December 31, 2020 was $20,800.
NOTE 6 – COMMITMENTS AND CONTINGENCIES
The Company is subject, from time to time, to claims by third parties under various legal disputes. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows. As of March 22, 2020, the Company did not have any legal actions pending against it.
On June 27, 2017, Altitude entered a license agreement with Sporting Edge UK (see Note 1), Sporting Edge UK is the sole and exclusive owner of and has the right to license to licensee the ability to manufacture and sell rights to the full range of membrane-based systems for the production of reduced oxygen environments and associated services as well as the use of patents and trademarks held by Sporting Edge UK or Vincent.
On January 24, 2019, Altitude and Sporting Edge UK entered into a Revised Licensing Agreement that grants a license to Altitude to use Sporting Edge UK’s proprietary technology related to properly engineered, membrane-based designs for simulated altitude training equipment. The annual license fee under the revised agreement is $1.00 per year. The product line ranges from personal at home use machines to fully integrated environmental rooms and chambers. Altitude has the licensing rights to use all technology to manufacture the products and to sell them (directly or through distributors) in the following territories:
| ● | The Continent of North America, Central America and South America. | |
| ● | Other territories as may be agreed from time to time, on a temporary or permanent basis. |
All amounts due under the 2017 license agreement were waived, as were all royalty fees.
NOTE 7 – RELATED PARTY TRANSACTIONS
As of December 31, 2019, and 2020, the balance due to our former CEO, David Vincent, was recorded under stockholder’s advance of $36,211 and $36,211, respectively, which is a verbal agreement, non-interest bearing, unsecured and payable on demand. On February 9, 2018, the Board of Directors changed the arrangement whereas the advance would begin accruing interest at the rate of 20%. The Company had accrued expenses to David Vincent, as of December 31, 2018 of $57,948 which were converted into common stock on January 10, 2019.
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| F-14 |
NOTE 8 – STOCKHOLDERS’ EQUITY
Preferred Stock
On February 5, 2015, the Board of Directors of the Company authorized 5,000,000 shares of preferred stock with no par value. Each share of the preferred stock is entitled to one vote and is convertible into one share of common stock.
As of December 31, 2020, and 2019, the Company has no preferred stock issued and outstanding.
Common Stock
Altitude was incorporated on May 18, 2017 under the laws of the state of Wisconsin with 100,000,000 authorized common stock with $0.001 par value. The shareholders have one vote per share of common stock.
After the closing of certain Stock Purchase Agreements, in private sale transaction and the Share Exchange Agreement, the Company’s common stock had no par value and is registered in New York.
On January 1, 2020, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for January 2020. The common stock of the Company is thinly traded and had a value of $0.0401 per share, therefore the Company recorded the transaction at $501.
On February 1, 2020, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for February 2020. The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $875.
On March 1, 2020, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for March 2020. The common stock of the Company is thinly traded and had a value of $0.04 per share, therefore the Company recorded the transaction at $500.
On April 1, 2020, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for April 2020. The common stock of the Company is thinly traded and had a value of $0.025 per share, therefore the Company recorded the transaction at $313.
On April 7, 2020, Kanuth converted $257,916 of notes and accrued interest into 7,390,144 shares of common stock of the Company, at the closing market price of $0.345 on April 3, 2020 when the conversion was agreed.
On May 1, 2020, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for May 2020. The common stock of the Company is thinly traded and had a value of $0.051 per share, therefore the Company recorded the transaction at $638.
On June 1, 2020, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for June 2020. The common stock of the Company is thinly traded and had a value of $0.047 per share, therefore the Company recorded the transaction at $588.
On July 1, 2020, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for July 2020. The common stock of the Company is thinly traded and had a value of $0.03 per share, therefore the Company recorded the transaction at $375.
On July 9, 2020, Frost converted $158,932 of debt into 7,946,625 shares of common stock. The conversion was at a discount whereas the fair market value was $198,666. The Company recognized a loss of $39,734 related to the discount.
On August 1, 2020, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for October 2020. The common stock of the Company is thinly traded and had a value of $0.05 per share, therefore the Company recorded the transaction at $375.
C:
| F-15 |
On November 1, 2020, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for November 2020. The common stock of the Company is thinly traded and had a value of $0.043 per share, therefore the Company recorded the transaction at $538.
On December 1, 2020, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for December 2020. The common stock of the Company is thinly traded and had a value of $0.045 per share, therefore the Company recorded the transaction at $563.
As of December 31, 2020, and 2019, the Company has 51,537,764 and 36,075,995 shares of no par common stock issued, issuable, and outstanding.
Stock Option Plan
On February 13, 2018, the Company’s shareholders and Board of Directors approved the 2017 Incentive Stock Plan.
On January 25, 2019, the Company issued 250,000 options to Vincent. The options vested at a rate of 25% every six months after the grant date and expire upon termination of employment. The exercise price is $0.077. The Black-Scholes calculation valued the options at $15,809, or $0.06 per share. These options expired three months following Vincent’s resignation in 2019 because they were not exercised prior to that time.
On January 25, 2019, the Company issued 250,000 options to Frost. The options vest at a rate of 25% every six months after the grant date and expire upon termination of employment. The exercise price is $0.077. The Black-Scholes calculation valued the options at $15,809, or $0.06 per share. As of December 31, 2020, $20,681 was amortized. On February 8, 2021, Frost exercised 250,000 options at $0.077 per share for $19,250. See Note 10.
NOTE 9 – INCOME TAXES
As of December 31, 2020, the Company has net operating loss carry forwards of $1,053,093 that $290,405 may be available to reduce future years’ taxable income through 2037 and $762,688 may be available to reduce future years’ taxable income indefinitely. The Company’s net operating loss carry forwards may be subject to annual limitations, which could reduce or defer the utilization of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code.
The Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying the United States Federal tax rate of 21% to loss before taxes for fiscal year 2020 and 2019), as follows:
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Tax expense (benefit) at the statutory rate | $ | (66,230 | ) | $ | (61,241 | ) | ||
| State income taxes, net of federal income tax benefit | (15,769 | ) | (14,581 | ) | ||||
| Change in valuation allowance | 81,999 | 75,822 | ||||||
| Total | $ | - | $ | - | ||||
The tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred tax assets and liabilities.
The tax years 2020 and 2019 remains to examination by federal agencies and other jurisdictions in which it operates.
The tax effect of significant components of the Company’s deferred tax assets and liabilities at December 31, 2020 and 2019, are as follows:
| December 31, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforward | $ | 247,032 | $ | 165,033 | ||||
| Timing differences | - | - | ||||||
| Total gross deferred tax assets | 247,032 | 165,033 | ||||||
| Less: Deferred tax asset valuation allowance | (247,032 | ) | (165,033 | ) | ||||
| Total net deferred taxes | $ | - | $ | - | ||||
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| F-16 |
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
Because of the historical earnings history of the Company, the net deferred tax assets for 2020 and 2019 were fully offset by a 100% valuation allowance. The valuation allowance for the remaining net deferred tax assets was $244,395 and $165,033 as of December 31, 2020 and 2019, respectively.
NOTE 10 – SUBSEQUENT EVENTS
On January 1, 2021, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for January 2021. The common stock of the Company is thinly traded and had a value of $0.103 per share, therefore the Company recorded the transaction at $1,288.
On February 1, 2021, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for February 2021. The common stock of the Company is thinly traded and had a value of $0.295 per share, therefore the Company recorded the transaction at $3,688.
On February 10, 2021, the Company filed amended Articles of Incorporation with the State of New York to amend its authorized shares of common stock by an additional 530,000,000 whereas the total authorized is a total of 605,000,000 shares of capital stock consisting of (i) 600,000,000 shares of common stock, no par value, and (ii) 5,000,000 shares of preferred stock, no par value.
On February 2, 2021, the Company issued shares of common stock for services as follows: Elizabeth K. Stahl, 40,000; Robin K. Walker, 100,000; Greg Whyte, 1,500,000; and Greg Anthony, 5,000,000.
On February 8, 2021, Frost exercised 250,000 options at $0.077 per share for $19,250. See Note 8.
In February 2021, the Company paid Frost the principal and accrued interest on the notes payable dated March 1, 2018, July 30, 2018, August 10, 2018 and November 5, 2018. See Note 5.
On March 1, 2021, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for March 2021. The common stock of the Company is thinly traded and had a value of $0.708 per share, therefore the Company recorded the transaction at $8,850.
On March 9, 2021, Frost converted $90,708 of payable due to him in exchange for 181,417 shares of common stock of the Company.
The outbreak of the coronavirus (COVID-19) resulted in increased travel restrictions, and shutdown of businesses, which may cause slower recovery of the economy. We may experience impact from quarantines, market downturns and changes in customer behavior related to pandemic fears and impact on our workforce if the virus continues to spread. In addition, one or more of our customers, partners, service providers or suppliers may experience financial distress, delayed or defaults on payment, file for bankruptcy protection, sharp diminishing of business, or suffer disruptions in their business due to the outbreak. The extent to which the coronavirus impacts our results will depend on future developments and reactions throughout the world, which are highly uncertain and will include emerging information concerning the severity of the coronavirus and the actions taken by governments and private businesses to attempt to contain the coronavirus. It is likely to result in a potential material adverse impact on our business, results of operations and financial condition. Wider-spread COVID-19 globally could prolong the deterioration in economic conditions and could cause decreases in or delays in advertising spending and reduce and/or negatively impact our short-term ability to grow our revenues. Any decreased collectability of accounts receivable, bankruptcy of small and medium businesses, or early termination of agreements due to deterioration in economic conditions could negatively impact our results of operations.
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| F-17 |
ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
ITEM 9A. Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Under the supervision and with the participation of our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure. We concluded that our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act were not effective as of December 31, 2020 to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, and summarized and reported within the time periods specified in SEC rules and forms and our disclosure controls and procedures were also ineffective to ensure that the information required to be disclosed in reports that we file under the Exchange Act is accumulated and communicated to our principal executive and financial officers to allow timely decisions regarding required disclosures.
Management’s Annual Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in rule 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of the CEO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Internal controls over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records which in reasonable detail accurately and fairly reflect the transactions and disposition of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made in accordance with authorizations of management and directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
In evaluating the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020, management used the criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the criteria established by COSO, management (with the participation of the CEO and CFO) identified the following material weaknesses in the Company’s internal control over financial reporting as of December 31, 2020, which arose from the limited number of number of staff at the Company and the inability to achieve proper segregation of duties:
| ● | The Company lacked effective controls for ensuring the accuracy of reporting over significant account balances, including the review, approval, and documentation of related transactions and account reconciliations and other complex accounting procedures. | |
| ● | The Company lacked effective controls because their directors are not independent. |
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| 20 |
As a result of these material weaknesses, management concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2020, based on the criteria established in Internal Control – Integrated Framework (2013) issued by COSO.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Security and Exchange Commission that permit us to provide only management’s report in this Annual Report.
Limitations on the Effectiveness of Controls
The Company’s management, including the CEO and acting CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control over Financial Reporting
Except as set forth above, there were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report on Form 10-K.
None.
ITEM 10. Directors, Executive Officers and Corporate Governance
The following table sets forth the names, ages and positions of our board members and executive officers as of March 22, 2021:
| Name | Age | Position | ||
| Greg Breunich | 62 | CEO and Chairman | ||
| Greg Anthony | 52 | Director, President and CCO | ||
| Lesley Visser | 67 | Director | ||
| Gregory Whyte | 53 | Director | ||
| Robert Kanuth | 73 | Director | ||
| David Vincent | 71 | Director | ||
| Gabe Jaramillo | 65 | Director and Executive Vice President |
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| 21 |
Biographies of Directors and Officers
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Greg Breunich, Chairman, Chief Executive Officer and Chief Financial Officer
Mr. Breunich, age 62, created and began building the IMG Academy in 1978, at the age of 21. Under his stewardship and service as the Senior Vice President and Managing Director, IMG became the international gold standard in elite athletic training and education, producing some of the most famous athletes in the world. Breunich left IMG in 2009 and for the last ten years has been developing his next generation of sports academies in Port St. Lucie and North Miami Beach. He is the co-founder of Nick Bollettieri Tennis Academy, Founder of the David Leadbetter Golf Academy, IMG Soccer Academy, IMG Basketball, Academy, IMG Baseball Academy, IMG International Performance Institute, IMG Academy (Pendleton School), Bollettieri Sports Medicine Institute, IMG Mountain Sports Academy (Speed Skiing, Snow Boarding, FreeStyle), Bollettieri Development Co., Academy Park Development Company, IMG Academy Golf and Country Club, Legends Bay Development Co., Legends Cove Development Co. He Co-Developed Sagemont Online High School (a private labeled University of Miami Online High School later acquired re-named Kaplan Online High School) & Virtual Sage (online academic curriculum publishing company), Med Group development company, Celebrity Auto Company, JMC Landscaping, North Miami Beach Academy, Trident Water Company, and numerous other development companies and real estate partnerships.
Greg Anthony, Director, Chief Communications Officer and President
Greg Anthony, 52, is an American former professional basketball player who is a television analyst for NBA TV and Turner Sports. He played 12 seasons in the National Basketball Association. Anthony also contributes to Yahoo! Sports as a college basketball analyst and serves as a co-host/analyst on SiriusXM NBA Radio. Anthony played his freshman year of college basketball for the University of Portland where he was the WCC Freshman of the Year before transferring to the University of Nevada, Las Vegas. In his junior season with UNLV, the Runnin’ Rebels won the 1990 NCAA Championship game.
Lesley Visser, Director
Lesley Visser is one of the most highly acclaimed female sportscasters of all-time. Her long and prestigious trailblazing career has seen her as the first and only woman to be recognized by the Pro Football Hall of Fame as the 2006 recipient of the Pete Rozelle Radio-Television Award, which recognizes “long-time exceptional contributions to radio and television in professional football.” Visser has been honored with the Compass Award for “changing the paradigm of her business” and was one of the 100 luminaries commemorating the 75th anniversary of the CBS Television Network in 2003. She was named “WISE Woman of the Year” in 2002 and voted the “Outstanding Women’s Sportswriter in America” in 1983 and won the “Women’s Sports Foundation Award for Journalism” in 1992. In 1999 she won the first AWSM Pioneer Award. Visser earned her bachelor’s degree in English from Boston College and received an honorary doctorate of Journalism from her alma mater in May 2007. Lesley Visser is married to Robert Kanuth, a director of the Company.
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Greg Whyte
Mr. Whyte is a well-known authority on Exercise Physiology and Sports and Exercise Performance. An internationally recognized expert in the field, Greg has extensive professional experience assessing, treating and improving the performance of patients, sporting enthusiasts and athletes.
In 2014 Professor Greg Whyte was awarded an OBE for his services to Sport, Sport Science & Charity, and was voted as one of the Top 10 Science Communicators in the UK by the British Science Council. Greg is an Olympian in modern pentathlon and is a European and World Championship medalist. He is an expert in the field of sports and exercise science. Graduating from Brunel University, he furthered his studies with an MSc in human performance in the USA and completed his PhD at St. Georges Hospital Medical School, London. Greg is currently a Professor of Applied Sport and Exercise Science at Liverpool John Moore’s University and Director of Performance at the Centre for Health and Human Performance at 76 Harley Street, London. Greg’s former roles include Director of Research for the British Olympic Association and Director of Science & Research for the English Institute of Sport.
Greg is the preeminent authority on Exercise Physiology and Sports and Exercise Performance in the UK. An internationally recognized expert in the field, Greg has extensive professional experience assessing, treating and improving the performance of patients, sporting enthusiasts and athletes ranging from cancer sufferers to celebrities attempting their first mountain summit to Gold medal seeking Olympians.
Greg is well-known for his involvement in Comic Relief, since 2006 Greg has applied his sports science work to assist various celebrities in completing some of the toughest challenges. Greg has trained, motivated and successfully coached 23 Sport & Comic Relief Challenges including: the comedian David Walliams to swim across the English Channel the Gibraltar Straits and the length of the Thames; James Cracknell to run, cycle and swim to Africa; a team of 9 celebrities including Cheryl Cole, Chris Moyles and Gary Barlow to climb Mt. Kilimanjaro; Eddie Izzard to run a remarkable 43 marathons in 50 days; Christine Bleakley to waterski across the English Channel; Dermot O’Leary, Oly Murrs and others to cross the driest desert in Africa; John Bishop to complete ‘Bishops Week of Hell’ that involved John cycle, row and run from Paris to London; and Davina McCall in her ‘Beyond Breaking Point’ 506 mile ultra-triathlon. This year, Greg supported Jo Brand on her ‘Hell of a Walk’ from Hull to Liverpool and Radio 1’s Greg James on his 5 triathlons in 5 cities in 5 days.
In 2019 Greg trained Claudia Winkleman and Tess Daly for a 24-hour Danceathon and raised over Ł700,000 for Comic Relief. 10 years on since Greg took the original 9 nine celebrities to Kilimanjaro, he found another 9 celebrities to attempt the challenge the list included Dani Dyer, Osi Umenyiora, Dan Walker, Alexander Armstrong, Shirley Ballas, Ed Balls, Jade Thirlwall and Leigh-Anne Pinnock and Anita Rani. Greg and the celebrities completed the challenge overcoming some obstacles with the main one being altitude sickness.
Robert Kanuth, Director
Robert Kanuth, a Harvard graduate, is an owner of Pelican Bay Suites, a hotel on Grand Bahama Island. Robert Cranston Kanuth, Jr., is a distinguished investment banker who founded and directed Cranston Securities in the mid-1970’s. Based in his hometown of Columbus, Ohio, Bob added headquarters in Washington, D.C., while doing large scale transactions throughout the United States. The company was sold to insurance giant Kemper Corporation in 1987. He then founded Cranston Development, funding projects which restored and revitalized such cities as Richmond, VA., Savannah, GA., and Pittsburgh, PA. A Harvard alumnus, Kanuth went on to serve in the Army National Guard before launching his compelling financial career. Kanuth is married to Hall of Fame Sportscaster Lesley Visser, a director of the Company.
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David Vincent, Director
David Vincent, a Chartered Engineer, is the pioneer of high-performance membrane technology for both altitude training and fire protection markets. For the past thirteen years, David has been the Managing Director at Sporting Edge UK with previous senior management positions at In BT, Andrew Corporation, Scientific Atlanta Inc, and Amstrad plc. He was educated to BSc level in Electrical and Electronic Engineering in Plymouth, England, and at 25 became one of the youngest Chartered Engineers in the country. He has since served on Technical Committees at the British Standards Institute and has registered several patents that improve the performance of simulated altitude systems.
Gabe Jaramillo, Director and Executive Vice President and Director of Tennis Operations
Gabe Jaramillo is a renowned international tennis coach who has worked with many of the greatest players in the history of the sport. Throughout his career, he’s trained eleven of the world’s No.1-ranked players and 27 top 10 players including Andre Agassi, Jim Courier, Pete Sampras, Maria Sharapova, Monica Seles, Kei Nishikori, and many others. From 1981 to 2009, Jaramillo also worked as the tennis director for the IMG Academy Bollettieri. There, he helped develop many multi-sport training programs and served as Nick Bollettieri’s right-hand man. For 26 consecutive years, Jaramillo coached players at all four Grand Slam events — the French Open, Wimbledon, the Australian Open, and the U.S. Open. Mr. Jaramillo is the co-founder of Club Med Academies and Principal of CMA Academics located in Florida, USA.
Jaramillo is also the founder and owner of International Coaching Services which specializes in tennis coaching, consultancy, training systems, programs, services, and resources for developing and implementing solutions to maximize results. As a Master Clinician, Jaramillo has developed annual clinic tours and conferences for players, coaches, and parents in 32 countries. He created the Tennis Periodization Training Method and played a key role in the development of System 5, a tennis training system used by practitioners worldwide. Jaramillo is a sought-after expert in the industry and has served as a keynote speaker for ITF World and Regional Conferences for the International Tennis Federation as well as JPTA, USPTA, RPT, PTR, CBT, and FEDCOL. He has been featured as an expert commentator on ESPN, FOX Sports, Euro Sports, Channel 10 Australia, Caracol Radio, Wowo TV Japan, Grand Slam TV. He served as a contributor to BBC Radio and writes for international magazines such as Japan’s Smash Magazine, Italy’s SpazioTennis, Great Britain’s UK Tennis Magazine, Germany’s Racquettech, China’s Tennis Magazine, TenisBrasil, Tennis Now, FedeColombia, and Bolivia El Deber. He is also a motivational speaker for organizations including Club Med, Discovery Channel, Propal, Neoris, World City Group, and the Young President Organization.
Indemnification of Directors and Officers
Our directors and officers are indemnified as provided by the New York Business Corporation Law (“Section 722”) and our bylaws. We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event of a claim for indemnification against such liabilities is asserted by one of our directors, executive officers or controlling persons, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court’s decision.
Director Compensation
There are no formal agreements with our directors for compensation, although they have received shares for their services from time to time.
Director Independence
During the period ended December 31, 2020, we had no independent directors.
Involvement on Certain Material Legal Proceedings During the Last Five Years
No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations.
No bankruptcy petitions have been filed by or against any business or property of any director, officer, significant employee or consultant of the Company nor has any bankruptcy petition been filed against a partnership or business association where these persons were general partners or executive officers.
No director, officer, significant employee or consultant has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.
No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law.
Directors’ and Officers’ Liability Insurance
The Company does not have directors’ and officers’ liability insurance insuring our directors and officers against liability for acts or omissions in their capacities as directors or officers.
Code of Ethics
We intend to adopt a code of ethics that applies to our officers, directors and employees, including our principal executive officer and principal accounting officer, but have not done so to date due to our relatively small size. We intend to adopt a written code of ethics in the near future.
Corporate Governance & Board Independence
Our Board of Directors consists of six directors and has not established a Nominating or Governance Committees as standing committees. The Board does not have an executive committee or any committees performing a similar function. We are not currently listed on a national securities exchange or in an inter-dealer quotation system that has requirements that a majority of the board of directors be independent.
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Due to our lack of operations and size, and since we are not currently listed on a national securities exchange, we are not subject to any listing requirements mandating the establishment of any particular committees; all functions of a nominating/governance committee were performed by our whole board of directors. Our board of directors intends to appoint such persons and form such committees as are required to meet the corporate governance requirements imposed by the national securities exchanges as necessary. Our board of directors does not believe that it is necessary to have such committees at the early stage of the company’s development, and our board of directors believes that the functions of such committees can be adequately performed by the members of our board of directors.
We believe that members of our board of directors are capable of analyzing and evaluating our consolidated financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date.
Board Leadership Structure
The Board of Directors is led by the Chairman. The Board believes its current leadership structure best serves the objectives of the Board’s oversight of management, the Board’s ability to carry out its roles and responsibilities on behalf of the Company’s shareholders, and the Company’s overall corporate governance. The Board periodically reviews the leadership structure to determine whether it continues to best serve the Company and its shareholders.
Audit Committee and Financial Expert; Committees
The Company does not have an audit committee. We are not a “listed company” under SEC rules and are therefore not required to have an audit committee comprised of independent directors.
The Company has no nominating or compensation committees at this time. The entire Board participates in the nomination and audit oversight processes and considers executive and director compensation. Given the size of the Company and its stage of development, the entire Board is involved in such decision-making processes. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.
Compliance with Section 16(A) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a).
Based solely on our review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the reports required to be filed with respect to transactions in our common stock during the fiscal year ended December 31, 2020, were timely, except that two of the newly-appointed directors did not timely file a Form 3 upon their appointments.
Family relationships
Other than the relationship between two of our directors, Lesley Visser and Robert Kanuth, who are married, there are no family relationships among any of our officers or directors.
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Current Management
Greg Breunich was appointed as the Chief Executive Officer and Chief Financial Officer of the Company on January 6, 2021.
Greg Anthony was appointed as the President effective as of September 19, 2019.
On September 19, 2019, Greg Anthony was appointed as President of the Company. On February 2, 2021, Greg Anthony was appointed Chief Communications Officer and Company Spokesperson of the Company.
On March 19, 2021, Joseph B. Frost resigned as a director and officer of the Company.
On March 24, 2021, Gabe Jaramillo was appointed as Executive Vice President and Director of Tennis Training. On March 26, 2021, Mr. Jaramillo was appointed to the Board of Directors of the Company.
ITEM 11. Executive Compensation
Summary Compensation Table
The table below sets forth, for our last two fiscal years, the compensation earned by our officers.
| Fiscal | Salary | Stock | Option | All Other | ||||||||||||||||||||||||
| Name and Principal Position | Year | Paid | Bonus | Awards | Awards | Compensation | Total | |||||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||
| Gregory Breunich (a) | 2020 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| 2019 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
| Joseph B. Frost, COO (b) | 2020 | 125,000 | 0 | 0 | 0 | 0 | 125,000 | |||||||||||||||||||||
| 2019 | 125,000 | 0 | 110,000 | 0 | 0 | 235,000 | ||||||||||||||||||||||
| Robert Kanuth, CEO (c) | 2020 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| 2019 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
| Gregory Anthony, President and CCO (d) | 2020 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| (a) | Appointed as CEO and CFO, January 2021. |
| (b) | Appointed as COO, January 2018, and resigned on March 19, 2021. |
| (c) | Appointed as CEO and CFO, January 2019, and resigned in January 2021. |
| (d) | Appointed as president, September 2019 and CCO in February 2021. |
We have no pension, health, annuity, bonus, insurance, profit sharing or similar benefit plans. As of March 19, 2018, we have a stock option plan, although no shares are currently outstanding under the Plan.
Employment Agreements
The Company has no other formal employment agreements.
Outstanding Equity Awards
There were no equity awards made to any named executive officer that were outstanding at December 31, 2020.
Director Compensation
On January 25, 2019, Mr. Kanuth, Ms. Visser and Mr. Whyte received shares of common stock for their service as directors of the Company. On July 18, 2019, Mr. Anthony, Mr. Frost and Mr. Sandore received shares of common stock for their services as directors of the Company. On February 10, 2021, Mr. Anthony received shares of common stock for his services as a director and officer of the Company.
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Change-in-Control Agreements
On January 17, 2021, Altitude International Holdings, Inc. (the “Company” or “Altitude”) entered into a Letter of Intent (the “LOI”) with Breunich Holdings, Inc., a privately held Delaware corporation (“BHI”). The LOI sets forth the headline terms of a proposed Share Exchange of Altitude with BHI through which 100% of the BHI shares will be exchanged for up to 80% of then-issued and outstanding shares of Altitude.
Upon the terms and subject to the conditions set forth in the LOI, following the Share Exchange, (i) BHI and its subsidiaries will be wholly-owned subsidiaries of Altitude; (ii) BHI shareholders would own approximately 80% of the common shares of Altitude, and Altitude shareholders would own approximately 20% of the common shares of Altitude, with such percentages calculated on a fully diluted basis; (iii) BHI has the right to appoint a majority of the directors of Altitude following the Share Exchange.
The completion of the Share Exchange would be subject to the satisfaction of specific conditions set forth in the LOI, including the completion of an audit of BHI and its subsidiaries and the parties first negotiating and executing a definitive Share Exchange agreement (the “Share Exchange Agreement”). These conditions may not ever be satisfied, the Company may never enter into a definitive Share Exchange Agreement with BHI, the Share Exchange with BHI may never be consummated, and even if it is, it may not be consummated on the terms described therein.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Security Ownership of Certain Beneficial Owners
The following table lists, as of March 9, 2021 the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 10% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using beneficial ownership’ concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 58,216,681 shares of our common stock issued and outstanding as of March 9, 2021. Except as disclosed herein, we do not have any outstanding options, or other securities exercisable for or convertible into shares of our common stock. Unless otherwise indicated, the address of each person listed is c/o Altitude International Holdings, Inc., 4500 SE Pine Valley Street, Port Saint Lucie, Florida 34952.
| Name and Address of Beneficial Owner | Title of Class | Amount and Nature of Beneficial Ownership (1) | Percent of Class (2) | ||||
| David Vincent | Common Stock | 8,961,686 | 15.35 | % | |||
| Lesley Visser (3) | Common Stock | 17,478,294 | 29.95 | % | |||
| Joseph B. Frost (4) | Common Stock | 10,196,625 | 17.47 | % | |||
| Robert Kanuth (3) | Common Stock | 17,478,294 | 29.95 | % | |||
| Greg Whyte | Common Stock | 1,565,000 | 2.68 | % | |||
| Greg Anthony | Common Stock | 6,000,000 | 10.28 | % | |||
| Gabe Jaramillo (5) | Common Stock | 0 | 0 |
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| 1. | The number and percentage of shares beneficially owned is determined under the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table. |
| 2. | SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person. At the present time there are no outstanding options or warrants. |
| 3. | Ms. Visser and Mr. Kanuth are married and own their shares jointly. |
| 4. | Mr. Frost resigned his position as an officer and director on March 19, 2021. |
| 5. | Mr. Jaramillo was appointed as an officer on March 24, 2021 and as a director on March 26, 2021. |
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
Director Independence
Our securities are not listed on a national securities exchange or on any inter-dealer quotation system which has a requirement that a majority of directors be independent. Our board of directors has undertaken a review of the independence of each director by the standards for director independence set forth in the NASDAQ Marketplace Rules. Under these rules, a director is not considered to be independent if he or she also is an executive officer or employee of the corporation. Our board of directors has determined that the Company does not have any independent directors.
ITEM 14. Principal Accountant Fees and Services
Audit Fees
The Company engaged BF Borgers CPA, PC (“BF Borgers”) as our independent registered public accounting firm on January 24, 2019. The audit fees for December 31, 2020 and 2019 were approximately $15,000 and $15,000, respectively.
Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by BF Borgers that are reasonably related to the performance of the audit or review of our consolidated financial statements including our quarterly interim reviews on Form 10-Q and are reported under Audit Fees above.
Tax Fees
BF Borgers did not charge us any tax fees for the year ended December 31, 2020 and 2019, respectively.
All Other Fees
BF Borgers has not billed any other fees since their engagement on January 24, 2019.
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ITEM 15. Exhibits, Financial Statement Schedules.
Exhibits
See the Exhibit Index following the signature page of this Registration Statement, which Exhibit Index is incorporated herein by reference.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| By: | /s/ Greg Breunich | |
| Greg Breunich | ||
| Principal Executive Officer and Principal Financial and Accounting Officer | ||
Dated: March 30, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| Name | Title | Date | ||
| /s/ Greg Breunich | Chairman | March 30, 2021 | ||
| Greg Breunich | ||||
| /s/ Lesley Visser | Director | March 30, 2021 | ||
| Lesley Visser | ||||
| /s/ Greg Whyte | Director | March 30, 2021 | ||
| Greg Whyte | ||||
| /s/ David Vincent | Director | March 30, 2021 | ||
| David Vincent | ||||
| /s/ Robert Kanuth | Director | March 30, 2021 | ||
| Robert Kanuth | ||||
| /s/ Greg Anthony | Director | March 30, 2021 | ||
| Greg Anthony | ||||
| /s/ Gabe Jaramillo | Director | March 30, 2021 | ||
| Gabe Jaramillo |
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| This ‘10-K’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 2/22/22 | ||||
| 12/15/21 | ||||
| Filed as of: | 3/31/21 | 10-Q | ||
| Filed on: | 3/30/21 | |||
| 3/29/21 | 8-K | |||
| 3/26/21 | ||||
| 3/24/21 | 8-K | |||
| 3/22/21 | ||||
| 3/19/21 | 8-K | |||
| 3/9/21 | ||||
| 3/1/21 | 4 | |||
| 2/17/21 | 8-K | |||
| 2/10/21 | ||||
| 2/8/21 | ||||
| 2/2/21 | 8-K | |||
| 2/1/21 | ||||
| 1/17/21 | 8-K | |||
| 1/6/21 | 8-K | |||
| 1/1/21 | ||||
| For Period end: | 12/31/20 | |||
| 12/20/20 | 8-K | |||
| 12/1/20 | ||||
| 11/1/20 | ||||
| 8/21/20 | ||||
| 8/1/20 | ||||
| 7/28/20 | 8-K | |||
| 7/9/20 | ||||
| 7/6/20 | 8-K | |||
| 7/1/20 | ||||
| 6/30/20 | 10-Q | |||
| 6/1/20 | ||||
| 5/5/20 | ||||
| 5/1/20 | ||||
| 4/24/20 | ||||
| 4/15/20 | 4, DEF 14C | |||
| 4/9/20 | ||||
| 4/7/20 | ||||
| 4/3/20 | PRE 14C | |||
| 4/1/20 | ||||
| 3/31/20 | 10-Q | |||
| 3/22/20 | ||||
| 3/18/20 | ||||
| 3/1/20 | ||||
| 2/26/20 | ||||
| 2/14/20 | ||||
| 2/8/20 | ||||
| 2/1/20 | ||||
| 1/3/20 | ||||
| 1/1/20 | ||||
| 12/31/19 | 10-K | |||
| 12/17/19 | ||||
| 11/25/19 | ||||
| 11/8/19 | ||||
| 10/31/19 | ||||
| 10/16/19 | ||||
| 9/19/19 | 8-K | |||
| 9/16/19 | ||||
| 9/5/19 | ||||
| 8/20/19 | 8-K | |||
| 8/13/19 | ||||
| 7/18/19 | 3, 4 | |||
| 7/15/19 | ||||
| 6/27/19 | ||||
| 5/23/19 | ||||
| 4/30/19 | ||||
| 2/4/19 | ||||
| 1/25/19 | 8-K | |||
| 1/24/19 | ||||
| 1/10/19 | ||||
| 1/1/19 | ||||
| 12/31/18 | 10-K | |||
| 12/15/18 | ||||
| 11/5/18 | ||||
| 8/10/18 | ||||
| 7/30/18 | ||||
| 6/4/18 | 8-K | |||
| 3/19/18 | ||||
| 3/2/18 | ||||
| 3/1/18 | ||||
| 2/13/18 | 3, 8-K, DEF 14A | |||
| 2/9/18 | ||||
| 6/27/17 | 3, 8-K, 8-K/A, D | |||
| 5/18/17 | ||||
| 2/5/15 | ||||
| 7/13/94 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/22/23 Altitude Int’l Holdings, Inc. 10-K 12/31/22 70:8.6M M2 Compliance LLC/FA 11/09/22 Altitude Int’l Holdings, Inc. S-1/A 75:14M M2 Compliance LLC/FA 10/31/22 Altitude Int’l Holdings, Inc. 10-Q 9/30/22 72:5.8M M2 Compliance LLC/FA 7/29/22 Altitude Int’l Holdings, Inc. 10-Q 6/30/22 62:4.6M M2 Compliance LLC/FA 5/12/22 Altitude Int’l Holdings, Inc. 10-Q 3/31/22 62:4.1M M2 Compliance LLC/FA 5/04/22 Altitude Int’l Holdings, Inc. S-1 5/03/22 63:9.4M M2 Compliance LLC/FA 3/15/22 Altitude Int’l Holdings, Inc. 10-K 12/31/21 64:6.8M M2 Compliance LLC/FA 8/20/21 Altitude Int’l Holdings, Inc. 8-K/A:1,2,3 7/23/21 4:3.2M M2 Compliance LLC/FA |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 1/28/19 Altitude Int’l Holdings, Inc. 8-K:1,3,4,5 1/25/19 4:179K Federal Filings, LLC/FA 7/03/17 Altitude Int’l Holdings, Inc. 8-K:1,2,3,5 6/27/17 5:1.4M Federal Filings, LLC/FA 1/19/16 Altitude Int’l Holdings, Inc. S-1 1/20/16 7:1.1M Federal Filings, LLC/FA |