Forza Innovations Inc - Quarter Report: 2022 March (Form 10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

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☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2022 

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

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FORZA INNOVATIONS INC.

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406 9th Avenue, Suite 210, San Diego, California 92101

(Address of Principal Executive Offices) (Zip Code)

(702) 205-2064
(Registrant’s telephone number, including area code)

___________________________________

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None.

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 ☒  No ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐  No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:  As of May 20, 2022, the issuer had 299,651,223 shares of its common stock issued and outstanding.

FORZA INNOVATIONS INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FORZA INNOVATIONS INC.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FORZA INNOVATIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FORZA INNOVATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FORZA INNOVATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2022 AND 2021

(Unaudited)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FORZA INNOVATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

FORZA INNOVATIONS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2022

(Unaudited)

NOTE 1 - NATURE OF OPERATIONS

Forza Innovations Inc. (the “Company”), was incorporated on December 9, 2014 under the laws of the State of Florida. The Company was a diversified multi-industry manufacturer of complex metal components and products. We serve all general industrial markets such as Aerospace, Automotive, Commercial, Food Processing, Industrial, Maritime, Medical, Railroad, Oil and Gas, Packaging, Telecom, Textiles, Robotics, Space Travel, Transportation and many more. We are a vertically integrated precision CNC manufacturing and fabrication company with core emphasis on product design, engineering and precision manufacturing of complex components and products.

On February 5, 2018, the Company formed Genesys Industries, LLC as a wholly owned subsidiary in the state of Missouri.

On January 21, 2021, Shefali Vibhakar, President of the Company closed a Share Purchase Agreement (the “Agreement”) that she entered into with Johnny Forzani to sell all of her 170,000,000 common shares and 10,000,000 preferred shares to Johnny Forzani for cash consideration of $177,000.

Further, as part of the Agreement, Ms. Vibhakar agrees to spin out all of the Company’s assets (except for certain machinery valued at $40,000 – which is subject to a separate purchase agreement) as well as all of the Company’s liabilities (except the Company’s note with Tangiers Capital, LLC). The value date of the assets and liabilities will be January 21, 2021.

On January 21, 2021, a change in control of the Company occurred pursuant to the Agreement. Mr. Forzani now has voting control over 93.9% of the Company’s issued and outstanding common stock.

On January 21, 2021, the Company received the resignation of Shefali Vibhakar as the Company’s President, Chief Executive Officer, Treasurer, Chief Financial Officer, Secretary and Director and appointed Johnny Forzani as its President, Chief Executive Officer, Treasurer, Chief Financial Officer and Secretary.

Effective January 21, 2021, the Company’s new address is 30 Forzani Way NW, Calgary, Alberta, Canada T3Z 1L5.

On February 17, 2021, the Company filed Articles of Continuance with the Secretary of State for the state of Wyoming. Accordingly, the Company transferred its state of formation from Florida to Wyoming and became a Wyoming entity.

On February 18, 2021, the Company filed a Certificate of Dissolution with the Secretary of State for the State of Florida, effectively dissolving the Company's existence in Florida.

As of June 30, 2021, Forza Innovations has moved out of the precision CNC manufacturing and fabrication business and has moved into the health-tech wearable performance business.  The Company has acquired the ownership and rights to certain late developmental stage products, including the J4 Sport, J4 X and J4 Fitbelt. These products are wearable back compression devices, used to relax, warmup, loosen, or relax stiff & sore muscles. The therapeutic application of heat causes a change in temperature of the soft tissues which decreases joint stiffness and relieves inflammation.  

On March 1, 2022, the Company entered into a Share Exchange Agreement (the “Agreement”) with Sustainable Origins Inc. (“Sustainable”), whereby the Company acquired 100% of the shares of Sustainable in exchange for 600,000 shares of the Company’s common stock and a cash payment of $17,000 and the payment of certain initial expenses, thereby making Sustainable a wholly-owned subsidiary of the Company. Sustainable is in the business of used cooking oil recycling and has recently entered into an asset purchase agreement with Oil Industries, Inc. of North Carolina to acquire certain assets related to the used cooking oil business. The Company valued the shares of common stock at $0.038, the closing stock price on the effective date of the agreement, for a valuation of $22,800. At the time of acquisition Sustainable had operations. As such the Company fully impaired the $22,800. As of March 31, 2022, the shares have not yet been issued to Sustainable.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2022 and for the related periods presented have been made. The results for the nine months ended March 31, 2022 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021, filed with the Securities and Exchange Commission

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Significant estimates include the estimated useful lives of property and equipment.  Actual results could differ from those estimates.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements for the nine months ended March 31, 2022, include the accounts of the Company and its wholly owned subsidiary, Sustainable Origins. All material inter-company transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the financial statements for the three months ended March 31, 2022.

Fair value of financial instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements.  To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments.  The Company’s notes payable amates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.

The following table classifies the Company’s asset measured at fair value on a recurring basis into the fair value hierarchy as of March 31, 2022:

Recently issued accounting pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 - GOING CONCERN

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.  As of March 31 2022, the Company has an accumulated deficit of $5,842,443 ($3,069,884 of which is from the FY 2021 loss on the asset acquisition and disposition of assets).

While the Company is successfully executing its growth strategy, its cash position may not still be sufficient to support the Company’s daily operations without additional financing. While the Company believes in the viability of its strategy to produce sales volume and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues. The unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.

NOTE 4 – MACHINERY AND EQUIPMENT

Long lived assets, including property and equipment and certain intangible assets to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets and certain identifiable intangibles to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Property and Equipment and intangible assets are first recorded at cost. Depreciation and/or amortization is computed using the straight-line method over the estimated useful lives of the various classes of assets between three and five years. Leasehold improvements are being depreciated over ten years, and the building over twenty years.

Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.

Property, Plant and equipment stated at cost, less accumulated depreciation for continuing operations consisted of the following:               

Depreciation expense

Depreciation expense for the nine months ended March 31, 2022 and 2021 was $19,707 and $0, respectively.

Our capitalized software cost, less accumulated amortization consisted of the following:   

Amortization expense

Amortization expense for the years ended March 31, 2022 and 2021 was $4,500 and $0, respectively.

NOTE 5 – CONVERTIBLE NOTES PAYABLE

On January 2, 2020, the Company executed a 10% convertible promissory note in which it agreed to borrow up to $300,000. The note is convertible at a price per share equal to the lower of (a) the Fixed Conversion Price (which is fixed at a price equal to $0.30); or (b) 80% of the lowest trading price of the Company’s common stock during the 5 consecutive trading days prior to the date on which lender elects to convert all or part of the Note. The initial deposit of $125,000 was made on January 15, 2020 and included a $25,000 OID. As required by ASC 470-20-30-6 the Company recognized and measured the embedded beneficial conversion feature at the commitment date of $200,000 which was credited to paid in capital, a $150,000 debt discount and a $75,000 loss on the issuance of convertible debt. As of December 31, 2021, all of the debt discount has been amortized to interest expense. During the nine months ended March 31, 2022, $134,476 of the note was converted into 4,249,961 shares of common stock per the terms of the agreement. As of March 31, 2022 and June 30, 2021, there is $15,524 and $150,000 and $56,677 and $40,250 of principal and interest, due on this loan, respectively.

During the nine months ended March 31, 2022, the Company issued the following new convertible promissory notes.

Conversion Terms

Total accrued interest on the above convertible notes as of March 31, 2022, is $72,468.

A summary of the activity of the derivative liability for the notes above is as follows:

A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy as of March 31, 2022, is as follows:

NOTE 6 - NOTE PAYABLE

On November 5, 2017, to fund its working capital requirements the Company obtained a Special Line of Credit (“LOC”) also recognized as a Blanket Secured Promissory Note for the total draw down amount of up to $500,000, from Twiga Capital Partners, LLC (“TCP”), an entity controlled by the Company’s former sole officer and largest stockholder, Shefali Vibhakar. This Note is secured by all of the assets of the Company in accordance with the Security Agreement by and between the Company and the Holder dated as of November 5, 2017. The LOC bears interest at 5% per annum and is due on demand. On January 21, 2021, TCP assigned all of its rights, title and interest in the debt to Front Row Seating Inc. On September 28, 2021, $100,000 of the note was converted into 10,000,000 shares of common stock. As of March 31, 2022 and June 30, 2021, the Company owed $22,729 and $122,729 of principal and $19,512 and $17,399 of accrued interest, respectively.

NOTE 7 – COMMON STOCK

On February 19, 2021, the Company filed a Definitive 14C in order to ratify the written consent received from one shareholder, holding 96.1% of our voting power to: (1) to amend the Company’s Articles of Incorporation, as amended (the “Articles”) to change our corporate name from Genesys Industries, Inc. to Forza Innovations Inc. (the “Name Change”); (2) to amend the Articles to increase the number of authorized shares of Class A Common Stock we may issue from 100,000,000 to 700,000,000 (the “Share Increase”); and, (3) to increase the number of the Company's total issued and outstanding shares of Class A Common Stock by conducting a forward stock split at the rate of 10 shares every 1 share currently issued and outstanding (the “Forward Split”).  All shares through these financial statements have been retroactively adjusted to reflect the forward split.

On October 20, 2021, the Company entered into a $3,000,000 equity line financing agreement (the “Investment Agreement”) with Tangiers Global, LLC (“Tangiers”), as well as a registration right agreement related thereto (the “Registration Rights Agreement”). The financing is over a maximum of 36 months. Pursuant to the Registration Rights Agreement, a maximum of 7,000,000 shares of our common stock that we may sell to Tangiers from time to time will be registered by us on Form S-1 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, for this financing. We are required to use our best efforts to file the Registration Statement within 45 days of the date the Investment Agreement.

Subject to the terms and conditions of the Investment Agreement, from time to time, the Company may, in its sole discretion, deliver a Put Notice to Tangiers which states the number of shares that the Company intends to sell to Tangiers on a closing date. The maximum amount of shares of Common Stock that the Company shall be entitled to put to Tangiers per any applicable Put Notice shall be an amount of shares up to or equal to 100% of the average of the daily trading volume of the Common Stock for the 10 consecutive Trading Days immediately prior to the applicable Put Notice Date (the “Put Amount”). The Put Amount has to be at least $5,000 and cannot exceed $300,000, as calculated by multiplying the Put Amount by the average daily VWAP for the 10 consecutive Trading Days immediately prior to the applicable Put Notice Date. The Purchase Price of the shares of our common stock that we may sell to Tangiers will be 80% of the lowest trading price of the Common Stock during the Pricing Period applicable to the Put Notice.

The Company issued Tangiers 25,000 shares of its Common Stock as a commitment fee. The shares were valued at $0.1373, the closing price on the date of grant for total non-cash expense of $3,431. As of March 31, 2022, the shares have not yet been issued by the transfer agent and are disclosed as common stock to be issued.

During the nine months ended March 31, 2022, Tangiers converted $134,476 of principal into 4,249,961 shares of common stock.

During the nine months ended March 31, 2022, Front Row Seating Inc. converted $100,000 of principal into 10,000,000 shares of common stock (see Note 6).

On January 5, 2022, the Company entered into a securities purchase agreement with Coventry Enterprises, LLC (“Coventry”). Pursuant to the terms of the agreement, the Company issued 200,000 shares of common stock to Coventry. The shares were valued at $0.085, the closing stock price on the date of grant, for total non-cash expense of $17,000.

On January 20, 2022, the Company entered into a securities purchase agreement with Mast Hill Fund, L.P., (“Mast Hill”). Pursuant to the terms of the agreement, the Company issued 2,500,000 shares of common stock to Mast Hill for a commitment fee. The shares were valued at $0.0589, the closing stock price on the date of grant, for total non-cash expense of $147,250.

NOTE 8 – PREFERRED STOCK

Preferred stock includes 25,000,000 shares of authorized at a par value of $0.001. Preferred stock includes 25,000,000 shares of Class B authorized at a par value of $0.001. The Preferred Stock constitutes a convertible stock in which (1) one Preferred Share is convertible into (5) five Common Shares. The Preferred Stockholders are entitled to vote on any matters on which the common stockholders are entitled to vote.

NOTE 9 - RELATED PARTY TRANSACTIONS

On January 21, 2021, the Company entered into an acquisition agreement with Mr. Forzani to acquire all of the ownership and the rights to certain late developmental stage products, including the J4 Sport, J4 X and J4 Fitbelt in exchange for the issuance of 10,000,000 common shares. The shares were valued at $0.28, the closing stock price on the date of the agreement, for a total value of $2,800,000. The assets were valued at cost of $95,135, resulting in a loss on asset acquisition of $2,704,865. As a result of this acquisition, the Company is moving out of the precision CNC manufacturing and fabrication business and moving into the health-tech wearable performance business.

During the year ended June 30, 2021, Mr. Forzani advanced the Company $54,833, for general operating expenses, the advance is non-interest bearing and due on demand. During the nine months ended March 31, 2022, Mr. Forzani advanced the Company an additional $27,088 and was repaid $28,106, for a total due as of March 31, 2022 of $53,816.

On August 23, 2021, Mr. Forzani exercised 400,000 of his options for $20,000.

On October 26, 2021, Geoff Stanbury exercised 100,000 of his options for $4,043.

NOTE 10– STOCK OPTIONS

On August 3, 2021, the Company granted 1,000,000 options to Johnny Forzani, CEO, 250,000 options to Geoff Stanbury, director, and 250,000 options to Tom Forzani, Director. The options were issued pursuant the Company’s 2021 Equity Award Plan. The options are exercisable at $0.05, are immediately vested and expire in two years.

The aggregate fair value of the 1,500,000 options, totaled $854,550 based on the Black Scholes Merton pricing model using the following estimates: exercise price of $0.05, 0.17% risk free rate, 704.9% volatility and expected life of the options of 2 years.

A summary of the status of the Company’s outstanding stock options and changes during the nine months ended March 31, 2022 is presented below:

NOTE 11 – WARRANTS

On January 5, 2022, the Company issued warrants to purchase up to 900,000 shares of common stock to Coventry in conjunction with convertible debt. The warrants are exercisable for 5 years, with a price of $0.175. Using the fair value calculation, the relative fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $63,908, accounted for in additional paid in capital.

On January 20, 2022, the Company issued warrants to purchase up to 700,000 and 350,000 shares of common stock to Mast Hill in conjunction with convertible debt. The warrants are exercisable for 5 years, with a price of $0.50 and $1.00, respectively. Using the fair value calculation, the relative fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $45,652, accounted for in additional paid in capital.

The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that would require a liability classification and are therefore considered equity.

The Black Scholes pricing model was used to estimate the fair value of the warrants issued with the following inputs:

NOTE 12 – DISCONTINUED OPERATIONS

On January 21, 2021, Shefali Vibhakar, President of the Company closed a Share Purchase Agreement (the “Agreement”) that she entered into with Johnny Forzani to sell all of her 17,000,000 common shares and 10,000,000 preferred shares to Johnny Forzani for cash consideration of $177,000.

Further, as part of the Agreement, Ms. Vibhakar agrees to spin out all of the Company’s assets (except for certain machinery valued at $40,000 – which is subject to a separate purchase agreement) as well as all of the Company’s liabilities (except the Company’s note with Tangiers Capital, LLC and Twiga Capital). The value date of the assets and liabilities will be January 21, 2021.

In accordance with the provisions of ASC 205-20, Presentation of Financial Statements, we have separately reported the assets and liabilities of the discontinued operations in the consolidated balance sheets. The income and expenses have been reflected as discontinued operations in the consolidated Statements of Operations for the three and nine months ended March 31, 2021, and consist of the following:

NOTE 13 - SUBSEQUENT EVENTS

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it has no material subsequent events to disclose in these unaudited condensed consolidated financial statements other than the following.

The Company entered into a Marketing Services Agreement dated as of April 14, 2022 (the “Agreement”) with North Equities Corp. (“North Equities”) to provide marketing services to the Company. Pursuant to the terms of the Agreement, the Company will issue 1,201,262 shares of common stock to North Equities.

On April 13, 2022, the Company, entered into a Convertible Promissory Note with Sixth Street Lending LLC., (“Sixth Street”) pursuant to which Sixth Street purchased a 10% unsecured promissory Note (the “Note”) from the Company in the principal amount of $55,000 of which $3,750 was retained by Sixth Street through an Original Issue Discount for due diligence and origination related to this transaction. The conversion price for the Note is 61% multiplied by the lowest trading price of the Company’s common stock as reported on the OTC Markets for the fifteen days prior to conversion.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Forward Looking Statements

Certain matters discussed herein are forward-looking statements. Such forward-looking statements contained in this Form 10-Q involve risks and uncertainties, including statements as to:

These forward-looking statements can generally be identified as such because the context of the statement will include words such as we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statements that describe our future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actual results to differ materially from those anticipated. Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included herein are only made as of the date of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

Cautionary Statement:

Statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, in future filings by the Company with the Securities and Exchange Commission, in the Company’s press releases and in oral statements made with the approval of an authorized executive officer that are not historical or current facts are “forward-looking statements.” These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. These risks and uncertainties are described in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021, as well as other filings the Company makes with the Securities and Exchange Commission. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made and are not predictions of actual future results. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Plan of Operations

The Company has acquired the ownership and rights to certain late developmental stage products, including the J4 Sport, J4 X and J4 Fitbelt.  These products are wearable back compression devices, used to relax, warmup, loosen, or relax stiff & sore muscles.  The therapeutic application of heat causes a change in temperature of the soft tissues which decreases joint stiffness and relieves inflammation.  

We have recently successfully completed our first acquisition of “Sustainable Origins” which is an eco-friendly ESG company, that converts used cooking oil to reusable biodiesel. This acquisition is part of our ongoing strategic plan for future revenue and expansion. While our primary focus will always be revolving around the innovation of wearable technology, these projects will take time to market. We want to align ourselves with like-minded Entrepreneurs that will mesh well with our team and collective interest. Having the ability to acquire companies’ current operations to generate steady revenue streams, will also help aid in financing the production of “WarmUp” and other products we will develop.

Results of Operation for the Three Months Ended March 31, 2022 Compared to the Three Months March 31, 2021

Revenues and Cost of Revenue

Due to the termination of our CNC manufacturing and fabrication business, we did not have any revenue or cost of revenue from continuing operations for the three months ended March 31, 2022 and 2021.

Operating Expenses from Continuing Operations

Operating expenses from continuing operations for the three months ended March 31, 2022 and 2021, were $406,530 and $10,964, respectively. We had general and administrative expenses (“G&A”) of $223,624 and $10,964, respectively. G&A expenses for the three months ended March 31, 2022, consisted primarily of debt and equity issuance cost of approximately $164,000, $23,000 of marketing fees and $15,700 for consulting expense. We also had $8,090 of depreciation and amortization expense.

Compensation Expense

Compensation expense for the three months ended March 31, 2022 and 2021, was $101,176 and $0, respectively. We are incurring compensation expense for both officers and newly hired employees.

Professional Fees

Professional fees for the three months ended March 31, 2022 and 2021, was $81,730 and $0, respectively. We incur professional fees for legal, audit, accounting and other consulting expense.

Other Income from Continuing Operations

During the three months ended March 31, 2022, we recognized total other expense of $592,700 compared to $3,073,665 for the prior period. During the three months ended March 31, 2022, we incurred a $773,636 loss on the issuance of convertible debt, $108,633 of debt discount amortization expense and a $22,800 impairment for the Sustainable asset acquisition. This was offset by a gain of $385,084 from the change in the fair value of our derivatives related to the new convertible notes. We also incurred $72,715 of interest expense. For the three months ended March 31, 2021, we incurred $3,781 of interest expense, $2,704,865 from the loss on asset acquisition and a $365,019 loss on the disposition of assets and liabilities related to the acquisition.

Net Loss from Continuing Operations

Our net loss from continuing operations for the three months ended March 31, 2022 was $999,230 compared to $3,084,629 for the prior period.

Results of Operation for the Nine Months Ended March 31, 2022 Compared to the Nine Months Ended March 31, 2021

Revenues and Cost of Revenue

Due to the termination of our CNC manufacturing and fabrication business, we did not have any revenue or cost of revenue from continuing operations for the nine months ended March 31, 2022 and 2021.

Operating Expenses from Continuing Operations

Operating expenses from continuing operations for the nine months ended March 31, 2022 and 2021, were $1,537,968 and $10,964, respectively. We had general and administrative expenses (“G&A”) of $359,221 and $10,964, respectively. G&A expenses for the nine months ended March 31, 2022 consisted primarily of debt and equity issuance cost of approximately $168,000, $64,000 of marketing fees and $25,700 for consulting expense. We also had $24,200 of depreciation and amortization expense.

Compensation Expense

Compensation expense for the nine months ended March 31, 2022 and 2021, was $211,456 and $0, respectively. We are incurring compensation expense for our officers and newly hired employees.

Professional Fees

Professional fees for the nine months ended March 31, 2022 and 2021, were $112,741 and $0, respectively. We incur professional fees for legal, audit, accounting and other consulting expense. Our total fees for the nine months ended March 31, 2022 was decreased by a credit memo for audit fees of $41,665.

In the current period we also incurred an $854,550 non-cash expense for the issuance of stock options to our officers and directors.

Other Income from Continuing Operations

During the nine months ended March 31, 2022, we recognized total other expense of $809,745 compared to $3,097,509 for the prior period. During the nine months ended March 31, 2022, we incurred a $1,072,356 loss on the issuance of convertible debt, $140,728 of debt discount amortization expense and a $22,800 impairment for the Sustainable asset acquisition. This was offset by a gain of $516,136 from the change in the fair value of our derivatives related to the new convertible notes. We also incurred $90,007 of interest expense. For the nine months ended March 31, 2021, we incurred $15,125 of interest expense, $2,704,865 from the loss on asset acquisition, a $365,019 loss on the disposition of assets and liabilities related to the acquisition and $12,500 of debt discount amortization.

Net Loss from Continuing Operations

Our net loss from continuing operations for the nine months ended March 31, 2022 was $2,347,713 compared to $3,108,473 for the prior period. Our net loss in the current period largely consists of non-cash stock compensation expense and losses related the issuance of convertible debt and the related valuation of derivatives as discussed above.

Liquidity and Capital Resources

As reflected in the accompanying unaudited condensed consolidated financial statements, the Company has an accumulated deficit of $5,842,443 at March 31, 2022, and a net loss from continuing operations of $2,347,713 for the nine months ended March 31, 2022.

For the nine months ended March 31, 2022, we used $493,704 of cash in operating activities, compared to receiving $79,777 for the nine months ended March 31, 2021. In the current period we used more cash to pay for professional fees and compensation expense as well has increased expenditures on marketing activities.

We neither received or used any cash in investing activities from continuing operations for the nine months ended March 31, 2022 or 2021.

Net cash received from financing activities for the nine months ended March 31, 2022, was $965,475 compared to $11,937 provided by financing activities in the prior period. In the current period we received $942,450 from the issuance of convertible debt and $24,043 from the exercise of stock options. We also received $27,088 from our CEO, with $28,106 repaid.

On January 2, 2020, the Company executed a 10% convertible promissory note in which it agreed to borrow up to $300,000. The note is convertible at a price per share equal to the lower of (a) the Fixed Conversion Price (which is fixed at a price equal to $0.30); or (b) 80% of the lowest trading price of the Company’s common stock during the 5 consecutive trading days prior to the date on which lender elects to convert all or part of the Note. As of March 31, 2022 and June 30, 2021, there is $15,524 and $150,000 and $56,677 and $40,250 of principal and interest, due on this loan, respectively.

On November 5, 2017, to fund its working capital requirements the Company obtained a Special Line of Credit (“LOC”) also recognized as a Blanket Secured Promissory Note for the total draw down amount of up to $500,000, from Twiga Capital Partners, LLC (“TCP”), an entity controlled by the Company’s former sole officer and largest stockholder, Shefali Vibhakar. This Note is secured by all of the assets of the Company in accordance with the Security Agreement by and between the Company and the Holder dated as of November 5, 2017. The LOC bears interest at 5% per annum and is due on demand. On January 21, 2021, TCP assigned all of its rights, title and interest in the debt to Front Row Seating Inc. On September 28, 2021, $100,000 of the note was converted into 10,000,000 shares of common stock. As of March 31, 2022 and June 30, 2021, the Company owed $22,729 and $122,729 of principal and $19,512 and $17,399 of accrued interest, respectively.

During the nine months ended March 31, 2022, the Company issued the following new convertible promissory notes.

Conversion Terms

Total accrued interest on the above convertible notes as of March 31, 2022, is $72,468.

Critical Accounting Estimates and Policies

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 the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Note 1 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes.  Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

We are subject to various loss contingencies arising in the ordinary course of business.  We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies.  An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.  We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities.  The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled.  Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.

Off-Balance Sheet Arrangements 

We have not entered into 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 and would be considered material to investors.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”), and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, they concluded that our disclosure controls and procedures were effective for the quarterly period ended March 31, 2022.

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

Changes in Internal Controls

Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that no change occurred in the Company's internal controls over financial reporting during the quarter ended March 31, 2022, that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are not presently any material pending legal proceedings to which the Company is a party or as to which any of our property is subject, and no such proceedings are known to the Company to be threatened or contemplated against it.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINING SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.