Form 1-A Issuer Information UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 1-A
REGULATION A OFFERING STATEMENT
UNDER THE SECURITIES ACT OF 1933
OMB APPROVAL

FORM 1-A

OMB Number: 3235-0286


Estimated average burden hours per response: 608.0

1-A: Filer Information

Issuer CIK
0001472847
Issuer CCC
XXXXXXXX
DOS File Number
Offering File Number
Is this a LIVE or TEST Filing? LIVE TEST
Would you like a Return Copy?
Notify via Filing Website only?
Since Last Filing?

Submission Contact Information

Name
Phone
E-Mail Address

1-A: Item 1. Issuer Information

Issuer Infomation

Exact name of issuer as specified in the issuer's charter
HARRISON VICKERS & WATERMAN INC
Jurisdiction of Incorporation / Organization
NEVADA
Year of Incorporation
2008
CIK
0001472847
Primary Standard Industrial Classification Code
RETAIL-EATING & DRINKING PLACES
I.R.S. Employer Identification Number
26-2883037
Total number of full-time employees
104
Total number of part-time employees
0

Contact Infomation

Address of Principal Executive Offices

Address 1
5781 Schaefer Avenue
Address 2
City
Chino
State/Country
CALIFORNIA
Mailing Zip/ Postal Code
91710
Phone
844-773-3823

Provide the following information for the person the Securities and Exchange Commission's staff should call in connection with any pre-qualification review of the offering statement.

Name
Robert W. Tetsch
Address 1
Address 2
City
State/Country
Mailing Zip/ Postal Code
Phone

Provide up to two e-mail addresses to which the Securities and Exchange Commission's staff may send any comment letters relating to the offering statement. After qualification of the offering statement, such e-mail addresses are not required to remain active.

Financial Statements

Industry Group (select one) Banking Insurance Other

Use the financial statements for the most recent period contained in this offering statement to provide the following information about the issuer. The following table does not include all of the line items from the financial statements. Long Term Debt would include notes payable, bonds, mortgages, and similar obligations. To determine "Total Revenues" for all companies selecting "Other" for their industry group, refer to Article 5-03(b)(1) of Regulation S-X. For companies selecting "Insurance", refer to Article 7-04 of Regulation S-X for calculation of "Total Revenues" and paragraphs 5 and 7 of Article 7-04 for "Costs and Expenses Applicable to Revenues".

Balance Sheet Information

Cash and Cash Equivalents
$ 533324.00
Investment Securities
$ 0.00
Total Investments
$
Accounts and Notes Receivable
$ 722460.00
Loans
$
Property, Plant and Equipment (PP&E):
$ 1427965.00
Property and Equipment
$
Total Assets
$ 2884336.00
Accounts Payable and Accrued Liabilities
$ 2403751.00
Policy Liabilities and Accruals
$
Deposits
$
Long Term Debt
$ 500000.00
Total Liabilities
$ 6692906.00
Total Stockholders' Equity
$ -4808571.00
Total Liabilities and Equity
$ 2884336.00

Statement of Comprehensive Income Information

Total Revenues
$ 16560280.00
Total Interest Income
$
Costs and Expenses Applicable to Revenues
$ 12048335.00
Total Interest Expenses
$
Depreciation and Amortization
$ 79568.00
Net Income
$ -3812078.00
Earnings Per Share - Basic
$ -0.01
Earnings Per Share - Diluted
$ 0.00
Name of Auditor (if any)

Outstanding Securities

Common Equity

Name of Class (if any) Common Equity
Common Stock
Common Equity Units Outstanding
6564838949
Common Equity CUSIP (if any):
415569102
Common Equity Units Name of Trading Center or Quotation Medium (if any)
OTC Markets

Preferred Equity

Preferred Equity Name of Class (if any)
Series A
Preferred Equity Units Outstanding
85162
Preferred Equity CUSIP (if any)
na
Preferred Equity Name of Trading Center or Quotation Medium (if any)
na

Preferred Equity

Preferred Equity Name of Class (if any)
Series B
Preferred Equity Units Outstanding
51
Preferred Equity CUSIP (if any)
na
Preferred Equity Name of Trading Center or Quotation Medium (if any)
na

Preferred Equity

Preferred Equity Name of Class (if any)
Series C
Preferred Equity Units Outstanding
2500
Preferred Equity CUSIP (if any)
na
Preferred Equity Name of Trading Center or Quotation Medium (if any)
na

Preferred Equity

Preferred Equity Name of Class (if any)
Series D
Preferred Equity Units Outstanding
2000000
Preferred Equity CUSIP (if any)
na
Preferred Equity Name of Trading Center or Quotation Medium (if any)
na

Preferred Equity

Preferred Equity Name of Class (if any)
Series F
Preferred Equity Units Outstanding
10000
Preferred Equity CUSIP (if any)
na
Preferred Equity Name of Trading Center or Quotation Medium (if any)
na

Preferred Equity

Preferred Equity Name of Class (if any)
Series G
Preferred Equity Units Outstanding
10000
Preferred Equity CUSIP (if any)
na
Preferred Equity Name of Trading Center or Quotation Medium (if any)
na

Debt Securities

Debt Securities Name of Class (if any)
Debt Securities Units Outstanding
0
Debt Securities CUSIP (if any):
Debt Securities Name of Trading Center or Quotation Medium (if any)

1-A: Item 2. Issuer Eligibility

Issuer Eligibility

Check this box to certify that all of the following statements are true for the issuer(s)

1-A: Item 3. Application of Rule 262

Application Rule 262

Check this box to certify that, as of the time of this filing, each person described in Rule 262 of Regulation A is either not disqualified under that rule or is disqualified but has received a waiver of such disqualification.

Check this box if "bad actor" disclosure under Rule 262(d) is provided in Part II of the offering statement.

1-A: Item 4. Summary Information Regarding the Offering and Other Current or Proposed Offerings

Summary Infomation

Check the appropriate box to indicate whether you are conducting a Tier 1 or Tier 2 offering Tier1 Tier2
Check the appropriate box to indicate whether the financial statements have been audited Unaudited Audited
Types of Securities Offered in this Offering Statement (select all that apply)
Equity (common or preferred stock)
Does the issuer intend to offer the securities on a delayed or continuous basis pursuant to Rule 251(d)(3)? Yes No
Does the issuer intend this offering to last more than one year? Yes No
Does the issuer intend to price this offering after qualification pursuant to Rule 253(b)? Yes No
Will the issuer be conducting a best efforts offering? Yes No
Has the issuer used solicitation of interest communications in connection with the proposed offering? Yes No
Does the proposed offering involve the resale of securities by affiliates of the issuer? Yes No
Number of securities offered
50000000000
Number of securities of that class outstanding
6564838949

The information called for by this item below may be omitted if undetermined at the time of filing or submission, except that if a price range has been included in the offering statement, the midpoint of that range must be used to respond. Please refer to Rule 251(a) for the definition of "aggregate offering price" or "aggregate sales" as used in this item. Please leave the field blank if undetermined at this time and include a zero if a particular item is not applicable to the offering.

Price per security
$ 0.0001
The portion of the aggregate offering price attributable to securities being offered on behalf of the issuer
$ 5000000.00
The portion of the aggregate offering price attributable to securities being offered on behalf of selling securityholders
$ 0.00
The portion of the aggregate offering price attributable to all the securities of the issuer sold pursuant to a qualified offering statement within the 12 months before the qualification of this offering statement
$ 0.00
The estimated portion of aggregate sales attributable to securities that may be sold pursuant to any other qualified offering statement concurrently with securities being sold under this offering statement
$ 0.00
Total (the sum of the aggregate offering price and aggregate sales in the four preceding paragraphs)
$ 5000000.00

Anticipated fees in connection with this offering and names of service providers

Underwriters - Name of Service Provider
Underwriters - Fees
$
Sales Commissions - Name of Service Provider
Sales Commissions - Fee
$
Finders' Fees - Name of Service Provider
Finders' Fees - Fees
$
Audit - Name of Service Provider
Audit - Fees
$
Legal - Name of Service Provider
Stout Law Group, PA
Legal - Fees
$ 25000.00
Promoters - Name of Service Provider
Promoters - Fees
$
Blue Sky Compliance - Name of Service Provider
Blue Sky Compliance - Fees
$
CRD Number of any broker or dealer listed:
Estimated net proceeds to the issuer
$ 4975000.00
Clarification of responses (if necessary)

1-A: Item 5. Jurisdictions in Which Securities are to be Offered

Jurisdictions in Which Securities are to be Offered

Using the list below, select the jurisdictions in which the issuer intends to offer the securities

Selected States and Jurisdictions
CONNECTICUT
FLORIDA
GEORGIA
NEVADA
NEW YORK

Using the list below, select the jurisdictions in which the securities are to be offered by underwriters, dealers or sales persons or check the appropriate box

None
Same as the jurisdictions in which the issuer intends to offer the securities
Selected States and Jurisdictions

1-A: Item 6. Unregistered Securities Issued or Sold Within One Year

Unregistered Securities Issued or Sold Within One Year

None

Unregistered Securities Issued

As to any unregistered securities issued by the issuer of any of its predecessors or affiliated issuers within one year before the filing of this Form 1-A, state:

(a)Name of such issuer
Harrison, Vickers & Waterman, Inc.
(b)(1) Title of securities issued
Common Stock
(2) Total Amount of such securities issued
3563275175
(3) Amount of such securities sold by or for the account of any person who at the time was a director, officer, promoter or principal securityholder of the issuer of such securities, or was an underwriter of any securities of such issuer.
0
(c)(1) Aggregate consideration for which the securities were issued and basis for computing the amount thereof.
$582,390
(2) Aggregate consideration for which the securities listed in (b)(3) of this item (if any) were issued and the basis for computing the amount thereof (if different from the basis described in (c)(1)).

Unregistered Securities Act

(e) Indicate the section of the Securities Act or Commission rule or regulation relied upon for exemption from the registration requirements of such Act and state briefly the facts relied upon for such exemption
Section 4(a)(2) of the Securities Act of 1933

 

 

 

 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 1-A

 

REGULATION A OFFERING CIRCULAR UNDER THE SECURITIES ACT OF 1933

 

Picture 1 

 

Harrison, Vickers & Waterman, Inc.

(Exact name of issuer as specified in its charter)

 

Wyoming

(State of other jurisdiction of incorporation or organization)

 

5781 Schaefer Avenue

Chino, CA 91710

844-773-3823

(Address, including zip code, and telephone number,

including area code of issuer’s principal executive office)

 

Matheau J. W. Stout, Esq.

201 International Circle, Suite 230

Hunt Valley, Maryland 21030

(410) 429-7076

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

 

5810

 

26-2883037

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

This Preliminary Offering Circular shall only be qualified upon order of the Commission, unless a subsequent amendment is filed indicating the intention to become qualified by operation of the terms of Regulation A.

 

This Preliminary Offering Circular is following the offering circular format described in Part II of Form 1-A.

 

 

 


i


 

 

 

PART II - OFFERING CIRCULAR - FORM 1-A: TIER 1

 

Dated: October 14, 2022

 

PURSUANT TO REGULATION A OF THE SECURITIES ACT OF 1933

 

Picture 1 

 

HARRISON, VICKERS & WATERMAN, INC.

5781 Schaefer Avenue

Chino, CA 91710

844-773-3823

 

admin@joinmps.com

 

50,000,000,000 Shares of Common Stock at $0.0001 per Share

 

Minimum Investment: 20,000,000 Shares ($2,000.00)

 

Maximum Offering: $5,000,000

 

See The Offering - Page 5 and Securities Being Offered - Page 29 For Further Details

None of the Securities Offered Are Being Sold By Present Security Holders

This Offering Will Commence Upon Qualification of this Offering by

the Securities and Exchange Commission and Will Terminate 180 Days from

the date of qualification by the Securities And Exchange Commission,

Unless Extended or Terminated Earlier By The Issuer

 

 

 

 

 

 

 

 

 

 

 

 

 


ii


 

 

AN OFFERING STATEMENT PURSUANT TO REGULATION A RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. INFORMATION CONTAINED IN THIS PRELIMINARY OFFERING CIRCULAR IS SUBJECT TO COMPLETION OR AMENDMENT. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE THE OFFERING STATEMENT FILED WITH THE COMMISSION IS QUALIFIED. THIS PRELIMINARY OFFERING CIRCULAR SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR MAY THERE BE ANY SALES OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL BEFORE REGISTRATION OR QUALIFICATION UNDER THE LAWS OF ANY SUCH STATE. WE MAY ELECT TO SATISFY OUR OBLIGATION TO DELIVER A FINAL OFFERING CIRCULAR BY SENDING YOU A NOTICE WITHIN TWO BUSINESS DAYS AFTER THE COMPLETION OF OUR SALE TO YOU THAT CONTAINS THE URL WHERE THE FINAL OFFERING CIRCULAR OR THE OFFERING STATEMENT IN WHICH SUCH FINAL OFFERING CIRCULAR WAS FILED MAY BE OBTAINED.

 

PLEASE REVIEW ALL RISK FACTORS ON PAGES PAGE 6 THROUGH PAGE 14 BEFORE MAKING AN INVESTMENT IN THIS COMPANY. AN INVESTMENT IN THIS COMPANY SHOULD ONLY BE MADE IF YOU ARE CAPABLE OF EVALUATING THE RISKS AND MERITS OF THIS INVESTMENT AND IF YOU HAVE SUFFICIENT RESOURCES TO BEAR THE ENTIRE LOSS OF YOUR INVESTMENT, SHOULD THAT OCCUR.

 

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING LITERATURE. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.

 

Because these securities are being offered on a “best efforts” basis, the following disclosures are hereby made:

 

 

 

 

 

 

 

Proceeds to

 

Proceeds to

 

 

Price to Public

 

Commissions (1)

 

Company (2)

 

Other Persons (3)

Per Share

 

$

0.0001

 

$

0

 

$

0.0001

 

None

Minimum Investment

 

$

2,000

 

$

0

 

$

2,000

 

None

Maximum Offering

 

$

5,000,000

 

$

0

 

$

5,000,000

 

None

 

(1)The Company shall pay no commissions to underwriters for the sale of securities under this Offering. 

 

(2)Does not reflect payment of expenses of this offering, which are estimated to not exceed $25,000.00 and which include, among other things, legal fees, accounting costs, reproduction expenses, due diligence, marketing, consulting, administrative services other costs of blue sky compliance, and actual out-of-pocket expenses incurred by the Company selling the Shares. This amount represents the proceeds of the offering to the Company, which will be used as set out in “USE OF PROCEEDS TO ISSUER.” 

 

(3)There are no finder’s fees or other fees being paid to third parties from the proceeds. See ‘PLAN OF DISTRIBUTION.’ 

 

 

 


iii


 

 

This offering (the “Offering”) consists of Common Stock (the “Shares” or individually, each a “Share”) that is being offered on a “best efforts” basis, which means that there is no guarantee that any minimum amount will be sold. The Shares are being offered and sold by Harrison, Vickers & Waterman, Inc. a Wyoming Corporation (“HVCW” or the “Company”). There are 50,000,000,000 Shares being offered at a price of $0.0001 per Share with a minimum purchase of 20,000,000 shares per investor. The Shares are being offered on a best efforts basis to an unlimited number of accredited investors and an unlimited number of non-accredited investors only by the Company. The maximum aggregate amount of the Shares offered is $5,000,000 (the “Maximum Offering”).

 

The Shares are being offered pursuant to Regulation A of Section 3(b) of the Securities Act of 1933, as amended, for Tier 1 offerings. The Shares will only be issued to purchasers who satisfy the requirements set forth in Regulation A. The offering is expected to expire on the first of: (i) all of the Shares offered are sold; or (ii) the close of business 180 Days from the date of qualification by the Commission, unless sooner terminated or extended by the Company’s CEO.

 

Funds will be promptly refunded without interest, for sales that are not consummated. Upon closing under the terms as set out in this Offering Circular, funds will be immediately transferred to the Company where they will be available for use in the operations of the Company’s business in a manner consistent with the “USE OF PROCEEDS TO ISSUER” in this Offering Circular.

 

THIS OFFERING CIRCULAR DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS CONCERNING THE COMPANY OTHER THAN THOSE CONTAINED IN THIS OFFERING CIRCULAR, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON.

 

PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS OFFERING CIRCULAR, OR OF ANY PRIOR OR SUBSEQUENT COMMUNICATIONS FROM THE COMPANY OR ANY OF ITS EMPLOYEES, AGENTS OR AFFILIATES, AS INVESTMENT, LEGAL, FINANCIAL OR TAX ADVICE.

 

BEFORE INVESTING IN THIS OFFERING, PLEASE REVIEW ALL DOCUMENTS CAREFULLY, ASK ANY QUESTIONS OF THE COMPANY’S MANAGEMENT THAT YOU WOULD LIKE ANSWERED AND CONSULT YOUR OWN COUNSEL, ACCOUNTANT AND OTHER PROFESSIONAL ADVISORS AS TO LEGAL, TAX AND OTHER RELATED MATTERS CONCERNING THIS INVESTMENT.

 

NASAA UNIFORM LEGEND

 

FOR RESIDENTS OF ALL STATES: THE PRESENCE OF A LEGEND FOR ANY GIVEN STATE REFLECTS ONLY THAT A LEGEND MAY BE REQUIRED BY THAT STATE AND SHOULD NOT BE CONSTRUED TO MEAN AN OFFER OR SALE MAY BE MADE IN A PARTICULAR STATE. IF YOU ARE UNCERTAIN AS TO WHETHER OR NOT OFFERS OR SALES MAY BE LAWFULLY MADE IN ANY GIVEN STATE, YOU ARE HEREBY ADVISED TO CONTACT THE COMPANY. THE SECURITIES DESCRIBED IN THIS OFFERING CIRCULAR HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAWS (COMMONLY CALLED ‘BLUE SKY’ LAWS).

 

IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURITIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

NOTICE TO FOREIGN INVESTORS

 

IF THE PURCHASER LIVES OUTSIDE THE UNITED STATES, IT IS THE PURCHASER’S RESPONSIBILITY TO FULLY OBSERVE THE LAWS OF ANY RELEVANT TERRITORY OR JURISDICTION OUTSIDE THE UNITED STATES IN CONNECTION WITH ANY PURCHASE OF THE


iv


SECURITIES, INCLUDING OBTAINING REQUIRED GOVERNMENTAL OR OTHER CONSENTS OR OBSERVING ANY OTHER REQUIRED LEGAL OR OTHER FORMALITIES. THE COMPANY RESERVES THE RIGHT TO DENY THE PURCHASE OF THE SECURITIES BY ANY FOREIGN PURCHASER.

 

Forward Looking Statement Disclosure

 

This Form 1-A, Offering Circular, and any documents incorporated by reference herein or therein contain forward-looking statements and are subject to risks and uncertainties. All statements other than statements of historical fact or relating to present facts or current conditions included in this Form 1-A, Offering Circular, and any documents incorporated by reference are forward-looking statements. Forward-looking statements give the Company’s current reasonable expectations and projections relating to its financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as ‘anticipate,’ ‘estimate,’ ‘expect,’ ‘project,’ ‘plan,’ ‘intend,’ ‘believe,’ ‘may,’ ‘should,’ ‘can have,’ ‘likely’ and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. The forward-looking statements contained in this Form 1-A, Offering Circular, and any documents incorporated by reference herein or therein are based on reasonable assumptions the Company has made in light of its industry experience, perceptions of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. As you read and consider this Form 1-A, Offering Circular, and any documents incorporated by reference, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond the Company’s control) and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect its actual operating and financial performance and cause its performance to differ materially from the performance anticipated in the forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect or change, the Company’s actual operating and financial performance may vary in material respects from the performance projected in these forward- looking statements. Any forward-looking statement made by the Company in this Form 1-A, Offering Circular or any documents incorporated by reference herein speaks only as of the date of this Form 1-A, Offering Circular or any documents incorporated by reference herein. Factors or events that could cause our actual operating and financial performance to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

 

About This Form 1-A and Offering Circular

 

In making an investment decision, you should rely only on the information contained in this Form 1-A and Offering Circular. The Company has not authorized anyone to provide you with information different from that contained in this Form 1-A and Offering Circular. We are offering to sell, and seeking offers to buy the Shares only in jurisdictions where offers and sales are permitted. You should assume that the information contained in this Form 1-A and Offering Circular is accurate only as of the date of this Form 1-A and Offering Circular, regardless of the time of delivery of this Form 1-A and Offering Circular. Our business, financial condition, results of operations, and prospects may have changed since that date. Statements contained herein as to the content of any agreements or other documents are summaries and, therefore, are necessarily selective and incomplete and are qualified in their entirety by the actual agreements or other documents. The Company will provide the opportunity to ask questions of and receive answers from the Company’s management concerning terms and conditions of the Offering, the Company or any other relevant matters and any additional reasonable information to any prospective investor prior to the consummation of the sale of the Shares. This Form 1-A and Offering Circular do not purport to contain all of the information that may be required to evaluate the Offering and any recipient hereof should conduct its own independent analysis. The statements of the Company contained herein are based on information believed to be reliable. No warranty can be made as to the accuracy of such information or that circumstances have not changed since the date of this Form 1-A and Offering Circular. The Company does not expect to update or otherwise revise this Form 1-A, Offering Circular or other materials supplied herewith. The delivery of this Form 1-A and Offering Circular at any time does not imply that the information contained herein is correct as of any time subsequent to the date of this Form 1-A and Offering Circular. This Form 1-A and Offering Circular are submitted in connection with the Offering described herein and may not be reproduced or used for any other purpose.


v


 

TABLE OF CONTENTS

 

OFFERING SUMMARY, PERKS AND RISK FACTORS

1

OFFERING SUMMARY

1

RISK FACTORS

2

DILUTION

11

PLAN OF DISTRIBUTION

11

USE OF PROCEEDS TO ISSUER

13

USE OF PROCEEDS

13

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

14

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

20

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

21

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS

23

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

24

SECURITIES BEING OFFERED

24

DISQUALIFYING EVENTS DISCLOSURE

25

ERISA CONSIDERATIONS

26

INVESTOR ELIGIBILITY STANDARDS

27

SIGNATURES

28

ACKNOWLEDGMENT ADOPTING TYPED SIGNATURES

28

INDEX TO EXHIBITS

29

SECTION F/S FINANCIAL STATEMENTS

F-1

 

 

 

 

 

 

 

 


vi


 

 

OFFERING SUMMARY, PERKS AND RISK FACTORS

 

OFFERING SUMMARY

 

The following summary is qualified in its entirety by the more detailed information appearing elsewhere in this Offering Circular and/or incorporated by reference in this Offering Circular. For full offering details, please (1) thoroughly review this Form 1-A filed with the Securities and Exchange Commission (2) thoroughly review this Offering Circular and (3) thoroughly review any attached documents to or documents referenced in, this Form 1-A and Offering Circular.

 

Type of Stock Offering:

 

Common Stock

Price Per Share:

 

$0.0001

Minimum Investment:

 

$2,000 per investor (20,000,000 Shares of Common Stock)

Maximum Offering:

 

$5,000,000. The Company will not accept investments greater than the Maximum Offering amount.

Maximum Shares Offered:

 

50,000,000,000 Shares of Common Stock

Use of Proceeds:

 

See the description in section entitled “USE OF PROCEEDS TO ISSUER” on page 18 herein.

Voting Rights:

 

The Shares have full voting rights.

Length of Offering:

 

Shares will be offered on a continuous basis until either (1) the maximum number of Shares or sold; (2) 180 Days from the date of qualification by the Commission, (3) if Company in its sole discretion extends the offering beyond 180 Days from the date of qualification by the Commission, or (4) the Company in its sole discretion withdraws this Offering.

 

The Offering

 

Common Stock Outstanding (1)

 

6,564,838,949 Shares

Common Stock in this Offering

 

50,000,000,000 Shares

Stock to be outstanding after the offering (2)

 

56,564,838,949 Shares

 

(1)No Preferred Stock is being sold in this Offering. 6,564,838,949 Common Stock was Outstanding as of June 30, 2022 and October 4, 2022. The Company has six classes of preferred stock outstanding as of October 4, 2022, Preferred Series A, Preferred Series B, Preferred Series C, Preferred Series D, Preferred Series F and Preferred Series G: 

 

(2)The total number of Shares of Common Stock assumes that the maximum number of Shares are sold in this offering. 

 

The Company may not be able to sell the Maximum Offering Amount. The Company will conduct one or more closings on a rolling basis as funds are received from investors.

 

The net proceeds of the Offering will be the gross proceeds of the Shares sold minus the expenses of the offering.

 

Our common stock is quoted on OTCMarkets.com under trading symbol “HVCW.” We are not listed on any stock exchange, and our ability to list our stock in the future is uncertain. Investors should not assume that the Offered Shares will be listed. A consistent public trading market for the shares may not develop.

 

Investment Analysis

 

There is no assurance Harrison, Vickers & Waterman, Inc. will be profitable, or that management’s opinion of the Company’s future prospects will not be outweighed in the by unanticipated losses, adverse regulatory developments and other risks. Investors should carefully consider the various risk factors below before investing in the Shares.

 


1


 

RISK FACTORS

 

The purchase of the Company’s Common Stock involves substantial risks. You should carefully consider the following risk factors in addition to any other risks associated with this investment. The Shares offered by the Company constitute a highly speculative investment and you should be in an economic position to lose your entire investment. The risks listed do not necessarily comprise all those associated with an investment in the Shares and are not set out in any particular order of priority. Additional risks and uncertainties may also have an adverse effect on the Company’s business and your investment in the Shares. An investment in the Company may not be suitable for all recipients of this Offering Circular. You are advised to consult an independent professional adviser or attorney who specializes in investments of this kind before making any decision to invest. You should consider carefully whether an investment in the Company is suitable in the light of your personal circumstances and the financial resources available to you.

 

The discussions and information in this Offering Circular may contain both historical and forward- looking statements. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company’s business, please be advised that the Company’s actual financial condition, operating results, and business performance may differ materially from that projected or estimated by the Company in forward-looking statements. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results may differ from the Company’s current expectations.

 

Before investing, you should carefully read and carefully consider the following risk factors:

 

Risks Relating to the Company and Its Business

 

The Company Has Limited Operating History.

 

The Company has a limited operating history and has suffered losses and there can be no assurance that the Company’s proposed plan of business can be realized in the manner contemplated and, if it cannot be, shareholders may lose all or a substantial part of their investment. There is no guarantee that it will continue to generate significant operating revenues or that its operations will be profitable.

 

The Company Is Dependent Upon Its Management, Key Personnel and Consultants to Execute the Business Plan.

 

The Company’s success is heavily dependent upon the continued active participation of the Company’s current executive officers as well as other key personnel and consultants. Loss of the services of one or more of these individuals could have a material adverse effect upon the Company’s business, financial condition or results of operations. Further, the Company’s success and achievement of the Company’s growth plans depend on the Company’s ability to recruit, hire, train and retain other highly qualified technical and managerial personnel. Competition for qualified employees among companies in the healthy living, healthcare and online industries is intense, and the loss of any of such persons, or an inability to attract, retain and motivate any additional highly skilled employees required for the expansion of the Company’s activities, could have a materially adverse effect on it. The inability to attract and retain the necessary personnel, consultants and advisors could have a material adverse effect on the Company’s business, financial condition or results of operations.

 

Although Dependent Upon Certain Key Personnel, The Company Does Not Have Any Key Man Life Insurance Policies On Any Such People.

 

The Company is dependent upon management in order to conduct its operations and execute its business plan; however, the Company has not purchased any insurance policies with respect to those individuals in the event of their death or disability. Therefore, should any of these key personnel, management or founders die or become disabled, the Company will not receive any compensation that would assist with such person’s absence. The loss of such person could negatively affect the Company and its operations.

 

The Company Is Subject To Income Taxes As Well As Non-Income Based Taxes, Such As Payroll, Sales, Use, Value-Added, Net Worth, Property And Goods And Services Taxes.

 

Significant judgment is required in determining our provision for income taxes and other tax liabilities. In the ordinary course of our business, there are many transactions and calculations where the ultimate tax determination is uncertain.


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Although the Company believes that our tax estimates will be reasonable: (i) there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our income tax provisions, expense amounts for non-income based taxes and accruals and (ii) any material differences could have an adverse effect on our consolidated financial position and results of operations in the period or periods for which determination is made.

 

The Company Is Not Subject To Sarbanes-Oxley Regulations And Lacks The Financial Controls And Safeguards Required Of Public Companies.

 

The Company does not have the internal infrastructure necessary, and is not required, to complete an attestation about our financial controls that would be required under Section 404 of the Sarbanes-Oxley Act of 2002. There can be no assurances that there are no significant deficiencies or material weaknesses in the quality of our financial controls. The Company expects to incur additional expenses and diversion of management’s time if and when it becomes necessary to perform the system and process evaluation, testing and remediation required in order to comply with the management certification and auditor attestation requirements.

 

The Company Has Engaged In Certain Transactions With Related Persons.

 

Please see the section of this Offering Circular entitled “Interest of Management and Others in Certain Related-Party Transactions and Agreements”

 

Changes In Employment Laws Or Regulation Could Harm The Company’s Performance.

 

Various federal and state labor laws govern the Company’s relationship with our employees and affect operating costs. These laws may include minimum wage requirements, overtime pay, healthcare reform and the implementation of various federal and state healthcare laws, unemployment tax rates, workers’ compensation rates, citizenship requirements, union membership and sales taxes. A number of factors could adversely affect our operating results, including additional government-imposed increases in minimum wages, overtime pay, paid leaves of absence and mandated health benefits, mandated training for employees, changing regulations from the National Labor Relations Board and increased employee litigation including claims relating to the Fair Labor Standards Act.

 

The Company’s Bank Accounts Will Not Be Fully Insured.

 

The Company’s regular bank accounts each have federal insurance that is limited to a certain amount of coverage. It is anticipated that the account balances in each account may exceed those limits at times. In the event that any of Company’s banks should fail, the Company may not be able to recover all amounts deposited in these bank accounts.

 

The Company’s Business Plan Is Speculative.

 

The Company’s present business and planned business are speculative and subject to numerous risks and uncertainties. There is no assurance that the Company will continue to generate significant revenues or profits.

 

The Company Will Likely Incur Debt.

 

The Company has incurred debt and expects to incur future debt in order to fund operations. Complying with obligations under such indebtedness may have a material adverse effect on the Company and on your investment.

 

The Company’s Expenses Could Increase Without a Corresponding Increase in Revenues.

 

The Company’s operating and other expenses could increase without a corresponding increase in revenues, which could have a material adverse effect on the Company’s consolidated financial results and on your investment. Factors which could increase operating and other expenses include, but are not limited to (1) increases in the rate of inflation, (2) increases in taxes and other statutory charges, (3) changes in laws, regulations or government policies which increase the costs of compliance with such laws, regulations or policies, (4) significant increases in insurance premiums, and (5) increases in borrowing costs.


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Increased Costs Could Affect The Company.

 

An increase in the cost of raw materials or energy could affect the Company’s profitability. Commodity and other price changes may result in unexpected increases in the cost of raw materials, glass bottles and other packaging materials used by the Company. The Company may also be adversely affected by shortages of raw materials or packaging materials. In addition, energy cost increases could result in higher transportation, freight and other operating costs. The Company may not be able to increase its prices to offset these increased costs without suffering reduced volume, sales and operating profit, and this could have an adverse effect on your investment.

 

We May Not Be Able to Maintain and Enhance Our Image.

 

It is important that the Company maintains and enhances the image of its existing service offerings. The image and reputation of the Company may be impacted for various reasons including litigation, complaints from regulatory bodies resulting from quality failure, illness or other health concerns. Such concerns, even when unsubstantiated, could be harmful to the Company’s image and reputation. From time to time, the Company may receive complaints from customers regarding the Company. The Company may in the future receive correspondence from customers requesting reimbursement. Certain dissatisfied customers may threaten legal action against the Company if no reimbursement is made. The Company may become subject to lawsuits from customers alleging injury because of a purported defect in services provided by the Company, claiming substantial damages and demanding payments from the Company. Any resulting litigation could be costly for the Company, divert management attention, and could result in increased costs of doing business, or otherwise have a material adverse effect on the Company’s business, results of operations, and financial condition. Any negative publicity generated as a result of customer complaints about the Company could damage the Company’s reputation and diminish the value of the Company’s brand, which could have a material adverse effect on the Company’s business, results of operations, and financial condition, as well as your investment. Deterioration in the Company’s brand may have a material adverse effect on its consolidated financial results as well as your investment.

 

If We Are Unable To Protect Effectively Our Intellectual Property, We May Not Be Able To Operate Our Business, Which Would Impair Our Ability To Compete.

 

Our success will depend on our ability to obtain and maintain meaningful intellectual property protection for any such intellectual property. The names and/or logos of Company brands (whether owned by the Company or licensed to us) may be challenged by holders of trademarks who file opposition notices, or otherwise contest trademark applications by the Company for its brands. Similarly, domains owned and used by the Company may be challenged by others who contest the ability of the Company to use the domain name or URL. Such challenges could have a material adverse effect on the Company’s consolidated financial results as well as your investment.

 

Computer, Website or Information System Breakdown Could Affect The Company’s Business.

 

Computer, website and/or information system breakdowns as well as cyber security attacks could impair the Company’s ability to service its customers leading to reduced revenue from sales and/or reputational damage, which could have a material adverse effect on the Company’s consolidated financial results as well as your investment.

 

Changes In The Economy Could Have a Detrimental Impact On The Company.

 

Changes in the general economic climate could have a detrimental impact on consumer expenditure and therefore on the Company’s revenue. It is possible that recessionary pressures and other economic factors (such as declining incomes, future potential rising interest rates, higher unemployment and tax increases) may adversely affect customers’ confidence and willingness to spend. Any of such events or occurrences could have a material adverse effect on the Company’s consolidated financial results and on your investment.

 

The Amount Of Capital The Company Is Attempting To Raise In This Offering Is Not Enough To Sustain The Company’s Current Business Plan.

 

In order to achieve the Company’s near and long-term goals, the Company will need to procure funds in addition to the amount raised in the Offering. There is no guarantee the Company will be able to raise such funds on acceptable terms or at all. If we are not able to raise sufficient capital in the future, we will not be able to execute our business plan, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise


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transfer all or substantially all of our remaining assets, which could cause you to lose all or a portion of your investment.

 

Additional Financing May Be Necessary For The Implementation Of Our Growth Strategy.

 

The Company may require additional debt and/or equity financing to pursue our growth and business strategies. These include, but are not limited to enhancing our operating infrastructure and otherwise respond to competitive pressures. Given our limited operating history and existing losses, there can be no assurance that additional financing will be available, or, if available, that the terms will be acceptable to us. Lack of additional funding could force us to curtail substantially our growth plans. Furthermore, the issuance by us of any additional securities pursuant to any future fundraising activities undertaken by us would dilute the ownership of existing shareholders and may reduce the price of our Shares.

 

Our Employees, Executive Officers, Directors And Insider Shareholders Beneficially Own Or Control A Substantial Portion Of Our Outstanding Shares.

 

Our CEO, Robert W. Tetsch, has majority voting control over the Company through his ownership of all 51 Shares of our Series B Preferred Stock, which are “super-voting” and entitle him to cast 51% of the vote on any matters coming before a vote of our shareholders of every class.  Mr. Tetsch is also our sole Officer and Director. This will limit your ability and the ability of our other shareholders, whether acting alone or together, to propose or direct the management or overall direction of our Company. Additionally, this concentration of ownership could discourage or prevent a potential takeover of our Company that might otherwise result in an investor receiving a premium over the market price for his Shares. Accordingly, Mr. Tetsch has the power to control the election of our directors and the approval of actions for which the approval of our shareholders is required. If you acquire our Shares, you will have no effective voice in the management of our Company. Such concentrated control of our Company may adversely affect the price of our Shares. Our principal shareholders may be able to control matters requiring approval by our shareholders, including the election of directors, mergers or other business combinations. Such concentrated control may also make it difficult for our shareholders to receive a premium for their Shares in the event that we merge with a third party or enter into different transactions, which require shareholder approval. These provisions could also limit the price that investors might be willing to pay in the future for our Shares.

 

Our Operating Plan Relies In Large Part Upon Assumptions And Analyses Developed By The Company. If These Assumptions Or Analyses Prove To Be Incorrect, The Company’s Actual Operating Results May Be Materially Different From Our Forecasted Results.

 

Whether actual operating results and business developments will be consistent with the Company’s expectations and assumptions as reflected in its forecast depends on a number of factors, many of which are outside the Company’s control, including, but not limited to:

 

·whether the Company can obtain sufficient capital to sustain and grow its business 

·our ability to manage the Company’s growth 

·whether the Company can manage relationships with key vendors and advertisers 

·demand for the Company’s products and services 

·the timing and costs of new and existing marketing and promotional efforts 

·competition 

·the Company’s ability to retain existing key management, to integrate recent hires and to attract, retain and motivate qualified personnel 

·the overall strength and stability of domestic and international economies 

·consumer spending habits 

 

Unfavorable changes in any of these or other factors, most of which are beyond the Company’s control, could materially and adversely affect its business, consolidated results of operations and consolidated financial condition.


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To Date, The Company Has Cumulative Operating Losses And May Not Be Initially Profitable For At Least The Foreseeable Future, And Cannot Accurately Predict When It Might Become Profitable.

 

The Company has a cumulative operating loss since the Company’s inception of $6,685,583 as of June 30, 2022. The Company may not be able to generate significant revenues in the future. In addition, the Company expects to incur substantial operating expenses in order to fund the expansion of the Company’s business. As a result, the Company may continue to experience substantial negative cash flow for at least the foreseeable future and cannot predict when, or even if, the Company becomes profitable again.

 

The Company May Be Unable To Manage Their Growth Or Implement Their Expansion Strategy.

 

The Company may not be able to expand the Company’s product and service offerings, the Company’s markets, or implement the other features of the Company’s business strategy at the rate or to the extent presently planned. The Company’s projected growth will place a significant strain on the Company’s administrative, operational and financial resources. If the Company is unable to successfully manage the Company’s future growth, establish and continue to upgrade the Company’s operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, the Company’s consolidated financial condition and consolidated results of operations could be materially and adversely affected.

 

The Company Relies Upon Trade Secret Protection To Protect Its Intellectual Property; It May Be Difficult And Costly To Protect The Company’s Proprietary Rights And The Company May Not Be Able To Ensure Their Protection.

 

The Company currently relies on trade secrets. While the Company uses reasonable efforts to protect these trade secrets, the Company cannot assure that its employees, consultants, contractors or advisors will not, unintentionally or willfully, disclose the Company’s trade secrets to competitors or other third parties. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Moreover, the Company’s competitors may independently develop equivalent knowledge, methods and know-how. If the Company is unable to defend the Company’s trade secrets from others use, or if the Company’s competitors develop equivalent knowledge, it could have a material adverse effect on the Company’s business. Any infringement of the Company’s proprietary rights could result in significant litigation costs, and any failure to adequately protect the Company’s proprietary rights could result in the Company’s competitors offering similar products, potentially resulting in loss of a competitive advantage and decreased revenue. Existing patent, copyright, trademark and trade secret laws afford only limited protection. In addition, the laws of some foreign countries do not protect the Company’s proprietary rights to the same extent as do the laws of the United States. Therefore, the Company may not be able to protect the Company’s proprietary rights against unauthorized third-party use. Enforcing a claim that a third party illegally obtained and is using the Company’s trade secrets could be expensive and time consuming, and the outcome of such a claim is unpredictable. Litigation may be necessary in the future to enforce the Company’s intellectual property rights, to protect the Company’s trade secrets or to determine the validity and scope of the proprietary rights of others. This litigation could result in substantial costs and diversion of resources and could materially adversely affect the Company’s future operating results.

 

The Company’s Business Model Is Evolving.

 

The Company’s business model is unproven and is likely to continue to evolve. Accordingly, the Company’s current business model may not be successful and may need to be changed. The Company’s ability to generate significant revenues will depend, in large part, on the Company’s ability to successfully market the Company’s products to potential users who may not be convinced of the need for the Company’s products and services or who may be reluctant to rely upon third parties to develop and provide these products. The Company intends to continue to develop the Company’s business model as the Company’s market continues to evolve.

 

The Company Needs to Increase Brand Awareness.

 

Due to a variety of factors, the Company’s opportunity to achieve and maintain a significant market share may be limited. Developing and maintaining awareness of the Company’s brand name, among other factors, is critical. Further, the importance of brand recognition will increase as competition in the Company’s market increases. Successfully promoting and positioning the Company’s brand, products and services will depend largely on the effectiveness of the Company’s marketing efforts. Therefore, the Company may need to increase the Company’s financial commitment to creating and maintaining brand awareness. If the Company fails to successfully promote the


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Company’s brand name or if the Company incurs significant expenses promoting and maintaining the Company’s brand name, it would have a material adverse effect on the Company’s consolidated results of operations.

 

The Company Faces Competition In The Company’s Markets From A Number Of Large And Small Companies, Some Of Which Have Greater Financial, Research And Development, Production And Other Resources Than The Company.

 

In many cases, the Company’s competitors have longer operating histories, established ties to the market and consumers, greater brand awareness, and greater financial, technical and marketing resources. The Company’s ability to compete depends, in part, upon a number of factors outside the Company’s control, including the ability of the Company’s competitors to develop alternatives that are superior. If the Company fails to successfully compete in its markets, or if the Company incurs significant expenses in order to compete, it would have a material adverse effect on the Company’s consolidated results of operations.

 

A Data Security Breach Could Expose The Company To Liability And Protracted And Costly Litigation, And Could Adversely Affect The Company’s Reputation And Operating Revenues.

 

To the extent that the Company’s activities involve the storage and transmission of confidential information, the Company and/or third-party processors will receive, transmit and store confidential customer and other information. Encryption software and the other technologies used to provide security for storage, processing and transmission of confidential customer and other information may not be effective to protect against data security breaches by third parties. The risk of unauthorized circumvention of such security measures has been heightened by advances in computer capabilities and the increasing sophistication of hackers. Improper access to the Company’s or these third parties’ systems or databases could result in the theft, publication, deletion or modification of confidential customer and other information. A data security breach of the systems on which sensitive account information is stored could lead to fraudulent activity involving the Company’s products and services, reputational damage, and claims or regulatory actions against us. If the Company is sued in connection with any data security breach, the Company could be involved in protracted and costly litigation. If unsuccessful in defending that litigation, the Company might be forced to pay damages and/or change the Company’s business practices or pricing structure, any of which could have a material adverse effect on the Company’s operating revenues and profitability. The Company would also likely have to pay fines, penalties and/or other assessments imposed as a result of any data security breach.

 

The Company Depends On Third-Party Providers For A Reliable Internet Infrastructure And The Failure Of These Third Parties, Or The Internet In General, For Any Reason Would Significantly Impair The Company’s Ability To Conduct Its Business.

 

The Company will outsource some or all of its online presence and data management to third parties who host the actual servers and provide power and security in multiple data centers in each geographic location. These third-party facilities require uninterrupted access to the Internet. If the operation of the servers is interrupted for any reason, including natural disaster, financial insolvency of a third-party provider, or malicious electronic intrusion into the data center, its business would be significantly damaged. As has occurred with many Internet-based businesses, the Company may be subject to ‘denial-of-service’ attacks in which unknown individuals bombard its computer servers with requests for data, thereby degrading the servers’ performance. The Company cannot be certain it will be successful in quickly identifying and neutralizing these attacks. If either a third-party facility failed, or the Company’s ability to access the Internet was interfered with because of the failure of Internet equipment in general or if the Company becomes subject to malicious attacks of computer intruders, its business and operating results will be materially adversely affected.

 

The Company’s Employees May Engage In Misconduct Or Improper Activities.

 

The Company, like any business, is exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with laws or regulations, provide accurate information to regulators, comply with applicable standards, report financial information or data accurately or disclose unauthorized activities to the Company. In particular, sales, marketing and business arrangements are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve improper or illegal activities which could result in regulatory sanctions and serious harm to the Company’s reputation.


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Limitation On Director Liability.

 

The Company may provide for the indemnification of directors to the fullest extent permitted by law and, to the extent permitted by such law, eliminate or limit the personal liability of directors to the Company and its shareholders for monetary damages for certain breaches of fiduciary duty. Such indemnification may be available for liabilities arising in connection with this Offering. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

 

Risks Relating to This Offering and Investment

 

The Company May Undertake Additional Equity or Debt Financing That May Dilute The Shares In This Offering.

 

The Company may undertake further equity or debt financing, which may be dilutive to existing shareholders, including you, or result in an issuance of securities whose rights, preferences and privileges are senior to those of existing shareholders, including you, and also reducing the value of Shares subscribed for under this Offering.

 

An Investment In The Shares Is Speculative And There Can Be No Assurance Of Any Return On Any Such Investment.

 

An investment in the Company’s Shares is speculative, and there is no assurance that investors will obtain any return on their investment. Investors will be subject to substantial risks involved in an investment in the Company, including the risk of losing their entire investment.

 

The Shares Are Offered On A “Best Efforts” Basis And The Company May Not Raise The Maximum Amount Being Offered.

 

Since the Company is offering the Shares on a “best efforts” basis, there is no assurance that the Company will sell enough Shares to meet its capital needs. If you purchase Shares in this Offering, you will do so without any assurance that the Company will raise enough money to satisfy the full Use Of Proceeds To Issuer which the Company has outlined in this Offering Circular or to meet the Company’s working capital needs.

 

If The Maximum Offering Is Not Raised, It May Increase The Amount Of Long-Term Debt Or The Amount Of Additional Equity It Needs To Raise.

 

There is no assurance that the maximum amount of Shares in this offering will be sold. If the maximum Offering amount is not sold, we may need to incur additional debt or raise additional equity in order to finance our operations. Increasing the amount of debt will increase our debt service obligations and make less cash available for distribution to our shareholders. Increasing the amount of additional equity that we will have to seek in the future will further dilute those investors participating in this Offering.

 

We Have Not Paid Dividends In The Past And Do Not Expect To Pay Dividends In The Future, So Any Return On Investment May Be Limited To The Value Of Our Shares.

 

We have never paid cash dividends on our Shares and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our Shares will depend on earnings, financial condition and other business and economic factors affecting it at such time that management may consider relevant. If we do not pay dividends, our Shares may be less valuable because a return on your investment will only occur if its stock price appreciates.

 

The Company May Not Be Able To Obtain Additional Financing.

 

Even if the Company is successful in selling the maximum number of Shares in the Offering, the Company may require additional funds to continue and grow its business. The Company may not be able to obtain additional financing as needed, on acceptable terms, or at all, which would force the Company to delay its plans for growth and implementation of its strategy which could seriously harm its business, financial condition and results of operations. If the Company needs additional funds, the Company may seek to obtain them primarily through additional equity or debt financings. Those additional financings could result in dilution to the Company’s current shareholders and to you if you invest in this Offering.


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The Offering Price Has Been Arbitrary Determined.

 

The offering price of the Shares has been arbitrarily established by the Company based upon its present and anticipated financing needs and bears no relationship to the Company’s present financial condition, assets, book value, projected earnings, or any other generally accepted valuation criteria. The offering price of the Shares may not be indicative of the value of the Shares or the Company, now or in the future.

 

The Management Of The Company Has Broad Discretion In Application of Proceeds.

 

The management of the Company has broad discretion to adjust the application and allocation of the net proceeds of this offering in order to address changed circumstances and opportunities. As a result of the foregoing, the success of the Company will be substantially dependent upon the discretion and judgment of the management of the Company with respect to the application and allocation of the net proceeds hereof.

 

An Investment in the Company’s Shares Could Result In A Loss of Your Entire Investment.

 

An investment in the Company’s Shares offered in this Offering involves a high degree of risk and you should not purchase the Shares if you cannot afford the loss of your entire investment. You may not be able to liquidate your investment for any reason in the near future.

 

There Is No Assurance The Company Will Be Able To Pay Distributions To Shareholders.

 

While the Company may choose to pay distributions at some point in the future to its shareholders, there can be no assurance that cash flow and profits will allow such distributions to ever be made.

 

There a Limited Public Trading Market for the Company’s Shares.

 

At present, the Company’s common stock is quoted on OTCMarkets.com under the trading symbol “HVCW.” Our common stock experiences fluctuation in volume and trading prices. There is no consistent and active trading market for the Company’s securities and the Company cannot assure that a consistent trading market will develop. OTCMarkets.com provides significantly less liquidity than a securities exchange such as the NASDAQ Stock Market. Prices for securities traded solely on OTCMarkets.com may be difficult to obtain and holders of the Shares and the Company’s securities may be unable to resell their securities at or near their original price or at any price. In any event, except to the extent that investors’ Shares may be registered on a Form S-1 Registration Statement with the Securities and Exchange Commission in the future, there is absolutely no assurance that Shares could be sold under Rule 144 or otherwise. The Company has no plans at this time to file an S-1 Registration Statement and thus there is no assurance that the Shares could be sold in the future.

 

Sales Of A Substantial Number Of Shares Of Our Type Of Stock May Cause The Price Of Our Type Of Stock To Decline.

 

If our shareholders sell substantial amounts of our Shares in the public market, Shares sold may cause the price to decrease below the current offering price. These sales may also make it more difficult for us to sell equity or equity-related securities at a time and price that we deem reasonable or appropriate.

 

The Company Has Made Assumptions In Its Projections and In Forward-Looking Statements That May Not Be Accurate.

 

The discussions and information in this Offering Circular may contain both historical and “forward- looking statements” which can be identified by the use of forward-looking terminology including the terms “believes,” “anticipates,” “continues,” “expects,” “intends,” “may,” “will,” “would,” “should,” or, in each case, their negative or other variations or comparable terminology. You should not place undue reliance on forward-looking statements. These forward-looking statements include matters that are not historical facts. Forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements contained in this Offering Circular, based on past trends or activities, should not be taken as a representation that such trends or activities will continue in the future. To the extent that the Offering Circular contains forward-looking statements regarding the financial condition, operating results, business prospects, or any other aspect of the Company’s business, please be advised that the Company’s actual financial condition, operating results, and business performance may


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differ materially from that projected or estimated by the Company. The Company has attempted to identify, in context, certain of the factors it currently believes may cause actual future experience and results to differ from its current expectations. The differences may be caused by a variety of factors, including but not limited to adverse economic conditions, lack of market acceptance, reduction of consumer demand, unexpected costs and operating deficits, lower sales and revenues than forecast, default on leases or other indebtedness, loss of suppliers, loss of supply, loss of distribution and service contracts, price increases for capital, supplies and materials, inadequate capital, inability to raise capital or financing, failure to obtain customers, loss of customers and failure to obtain new customers, the risk of litigation and administrative proceedings involving the Company or its employees, loss of government licenses and permits or failure to obtain them, higher than anticipated labor costs, the possible acquisition of new businesses or products that result in operating losses or that do not perform as anticipated, resulting in unanticipated losses, the possible fluctuation and volatility of the Company’s operating results and financial condition, adverse publicity and news coverage, inability to carry out marketing and sales plans, loss of key executives, changes in interest rates, inflationary factors, and other specific risks that may be referred to in this Offering Circular or in other reports issued by us or by third-party publishers.

 

You Should Be Aware Of The Long-Term Nature Of This Investment.

 

Because the Shares have not been registered under the Securities Act or under the securities laws of any state or non-United States jurisdiction, the Shares may have certain transfer restrictions. It is not currently contemplated that registration under the Securities Act or other securities laws will be effected. Limitations on the transfer of the Shares may also adversely affect the price that you might be able to obtain for the Shares in a private sale. You should be aware of the long-term nature of your investment in the Company. You will be required to represent that you are purchasing the Securities for your own account, for investment purposes and not with a view to resale or distribution thereof.

 

Neither The Offering Nor The Securities Have Been Registered Under Federal Or State Securities Laws, Leading To An Absence Of Certain Regulation Applicable To The Company.

 

The Company also has relied on exemptions from securities registration requirements under applicable state and federal securities laws. Investors in the Company, therefore, will not receive any of the benefits that such registration would otherwise provide. Prospective investors must therefore assess the adequacy of disclosure and the fairness of the terms of this Offering on their own or in conjunction with their personal advisors.

 

The Shares In This Offering Have No Protective Provisions.

 

The Shares in this Offering have no protective provisions. As such, you will not be afforded protection, by any provision of the Shares or as a Shareholder in the event of a transaction that may adversely affect you, including a reorganization, restructuring, merger or other similar transaction involving the Company. If there is a ‘liquidation event’ or ‘change of control’ the Shares being offered do not provide you with any protection. In addition, there are no provisions attached to the Shares in the Offering that would permit you to require the Company to repurchase the Shares in the event of a takeover, recapitalization or similar transaction.

 

You Will Not Have Significant Influence On The Management Of The Company.

 

Substantially all decisions with respect to the management of the Company will be made exclusively by the officers, directors, managers or employees of the Company. You will have a very limited ability, if at all, to vote on issues of Company management and will not have the right or power to take part in the management of the Company and will not be represented on the board of directors or by managers of the Company. Accordingly, no person should purchase Shares unless he or she is willing to entrust all aspects of management to the Company, and specifically, to the Company’s CEO, Robert W. Tetsch, who has majority voting control over the Company, by virtue of holding all 51 shares of the Company’s Series B Preferred Stock, entitling him to a vote equal to 51% of all votes cast by shareholders of the Company of all classes on any matter coming before a vote of the shareholders

 

No Guarantee of Return on Investment.

 

There is no assurance that you will realize a return on your investment or that you will not lose your entire investment. For this reason, you should read this Form 1-A, Offering Circular and all exhibits and referenced materials carefully and should consult with your own attorney and business advisor prior to making any investment decision.


10


IN ADDITION TO THE RISKS LISTED ABOVE, BUSINESSES ARE OFTEN SUBJECT TO RISKS NOT FORESEEN OR FULLY APPRECIATED BY THE MANAGEMENT. IT IS NOT POSSIBLE TO FORESEE ALL RISKS THAT MAY AFFECT THE COMPANY. MOREOVER, THE COMPANY CANNOT PREDICT WHETHER THE COMPANY WILL SUCCESSFULLY EFFECTUATE THE COMPANY’S CURRENT BUSINESS PLAN. EACH PROSPECTIVE PURCHASER IS ENCOURAGED TO CAREFULLY ANALYZE THE RISKS AND MERITS OF AN INVESTMENT IN THE SECURITIES AND SHOULD TAKE INTO CONSIDERATION WHEN MAKING SUCH ANALYSIS, AMONG OTHER FACTORS, THE RISK FACTORS DISCUSSED ABOVE.

 

DILUTION

 

The term ‘dilution’ refers to the reduction (as a percentage of the aggregate Shares outstanding) that occurs for any given share of stock when additional Shares are issued. If all of the Shares in this offering are fully subscribed and sold, the Shares offered herein will constitute approximately 9.42% of the total Shares of stock of the Company. The Company anticipates that subsequent to this offering the Company may require additional capital and such capital may take the form of Common Stock, other stock or securities or debt convertible into stock. Such future fund raising will further dilute the percentage ownership of the Shares sold herein in the Company.

 

If you invest in our Common Stock, your interest will be diluted immediately to the extent of the difference between the offering price per share of our Common Stock and the pro forma net tangible book value per share of our Common Stock after this offering. As of June 30, 2022, the net tangible book value of the Company was a deficit of approximately $ (4,808,571 based on the number of Shares of Common Stock 6,564,838,949 issued and outstanding as of that date. As of June 30, 2022 that equates to a net tangible book value of approximately ($0.0007) per share of Common Stock on a pro forma basis. Net tangible book value per share consists of shareholders’ equity adjusted for the retained earnings (deficit), divided by the total number of Shares of Common Stock outstanding. The pro forma net tangible book value, assuming full subscription in this Offering, would be $0.0000 per share of Common Stock.

 

Thus, if the Offering is fully subscribed, the net tangible book value per share of Common Stock owned by our current shareholders will have immediately increased by approximately $0.0007 without any additional investment on their part and the net tangible book value per Share for new investors will be immediately diluted to $0.0000 per Share. These calculations do not include the costs of the offering, and such expenses will cause further dilution.

 

The following table illustrates this per Share dilution:

 

Offering price per Share*

 

$

0.0001

Net Tangible Book Value per Share before Offering (based on 6,564,838,949 Common Shares at June 30, 2022)

 

$

(0.0007)

Increase in Net Tangible Book Value per Share Attributable to Shares Offered Hereby (based on 50,000,000,000 Common Shares at $0.0001 per share)

 

$

0.0007

Net Tangible Book Value per Share after Offering (based on 56,564,838,949 Shares)

 

$

0.0000

Dilution of Net Tangible Book Value per Share to Purchasers in this Offering

 

$

0.0001

 

*Before deduction of offering expenses

 

PLAN OF DISTRIBUTION

 

We are offering a Maximum Offering of up to 50,000,000,000 Shares of our Common Stock. This offering is being conducted on a best-efforts basis with a minimum number of 20,000,000 shares required to be sold.

 

The Company will not initially sell the Shares through commissioned broker-dealers. The Company will undertake one or more closings on a rolling basis as funds are received from investors. The Company will take a number of considerations into account when determining when to hold a closing. Such considerations will include the amount of funds raised in the Offering prior to such closing, the feedback received from market participants regarding their interest in participating in the Offering and the impact that a closing would have on the continuation of the Offering. The Company may terminate the offering at any time for any reason at its sole discretion, and may extend the Offering past the termination date of 180 Days from the date of qualification by the Commission in the absolute discretion of the Company and in accordance with the rules and provisions of Regulation A of the JOBS Act.

 

None of the Shares being sold in this offering are being sold by existing securities holders.


11


 

After the Offering Statement has been qualified by the Securities and Exchange Commission (the “SEC”), the Company will accept tenders of funds to purchase the Shares. No escrow agent is involved and the Company will receive the proceeds directly from any subscription.

 

The Shares will be sold only to a person who is not an accredited investor if the aggregate purchase price paid by such person is no more than 10% of the greater of such person’s annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2). Each accredited investor will complete a subscription agreement in order to invest.

 

No broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority (“FINRA”), is being engaged as an underwriter or for any other purpose in connection with this Offering.

 

This offering will commence on the qualification of this Offering Circular, as determined by the Securities and Exchange Commission and continue for a period of 180 Days. The Company may extend the Offering for an additional time period unless the Offering is completed or otherwise terminated by us, or unless we are required to terminate by application of Regulation A of the JOBS Act. Funds received from investors will be counted towards the Offering only if the form of payment, such as a check or wire transfer, clears the banking system and represents immediately available funds held by us prior to the termination of the subscription period, or prior to the termination of the extended subscription period if extended by the Company.

 

If you decide to subscribe for any Common Stock in this offering, you must deliver funds for acceptance or rejection. The minimum investment amount for a single investor is 20,000,000 Shares of Common Stock in the principal amount of $2,000. All subscription checks should be sent to the following address:

 

Harrison, Vickers & Waterman, Inc.

5781 Schaefer Avenue

Chino, CA 91710

 

In such case, subscription checks should be made payable to Harrison, Vickers & Waterman, Inc. If a subscription is rejected, all funds will be returned to subscribers within ten days of such rejection without deduction or interest. Upon acceptance by the Company of a subscription, a confirmation of such acceptance will be sent to the investor.

 

The Company maintains the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected subscriptions will be returned by the Company to the investor, without interest or deductions.

 

This is an offering made under “Tier 1” of Regulation A, and the Shares will not be listed on a registered national securities exchange upon qualification. The Shares will be sold only to a person who is not an accredited investor if the aggregate purchase price paid by such person is no more than 10% of the greater of such person’s annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended.

 

Each investor must represent in writing that he/she/it meets the applicable requirements set forth above and in the Subscription Agreement, including, among other things, that (i) he/she/it is purchasing the shares for his/her/its own account and (ii) he/she/it has such knowledge and experience in financial and business matters that he/she/it is capable of evaluating without outside assistance the merits and risks of investing in the shares, or he/she/it and his/her/its purchaser representative together have such knowledge and experience that they are capable of evaluating the merits and risks of investing in the shares.

 

Broker-dealers and other persons participating in the offering must make a reasonable inquiry in order to verify an investor’s suitability for an investment in the Company. Transferees of the shares will be required to meet the above suitability standards.

 

The shares may not be offered, sold, transferred, or delivered, directly or indirectly, to any person who (i) is named on the list of “specially designated nationals” or “blocked persons” maintained by the U.S. Office of Foreign Assets Control (“OFAC”) at www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise published from time to time, (ii) an agency of the government of a Sanctioned Country, (iii) an organization controlled by a Sanctioned Country, or (iv) is a person residing in a Sanctioned Country, to the extent subject to a sanctions program administered by OFAC. A “Sanctioned Country” means a country subject to a sanctions program identified on the list maintained by OFAC


12


and available at www.ustreas.gov/offices/enforcement/ofac/sdn or as otherwise published from time to time. Furthermore, the shares may not be offered, sold, transferred, or delivered, directly or indirectly, to any person who (i) has more than fifteen percent (15%) of its assets in Sanctioned Countries or (ii) derives more than fifteen percent (15%) of its operating income from investments in, or transactions with, sanctioned persons or Sanctioned Countries.

 

The sale of other securities of the same class as those to be offered for the period of distribution will be limited and restricted to those sold through this Offering. Because the Shares being sold are not publicly or otherwise traded, the market for the securities offered is presently stabilized.

 

USE OF PROCEEDS TO ISSUER

 

The Use of Proceeds is an estimate based on the Company’s current business plan. We may find it necessary or advisable to reallocate portions of the net proceeds reserved for one category to another, or to add additional categories, and we will have broad discretion in doing so.

 

The maximum gross proceeds from the sale of the Shares in this Offering are $5,000,000. The net proceeds from the offering, assuming it is fully subscribed, are expected to be approximately $4,975,000 after the payment of offering costs, but before printing, mailing, marketing, legal and accounting costs, and other compliance and professional fees that may be incurred. The estimate of the budget for offering costs is an estimate only and the actual offering costs may differ from those expected by management.

 

Management of the Company has wide latitude and discretion in the use of proceeds from this Offering. Ultimately, management of the Company intends to use a substantial portion of the net proceeds for general working capital. At present, management’s best estimate of the use of proceeds, at various funding milestones, is set out in the chart below. However, potential investors should note that this chart contains only the best estimates of the Company’s management based upon information available to them at the present time, and that the actual use of proceeds is likely to vary from this chart based upon circumstances as they exist in the future, various needs of the Company at different times in the future, and the discretion of the Company’s management at all times.

 

A portion of the proceeds from this Offering may be used to compensate or otherwise make payments to officers or directors of the issuer. The officers and directors of the Company may be paid salaries and receive benefits that are commensurate with similar companies, and a portion of the proceeds may be used to pay these ongoing business expenses.

 

USE OF PROCEEDS

 

 

50,000,000,000

 

37,500,000,000

 

25,000,000,000

 

12,500,000,000

 

shares sold

 

shares sold

 

shares sold

 

shares sold

Percent sold

100%

 

75%

 

50%

 

25%

Prospectus price

$

0.0001

 

$

0.0001

 

$

0.0001

 

$

0.0001

Proceeds

$

5,000,000

 

$

3,750,000

 

$

2,500,000

 

$

1,250,000

Fees

 

(25,000)

 

 

(25,000)

 

 

(25,000)

 

 

(25,000)

Net proceeds

$

4,975,000

 

$

3,725,000

 

$

2,475,000

 

$

1,225,000

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse

$

500,000

 

$

450,000

 

$

405,000

 

$

200,000

Inventory

 

1,750,000

 

 

1,500,000

 

 

750,000

 

 

375,000

Trucks

 

750,000

 

 

500,000

 

 

300,000

 

 

150,000

Compensation

 

875,000

 

 

675,000

 

 

500,000

 

 

300,000

Marketing

 

450,000

 

 

300,000

 

 

150,000

 

 

75,000

Office supplies

 

5,000

 

 

5,000

 

 

5,000

 

 

5,000

Website

 

50,000

 

 

50,000

 

 

50,000

 

 

50,000

Website development

 

20,000

 

 

20,000

 

 

20,000

 

 

20,000

Travel

 

10,000

 

 

10,000

 

 

10,000

 

 

10,000

Legal IP & Compliance

 

105,000

 

 

35,000

 

 

30,000

 

 

25,000

New business opportunities

 

460,000

 

 

180,000

 

 

255,000

 

 

15,000

Total principal uses of proceeds

 

4,975,000

 

 

3,725,000

 

 

2,475,000

 

 

1,225,000

Assets unallocated

$

-

 

$

-

 

$

-

 

$

-


13


 

 

The Company reserves the right to change the use of proceeds set out herein based on the needs of the ongoing business of the Company and the discretion of the Company’s management. The Company may reallocate the estimated use of proceeds among the various categories or for other uses if management deems such a reallocation to be appropriate.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

You should read the following discussion and analysis of our financial condition and results of our operations together with our financial statements and related notes appearing at the end of this Offering Circular. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” and elsewhere in this Offering Circular.

 

Forward-looking Statements

 

This section contains certain statements that may include “forward-looking statements”. These forward-looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects,” “anticipate,” “optimistic,” “intend,” “will” or other similar expressions. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with OTCMarkets and available on its website at http://www.otcmarkets.com. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under applicable securities laws, the Company does not assume a duty to update these forward-looking statements.

 

Description of Business

 

Corporate History

 

We were incorporated on June 5, 2008, under the laws of the State of Nevada under the name Sharp Performance Inc. From inception until September 2013, our business focus was on the provision of consulting services to the American automotive industry. From September 2013 until April 21, 2015, we were primarily engaged in the business of making commercial secured real estate loans. On October 24, 2013, we changed our name to Harrison, Vickers & Waterman Inc. in conjunction with the change in our business focus. On April 21, 2015, we commenced operations in a new line of business, the ownership of World of Beer taverns that serve craft and imported beer along with food and other spirits. We no longer are involved in the commercial secured real estate loans. On October 24, 2018, the Company entered into a Securities Exchange Agreement with NJ Battery Energy Storage Project 1, LLC. In January 2020, the assets of NJ Battery Energy Storage Project 1, LLC were sold and in September 2020, the net assets of the taverns were sold. Currently the Company has no operating business and is looking for acquisitions.

 

Acquisition of World of Beer

 

In April 2015, we entered into a Purchase Agreement (the “Purchase Agreement”), with the original shareholders of Attitude Beer Holdings, Inc. (“ABH”), namely, Attitude Drinks Incorporated, a Delaware corporation (“Attitude Drinks”), and two significant investors of ABH, pursuant to which the shareholders sold to us all of the outstanding shares of stock of ABH, and ABH thereupon became our wholly owned subsidiary. In consideration for the purchase of the shares of common stock of ABH, we issued: (i) to Attitude Drinks, 51 shares of our newly created Series B Preferred Stock of the Company (the “Series B Preferred Stock”) and a seven year warrant (the “B Warrant”) to purchase 5,000,000 shares of our common stock, par value $.0001 per share (the “Common Stock”), at an exercise price of $0.075 per share (subject to customary anti-dilution adjustments); (ii) to the significant investors, a secured convertible note of approximately $2.2 million and warrants to purchase approximately 1.7 billion shares at $.0025 per share. The warrants have a seven-year life commencing April 20, 2015. These investors also acquired an Additional Investment Right to invest up to $5,000,000 on the same terms.


14


 

One of the investors acquired 32,300 shares of our Series A Preferred Stock (convertible into 32,300,000 shares of Common Stock) from HVW Holdings LLC “HVW”, an entity of which Mr. James Giordano, our prior Chief Executive Officer and prior Chairman of the Board, was the managing member, subject to the terms of a Purchase Agreement. Attitude Drinks purchased 87,990,000 shares of Common Stock from HVW Holdings LLC at a price of $65,000.

 

Sale of World of Beer

 

On September 28, 2020, the Company sold its interests in the West Hartford World of Beer, and Cambridge Craft restaurants. Concurrent with this sale, the Purchaser also assumed all of the debt associated with the taverns with the exception of $5,000.

 

Acquisition of NJ Battery Energy Storage Project 1, LLC (NJB 1, LLC)

 

On October 24, 2018, the Company entered into a Securities Exchange Agreement (the “Securities Exchange Agreement”) with NJB 1, LLC, its Members, and various securities holders of the Company, under which the Company purchased approximately 80% of the LLC Membership Interest of NJB 1, LLC in exchange for the issuance of 100,000 Shares of newly issued Series C Convertible Preferred Stock. With the exception of 2,500 shares, all the shares held by the former owners of NJB 1, LLC were sold in September and October 2021. On February 25, 2022, those shares were exchanged for newly issued Series D Preferred stock

 

Sale of NJ Battery Energy Storage Project 1, LLC

 

In January 2020, the Company sold its rights to the Battery Project and paid the proceeds of $75,000 to the prior owners of the Battery project. All liabilities and assets were extinguished from the Company’s financial statements and the Battery project’s operations were deemed to be discontinued. There had been some dispute in regards to the Series C Preferred shares owned by the formers owners of the Battery project. During September 2021, 10,000 shares of the Series C Preferred stock owned by Chris Harrison were sold to outside investors, and in October 2021, 67,500 shares were sold to outside investors

 

Acquisition of MPS

 

On August 8, 2022, Harrison, Vickers & Waterman, Inc., a Wyoming corporation (“HVCW”), PEN Merger Sub, LLC, a California limited liability company (“Merger Sub”), Pacific Energy Network LLC, a California limited liability company (“PEN”), and Robert William Tetsch on behalf of the members of PEN, (the “Merger”) officially closed on the previously disclosed Agreement and Plan of Merger (the “Merger Agreement”) which was executed July 15, 2022.

 

Pacific Energy Network (PEN) is a California based parent company of several subsidiary LLCs that manage solar, roofing, HVAC, security, distribution, consulting, lead generation, marketing, sales, data, software and mortgage divisions. Founded in 2018, PEN has quickly become one of the largest and most successful home services companies in the nation with a footprint across multiple states. With a focus on customer satisfaction and strategic business planning, PEN has grown into a multi-product business that has increased revenue year over year and expanded its reach into new markets across the United States.

 

The Merger Agreement provided that, upon the closing, the Merger Sub was merged with and into PEN, with PEN continuing as a wholly owned subsidiary of HVCW, but with the management of PEN taking over voting control of HVCW.

 

The Merger Agreement was forwarded to the California Secretary of State for filing and issuance of a Certificate of Merger. The Merger was approved by the stockholders of HVCW and the members of PEN. The Merger Agreement was approved, authorized and agreed to by the boards of directors of each of HVCW and PEN.

 

Effective on August 8, 2022, Jeffrey M. Canouse, sole Officer and Director and Majority Shareholder of HVCW, appointed Robert W. Tetsch as sole Officer and Director of HVCW as his successor as his last official act and resigned as a condition of the Merger.

 

Also, effective on August 8, 2022, Jeffrey M. Canouse, assigned all 51 shares of HVCW’s Series B Preferred Stock, giving Robert Tetsch majority voting control of HVCW.


15


In consideration for the contribution of net assets of PEN, the Company issued 10,000 shares of Series F Preferred stock convertible into 85% of the Company’s outstanding common stock. In consideration for consulting and advisory services provided for the transaction, the Company issued 10,000 shares of Series G Preferred stock, convertible into 10% of the Company’s outstanding common stock.

 

Departure of Jeffrey M. Canouse and Appointment of Robert Tetsch

 

Effective on August 8, 2022, Jeffrey M. Canouse, Sole Officer and Director of HVCW resigned from his positions, and the Board of Directors accepted the appointment of Robert Tetsch, as the Company’s new Sole Officer and Director to replace Mr. Canouse on that date.

 

Mr. Canouse’s resignation was not due to any disagreement with the Company or its Board of Directors.

 

Control Block Transfer

 

Effective August 8, 2022, Jeffrey M. Canouse assigned 51 shares of Series B Preferred Stock to Robert W. Tetsch, giving Mr. Tetsch majority voting control over the Company, as his 51 shares carry voting rights equal to 51% of the issued and outstanding shares of the Company’s stock of all classes, meaning that he can outvote our other shareholders on any matter coming before a vote.

 

Results of Operations

 

Year Ended June 30, 2022 Compared to Year Ended June 30, 2021

 

Revenues

 

For the years ended June 30, 2022 and 2021, our business had total revenues of $16,560,280, and $3,400,037 respectively. The increase in revenues of approximately $13 million was due to the addition of new markets and the change in business model from being solely a sales organization to a full-service provider. As a result of the change in model, the gross margin as a percentage of revenues dropped from 80% to 27%. In a sales only environment, there is very little cost of goods sold

 

Operating expenses

 

The net change in operating expenses is delineated below:

 

 

Years ended

 

 

 

 

 

June 30,

 

June 30,

 

 

 

 

 

2022

 

2021

 

Difference

 

%

Operating Expenses

 

 

 

 

 

 

 

Wages and related expenses

$

4,154,236

 

$

2,421,768

 

$

1,732,468

 

71.5%

Sales and marketing expenses

 

374,135

 

 

369,449

 

 

4,686

 

1.3%

General and administrative

 

2,894,466

 

 

638,363

 

 

2,256,104

 

353.4%

Depreciation and Amortization

 

79,568

 

 

21,281

 

 

58,287

 

273.9%

Consulting expense

 

200,000

 

 

-

 

 

200,000

 

 

Total Operating Expenses

$

7,702,405

 

$

3,450,861

 

$

4,251,545

 

123.2%

 

The overall increase of $4.2 million or 123% is entirely due to the increase in operations. Sales and marketing expenses were comparable despite the four-fold increase in revenues due to the change in business model.

 

 

 


16


 

 

Other Income (Expense)

 

The net change in Other Income (Expense) is as follows:

 

 

Years ended

 

 

 

June 30,

2022

 

June 30,

2021

 

Difference

Other Income (Expense)

 

 

 

 

 

 

 

 

Other income

$

(55,500)

 

$

3,000

 

$

(58,500)

Interest expense

 

(662,803)

 

 

(200,675)

 

 

(462,128)

Amortization of debt discounts

 

 

 

 

(59,394)

 

 

59,394

Gain on change of accounting methodology

for debt instruments with equity characteristics

 

 

 

 

623,403

 

 

(623,403)

Change in derivative liability

 

 

 

 

(890,309)

 

 

890,309

Loss on disposal of asset

 

(13,297)

 

 

-

 

 

(13,297)

Forgiveness of PPP note

 

74,982

 

 

-

 

 

74,982

Gain on retirement of debt

 

35,000

 

 

-

 

 

35,000

Total Other Income (Expense)

$

(621,618)

 

$

(523,975)

 

$

(97,643)

 

 

Off-Balance Sheet Arrangements

 

The Company has no off-balance sheet arrangements.

 

Quantitative and Qualitative Disclosures about Market Risk

 

In the ordinary course of our business, we are not exposed to market risk of the sort that may arise from changes in interest rates or foreign currency exchange rates, or that may otherwise arise from transactions in derivatives.

 

The preparation of financial statements in conformity with GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates and assumptions include the fair value of the Company’s Common Stock, stock-based compensation, the recoverability and useful lives of long-lived assets, and the valuation allowance relating to the Company’s deferred tax assets.

 

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, in consultation with its legal counsel as appropriate, assesses 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, in consultation with 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 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 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 guarantees would be disclosed.

 

Dividends

 

We do not intend to retain future earnings to support our growth. Any payment of cash dividends in the future will be dependent upon: the amount of funds legally available; therefore, our earnings; financial condition, capital requirements, and other factors which our board of directors deems relevant.


17


Legal Proceedings

 

We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to temporary employee staffing business. These matters may include product liability, intellectual property, employment, personal injury caused by our employees, and other general claims. We will accrue for contingent liabilities when it is probable that a liability has been incurred and the amount can be reasonably estimated. We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

 

Critical Accounting Policies

 

We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management’s judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operation where such policies affect our reported and expected financial results. Note that our preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

 

Income taxes are one such critical accounting policy. Income taxes are recorded on an accrual basis of accounting based on tax positions taken or expected to be taken in a tax return. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon examination by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all or some portion, of such assets will more than likely not be realized. Should they occur, our policy is to classify interest and penalties related to tax positions as income tax expense. Since our inception, no such interest or penalties have been incurred.

 

Summary of Significant Accounting Policies

 

Basis of Presentation

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). In connection with the preparation of the financial statements, we are required to make assumptions and estimates about future events that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions and estimates on historical experience and other factors that management believes are relevant at the time our financial statements are prepared. On a periodic basis, management reviews the accounting policies, assumptions and estimates to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from the estimates and assumptions, and such differences could be material.

 

Use of Estimates

 

The preparation of the unaudited condensed consolidated financial statements 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 dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain of our estimates, including evaluating the collectability of accounts receivable, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. In the opinion of management, the condensed financial statements included herein contain all adjustments necessary to present fairly the Company’s financial position and


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the results of its operations and cash flows for the periods presented. Such adjustments are of a normal recurring nature.

 

Cash

 

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. At times, the Company’s cash balances may exceed the current insured amounts under the Federal Deposit Insurance Corporation. There were no accounts that exceeded federally insured limits at June 30, 2022 and June 30, 2021.

 

Accounts Receivable

 

Accounts receivable are carried at their estimated collectible amounts. Trade accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition

 

Impairment of Long-Lived Assets

 

The Company’s long-lived assets (consisting primarily of the fixed 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. At June 30, 2022, there was no impairment to any material assets of the Company.

 

Fixed Assets

 

Fixed assets are stated at cost less accumulated depreciation and amortization. Routine maintenance and repairs and minor replacement costs are charged to expense as incurred, while expenditures that extend the life of these assets are capitalized. Depreciation and amortization are provided for in amounts sufficient to write off the cost of depreciable assets to operations over their estimated service lives. The Company uses the straight-line method of depreciation method for both financial reporting and tax purposes. Upon the sale or retirement of property and equipment, the cost and related accumulated depreciation and amortization will be removed from the accounts and the resulting profit or loss will be reflected in the statement of income. At June 30, 2022 and June 30, 2021, all fixed assets were fully depreciated.

 

Revenue Recognition

 

The Company recognizes revenue in accordance with ASC 605, Revenue Recognition. ASC 605 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery of product has met the criteria established in the arrangement or services rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. This occurs when the services are completed in accordance with the contracts we have with clients. In connection with our products and services arrangements, when we are paid in advance, these amounts are classified as deferred revenue and recognized as revenue in the period the services were performed.

 

Deferred Revenue

 

Prepayments from customers before the period in which service is delivered are recorded as deferred revenue.

 

Fair Value Measurements

 

The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

 

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity


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to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

 

Level 1 - quoted prices in active markets for identical assets or liabilities

Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 - inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

 

The fair value of the Company’s current assets and current liabilities approximate their carrying values due to their short-term nature.

 

Income Taxes

 

We record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized.

 

We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We make adjustments to these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made and could have a material impact on our financial condition and operating results.

 

Recent Accounting Pronouncements

 

Not applicable

 

Additional Company Matters

 

The Company has not filed for bankruptcy protection nor has it ever been involved in receivership or similar proceedings.

 

DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES

 

As of October 4, 2022, Harrison, Vickers & Waterman, Inc. had 104 full-time employees, who were not an executive officer of the Company.

 

The directors and executive officers of the Company following the closing of the Merger with Modern Pro Solutions as of October 4, 2022 are as follows:

 

Robert W. Tetsch, Current President, CEO, CFO, Treasurer, Secretary, and Director

 

Robert Tetsch, age 35, is a self-taught business visionary. He founded Modern Pro Solutions (formerly Pacific Energy Network) in 2018 to leverage his nearly 20 years of field and managerial experience in all aspects of home and business services, maintenance, and owner support. Since starting Modern Pro Solutions, a full-service residential and commercial rooftop solar energy company, Mr. Tetsch has led an ambitious vertical integration. In 2021, Modern Pro Solutions expanded its footprint from residential solar and structured a parent company that manages subsidiary roofing, solar, HVAC, smart home, business consulting, distribution, and business financing. Born into an Army family that helped instill the virtues of hard work, discipline, accountability, and leadership, Mr. Tetsch is intent on pioneering the integrated home services industry. His plans include expansion of MPS’s territory and partnerships, and authorized dealer relationships, and scaling the company’s manufacturing and distribution capabilities to combat supply chain inconsistencies. Mr. Tetsch is also intent on adding a range of services such as integrating and mobilizing,


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building data collected from internet-of-things-connected devices, building inspections, maintenance consulting, control and monitoring software, green mortgages and bringing consumer financing in house.

 

Jeffrey M. Canouse, Former President, CEO, CFO, Treasurer, Secretary and Director)

 

Mr. Jeffrey M. Canouse, age 47, formerly served as the sole officer and director of Harrison, Vickers & Waterman from August 14, 2017 through the closing of the Merger with Modern Pro Solutions on August 8, 2022. He combines over twenty-three years of experience in financial senior management following a thirteen-year career as an Investment Banker. Previously, he had been involved in various companies in the investment industry holding positions including Vice President, Senior Vice President and Managing Director at J. P. Carey Inc., J.P. Carey Securities Inc. and JPC Capital a boutique (the “Carey Company’s”) investment banking firm that assisted in arranging over $2 billion in financing. During his time with the Carey Company’s Mr. Canouse was personally responsible for sourcing new corporate clients, presenting to institutional investors, structuring terms, and working with counsel for timely closings. From July 11, 2011 through the present day, Mr. Canouse has acted as Managing Member of Anvil Financial Management, LLC where he has offered his expertise to companies in need of restructuring, financing, debt settlement and compliance assistance. Mr. Canouse has also previously acted as Chief Executive Officer of two other publicly traded companies, where he oversaw acquisitions and restructuring amongst other duties in those roles.

 

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

 

The director of Harrison, Vickers & Waterman, Inc. is, at present, not compensated by the Company for their role as director. For the current director, only expenses are reimbursed for their participation on the board of directors. The Company may choose to compensate the present director in the future, as well as compensate future directors, in the Company’s discretion.

 

Executive Compensation

 

During the years ended June 30, 2022, and June 30, 2021, Harrison, Vickers & Waterman, Inc. paid the following annualized salaries to its executive officers:

 

Jeffrey M. Canouse, former CEO (served through August 8, 2022)*

 

2022

 

 

$

210,000

 

 

2021

 

 

$

338,694

 

 

 

 

 

 

 

Robert W. Tetsch, current CEO (did not serve as an officer during 2022 or 2021)*

 

2022

 

 

$

-

 

 

2021

 

 

$

-

 

*Robert W. Tetsch became CEO on August 8, 2022, upon the closing of the Agreement and Plan of Merger with MPS Solutions. Jeffrey M. Canouse resigned from all officer and director positions upon the appointment of Mr. Tetsch, on August 8, 2022.

 

Employment Agreements

 

Stock Incentive Plan

 

In the future, we may establish a management stock incentive plan pursuant to which stock options and awards may be authorized and granted to our directors, executive officers, employees and key employees or consultants. Details of such a plan, should one be established, have not been decided yet. Stock options or a significant equity ownership position in us may be utilized by us in the future to attract one or more new key senior executives to manage and facilitate our growth.

 

Board of Directors

 

Our board of directors currently consists of one director, who is not considered “independent” as defined in Rule 4200 of FINRA’s listing standards. We may appoint additional independent directors to our board of directors in the future, particularly to serve on committees should they be established.


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Committees of the Board of Directors

 

We may establish a compensation committee, a nominating and governance committee and other committees to our Board of Directors in the future, but have not done so as of the date of this Offering Circular. Until such committees are established, matters that would otherwise be addressed by such committees will be acted upon by the Board of Directors.

 

Director Compensation

 

We currently do not pay our directors any compensation for their services as board members, with the exception of reimbursing and board related expenses. In the future, we may compensate directors, particularly those who are not also employees and who act as independent board members, on either a per meeting or fixed compensation basis.

 

Limitation of Liability and Indemnification of Officers and Directors

 

Our Bylaws limit the liability of directors and officers of the Company to the maximum extent permitted by Wyoming law. The Bylaws state that the Company shall indemnify and hold harmless each person who was or is a party or is threatened to be made a party to, or is otherwise involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was a director or an officer of the Company or such director or officer is or was serving at the request of the Company as a director, officer, partner, member, manager, trustee, employee or agent of another company or of a partnership, limited liability company, joint venture, trust or other enterprise.

 

The Company believes that indemnification under our Bylaws covers at least negligence and gross negligence on the part of indemnified parties. The Company also may secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in connection with their services to us, regardless of whether our Bylaws permit such indemnification.

 

The Company may also enter into separate indemnification agreements with its directors and officers, in addition to the indemnification provided for in our Bylaws. These agreements, among other things, may provide that we will indemnify our directors and officers for certain expenses (including attorneys’ fees), judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of such person’s services as one of our directors or officers, or rendering services at our request, to any of its subsidiaries or any other company or enterprise. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers.

 

There is no pending litigation or proceeding involving any of our directors or officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

 

For additional information on indemnification and limitations on liability of our directors and officers, please review the Company’s Bylaws, which are attached to this Offering Circular.

 

 

 

 

 

 

 


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SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS

 

The following table sets forth information regarding beneficial ownership of our Common Stock and all Series of Preferred Stock, following the closing of our Merger with MPS, and as of October 4, 2022. None of our Officers or Directors are selling stock in this Offering.

 

**No shareholders own greater than 4.99% of our issued and outstanding shares of Common Stock, and therefore the table below shows beneficial ownership of each series of our Preferred Stock only.

 

Name of

Officer/Director

and Control Person

 

Affiliation with

Company (e.g.

Officer/Director/Owner

of more than 5%)

 

Residential

Address

(City /

State Only)

 

Number

of shares

owned

 

Share

type/class

 

Ownership

Percentage

of Class

Outstanding

Robert W. Tetsch

 

Officer,Director, Owner(2)

 

Carona, CA

 

 

51

 

Preferred Series B

 

 

100%

Robert W. Tetsch

 

Officer, Director, Owner(5)

 

Carona, CA

 

 

9,700

 

Preferred Series F

 

 

97%

Alpha Capital Anstalt

 

Owner(1)

 

Vaduz, Lichtenstein

 

 

70,000

 

Preferred Series A

 

 

87.5%

Robert Sharp

 

Owner(1)

 

New Canaan, CT

 

 

10,000

 

Preferred Series A

 

 

12.5%

Dawn Caputo

 

Owner(3)

 

Long Beach, NJ

 

 

2,500

 

Preferred Series C

 

 

100%

JP Carey Limited Partners, LLC

 

Owner(4)

 

Alpharetta, GA

 

 

1,000,000

 

Preferred Series D

 

 

52%

Livingston Asset Management, LLC

 

Owner(4)

 

Ridgefield, CT

 

 

81,083

 

Preferred Series D

 

 

4%

Trillium Partners, LP

 

Owner(4)

 

Ridgefield, CT

 

 

333,334

 

Preferred Series D

 

 

17%

Oscaleta Partners, LLC

 

Owner(4)

 

Ridgefield, CT

 

 

333,333

 

Preferred Series D

 

 

17%

Matterhorn Partners, LLC

 

Owner(4)

 

Madison, CT

 

 

175,000

 

Preferred Series D

 

 

9%

Trillium Partners, LP

 

Owner(6)

 

Ridgefield, CT

 

 

6,500

 

Series G

 

 

65%

Jeffrey Canouse

 

Owner(6)

 

Alpharetta, GA

 

 

3,500

 

Series G

 

 

35%

 

(1)Series A Preferred Stock: There are 80,000 shares of Series A Preferred Stock authorized. 80,000 shares of Series A are issued and outstanding, of which 70,000 shares are owned by Alpha Capital Anstalt. Konrad Ackerman is the beneficial owner of Alpha Capital Anstalt. The remaining 10,000 shares of Series A are owned by Robert Sharp. 

 

(2)Series B Preferred Stock: There are 51 shares of Series B Preferred Stock authorized. Robert W. Tetsch acquired all 51 shares of Series B Preferred Stock from Jeffrey M. Canouse upon the closing of the Company’s merger with MPS on August 8, 2022. As the holder of all of our Series B Preferred Stock, Robert W. Tetsch effectively holds the control block, and has majority voting control of the Company, as his voting power is equivalent to 51% of the votes of all shareholders in the Company on any matter coming before a vote of its shareholders. As of the date of this filing, Mr. Tetsch is also the Company’s sole officer and director. 

 

(3)Series C Preferred Stock. There are 2,500 shares of Series C Preferred Stock authorized. Dawn Caputo is the owner of all 2,500 shares of Series C Preferred Stock. 

 

(4)Series D Preferred Stock. There are 2,000,000 shares of Series D Preferred Stock authorized. A total of 2,000,000 shares of Series D were issued upon exchange for outstanding Series C Preferred Stock.  Currently, there are 1,922,750 Series D shares outstanding, and owned as follows: JP Carey Limited Partners, LLC owns 1,000,000 of Series D. JP Carey Limited Partners, LLC is beneficially owned by Joseph Canouse. Trillium Partners, LP owns 333,333,334 shares, Oscaleta Partners, LLC, owns 333,333,333 shares, and  


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Livingston Asset Management, LLC owns 81,083 shares. Stephen Hicks is the beneficial owner of Livingston, Trillium, and Oscaleta. Matterhorn Partners, LLC owns 175,000 shares of Series D Preferred Stock.  Matterhorn Partners, LLC is beneficially owned by Paul Montney.

 

There are no shares of Series E Preferred Stock authorized or issued and outstanding.

 

(5)Series F Preferred Stock. There are 10,000 shares of Series F Preferred Stock authorized. A total of 9,700 shares of Series F Preferred Stock are issued and outstanding, which are owned by our CEO, Robert W. Tetsch. 

 

(6)Series G. Preferred Stock. There are 10,000 shares of Series G Preferred Stock authorized.  A total of 10,000 shares of Series G Preferred Stock are issued and outstanding, of which 6,500 shares are owned by Trillium Partners, LP and 3,500 shares are owned by Jeffrey M. Canouse. Trillium is beneficially owned by Stephen Hicks. 

 

Beneficial ownership and percentage ownership are determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to Shares of stock. This information does not necessarily indicate beneficial ownership for any other purpose.

 

Unless otherwise indicated and subject to applicable community property laws, to our knowledge, each Shareholder named in the following table possesses sole voting and investment power over their Shares of Common Stock. Percentage of beneficial ownership before the offering is based on 6,564,838,949 Shares of Common Stock outstanding as of June 30, 2022 and October 4, 2022.

 

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

 

SECURITIES BEING OFFERED

 

The Company is offering Shares of its Common Stock. Except as otherwise required by law, the Company’s Articles of Incorporation or Bylaws, each Shareholder shall be entitled to one vote for each Share held by such Shareholder on the record date of any vote of Shareholders of the Company. The Shares of Common Stock, when issued, will be fully paid and non-assessable.

 

The Company does not expect to create any additional classes of Common Stock during the next 12 months, but the Company is not limited from creating additional classes which may have preferred dividend, voting and/or liquidation rights or other benefits not available to holders of its common stock.

 

The Company does not expect to declare dividends for holders of Common Stock in the foreseeable future. Dividends will be declared, if at all (and subject to rights of holders of additional classes of securities, if any), in the discretion of the Company’s Board of Directors. Dividends, if ever declared, may be paid in cash, in property, or in shares of the capital stock of the Company, subject to the provisions of law, the Company’s Bylaws and the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Company available for dividends such sums as the Board of Directors, in its absolute discretion, deems proper as a reserve for working capital, to meet contingencies, for equalizing dividends, for repairing or maintaining any property of the Company, or for such other purposes as the Board of Directors shall deem in the best interests of the Company.

 

The minimum subscription that will be accepted from an investor is $2,000 for the purchase of 20,000,000 Shares (the ‘Minimum Subscription’).

 

$2,000 or more in the Shares may be made only by tendering to the Company the executed Subscription Agreement (electronically or in writing) delivered with the subscription price in a form acceptable to the Company, via check, wire, credit or debit card, or ACH. The execution and tender of the documents required, as detailed in the materials, constitutes a binding offer to purchase the number of Shares stipulated therein and an agreement to hold the offer open until the Expiration Date or until the offer is accepted or rejected by the Company, whichever occurs first.

 

The Company reserves the unqualified discretionary right to reject any subscription for Shares, in whole or in part. If the Company rejects any offer to subscribe for the Shares, it will return the subscription payment, without interest or reduction. The Company’s acceptance of your subscription will be effective when an authorized representative of the Company issues you written or electronic notification that the subscription was accepted.


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There are no liquidation rights, preemptive rights, conversion rights, redemption provisions, sinking fund provisions, impacts on classification of the Board of Directors where cumulative voting is permitted or required related to the Common Stock, provisions discriminating against any existing or prospective holder of the Common Stock as a result of such Shareholder owning a substantial amount of securities, or rights of Shareholders that may be modified otherwise than by a vote of a majority or more of the shares outstanding, voting as a class defined in any corporate document as of the date of filing. The Common Stock will not be subject to further calls or assessment by the Company. There are no restrictions on alienability of the Common Stock in the corporate documents other than those disclosed in this Offering Circular. The Company has engaged Action Stock Transfer, Inc. to serve as the transfer agent and registrant for the Shares. For additional information regarding the Shares, please review the Company’s Bylaws, which are attached to this Offering Circular.

 

DISQUALIFYING EVENTS DISCLOSURE

 

Recent changes to Regulation A promulgated under the Securities Act prohibit an issuer from claiming an exemption from registration of its securities under such rule if the issuer, any of its predecessors, any affiliated issuer, any director, executive officer, other officer participating in the offering of the interests, general partner or managing member of the issuer, any beneficial owner of 20% or more of the voting power of the issuer’s outstanding voting equity securities, any promoter connected with the issuer in any capacity as of the date hereof, any investment manager of the issuer, any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with such sale of the issuer’s interests, any general partner or managing member of any such investment manager or solicitor, or any director, executive officer or other officer participating in the offering of any such investment manager or solicitor or general partner or managing member of such investment manager or solicitor has been subject to certain “Disqualifying Events” described in Rule 506(d)(1) of Regulation D subsequent to September 23, 2013, subject to certain limited exceptions. The Company is required to exercise reasonable care in conducting an inquiry to determine whether any such persons have been subject to such Disqualifying Events and is required to disclose any Disqualifying Events that occurred prior to September 23, 2013 to investors in the Company. The Company believes that it has exercised reasonable care in conducting an inquiry into Disqualifying Events by the foregoing persons and is aware of the no such Disqualifying Events.

 

It is possible that (a) Disqualifying Events may exist of which the Company is not aware and (b) the SEC, a court or other finder of fact may determine that the steps that the Company has taken to conduct its inquiry were inadequate and did not constitute reasonable care. If such a finding were made, the Company may lose its ability to rely upon exemptions under Regulation A, and, depending on the circumstances, may be required to register the Offering of the Company’s Common Stock with the SEC and under applicable state securities laws or to conduct a rescission offer with respect to the securities sold in the Offering.


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ERISA CONSIDERATIONS

 

Trustees and other fiduciaries of qualified retirement plans or IRAs that are set up as part of a plan sponsored and maintained by an employer, as well as trustees and fiduciaries of Keogh Plans under which employees, in addition to self-employed individuals, are participants (together, “ERISA Plans”), are governed by the fiduciary responsibility provisions of Title 1 of the Employee Retirement Income Security Act of 1974 (“ERISA”). An investment in the Shares by an ERISA Plan must be made in accordance with the general obligation of fiduciaries under ERISA to discharge their duties (i) for the exclusive purpose of providing benefits to participants and their beneficiaries; (ii) with the same standard of care that would be exercised by a prudent man familiar with such matters acting under similar circumstances; (iii) in such a manner as to diversify the investments of the plan, unless it is clearly prudent not do so; and (iv) in accordance with the documents establishing the plan. Fiduciaries considering an investment in the Shares should accordingly consult their own legal advisors if they have any concern as to whether the investment would be inconsistent with any of these criteria.

 

Fiduciaries of certain ERISA Plans which provide for individual accounts (for example, those which qualify under Section 401(k) of the Code, Keogh Plans and IRAs) and which permit a beneficiary to exercise independent control over the assets in his individual account, will not be liable for any investment loss or for any breach of the prudence or diversification obligations which results from the exercise of such control by the beneficiary, nor will the beneficiary be deemed to be a fiduciary subject to the general fiduciary obligations merely by virtue of his exercise of such control. On October 13, 1992, the Department of Labor issued regulations establishing criteria for determining whether the extent of a beneficiary’s independent control over the assets in his account is adequate to relieve the ERISA Plan’s fiduciaries of their obligations with respect to an investment directed by the beneficiary. Under the regulations, the beneficiary must not only exercise actual, independent control in directing the particular investment transaction, but also the ERISA Plan must give the participant or beneficiary a reasonable opportunity to exercise such control, and must permit him to choose among a broad range of investment alternatives.

 

Trustees and other fiduciaries making the investment decision for any qualified retirement plan, IRA or Keogh Plan (or beneficiaries exercising control over their individual accounts) should also consider the application of the prohibited transactions provisions of ERISA and the Code in making their investment decision. Sales and certain other transactions between a qualified retirement plan, IRA or Keogh Plan and certain persons related to it (e.g., a plan sponsor, fiduciary, or service provider) are prohibited transactions. The particular facts concerning the sponsorship, operations and other investments of a qualified retirement plan, IRA or Keogh Plan may cause a wide range of persons to be treated as parties in interest or disqualified persons with respect to it. Any fiduciary, participant or beneficiary considering an investment in Shares by a qualified retirement plan IRA or Keogh Plan should examine the individual circumstances of that plan to determine that the investment will not be a prohibited transaction. Fiduciaries, participants or beneficiaries considering an investment in the Shares should consult their own legal advisors if they have any concern as to whether the investment would be a prohibited transaction.

 

Regulations issued on November 13, 1986, by the Department of Labor (the “Final Plan Assets Regulations”) provide that when an ERISA Plan or any other plan covered by Code Section 4975 (e.g., an IRA or a Keogh Plan which covers only self-employed persons) makes an investment in an equity interest of an entity that is neither a “publicly offered security” nor a security issued by an investment company registered under the Investment Company Act of 1940, the underlying assets of the entity in which the investment is made could be treated as assets of the investing plan (referred to in ERISA as “plan assets”). Programs which are deemed to be operating companies or which do not issue more than 25% of their equity interests to ERISA Plans are exempt from being designated as holding “plan assets.” Management anticipates that we would clearly be characterized as an “operating” for the purposes of the regulations, and that it would therefore not be deemed to be holding “plan assets.”

 

Classification of our assets of as “plan assets” could adversely affect both the plan fiduciary and management. The term “fiduciary” is defined generally to include any person who exercises any authority or control over the management or disposition of plan assets. Thus, classification of our assets as plan assets could make the management a “fiduciary” of an investing plan. If our assets are deemed to be plan assets of investor plans, transactions which may occur in the course of its operations may constitute violations by the management of fiduciary duties under ERISA. Violation of fiduciary duties by management could result in liability not only for management but also for the trustee or other fiduciary of an investing ERISA Plan. In addition, if our assets are classified as “plan assets,” certain transactions that we might enter into in the ordinary course of our business might constitute “prohibited transactions” under ERISA and the Code.


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Under Code Section 408(i), as amended by the Tax Reform Act of 1986, IRA trustees must report the fair market value of investments to IRA holders by January 31 of each year. The Service has not yet promulgated regulations defining appropriate methods for the determination of fair market value for this purpose. In addition, the assets of an ERISA Plan or Keogh Plan must be valued at their “current value” as of the close of the plan’s fiscal year in order to comply with certain reporting obligations under ERISA and the Code. For purposes of such requirements, “current value” means fair market value where available. Otherwise, current value means the fair value as determined in good faith under the terms of the plan by a trustee or other named fiduciary, assuming an orderly liquidation at the time of the determination. We do not have an obligation under ERISA or the Code with respect to such reports or valuation although management will use good faith efforts to assist fiduciaries with their valuation reports. There can be no assurance, however, that any value so established (i) could or will actually be realized by the IRA, ERISA Plan or Keogh Plan upon sale of the Shares or upon liquidation of us, or (ii) will comply with the ERISA or Code requirements.

 

The income earned by a qualified pension, profit sharing or stock bonus plan (collectively, “Qualified Plan”) and by an individual retirement account (“IRA”) is generally exempt from taxation. However, if a Qualified Plan or IRA earns “unrelated business taxable income” (“UBTI”), this income will be subject to tax to the extent it exceeds $1,000 during any fiscal year. The amount of unrelated business taxable income in excess of $1,000 in any fiscal year will be taxed at rates up to 36%. In addition, such unrelated business taxable income may result in a tax preference, which may be subject to the alternative minimum tax. It is anticipated that income and gain from an investment in the Shares will not be taxed as UBTI to tax exempt shareholders, because they are participating only as passive financing sources.

 

INVESTOR ELIGIBILITY STANDARDS

 

The Shares will be sold only to a person who is not an accredited investor if the aggregate purchase price paid by such person is no more than 10% of the greater of such person’s annual income or net worth, not including the value of his primary residence, as calculated under Rule 501 of Regulation D promulgated under Section 4(a)(2) of the Securities Act of 1933, as amended. In the case of sales to fiduciary accounts (Keogh Plans, Individual Retirement Accounts (IRAs) and Qualified Pension/Profit Sharing Plans or Trusts), the above suitability standards must be met by the fiduciary account, the beneficiary of the fiduciary account, or by the donor who directly or indirectly supplies the funds for the purchase of Shares. Investor suitability standards in certain states may be higher than those described in this Offering Circular. These standards represent minimum suitability requirements for prospective investors, and the satisfaction of such standards does not necessarily mean that an investment in the Company is suitable for such persons.

 

Each investor must represent in writing that he/she meets the applicable requirements set forth above and in the Subscription Agreement, including, among other things, that (i) he/she is purchasing the Shares for his/her own account and (ii) he/she has such knowledge and experience in financial and business matters that he/she is capable of evaluating without outside assistance the merits and risks of investing in the Shares, or he/she and his/her purchaser representative together have such knowledge and experience that they are capable of evaluating the merits and risks of investing in the Shares. Transferees of Shares will be required to meet the above suitability standards.

 

 

 

 

 


27


 

SIGNATURES

 

Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chino, California, on October 14, 2022

 

Harrison, Vickers & Waterman, Inc.

 

 

By:

/s/ Robert W. Tetsch

 

Chief Executive Officer and Director

 

 

 

October 14, 2022

 

This offering statement has been signed by the following persons in the capacities and on the dates indicated.

 

By:

/s/ Robert W. Tetsch

 

Chief Financial Officer

 

 

 

October 14, 2022

 

ACKNOWLEDGEMENT ADOPTING TYPED SIGNATURES

 

The undersigned hereby authenticate, acknowledge and otherwise adopt the typed signatures above and as otherwise appear in this filing and Offering.

 

By:

/s/ Robert W. Tetsch

 

Chief Executive Officer and Director

 

 

 

October 14, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 


28


 

INDEX TO EXHIBITS

 

Description

 

Item

 

Exhibit

 

 

 

 

 

Articles of Incorporation

 

17.2

 

1A-2A

Bylaws

 

17.2

 

1A-2B

Certificate of Designation - Series A Convertible Preferred Stock

 

17.3

 

1A-3A

Certificate of Designation - Series B Convertible Preferred Stock

 

17.3

 

1A-3B

Certificate of Designation - Series C Convertible Preferred Stock

 

17.3

 

1A-3C

Certificate of Designation - Series D Convertible Preferred Stock

 

17.3

 

1A-3D

Certificate of Designation - Series F and G Convertible Preferred Stock

 

17.3

 

1A-3E

Form of Subscription Agreement

 

17.4

 

1A-4

Agreement and Plan of Merger with MPS Solutions dated July 15, 2022

 

17.6

 

1A-6A

Legal Opinion of Matheau J. W. Stout

 

17.12

 

1A-12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


29


FINANCIAL STATEMENTS

 

 

Page

 

 

PACIFIC ENERGY NETWORK, LLC - CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

June 30, 2022

 

 

 

Consolidated Financial Statements:

 

Consolidated Balance Sheet at June 30, 2022 and June 30, 2021

F-2

Consolidated Statement of Operations for the twelve months ended June 30, 2022, and June 30, 2021

F-3

Consolidated Statement of Owners (Deficit) for the period beginning ended June 30, 2020, through June 30 2022

F-4

Consolidated Statement of Cash Flows for the twelve months ended June 30, 2022, and June 30, 2021

F-5

Notes to the Consolidated Financial Statements

F-6

 

 

HARRISON, VICKERS & WATERMAN, INC. - CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

June 30, 2022

 

 

 

Consolidated Financial Statements:

 

Consolidated Balance Sheet at June 30, 2022, and June 30, 2021

F-15

Consolidated Statement of Operations for the twelve months ended June 30, 2022, and 2021

F-16

Consolidated Statement of Shareholders Deficit for the twelve months ended June 30, 2022

F-17

Consolidated Statement of Shareholders Deficit for the twelve months ended June 30, 2021

F-18

Consolidated Statement of Cash Flows for the twelve months ended June 30, 2022, and 2021

F-19

Notes to Consolidated financial statements

F-20

 

 

HARRISON VICKERS & WATERMAN, INC - (CONSOLIDATED WITH PACIFIC ENERGY NETWORKS, LLC) - (PRO-FORMA) - CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

June 30, 2022

 

 

 

Consolidated Financial Statements:

 

Consolidated Balance Sheet at June 30, 2022

F-36

Consolidated Balance Sheet at June 30, 2021

F-37

Consolidated Statement of Operations for Year Ended June 30, 2022

F-38

Consolidated Statement of Operations for Year Ended June 30, 2021

F-39

Consolidated Statement of shareholders Deficit – July 1, 2021, to June 30, 2022

F-40

Consolidated Statement of Cash flows for Year Ended June 30, 2022

F-41

Consolidated Statement of Cash flows for Year Ended June 30, 2021

F-42

Notes to the Consolidated Financial Statements

F-43

 

 

 

 


F-1


 

Pacific Energy Network, LLC

Consolidated Balance Sheet

June 30, 2022 and 2021

(Unaudited)

 

 

 

 

June 30, 2022

 

June 30, 2021

Assets

 

 

 

 

 

Cash

 

$

473,308

 

$

356,200

 

Advances to Related party

 

 

134,099

 

 

62,962

 

Employee cash advances

 

 

4,950

 

 

29,800

 

Accounts receivable

 

 

722,460

 

 

-

 

Other Current Assets

 

 

20,427

 

 

-

Total Current Assets

 

$

1,355,243

 

$

448,962

 

 

 

 

 

 

 

 

 

Net Fixed Assets

 

 

1,427,695

 

 

37,107

 

Other Assets

 

 

41,382

 

 

14,560

Total Non- current assets

 

 

1,469,077

 

 

51,667

Total Assets

 

$

2,824,319

 

$

500,629

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Accounts Payable

 

$

1,851,158

 

$

192,324

 

Accrued expenses

 

 

379,642

 

 

51,580

 

Line of credit

 

 

1,400,000

 

 

-

 

Notes Payable

 

 

764,373

 

 

-

 

Payroll protection program

 

 

254,681

 

 

331,015

 

Capital lease liability

 

 

558,694

 

 

-

Total Current Liabilities

 

 

5,208,548

 

 

574,919

 

 

 

 

 

 

 

 

 

SBA loan

 

 

500,000

 

 

149,900

 

Other borrowings

 

 

500,000

 

 

-

Total long-term liabilities

 

 

1,000,000

 

 

149,900

Total liabilities

 

 

6,208,548

 

 

724,819

 

 

 

 

 

 

 

 

 

Retained Earnings

 

 

(3,384,229)

 

 

(224,190)

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

(3,384,229)

 

 

(224,190)

 

 

 

 

 

 

 

 

Total Liabilities & Equity

 

$

2,824,319

 

$

500,629

 

 

 

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


F-2


 

Pacific Energy Network, LLC

Consolidated Statement of Operations

Twelve months ended June 30, 2022 and June 30, 2021

(Unaudited)

 

 

 

 

June 30, 2022

 

June 30, 2021

Revenues

 

 

 

 

 

Net Sales

 

$

16,560,280

 

$

3,400,037

 

Cost of goods sold

 

 

(12,048,335)

 

 

(696,500)

 

Gross Profit

 

 

4,511,945

 

 

2,703,537

Operating Expenses

 

 

 

 

 

 

 

Wages and related expenses

 

 

3,944,236

 

 

2,083,074

 

Sales and marketing expenses

 

 

374,135

 

 

369,449

 

General and administrative

 

 

2,854,114

 

 

618,782

 

Depreciation and Amortization

 

 

79,568

 

 

21,281

 

Total Operating Expenses

 

 

7,252,052

 

 

3,092,586

 

Net operating profit (loss)

 

 

(2,740,107)

 

 

(389,048)

Other Income (Expense)

 

 

 

 

 

 

 

Other income

 

 

(55,500)

 

 

3,000

 

Interest expense

 

 

(426,116)

 

 

-

 

Loss on disposal of asset

 

 

(13,297)

 

 

-

 

Forgiveness of PPP note

 

 

74,982

 

 

-

 

Total Other Income (Expense)

 

 

(419,931)

 

 

3,000

 

 

 

 

 

 

 

 

Net income before income taxes

 

 

(3,160,039)

 

 

(386,048)

 

 

 

 

 

 

 

 

Provision for Income Taxes

 

 

-

 

 

-

Net loss

 

$

(3,160,039)

 

$

(386,048)

 

 

 

 

 

 

 

 

 

 

 

 

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


F-3


 

Pacific Energy Network, LLC

Statement of Owners’ Equity (Deficiency)

As of June 30, 2022 and June 30, 2021

 

 

Retained earnings

 

 

 

Balance at June 30, 2020

$

161,858

Net income, twelve months, June 30, 2021

 

(237,833)

Balance at June 30, 2021

 

(75,975)

Net loss, twelve months, June 30, 2022

 

(3,308,254)

Balance at June 30, 2022

$

(3,384,229)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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


F-4


 

Pacific Energy Network, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Twelve months ended June 30, 2022 and 2021

(Unaudited)

 

 

 

June 30, 2022

 

June 30, 2021

Cash Flows from Operating activities:

 

 

 

 

Net loss

 

$

(3,160,039)

 

$

(386,048)

Depreciation Expense

 

 

79,568

 

 

21,281

PPP loan forgiveness

 

 

(74,982)

 

 

-

PPP loan recorded as revenue

 

 

(148,215)

 

 

 

Gain on retirement of note

 

 

13,297

 

 

-

Change in Working capital items:

 

 

 

 

 

 

Due from related party

 

 

(71,137)

 

 

161,233

Employee cash advances

 

 

24,850

 

 

(26,000)

Accounts receivable

 

 

(722,460)

 

 

-

Prepaid Expense & Other

 

 

-

 

 

(14,560)

Other Current Assets

 

 

(20,427)

 

 

1,279

Accounts Payable

 

 

1,658,834

 

 

192,324

Accrued expenses

 

 

328,061

 

 

36,356

Capital lease liability

 

 

558,694

 

 

-

Change in working capital due to change

from cash to accrual accounting

 

 

-

 

 

17,591

Net cash flows provided by Operating activities

 

 

(1,533,954)

 

 

3,456

 

 

 

 

 

 

 

Cash flows from Investing activities

 

 

 

 

 

 

Purchase of fixed assets

 

 

(1,363,411)

 

 

(51,288)

Net Cash flows from Investing activities

 

 

(1,363,411)

 

 

(51,288)

 

 

 

 

 

 

 

Cash Flows from Financing activities

 

 

 

 

 

 

Line of credit

 

 

1,400,000

 

 

-

Notes payable

 

 

764,373

 

 

-

Loan from shareholder

 

 

500,000

 

 

-

Payroll protection program

 

 

-

 

 

148,215

SBA loan

 

 

350,100

 

 

149,900

Net cash flows from Financing activities

 

 

3,014,473

 

 

298,115

 

 

 

 

 

 

 

Net increase in Cash and Cash Equivalents

 

 

117,108

 

 

250,283

Cash and Equivalents, Beginning of period

 

 

356,200

 

 

105,917

Cash and Equivalents, End of period

 

$

473,308

 

$

356,200

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

Interest

 

$

303,113

 

$

-

Taxes

 

$

-

 

$

-

 

 

 

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


F-5


PACIFIC ENERGY NETWORK, LLC

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

 

 

NOTE 1 - BASIS OF PRESENTATION AND ORGANIZATION

 

The accompanying consolidated financial statements include the accounts of PACIFIC ENERGY NETWORK, LLC (“PEN”)and its subsidiaries (together with its subsidiaries, “ All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and with the instructions to Form 10-K, Regulation S-X, and Regulation S-K. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Pacific Energy Network (“PEN” or the “Company”) is a California based parent company of several subsidiary LLC’s under the umbrella of Modern Pro Solutions, LLC (“MPS”) that manage solar, roofing, HVAC, security, distribution, consulting, lead generation, marketing, sales, data, software and mortgage divisions. Founded in June 2018, as a sales-only  organization in Southern California, PEN has quickly become one of the largest and most successful home services companies in the nation. In 2019, PEN expanded into the Central California market which was followed by expansion into the Midwest in 2021.  Commencing in May 2021,the Company began doing their own installations.    With a focus on customer satisfaction and strategic business planning, PEN has grown into a multi-product business that has increased revenue year over year and expanded its reach into new markets across the United States. Expansion plans for 2023 include entering markets in eleven new states mostly in the Southeastern and Southwestern parts of the country, where we feel demographics and geography provide very favorable opportunities.  Revenues are currently running at a rate of at least $25 million on an annual basis.

 

For the twelve months ended June 30, 2022 and June 30, 2021, the Company incurred net losses of $(3,160,039) and $(386,048), respectively, and  cash flows provided from /(used in)  operations of $(1,533,954) and $3,456 respectively. Management intends to raise additional funds through equity or debt financing and to generate cash from the sale of the Company’s services.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Accounting Method

 

The Company’s consolidated financial statements are prepared using the accrual method of accounting. The Company has elected a fiscal year ending of June 30.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, PEN, on a pro-forma basis and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions 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. It is possible that accounting estimates and assumptions may be material to the Company due to the levels of subjectivity and judgment involved.


F-6


 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

 

Accounts Receivable

 

The Company grants credit to customers under credit terms that it believes are customary in the industry. The Company assists the customer in finding the most economic financing terms available from outside lending forces. Loan terms vary based on the customer’s desires, system size and geographic deployment. However, the Company is usually paid within thirty days of signing a contract and bad debts have been minimal.

 

Net Fixed Assets

 

Our net Fixed assets are principally trucks and other equipment, which are used in installations of solar projects. While we consider the possibility unlikely, The Company reviews its net fixed assets for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value.

 

Net fixed assets are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful asset lives (five years for vehicles and trailers, fifteen years for leasehold improvements.)

 

Revenue Recognition

 

The Company recognizes revenue from interest income on consumer loans as the interest is earned. The Company’s revenue recognition policies comply with FASB ASC Topic 605. Revenue is recorded when earned, which is generally over the period services are provided and no contingencies exist.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

 

Paycheck Protection Program Loan

 

The Company’s policy is to account for forgivable loans received through the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Paycheck Protection Program (PPP) as a contingent liability in accordance with Accounting Standards Codification (ASC) 450-30, Contingencies, and other related accounting pronouncements. The forgiveness of debt, in whole or in part, is recognized once the forgiveness is realized or realizable, which occurs when the Company believes all uncertainties regarding the final forgiveness of the loan are resolved. Any portion of debt forgiven, adjusted for accrued interest forgiven and unamortized debt issuance costs, is recorded as a gain on extinguishment of debt, and presented in the other income section of the statement of income. The Company has received two PPP loans (See Note 11). In 2021, the Company received partial forgiveness of $74,982 on one loan. The Company does not believe it is entitled to forgiveness on the existing notes.


F-7


 

Leases

 

In February 2016, the FASB updated the accounting guidance related to leases. The most significant change in the updated accounting guidance requires lessees to recognize lease assets and liabilities on the balance sheet for all operating leases with the exception of short-term leases. The standard also expands the disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. For a lessee, the recognition, measurement, and presentation of expenses and cash flows arising from a lease did not significantly change from previous guidance. We adopted the updated guidance on December 1, 2020 on a prospective basis and as a result, prior period amounts were not adjusted to reflect the impacts of the updated guidance.

 

Recent Accounting Pronouncements

 

Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 removes, modifies and adds certain disclosure requirements in Topic 820 “Fair Value Measurement”. ASU 2018-13 eliminates certain disclosures related to transfers and the valuations process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. ASU 2018-13 is effective for the Company for annual and interim reporting periods beginning January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures. In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”). This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those annual periods. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements. In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which clarifies the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The guidance clarifies how to account for the transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative. The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.

 

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2021 and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements. Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements.

 

In April 2020, the FASB issued a Staff Q&A, Topic 842 and 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic in order to provide clarity regarding the accounting treatment for lease concessions provided as a result of COVID-19. Under existing lease guidance, changes to certain lease terms not specified in the original lease agreement require modification accounting treatment. To provide relief, the FASB Staff Q&A permits alternatives to modification accounting under Topic 842. For concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or our obligations as the lessee, we are not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the lease agreement and can elect to apply or not apply the lease modification guidance in Topic 842. In fiscal year 2020 and 2021, no financial concessions had been taken by the Company or any of its subsidiaries.

 

In August 2020, the FASB issued ASU 2020-06, which amends the measurement and disclosure of convertible instruments, contracts in an entity’s own equity, and EPS guidance. The guidance can be adopted using a modified retrospective method or a fully retrospective method. The amendments are effective for fiscal years beginning after December 15, 2021 for public entities, excluding those that are smaller reporting companies. For all other entities the


F-8


amendments are effective for fiscal years beginning after December 15, 2023. The Company does not expect the update to have a material impact on its consolidated financial statements and related disclosures.

 

In June, 2020 the FASB issued ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606). Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted Topic 606 in September 2019,  and recognizes revenue when control of goods and services is transferred to customers. The Company recognizes revenue in accordance with ASC Topic 606. The Company recognizes revenue upon transfer of control of goods to customers.

 

In November, 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-10 Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance is effective for fiscal periods after December 15, 2021, for both public and private companies. The Company has not yet adopted this standard and has disclosed its financial assistance received in the form of Payroll Protection Program (PPP) and SBA Economic Injury Disaster (EIDL) Loans in accordance with Accounting Standards Codification (ASC) 470, Debt until the point of forgiveness and then as a government grant by analogy to International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance.

 

NOTE 3 - GOING CONCERN

 

The accompanying unaudited interim consolidated condensed financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company on a going-concern basis. The going concern basis assumes that assets are realized, and liabilities are extinguished in the ordinary course of business at amounts disclosed in the consolidated financial statements. The Company has incurred recurring losses from operations and has an accumulated deficit of ($3,384,229). The Company’s ability to continue as a going concern depends upon its ability to obtain adequate funding to support its operations through continuing investments of debt and/or equity by qualified investors/creditors, internally generated working capital and monetization of intellectual property assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management is currently pursuing a business strategy which includes raising the necessary funds to finance the Company’s development and marketing efforts.

 

NOTE 4 - ADVANCES TO RELATED PARTY

 

Advances to related party are amounts paid on behalf of our Chief Executive and Chief Financial Officer, Bobby Tetsch.  These amounts were lent at interest rates between 2.5% and 3.25% over a ten year term. and above the amount earned through his salary.  Mr. Tetsch has a management contract which pays him $400,000 per year It is anticipated that these amounts will be repaid in lieu of his salary.  Balances are as follows:

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Advances to related party

$134,099

 

$62,962

 

NOTE 5- ACCOUNTS RECEIVABLE

 

Accounts receivable  are at the operating LLCs of PEN. The Company grants credit to customers under credit terms that it believes are customary in the industry. The Company assists the customer in finding the most economic financing terms available from outside lending forces. Loan terms vary based on the customer’s desires, system size and geographic deployment. However, the Company is usually paid within thirty days of signing a contract and bad debts have been minimal.

 

 


F-9


 

 

The Company considers all receivables over 45 days to be past due. Management of the Company has not provided an allowance for doubtful accounts receivable at June 30, 2022 and 2021. Generally, the Company requires deposits against orders of up to 100% of the order value. Management considers all receivables collectable and are reflected at net realizable value. As of June 30, 2022 and June 30, 2021, the balances were as follows:

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Accounts receivable

$722,460

 

$-

 

The increase in accounts receivable was principally due to the entrance into new markets and the change in business model.

 

NOTE 6 - NET FIXED ASSETS

 

The Company has the following fixed assets:

 

 

 

June 30,

 

June 30,

 

 

2022

 

2021

Furniture, fixtures and Equipment

 

$

47,082

 

$

17,782

Vehicles and Trailers

 

 

1,341,431

 

 

9,200

Leasehold improvements

 

 

121,922

 

 

-

Fixed assets gross

 

$

1,510,434

 

$

43,264

Accumulated depreciation

 

 

(82,739)

 

 

(6,156)

Fixed assets-net

 

$

1,427,695

 

$

37,107

 

Vehicles and furniture and fixtures are depreciated over a five year time frame. Leasehold improvements are depreciated over a fifteen year timeframe

 

NOTE 7 - ACCOUNTS PAYABLE

 

Accounts payable principally exist at our operating subsidiaries and are mostly for accrued wages and purchases of materials. As of June 30, 2022 and June 30, 2021, the balances were as follows:

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Accounts payable

$1,851,158

 

$192,234

 

The increase in accounts payable was principally due to greater purchases of materials due to entrance into new markets as well as the change in the Company’s business model from solely a sales organization to a full-service provider.

 

NOTE 8 - ACCRUED EXPENSES

 

Accrued expenses principally exist at our operating subsidiaries and are mostly for accrued wages and purchases of materials. As of June 30, 2022 and June 30, 2021, the balances were as follows:

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Accrued expenses

$379,642

 

$51,580

 

The increase in accrued expenses was principally due to greater accrued wages and fuel charges due to entrance into new markets and the change in business model from solely a sales organization to a full-service provider.


F-10


 

NOTE 9 - LINE OF CREDIT

 

On May 22, 2022, the Company established a line of credit with Trillium Partners, L.P. and J.P. Carey Limited Partners, L.P (collectively “the Lenders”).  Under the terms of the Line of Credit, the Company may draw up to $ 3,000,000  based upon 75% of eligible receivables from the Lenders.  The interest rate is .782% per seven days. Balances outstanding under the line of credit are as follows:

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Line of credit

$1,400,000

 

$-

 

The term of the line of credit is two years.

 

NOTE 10 - NOTES PAYABLE

 

The Company has the following notes payable outstanding at June 30, 2022:

 

 

Execution

Original

Current

 

Creditor

Date

Amount

Amount

Weekly payment

 

 

 

 

 

Kalamata Capital

3-7-22

$  444,500

$309,426

$   8,549

Fresh Funding Solutions

4-7-22

387,000

286,044

8,413

IDEA 247, Inc.

3-3-22

300,000

168,903

7,712

 

 

 

 

 

Total

 

$1,131,500

$764,373

$ 24,674

 

NOTE 11- PAYROLL PROTECTION PROGRAM

 

The Company took out two loans under the Payroll Protection Program as follows

 

 

Execution

June 30,

June 30,

 

Creditor

Date

2022

2021

Maturity Date

 

 

 

 

 

Note One

5-5-20

$  106,466

$    182,800

12-31-23

Note Two

2-18-21

148,215

148,215

2-18-26

 

 

 

 

 

Total

 

$  254,681

$    331,015

 

 

These loans bear interest at 1% and do not qualify for forgiveness. Note one was partially forgiven and Note two does not qualify for forgiveness.  Interest rates on the notes are 1% and have a five year term

 

NOTE 12- CAPITAL LEASE LIABILITY

 

Capital lease liability represent the leases on the Company’s vehicles.  Leases last for between 48 and 60 months.  All leases expire between May 31, 2026 and June 30, 2027.

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Capital Lease liability

$558,694

 

$-


F-11


 

 

NOTE 13 - SMALL BUSINESS ADMINISTRATION (SBA) LOAN

 

The SBA Loan was originally dated on January 5, 2021 and was amended on July 3, 2021

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

SBA Loan

$500,000

 

$149,900

 

Terms are as follows:

 

Interest rate:

3.75%

Term:

0 years

Monthly payment:

$2,486 (beginning 18 months after the date of the original note)

 

NOTE 14 - OTHER BORROWINGS

 

Between April and June 2022, the Company borrowed $500,000 in three specific transactions from Kensington Financial, LLC, LLC. Interest accrues at 20% per annum.

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Other borrowings

$500,000

 

$-

 

NOTE 15 - COMMITMENTS AND CONTINGENCIES – LEASES

 

The Company’s commitments and contingencies are principally on the Company’s vehicles as stated in Note 12

 

NOTE 16 – LEGAL PROCEEDINGS

 

As a commercial enterprise and employer, the Company is subject to various claims and legal actions in the ordinary course of business. These matters can include professional liability, employment-relations issues, workers’ compensation, tax, payroll and employee-related matters, other commercial disputes arising in the course of its business, and inquiries and investigations by governmental agencies regarding our employment practices or other matters. The Company is not aware of any pending or threatened litigation that it believes is reasonably likely to have a material adverse effect on its results of operations, financial position or cash flows.

 

NOTE 17 - INCOME TAX

 

In accordance with ASC 740, we are required to recognize the impact of an uncertain tax position in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained upon examination by the tax authorities. It is also our policy, in accordance with authoritative guidance, to recognize interest and penalties related to income tax matters in interest and other expense in our Statements of Operations.

 

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. As a result of our cumulative losses, management has concluded that a full valuation allowance against our net deferred tax assets is appropriate.

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has


F-12


evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

The provision for income taxes on our loss from continuing operations for the fiscal years ended June 30, 2022 and 2021 is as follows:

 

 

 

Year ended

 

Year ended

Reconciliation of book and

 

June 30,

 

June 30,

taxable income and tax expense

 

2022

 

2022

 

 

 

 

 

Book net income

 

$

(3,160,039)

 

$

(386,048)

 

 

 

 

 

 

 

Gain on retirement of PPP note

 

 

74,982

 

 

-

 

 

 

 

 

 

 

Taxable net income

 

$

(3,085,057)

 

$

(386,048)

 

 

 

 

 

 

 

Change in Valuation allowance

 

 

806,280

 

 

100,894

 

 

 

 

 

 

 

Income tax expense based on taxable net income

 

 

(806,280)

 

 

(100,894)

 

 

 

 

 

 

 

Income tax expense

 

$

-

 

$

-

 

The Company’s Effective tax rate was 0.0% for each of the two fiscal years ended June 30, 2022 and June 30, 2021. A reconciliation of the valuation allowance follows below:

 

Federal income tax rate

 

21.0%

 

21.0%

Incremental state income tax rate

 

6.5%

 

6.5%

Impact of Federal rate on state rate

 

-1.4%

 

-1.4%

 

 

 

 

 

Marginal income tax rate

 

26.1%

 

26.1%

 

NOTE 15 - COVID-19

 

The Company, like all enterprises, is currently dealing with the impact of COVID-19 on future prospects. Recent events such as the vaccinations mitigate, but do not eliminate, the possible adverse consequences to the domestic and international economies.  Recent increases in the Delta Variant of COVID-19 and the onset of the Omicron variant have resulted in greater infections and its ultimate impact cannot be ascertained.

 

NOTE 16 - IMPACT OF CLIMATE CHANGE

 

The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information. The TCFD requires that the impact of climate change upon risk assessment, capital allocation and strategic planning be discussed.

 

At this time, the impact cannot be determined.

 

 


F-13


 

 

NOTE 17 – SUBSEQUENT EVENTS

 

Pursuant to ASC 855-10, the Company has evaluated all events or transactions that occurred from July 1, 2022  to the date of this report. The Company believes that the following events meet the criterion and require disclosure.

 

Incremental Borrowing

 

The Company borrowed $253,300 after June 30, 2022 as follows:

 

 

Execution

Original

Creditor

Date

Amount

 

 

 

Lend Bug, LLC

7-27-22

$  126,650

Advance Servicing, Inc.

7-27-22

126,650

 

 

 

Total

 

$  253,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


F-14


 

HARRISON, VICKERS & WATERMAN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

June 30,

 

June 30,

 

 

2022

 

2021

ASSETS

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$

60,016

 

$

52,869

Total Current Assets

 

 

60,016

 

 

52,869

 

 

 

 

 

 

 

Total Assets

 

$

60,016

 

$

52,869

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

Accrued expenses

 

$

113,000

 

$

116,703

Accrued interest

 

 

59,951

 

 

13,545

Convertible Notes payable, net of warrants of $6,217 and $-0-

 

 

826,235

 

 

378,450

Put premium on stock settled debt

 

 

485,172

 

 

332,300

Total Current Liabilities

 

 

1,484,358

 

 

840,988

 

 

 

 

 

 

 

Total Liabilities

 

 

1,484,358

 

 

840,998

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (See Note 13)

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

Preferred stock; par value of $.001, 100,000,000 shares authorized;

 Series A, 8% convertible preferred stock, stated value of $1,000

 85,164 shares outstanding at June 30, 2022 and June 30, 2021

 

 

8

 

 

10

Series B, stated value of $1,000, 51 shares outstanding at

 June 30, 2022 and June 30, 2021, Par value $.001

 Series C, 8% convertible preferred stock, stated value of $1,000

 2,500 and 100,000 shares outstanding at June 30, 2022 and June 30

 2021, respectively, Par value $.001

 

 

3

 

 

100

Series D, 3% convertible preferred stock, stated value of $1

 2,000,000 and -0-shares outstanding at June 30, 2022 and June 30,

 respectively

 

 

2,000

 

 

-

Common stock; par value of $.0001, 25,000,000,000 shares authorized;

 6,564,838,949 and 3,001,563,744 shares issued and outstanding at

 June 30,2022 and June 30, 2021, respectively

 

 

656,484

 

 

300,156

Additional paid in capital

 

 

1,329,625

 

 

1,560,920

Dividends on preferred stock

 

 

(111,107)

 

 

 

Accumulated deficit

 

 

(3,301,355)

 

 

(2,649,315)

 

 

 

 

 

 

 

Total Stockholders’ Deficit

 

 

(1,424,342)

 

 

(788,129)

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

$

60,016

 

$

52,869

 

 

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


F-15


 

HARRISON, VICKERS & WATERMAN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

For the Twelve

 

For the Twelve

 

 

months ended

 

months ended

 

 

June 30, 2022

 

June 30, 2021

Discontinued operations:

 

 

 

 

Net income (See Note 4)

 

$

-

 

$

(10,660)

Gain on disposition of net assets (See Note 5)

 

 

-

 

 

19,403,003

Interest expense

 

 

-

 

 

 

Provision for income taxes

 

 

-

 

 

-

Net income from discontinued operations

 

 

-

 

 

19,392,343

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

Consulting expense

 

$

200,000

 

 

 

Compensation expense

 

 

210,000

 

 

338,694

General and Administrative expense

 

 

40,353

 

 

19,581

Total Operating expenses

 

 

450,353

 

 

358,275

 

 

 

 

 

 

 

Net operating income

 

 

(450,353)

 

 

(358,275)

 

 

 

 

 

 

 

Other Income/(Expense):

 

 

 

 

 

 

Change in Fair value of derivative liability

 

 

-

 

 

(890,309)

Amortization of discount

 

 

-

 

 

(59,394)

Gain on change of accounting methodology for

 

 

 

 

 

 

Debt instruments with equity characteristics

 

 

 

 

 

623,403

Gain on retirement of debt

 

 

35,000

 

 

 

Interest expense

 

 

(236,687)

 

 

(200,675)

Total Other income/(expense)

 

 

(201,687)

 

 

(526,975)

 

 

 

 

 

 

 

Net (loss) from continuing operations

 

 

(652,040)

 

 

(885,250)

Net income/(loss) from operations before income taxes

 

 

(652,040)

 

 

18,507,093

Provision for income taxes

 

 

-

 

 

-

Net income from continuing operations

 

 

(652,040)

 

 

18,507,093

 

 

 

 

 

 

 

Weighted average number of shares outstanding-basic

 

 

5,045,998,498

 

 

2,833,665,964

Weighted average number of shares outstanding-fully diluted

 

 

54,009,190,212

 

 

41,395,531,445

Net income from discontinued and continuing operations-basic

 

$

(0.00)

 

$

0.01

Net income from continuing and discontinued operations-fully diluted

 

$

(0.00)

 

$

0.00

 

 

 

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


F-16


HARRISON, VICKERS & WATERMAN, INC.

STATEMENT OF CHANGE IN STOCKHOLDERS’ DEFICIENCY

JUNE 30, 2021 THROUGH JUNE 30, 2022

(UNAUDITED)

 

 

Preferred Stock

 

Common Stock

 

 

 

 

 

 

 

 

 

Series A

Par Value

$.0001

 

Series B

Par Value

$.0001

 

Series C

Par Value

$.001

 

Series D

Par Value

$.001

 

Par Value

$.0001

 

 

 

 

 

 

 

 

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Additional

Paid-In

Capital

 

Dividends

on

Preferred

stock

 

Accumulated

Deficit

 

Total

Stockholders’

Deficiency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2021

98,000

$

10

 

51

$

0

 

100,000

$

100

 

-

$

-

 

3,001,563,744

$

300,156

 

$

1,560,920

 

$

-

 

$

(2,649,315)

 

$

(788,129)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares for extinguishment of convertible preferred stock and accrued dividends

-

 

-

 

-

 

-

 

(12,492)

 

(12)

 

-

 

-

 

3,371,095,980

 

337,110

 

 

(225,990)

 

 

(111,107)

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange of Series A and Series C Preferred stock for newly issued Series D Preferred stock

(12,836)

 

(1)

 

 

 

 

 

(85,008)

 

(85)

 

2,000,000

 

2,000

 

-

 

 

 

 

(1,914)

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange of Series A and Series C Preferred stock for newly issued Series D Preferred stock

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

192,179,195

 

19,218

 

 

(9,609)

 

 

-

 

 

-

 

 

9,609

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants issued on consulting notes

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

6,217

 

 

-

 

 

-

 

 

6,217

Net income, twelve months ended June 30, 2022

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

-

 

 

-

 

 

(652,040)

 

 

(652,040)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2022

85,164

$

9

 

51

$

0

 

2,500

$

3

 

2,000,000

$

2,000

 

6,564,838,919

$

656,484

 

$

1,329,625

 

$

(111,107)

 

$

(3,301,355)

 

$

(1,424,342)

 

 

 

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


F-17


 

HARRISON VICKERS & WATERMAN, INC

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

FOR THE TWELVE MONTHS ENDED JUNE 30, 2021

(UNAUDITED)

 

 

Preferred Stock

 

Common Stock

 

 

 

 

 

 

 

Shares*

 

Amount*

 

Shares

 

 

Amount

 

Additional

Paid in

Capital

 

Accumulated

Deficit

 

Total

Stockholders’

(Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2020

 

 

198,051

 

 

$

110

 

 

2,784,563,744

 

 

$

278,456

 

$

1,493,011

 

$

(21,156,408)

 

$

(19,384,831)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for extinguishment of debt and accrued interest

 

 

-

 

 

 

-

 

 

217,000,000

 

 

 

21,700

 

 

67,909

 

 

-

 

 

89,609

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income for the twelve months ended June 30, 2021

 

 

-

 

 

 

-

 

 

-

 

 

 

-

 

 

-

 

 

18,507,093

 

 

18,507,093

Balance, June 30, 2021

 

 

198,051

 

 

$

110

 

 

3,001,563,744

 

 

$

300,156

 

$

1,560,920

 

$

(2,649,315)

 

$

(788,129)

 

*Preferred stock summary: 

 

 

June 30, 2021

 

June 30, 2021

 

Shares

 

Amount

 

Shares

 

Amount

 

 

 

 

 

 

 

 

Series A

 

98,000

 

 

$

110

 

 

98,000

 

$

10

Series B

 

51

 

 

 

-

 

 

51

 

 

-

Series C

 

100,000

 

 

 

-

-

 

100,000

 

 

100

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Preferred

 

198,051

 

 

$

110

 

 

198,051

 

$

110

 

 

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


F-18


HARRISON, VICKERS & WATERMAN, INC.

STATEMENT OF CASH FLOWS

FOR THE TWELVE MONTHS ENDED JUNE 30, 2022 and 2021

(Unaudited)

 

 

 

For the Twelve Months Ended

 

 

June 30, 2022

 

March 31, 2021

OPERATING ACTIVITIES:

 

 

 

 

Cash flow from Operations from Discontinued operations

 

$

-

 

$

21,098

Net income from continuing operations

 

 

(652,040)

 

 

18,507,093

Gain on disposition of net liabilities of taverns

 

 

 

 

 

(19,403,003)

Expenses incurred on extinguishment of debt

 

 

1,500

 

 

6,500

Gain in change of methodology for

 debt instruments with equity characteristics

 

 

 

 

 

(623,403)

Note issued for legal services

 

 

25,000

 

 

5,000

Change in fair value of derivative liability’

 

 

-

 

 

890,309

Amortization of discount on convertible debt

 

 

-

 

 

59,394

Notes issued for consulting services

 

 

200,000

 

 

-

Accrued interest on debt

 

 

49,514

 

 

118,479

Original issue discount and legal fees expensed

 

 

12,300

 

 

5,500

Accrued expenses on professional fees

 

 

 

 

 

(42,000)

Gain on retirement of note

 

 

(35,000)

 

 

-

Put premium on stock settled debt

 

 

177,872

 

 

77,000

Accrued compensation expense

 

 

153,000

 

 

334,050

Net cash provided (used) by Operations from Continuing operations

 

 

(67,853)

 

 

(65,081)

Net cash flows provided by Operating activities

 

 

(67,853)

 

 

(43,983)

 

 

 

 

 

 

 

Cash flows from Investing activities:

 

 

-

 

 

-

Cash on hand at disposition of taverns

 

 

-

 

 

(80,550)

Net cash flows from investing activities

 

 

-

 

 

(80,550)

 

 

 

 

 

 

 

Cash flows from Financing activities:

 

 

 

 

 

 

Cash portion of convertible notes

 

 

90,000

 

 

117,950

Repayment of convertible notes

 

 

(15,000)

 

 

-

Net Cash flows from Financing activities

 

 

75,000

 

 

117,950

 

 

 

 

 

 

 

Net increase (decrease) in Cash and Cash equivalents

 

 

7,147

 

 

(6,583)

Cash and Cash equivalents, beginning of period

 

 

52,869

 

 

59,452

Cash and Cash equivalents, end of period

 

$

60,016

 

$

52,869

 

 

 

 

 

 

 

Cash paid during the period for

 

 

 

 

 

 

Interest

 

$

-

 

$

-

Taxes

 

$

-

 

$

-

 

 

 

 

 

 

 

Debt extinguished upon conversion

 

$

5,000

 

$

-

Common stock issued to extinguish

 

 

 

 

 

 

debt, accrued interest and expenses

 

$

9,609

 

$

-

Common stock issued to extinguish

 

 

 

 

 

 

preferred stock and accrue dividends

 

$

176,620

 

 

 

 

 

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


F-19


HARRISON, VICKERS & WATERMAN, INC.

JUNE 30, 2022

NOTES TO FINANCIAL STATEMENTS

 

 

NOTE 1 - NATURE OF OPERATIONS

 

Corporate History

 

We were incorporated on June 5, 2008, under the laws of the State of Nevada under the name Sharp Performance Inc. From inception until September 2013, our business focus was on the provision of consulting services to the American automotive industry. From September 2013 until April 21, 2015, we were primarily engaged in the business of making commercial secured real estate loans. On October 24, 2013, we changed our name to Harrison, Vickers & Waterman Inc. in conjunction with the change in our business focus.  On April 21, 2015, we commenced operations in a new line of business, the ownership of World of Beer taverns that serve craft and imported beer along with food and other spirits. We no longer are involved in the commercial secured real estate loans. On October 24, 2018, the Company entered into a Securities Exchange Agreement with NJ Battery Energy Storage Project 1, LLC. In January 2020, the assets of NJ Battery Energy Storage Project 1, LLC were sold and in September 2020, the net assets of the taverns were sold. Currently the Company has no operating business and is looking for acquisitions.

 

Acquisition of World of Beer

 

In April 2015, we entered into a Purchase Agreement (the “Purchase Agreement”), with the original shareholders of Attitude Beer Holdings, Inc. (“ABH”), namely, Attitude Drinks Incorporated, a Delaware corporation (“Attitude Drinks”), and two significant investors of ABH, pursuant to which the shareholders sold to us all of the outstanding shares of stock of ABH, and ABH thereupon became our wholly owned subsidiary. In consideration for the purchase of the shares of common stock of ABH, we issued: (i) to Attitude Drinks, 51 shares of our newly created Series B Preferred Stock of the Company (the “Series B Preferred Stock”) and a seven year warrant (the “B Warrant”) to purchase 5,000,000 shares of our common stock, par value $.0001 per share (the “Common Stock”), at an exercise price of $0.075 per share (subject to customary anti-dilution adjustments); (ii) to the significant investors, a secured convertible note of  approximately $2.2 million and warrants to purchase approximately 1.7 billion shares at $.0025 per share. The warrants have a seven-year life commencing April 20, 2015. These investors also acquired an Additional Investment Right to invest up to $5,000,000 on the same terms.

 

One of the investors acquired 32,300 shares of our Series A Preferred Stock (convertible into 32,300,000 shares of Common Stock) from HVW Holdings LLC “HVW”, an entity of which Mr. James Giordano, our prior Chief Executive Officer and prior Chairman of the Board, was the managing member, subject to the terms of a Purchase Agreement. Attitude Drinks purchased 87,990,000 shares of Common Stock from HVW Holdings LLC at a price of $65,000.

 

Sale of World of Beer

 

On September 28, 2020, the Company sold its interests in the West Hartford World of Beer, and Cambridge Craft restaurants. Concurrent with this sale, the Purchaser also assumed all of the debt associated with the taverns with the exception of $5,000.

 

Acquisition of NJ Battery Energy Storage Project 1, LLC (NJB 1, LLC)

 

On October 24, 2018, the Company entered into a Securities Exchange Agreement (the “Securities Exchange Agreement”) with NJB 1, LLC, its Members, and various securities holders of the Company, under which the Company purchased approximately 80% of the LLC Membership Interest of NJB 1, LLC in exchange for the issuance of 100,000 Shares of newly issued Series C Convertible Preferred Stock.  With the exception of 2,500 shares, all the shares held by the former owners of NJB 1, LLC were sold in September and October 2021 per Note 7 below. On February 25, 2022, those shares were exchanged for newly issued Series D Preferred stock


F-20


 

Sale of NJ Battery Energy Storage Project 1, LLC

 

In January 2020, the Company sold its rights to the Battery Project and paid the proceeds of $75,000 to the prior owners of the Battery project.  All liabilities and assets were extinguished from the Company’s financial statements and the Battery project’s operations were deemed to be discontinued.  There had been some dispute in regards to the Series C Preferred shares owned by the formers owners of the Battery project. During September 2021, 10,000 shares of the Series C Preferred stock owned by Chris Harrison were sold to outside investors, and in October 2021, 67,500 shares were sold to outside investors. (See Note 8)

 

Acquisition of MPS

 

On August 8, 2022, Harrison, Vickers & Waterman, Inc., a Wyoming corporation (“HVCW”), PEN Merger Sub, LLC, a California limited liability company (“Merger Sub”), Pacific Energy Network LLC, a California limited liability company (“PEN”), and Robert William Tetsch on behalf of the members of PEN, (the “Merger”) officially closed on the previously disclosed Agreement and Plan of Merger (the “Merger Agreement”) which was executed July 15, 2022.

 

Pacific Energy Network (PEN) is a California based parent company of several subsidiary LLC’s that manage solar, roofing, HVAC, security, distribution, consulting, lead generation, marketing, sales, data, software and mortgage divisions. Founded in 2018, PEN has quickly become one of the largest and most successful home services companies in the nation with a footprint across multiple states. With a focus on customer satisfaction and strategic business planning, PEN has grown into a multi-product business that has increased revenue year over year and expanded its reach into new markets across the United States.

 

The Merger Agreement provided that, upon the closing, the Merger Sub was merged with and into PEN, with PEN continuing as a wholly owned subsidiary of HVCW, but with the management of PEN taking over voting control of HVCW.

 

The Merger Agreement was forwarded to the California Secretary of State for filing and issuance of a Certificate of Merger.  The Merger was approved by the stockholders of HVCW and the members of PEN. The Merger Agreement was approved, authorized and agreed to by the boards of directors of each of HVCW and PEN.

 

Effective on August 8, 2022, Jeffrey M. Canouse, sole Officer and Director and Majority Shareholder of HVCW, appointed Robert W. Tetsch as sole Officer and Director of HVCW as his successor as his last official act and resigned as a condition of the Merger.

 

Also, effective on August 8, 2022, Jeffrey M. Canouse, assigned all 51 shares of HVCW’s Series B Preferred Stock, giving Robert Tetsch majority voting control of HVCW.

 

In consideration for the contribution of net assets of PEN, the Company issued 10,000 shares of Series F Preferred stock convertible into 85% of the Company’s outstanding common stock. In consideration for consulting and advisory services provided for the transaction, the Company issued 10,000 shares of Series G Preferred stock, convertible into 10% of the Company’s outstanding common stock.

 

Departure of Jeffrey M. Canouse and Appointment of Robert Tetsch

 

Effective on August 8, 2022, Jeffrey M. Canouse, Sole Officer and Director of HVCW resigned from his positions, and the Board of Directors accepted the appointment of Robert Tetsch, as the Company’s new Sole Officer and Director to replace Mr. Canouse on that date.

 

Mr. Canouse’s resignation was not due to any disagreement with the Company or its Board of Directors.

 

Robert Tetsch (35) is a self-taught business visionary. He founded Modern Pro Solutions (formerly Pacific Energy Network) in 2018 to leverage his nearly 20 years of field and managerial experience in all aspects of home and business services, maintenance, and owner support. Since starting Modern Pro Solutions, a full-service residential and commercial rooftop solar energy company, Mr. Tetsch has led an ambitious vertical integration. In 2021, Modern Pro Solutions expanded its footprint from residential solar and structured a parent company that manages subsidiary


F-21


roofing, solar, HVAC, smart home, business consulting, distribution, and business financing. Born into an Army family that helped instill the virtues of hard work, discipline, accountability, and leadership, Mr. Tetsch is intent on pioneering the integrated home services industry. His plans include expansion of MPS’s territory and partnerships, and authorized dealer relationships, and scaling the company’s manufacturing and distribution capabilities to combat supply chain inconsistencies. Mr. Tetsch is also intent on adding a range of services such as integrating and mobilizing, building data collected from internet-of-things-connected devices, building inspections, maintenance consulting, control and monitoring software, green mortgages and bringing consumer financing in house.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The Company prepares its consolidated financial statements are prepared in conformity with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of all subsidiaries.  All significant inter-company balances and transactions have been eliminated in consolidation.

 

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, allowance for accounts receivable, depreciable lives of the web site, valuation of warrants and beneficial conversion feature debt discounts, valuation of derivatives, and valuation of share-based payments.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

 

Property, Equipment and Depreciation

 

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of three years for computer equipment, five years for office furniture and fixtures, and the lesser of the lease term or the useful life of the leased equipment. Leasehold improvements, if any, would be amortized over the lesser of the lease term or the useful life of the improvements. Expenditures for maintenance and repairs along with fixed assets below our capitalization threshold are expensed as incurred.

 

Discontinued operations

 

Pursuant to Accounting Standards Update No. 2014-08 the disposal of a component (including business activities) must be reported in discontinued operations only if the disposal represents a “strategic shift” that has or will have a major effect on the company’s operations and financial results. The sale of the Company’s battery project business and World of Beer taverns were determined to be a strategic shift and thusly its operations have been recorded as discontinued.

 

Accounting for Derivatives

 

The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this


F-22


accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.

 

Convertible Notes with Fixed Rate Conversion Options

 

The Company may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. The Company records the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the note date with a charge to interest expense in accordance with ASC 480 - “Distinguishing Liabilities from Equity”.

 

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

 

The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses, deposits received from customers for layaway sales and short-term loans the carrying amounts approximate fair value due to their short maturities.

 

We follow accounting guidance for financial and non-financial assets and liabilities. 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

 

The Company recognized revenue for our services in accordance with ASC 605-10, “Revenue Recognition in Financial Statements.” Under these guidelines, revenue is recognized on transactions when all of the following exist:


F-23


persuasive evidence of an arrangement did exist, delivery of service has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured.

 

Restatements

 

All financial statements for prior periods have been restated to more accurately present financial condition. There has been no profit and loss impact on any prior period statements.

 

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. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.

 

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.

 

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 June 30, 2022. 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 were any significant interest expense recognized during the twelve months ended June 30, 2022 and 2021.

 

Net Earnings (Loss) Per Share

 

In accordance with ASC 260-10, “Earnings Per Share,” basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period.

 

NOTE 3 – GOING CONCERN

 

The Company has not generated substantial revenues and has recurring net losses. For the nine months ended June 30, 2022 and 2021, net operating (loss) from continuing operations was $(492,331) and $(1,363,526) respectively.

 

In addition, as of June 30, 2022, the Company had an accumulated deficit and stockholders’ deficit of ($3,141,646) and ($1,270,851) respectively. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities


F-24


in the normal course of business. The ability of the Company to continue its operations is dependent on the execution of management’s plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the consolidated financial statements.

 

There can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Based on the Company’s current resources, the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary.

 

The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company is attempting to commence explorations and generate revenue; however, the Company’s future cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy in the exploration and development of its unproved properties and the Company’s ability to raise additional funds, until such time it is able to generate sufficient revenue to support its operations, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon its ability to further implement its business plan and in its ability to raise additional funds, until such time the Company can generate sufficient revenues to support its operations.

 

In the event the Company is unable to raise funding in the near term, we will not be able to pay our liabilities. In the event we are unable to raise adequate funding in the future for our operations and to pay our outstanding debt obligations, and if our current creditors elect to foreclose on the outstanding debts then owed, we would be forced to liquidate our assets or may be forced to seek bankruptcy protection, which could result in the value of our outstanding securities declining in value or becoming worthless.

 

The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

NOTE 4 - NET LOSS FROM DISCONTINUED OPERATIONS

 

For the period beginning July 1, 2020 through September 28, 2020, the operations of the taverns were part of the Company. Their results were as follows and are reported for the twelve months ended June 30, 2021:

 

Revenues

$

866,998

Food and Beverage costs

 

203,530

Gross profit

 

663,468

 

 

 

Operating expenses

 

 

Labor

 

277,402

General and Administrative

 

359,468

Depreciation

 

47,500

Total Operating expenses

 

684,370

 

 

 

Net loss before non-controlling interest

 

(20,902)

Non-controlling interest

 

10,242

 

 

 

Net income from discontinued operations

$

(10,660)


F-25


NOTE 5 - GAIN ON DISPOSITION OF NET ASSETS OF WORLD OF BEER TAVERNS

 

Upon the disposition of the net assets of the World of Beer taverns, the company recorded a net gain of $19,403,003 during the twelve months ended June 30, 2021 as follows:

 

Total assets disposed

 

 

 

 

 

Cash and Cash Equivalents

$

80,550

Inventories

 

56,831

Prepaid Expenses

 

184,692

Total Current Assets

 

322,073

 

 

 

Fixed Assets- net

 

2,019,312

Deposits

 

50,498

Total Other Assets

 

2,069,810

Total Assets disposed

$

2,391,883

 

 

 

Total liabilities disposed

 

 

 

 

 

Accounts Payable

$

153,608

Accrued liabilities

 

338,310

Deferred Expenses

 

252,723

Derivative liabilities

 

1,698,667

Put premium on convertible notes

 

10,741,206

Loan payable to minority owners

 

294,032

Convertible Notes payable

 

5,679,119

Paycheck Protection Program note payable

 

351,064

Non-convertible notes payable

 

3,400,211

Minority interest

 

(1,114,054)

Total liabilities disposed

$

21,794,886

 

 

 

Total liabilities disposed

$

21,794,886

Total assets disposed

 

2,391,883

Gain on disposition of net assets

$

19,403,003

 

NOTE 6 – ACCRUED EXPENSES

 

Accrued Expenses at June 30, 2022 and June 30, 2021 represent the following:

 

 

 

June 30,

 

 

2022

 

2021

 

 

 

 

 

Accrued compensation

 

$

95,000

 

$

98,703

Other

 

 

18,000

 

 

18,000

Total

 

$

113,000

 

$

116,703

 

Accrued compensation

 

Accrued compensation represents amounts owed to our Chief Executive.  $156,702 of this liability was put into a non-interest bearing note as of January 4, 2022. See Note 7 below.


F-26


 

NOTE 7 – CONVERTIBLE NOTES PAYABLE AND PUT PREMIUM ON STOCK SETTLED DEBT

 

The balances in convertible notes payable and put premium on stock settled debt at June 30, 2022 are as follows:

 

 

 

 

 

 

 

Amount

 

Percentage of

Put premium

 

Date

Maturity

Interest

Original

Current

Amount

Assigned

for

Carrying

Stock

price used

on

stock settled

Creditor

Issued

Date

Rate

amount

Outstanding

warrants

amount

for conversion

debt

 

 

 

 

 

 

 

 

 

 

Chris Harrison

4-Jan-21

4-Jan-22

8%

$

100,000

$

100,000

$

-

$

100,000

50%

$

100,000

Jeff Canouse

4-Jan-21

4-Jan-22

12%

 

150,000

 

150,000

 

-

 

150,000

50%

 

150,000

JP Carey Enterprises, LTD

19-Feb-21

19-Feb-22

8%

 

3,450

 

3,450

 

-

 

3,450

60%

 

2,300

JP Carey Enterprises, LTD

12-Mar-21

12-Mar-22

8%

 

4,500

 

4,500

 

-

 

4,500

60%

 

3,000

Trillium Partners, LP

3-Jun-21

3-Jun-22

12%

 

26,500

 

26,500

 

-

 

26,500

60%

 

17,667

JP Carey Enterprises

11-Jun-21

11-Jun-22

12%

 

26,500

 

26,500

 

-

 

26,500

60%

 

17,667

Trillium Partners, LP

14-Jun-21

14-Jun-22

12%

 

62,500

 

62,500

 

-

 

62,500

60%

 

41,667

Frondeur Partners LLC

1-Nov-21

30-Sep-22

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Frondeur Partners LLC

1-Dec-21

31-Oct-22

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Frondeur Partners LLC

1-Jan-22

30-Nov-22

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Jeffrey M Canouse

4-Jan-22

4-Jan-23

0%

 

156,702

 

156,702

 

-

 

156,702

70%

 

67,158

Frondeur Partners LLC

1-Feb-22

31-Dec-22

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Frondeur Partners LLC

1-Mar-22

31-Jan-23

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Frondeur Partners LLC

01-Apr-22

28-Feb-23

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Frondeur Partners LLC

01-May-22

31-Mar-23

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Trillium Partners, LP

13-May-22

13-May-23

12%

 

51,150

 

51,150

 

-

 

51,150

-

 

-

JP Carey Limited Partners, LP

13-May-22

13-May-23

12%

 

51,150

 

51,150

 

-

 

51,150

-

 

-

Frondeur Partners LLC

01-Jun-22

30-Apr-23

10%

 

25,000

 

25,000

 

(6,217)

 

18,783

70%

 

10,714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

$

832,452

$

832,452

$

(6,217)

$

826,235

 

$

485,172

 

Chris Harrison Note

 

Upon leaving the company, Mr. Harrison received a note for services rendered of $100,000. The note bears interest at a rate of 8% and matures on January 4, 2022.  The note was originally convertible into common stock of the Company at the lower of seventy five percent (75%) of the closing bid price for the Company’s common stock on the date of this Note, or (b) fifty percent (50%) (“Discount”) of the lowest closing bid price for the Company’s common stock during the thirty (30) trading days immediately preceding the date of delivery by Holder to Company of the Conversion Notice. On June 30, 2021, Mr. Harrison signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00005.

 

Jeffrey M. Canouse Note

 

Upon becoming Chief Executive of the Company, Mr. Canouse received a note of $150,000. The note bears interest at a rate of 12% and matures on January 4, 2022.  The note is convertible into common stock of the Company at the lower of seventy five percent (75%) of the closing bid price for the Company’s common stock on the date of this Note, or (b) fifty percent (50%) (“Discount”) of the lowest closing bid price for the Company’s common stock during the thirty (30) trading days immediately preceding the date of delivery by Holder to Company of the Conversion Notice.  On June 30, 2021, Mr. Canouse signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00005.

 

JP Carey Enterprises, Inc. Note of February 19, 2021

 

On that date, the Company issued a note for $3,450 The Note is convertible into the Company’s common stock at a 40% discount to the lower of a) average of the lowest two closing bid price during the 10 trading days prior to conversion or b) $.001. On June 30, 2021, Management at JP Carey Enterprises, Inc. signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of March 31, 2022, the conversion price is $.00006. The interest rate on the note is 12%.

 

JP Carey Enterprises, Inc. Note of March 12, 2021

 

On that date, the Company issued a note for $4,500 The Note is convertible into the Company’s common stock at a 40% discount to the lower of a) average of the lowest two closing bid price during the 10 trading days prior to conversion or b) $.001. On June 30, 2021, Management at JP Carey Enterprises, Inc. signed an amendment to the


F-27


Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00006. The interest rate on the note is 12%

 

Trillium Partners, LP. Note of June 3, 2021

 

On that date, the Company issued a note for $26,500 consisting of $25,000 in cash and $1,500 in Original issue discount (“OID”). The OID was charged to interest expense. The Note is convertible into the Company’s common stock at a 40% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. On June 30, 2021, Management at Trillium Partners, LP. signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00006. The interest rate on the note is 12%

 

JP Carey Limited Partners, LP. Note of June 3, 2021

 

On that date, the Company issued a note for $26,500 consisting of $25,000 in cash and $1,500 in Original issue discount (“OID”). The OID was charged to interest expense. The Note is convertible into the Company’s common stock at a 40% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. On June 30, 2021, Management at JP Carey Enterprises, Inc. signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00006. The interest rate on the note is 12%.

 

Trillium Partners, LP. Note of June 14, 2021

 

On that date, the Company issued a note for $62,500 consisting of $60,000 in cash and $2,500 in Original issue discount (“OID”). The OID was charged to interest expense. The Note is convertible into the Company’s common stock at a 40% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. On June 30, 2021, Management at Trillium Partners, LP signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00006. The interest rate on the note is 12%.

 

Frondeur Partners, LLC Note of November 1, 2021

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2022, the conversion price is $.0007. The interest rate on the note is 10%.

 

Frondeur Partners, LLC Note of December 1, 2021

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2022, the conversion price is $.00007. The interest rate on the note is 10%.

 

Frondeur Partners, LLC Note of January 1, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2022, the conversion price is $.00007. The interest rate on the note is 10%.

 

Jeffrey M. Canouse Note of January 4, 2022

 

Mr. Canouse converted his accrued salary as of January 4, 2022, the one year anniversary of his becoming Chief Executive Officer into a note.  The balance of the liability on that date was $156,702.  The note is coverable into common stock at 30% discount to the average of the two low closing bid prices. As of June 30, 2022, the conversion price is $.00007. The note bears no interest.


F-28


 

 

Frondeur Partners, LLC Note of February 1, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2021, the conversion price is $.00007. The interest rate on the note is 10%.

Frondeur Partners, LLC Note of March 1, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2021, the conversion price is $.00007. The interest rate on the note is 10%.

 

Frondeur Partners, LLC Note of April 1, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2021, the conversion price is $.00007. The interest rate on the note is 10%.

 

Frondeur Partners, LLC Note of May 1, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2021, the conversion price is $.00007. The interest rate on the note is 10%.

 

Trillium Partners, LP. Note of May 13, 2022

 

On that date, the Company issued a note for $51,150 consisting of $45,000 in cash to the Company, $1,500 in legal fees and an Original issue discount (“OID”) of $4,650.   The OID was charged to interest expense. The Note is convertible into the Company’s common stock at $.00005 per share. The interest rate on the note is 12%

 

JP Carey Limited Partners, LP. Note of May 13, 2022

 

On that date, the Company issued a note for $51,150 consisting of $45,000 in cash to the Company, $1,500 in legal fees and an Original issue discount (“OID”) of $4,650. The OID was charged to interest expense. The Note is convertible into the Company’s common stock at $.00005 per share. The interest rate on the note is 12%.

 

Frondeur Partners, LLC Note of June, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2021, the conversion price is $.00007. The interest rate on the note is 10%.

 

At June 30, 2022, if all the convertible debt were converted, approximately 15 billion shares of common stock would be issued.

 

 


F-29


 

NOTE 8 - SALE OF SERIES C PREFERRED STOCK

 

The Preferred stock which was originally issued for the purchase of NJB 1 LLC were sold in a private transaction.  The purchasers listed below subsequently exchanged their shares for 2,000,000 shares of newly issued Series D preferred stock

 

Date

 

Seller

 

Buyer

 

Shares

 

 

 

 

 

 

 

9/3/21

 

Christopher Harrison

 

J.P. Carey Enterprises

 

10,000

 

 

 

 

 

 

 

10/19/21

 

New Jersey Battery Energy

 

 

 

 

 

 

Storage Project 2, LLC

 

J.P. Carey Limited Partners

 

25,000

 

 

 

 

 

 

 

10/19/21

 

MSS Capital LLC

 

J.P. Carey Limited Partners

 

22,500

 

 

 

 

 

 

 

10/19/21

 

McCrae Associates, LLC

 

Trillium Partners, LP

 

10,000

 

 

 

 

 

 

 

10/19/21

 

Imperio Capital

 

Trillium Partners, LP

 

10,000

Total

 

 

 

 

 

77,500

 

Terms were privately negotiated.

 

NOTE 9 - CONSULTING CONTRACT

 

Consulting contract

 

Entrance into consulting agreement

 

Effective November 1, 2021 the Company entered into a consulting arrangement for $25,000 per month. Services to be provided include financial statement preparation, providing support for regulatory filings including the Regulation A financing and preparing financial analysis work to assist the Company in raising capital efficiently amongst other items.

 

NOTE 10 – STOCKHOLDERS’ DEFICIT

 

Common stock

 

There are 25,000,000,000 shares of common stock authorized of June 30, 2022. At June 30, 2022 and June 30, 2020, there were 6,564,838,949and 3,001,563,774, shares of Common stock outstanding, respectively. As of the date of this report, there are 6,564,838,949 shares of common stock outstanding. The Company increased its shares authorized from 5 billion to 12 billion on August 19, 2021. On December 15, 2021, the Company increased its authorized common shares outstanding from 12 billion to 25 billion.

 

Common shares outstanding -fully diluted as of June 30, 2022:

 

Shares outstanding

6,564,838,949

Conversion of convertible debt

15,334,398,317

Conversion of Series C Preferred stock

1,340,722,177

Conversion of Series D Preferred stock

30,769,230,769

 

54,009,190,212

 

For purposes of this calculation, shares to be issued under the remaining Series A and Series B Preferred stock issuances are omitted due to their immateriality.


F-30


 

Preferred Stock

 

Here is a summary of the Company’s outstanding preferred stock.

 

Series A 8% Convertible Preferred Stock

 

On September 17, 2013 the Company filed the Series A 8% Convertible Preferred Stock Certificate of Designation with the Secretary of State of Nevada (the “Certificate of Designation”) authorizing 100,000 shares of Series A Convertible Preferred Stock and establishing the rights, preferences, privileges and obligations thereof.

 

As set forth in the Certificate of Designation, the holders of Series A Convertible Preferred Stock are entitled to receive, when and as declared by the Board of Directors out of funds legally available therefore, and the Company is obligated to accrue, quarterly in arrears on June 30, September 30, September 30, and December 31 of each year, cumulative dividends on the Series A Preferred Stock at the rate per share equal to eight percent (8%) per annum on the Stated Value, payable in common stock valued at the closing trade price per share on the last trading day of the calendar quarter. Through the Balance sheet date, the holders of the Series A Preferred Stock have waived all dividends.  There is no guarantee they will do so going forward. The Series A Convertible Preferred Stock does not have the right to vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, either by written consent or by proxy. So long as any shares of Series A Preferred Stock are outstanding, the Company does not have the right to, and cannot cause its subsidiaries not to, without the affirmative vote of the Requisite Holders, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, (b) alter or amend this Certificate of Designation, (c) amend its certificate of incorporation, bylaws or other charter documents so as to affect adversely any rights of any Holders of the Series A Preferred Stock, (d) increase the authorized or designated number of shares of Series A Preferred Stock, (e) issue any additional shares of Series A Preferred Stock (including the reissuance of any shares of Series A Preferred Stock converted for Common Stock) or (f) enter into any agreement with respect to the foregoing. Each share of Series A Convertible Preferred Stock is convertible into 1,000 shares of Common Stock.  On February 25, 2022, an investor exchanged 12,836 shares of Series A Preferred stock for 333,333 shares of newly issued Series D Preferred stock

 

Series B Convertible Preferred Stock

 

On April 21, 2015, the Company issued 51 shares of Series B Convertible Preferred Stock to Attitude Drinks Incorporated.  At the time, the Company accounted for approximately $1,000,000 in additional paid in capital due to its issuance.  Each share has a par value of $0.0001 and a stated value of $1,000 per share. Unless in the event of liquidation, holders shall not be entitled to receive dividends. Each one (1) share of the Series B Preferred Stock shall have voting rights equal to (x) (i) 0.019607 multiplied by the aggregate total of (A) the issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote, plus (B) the number of votes which all other series or classes of securities other than this Series B Preferred Stock are entitled to cast together with the holders of Common Stock at the time of the relevant vote (the amount determined by this clause (i), the “Numerator”), divided by (ii) 0.49, minus (y) the Numerator.

 

The series B Preferred stock was owned by former Chief Executive Officer, Jeffrey M Canouse on June 30, 2022.  Mr. Canouse assigned all 51 shares to our current Chief Executive Officer, Robert W. Tetsch, on August 8, 2022.

 

Series C Preferred stock

 

Originally, 100,000 shares of Series C Preferred stock were issued as part of the NJB1 LLC purchase. See Note 1 above. On February 25, 2022, 85,008 shares of those shares were exchanged for Series D preferred stock. See Note 8 above. Currently 2,500 shares of Series C preferred stock remain.


F-31


 

Series D Preferred stock

 

On February 25, 2022 the owners of the 77,500 shares of Series C preferred stock plus  (See Note 7)  plus another owner of 7,508 shares plus an owner of 12,836 shares of Series A Preferred stock exchanged their shares for newly issued Series D Preferred stock as follows:

 

Entity

 

Series A

Series C

Series D

JP Carey Limited Partners, LLC

 

-

(57,500)

1,000,000

Oscaleta Partners, LLC

 

-

(7,508)

333,333

Livingston Asset Management LLC

 

(12,836)

-

333,333

Trillium Partners, LP

 

-

(20,000)

333,334

Total

 

(12,836)

(85,008)

2,000,000

 

Shares authorized and par value:

 

Preferred Series Class

 

Shares authorized

 

Par value

 

 

 

 

 

Series A

 

100,000

 

$.0001

Series B

 

51

 

$.0001

Series C

 

100,000

 

$.001

Series D

 

2,000,000

 

$.001

 

Shares outstanding:

 

Preferred Series Class

 

June 30, 2022

 

June 30, 2022

 

 

 

 

 

Series A

 

85,164

 

98,000

Series B

 

51

 

51

Series C

 

2,500

 

100,000

Series D

 

2,000,000

 

-0-

 

Common shares to be issued upon conversion:

 

Preferred Series Class

 

June 30, 2022

 

June 30, 2022

 

 

 

 

 

Series A

 

85 million

 

98 million

Series B

 

51

 

51

Series C (including accrued dividends)

 

1.3 billion

 

38.1 billion

Series D

 

31 billion

 

-

 

NOTE 11 - GAIN ON RETIREMENT OF DEBT

 

In August 2021, we issued our legal counsel a $25,000 note for legal services associated with our Regulation A filing.  During the fourth quarter of Fiscal year 2022, he accepted $15,000 cash as full payment on account.  The Company recorded a $10,000 gain for the difference between the amount paid and the face value of the note and a $25,000 gain on the elimination of the put premium for stock settled debt.  Thusly, a gain of $35,000 was recorded.

 

NOTE 12 - INCOME TAXES

 

In accordance with ASC 740, we are required to recognize the impact of an uncertain tax position in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained upon examination by the tax authorities. We had no unrecognized tax benefits from uncertain tax positions as of December 31, 2020 and 2019. It is also our policy, in accordance with authoritative guidance, to recognize interest and penalties related to income tax matters in interest and other expense in our Statements of Operations.


F-32


Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. As a result of our cumulative losses, management has concluded that a full valuation allowance against our net deferred tax assets is appropriate.

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of 21%.

 

The provision for income taxes on our loss from continuing operations for the fiscal years ended June 30, 2021 is as follows:

 

 

Income tax

 

Percentage

 

Expense

 

of

 

Reconciliation

 

taxable income

 

 

 

 

Book net income

$

(652,040)

 

100.0%

Gain on retirement of debt

 

(35,000)

 

5.4%

Interest expense from put premium on stock settled debt

 

131,444

 

(20.2)%

Original issue discount expensed

 

9,300

 

(1.4)%

Taxable net income

$

(546,296)

 

83.8%

 

 

 

 

 

Change in Valuation allowance

 

142,774

 

(21.9)%

Income tax expense based on taxable net income

 

(142,774)

 

21.9%

Income tax expense

$

-

 

0.0%

 

Federal income tax rate

21.0%

Incremental state income tax rate

6.5%

Impact of Federal rate

(1.4)%

Marginal income tax rate

26.1%

 

NOTE 13 - COVID-19

 

The Company’s new business maybe significantly affected due to the COVID-19 social distancing requirements mandated by the federal, state and local governments where the Company’s operations occur. For some businesses, like the Company’s, much of its core business operations cannot always be done through “virtual” means, and even when this is possible, it requires significant capital and time to achieve. If the Company is unable to meet the demand for its products due to limited capital or limited staff because of social distancing, or other changes required in order to comply with the ongoing federal, state and local governmental orders related to COVID-19, the Company’s ability to expand its business and market will be at risk.

 

NOTE 14 - IMPACT OF CLIMATE CHANGE

 

The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information. The TCFD requires that the impact of climate change upon risk assessment, capital allocation and strategic planning be discussed.

 

At this time, the impact cannot be determined.


F-33


 

NOTE 15 - COMMITMENTS AND CONTINGENCIES

 

During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with FASB ASC 450-20-50, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals.

 

The Company has concluded that there are no material commitments or contingencies to be reported at this time

 

NOTE 16 - SUBSEQUENT EVENTS

 

Purchase of MPS

 

On August 8, 2022, Harrison, Vickers & Waterman, Inc., a Wyoming corporation (“HVCW”), PEN Merger Sub, LLC, a California limited liability company (“Merger Sub”), Pacific Energy Network LLC, a California limited liability company (“PEN”), and Robert William Tetsch on behalf of the members of PEN, (the “Merger”) officially closed on the previously disclosed Agreement and Plan of Merger (the “Merger Agreement”) which was executed July 15, 2022.

 

Pacific Energy Network (PEN) is a California based parent company of several subsidiary LLC’s that manage solar, roofing, HVAC, security, distribution, consulting, lead generation, marketing, sales, data, software and mortgage divisions. Founded in 2018, PEN has quickly become one of the largest and most successful home services companies in the nation with a footprint across multiple states. With a focus on customer satisfaction and strategic business planning, PEN has grown into a multi-product business that has increased revenue year over year and expanded its reach into new markets across the United States.

 

The Merger Agreement provided that, upon the closing, the Merger Sub was merged with and into PEN, with PEN continuing as a wholly owned subsidiary of HVCW, but with the management of PEN taking over voting control of HVCW.

 

The Merger Agreement was forwarded to the California Secretary of State for filing and issuance of a Certificate of Merger.  The Merger was approved by the stockholders of HVCW and the members of PEN. The Merger Agreement was approved, authorized and agreed to by the boards of directors of each of HVCW and PEN.

 

Effective on August 8, 2022, Jeffrey M. Canouse, sole Officer and Director and Majority Shareholder of HVCW, appointed Robert W. Tetsch as sole Officer and Director of HVCW as his successor as his last official act and resigned as a condition of the Merger.

 

Also, effective on August 8, 2022, Jeffrey M. Canouse, assigned all 51 shares of HVCW’s Series B Preferred Stock, giving Robert Tetsch majority voting control of HVCW.

 

In consideration for the contribution of net assets of PEN, the Company issued 10,000 shares of Series F Preferred stock convertible into 85% of the Company’s outstanding common stock. In consideration for consulting and advisory services provided for the transaction, the Company issued 10,000 shares of Series G Preferred stock, convertible into 10% of the Company’s outstanding common stock.

 

Departure of Jeffrey M. Canouse and Appointment of Robert Tetsch

 

Effective on August 8, 2022, Jeffrey M. Canouse, Sole Officer and Director of HVCW resigned from his positions, and the Board of Directors accepted the appointment of Robert Tetsch, as the Company’s new Sole Officer and Director to replace Mr. Canouse on that date.

 

Mr. Canouse’s resignation was not due to any disagreement with the Company or its Board of Directors.


F-34


Robert Tetsch (35) is a self-taught business visionary. He founded Modern Pro Solutions (formerly Pacific Energy Network) in 2018 to leverage his nearly 20 years of field and managerial experience in all aspects of home and business services, maintenance, and owner support. Since starting Modern Pro Solutions, a full-service residential and commercial rooftop solar energy company, Mr. Tetsch has led an ambitious vertical integration. In 2021, Modern Pro Solutions expanded its footprint from residential solar and structured a parent company that manages subsidiary roofing, solar, HVAC, smart home, business consulting, distribution, and business financing. Born into an Army family that helped instill the virtues of hard work, discipline, accountability, and leadership, Mr. Tetsch is intent on pioneering the integrated home services industry. His plans include expansion of MPS’s territory and partnerships, and authorized dealer relationships, and scaling the company’s manufacturing and distribution capabilities to combat supply chain inconsistencies. Mr. Tetsch is also intent on adding a range of services such as integrating and mobilizing, building data collected from internet-of-things-connected devices, building inspections, maintenance consulting, control and monitoring software, green mortgages and bringing consumer financing in house.

 

Issuance of Convertible debt

 

On August 1, 2022, the Company issued a note for $50,000 for consulting services to Frondeur Partners LLC. The Note is convertible into the Company’s common stock at a 70% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. The interest rate on the note is 10%.

 

 

 

 

 

 

 

 

 

 

 

 


F-35


Harrison Vickers and Waterman, Inc.

Consolidated Balance Sheet

30-Jun-22

(Pro-forma basis)

(Unaudited)

 

 

Pacific Energy

Network, LLC

 

Harrison Vickers

&

Waterman, Inc.

 

ELIMINATIONS

 

June 30,

2022

Assets

 

 

 

 

 

 

 

 

Cash

$

473,308

 

$

60,016

 

$

-

 

$

533,324

 

Due from related party

 

134,099

 

 

-

 

 

-

 

 

134,099

 

Employee cash advances

 

4,950

 

 

-

 

 

-

 

 

4,950

 

Accounts receivable

 

722,460

 

 

-

 

 

-

 

 

722,460

 

Other Current Assets

 

20,427

 

 

-

 

 

-

 

 

20,427

Total Current Assets

$

1,355,243

 

$

60,016

 

$

-

 

$

1,415,259

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Fixed Assets

 

1,427,695

 

 

-

 

 

-

 

 

1,427,695

 

Other Assets

 

41,382

 

 

-

 

 

-

 

 

41,382

Total Non- current assets

 

1,469,077

 

 

-

 

 

-

 

 

1,469,077

Total Assets

$

2,824,319

 

$

60,016

 

$

-

 

$

2,884,336

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Payable

$

1,851,158

 

$

-

 

$

-

 

$

1,851,158

 

Accrued expenses

 

379,642

 

 

172,951

 

 

-

 

 

552,593

 

Line of credit

 

1,400,000

 

 

-

 

 

-

 

 

1,400,000

 

Factor payable

 

764,373

 

 

-

 

 

-

 

 

764,373

 

Convertible notes payable, net of warrants of $6,217

 

-

 

 

826,235

 

 

-

 

 

826,235

 

Put premium on stock settled debt

 

 

 

 

485,172

 

 

-

 

 

485,172

 

Payroll protection program

 

254,681

 

 

 

 

 

-

 

 

254,681

 

Capital lease liability

 

558,694

 

 

 

 

 

-

 

 

558,694

Total Current Liabilities

 

5,208,548

 

 

1,484,358

 

 

-

 

 

6,692,906

 

SBA loan

 

500,000

 

 

-

 

 

-

 

 

500,000

 

Other borrowings

 

500,000

 

 

-

 

 

-

 

 

500,000

Total long-term liabilities

 

1,000,000

 

 

-

 

 

-

 

 

1,000,000

Total liabilities

 

6,208,548

 

 

1,484,358

 

 

-

 

 

7,692,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock- Series A, 8% convertible preferred stock, stated value, $1,000, 85,164 shares outstanding

 

 

 

 

7

 

 

-

 

 

7

 

Preferred Stock- Series B preferred stock, stated value, $1,000, 51 shares outstanding

 

 

 

 

-

 

 

-

 

 

-

 

Preferred Stock- Series C, 8% convertible preferred stock, stated value, $1,000, 2,500 shares outstanding

 

 

 

 

3

 

 

-

 

 

3

 

Preferred Stock- Series D, 3% convertible Preferred stock, 2,000,000 shares outstanding, stated value $1

 

 

 

 

2,000

 

 

-

 

 

2,000

 

Series F Preferred stock- 10,000 shares outstanding, $.001 par value

 

 

 

 

 

 

 

10

 

 

10

 

Series G Preferred stock- 10,000 shares outstanding, $.001 par value

 

 

 

 

 

 

 

10

 

 

10

 

Preferred dividends paid

 

 

 

 

(111,107)

 

 

-

 

 

(111,107)

 

Common stock, par value $.0001, 25,000,000,000 shares authorized, 6,564,838,949 shares outstanding

 

 

 

 

656,484

 

 

 

 

 

656,484

 

Additional paid-in capital

 

 

 

 

1,329,625

 

 

(20)

 

 

1,329,605

 

Accumulated deficit

 

(3,384,229)

 

 

(3,301,354)

 

 

 

 

 

(6,685,583)

Total stockholders’ deficit

 

(3,384,229)

 

 

(1,424,342)

 

 

-

 

 

(4,808,571)

Total Liabilities & Equity

$

2,824,319

 

$

60,016

 

$

-

 

$

2,884,336


F-36


 

Harrison Vickers and Waterman, Inc.

Consolidated Balance Sheet

30-Jun-21

(pro-Forma basis)

(Unaudited)

 

 

Pacific Energy

Network, LLC

 

Harrison Vickers

&

Waterman, Inc.

 

ELIMINATIONS

 

June 30,

2022

Assets

 

 

 

 

 

 

 

 

Cash

$

356,200

 

$

52,869

 

$

-

 

$

409,069

 

Due from related party

 

62,962

 

 

-

 

 

-

 

 

62,962

 

Employee cash advances

 

29,800

 

 

-

 

 

-

 

 

29,800

Total Current Assets

$

448,962

 

$

60,016

 

$

-

 

$

501,831

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Fixed Assets

 

37,107

 

 

-

 

 

-

 

 

37,107

 

Other Assets

 

14,560

 

 

-

 

 

-

 

 

14,560

Total Non- current assets

 

51,667

 

 

-

 

 

-

 

 

51,667

Total Assets

$

500,629

 

$

52,869

 

$

-

 

$

553,498

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts Payable

$

192,324

 

$

-

 

$

-

 

$

192,324

 

Accrued expenses

 

51,580

 

 

116,703

 

 

-

 

 

168,283

 

Accrued Interest

 

-

 

 

13,545

 

 

-

 

 

13,545

 

Paycheck protection program payable

 

331,015

 

 

-

 

 

 

 

 

331,015

 

Convertible notes payable- current

 

-

 

 

378,450

 

 

-

 

 

378,450

 

Put premium on stock settled debt

 

-

 

 

332,300

 

 

-

 

 

332,300

Total Current Liabilities

 

574,919

 

 

840,998

 

 

-

 

 

1,415,917

 

SBA loan

 

149,900

 

 

-

 

 

-

 

 

149,900

Total long-term liabilities

 

149,900

 

 

-

 

 

-

 

 

149,900

Total liabilities

 

724,819

 

 

840,998

 

 

-

 

 

1,565,817

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock- Series A, 8% convertible preferred stock, stated value, $1,000 shares outstanding

 

-

 

 

10

 

 

-

 

 

10

 

Preferred Stock- Series B preferred stock, stated value, $1,000, 51 shares outstanding

 

-

 

 

-

 

 

-

 

 

-

 

Preferred Stock- Series C, 8% convertible preferred stock, stated value, $1,000 shares outstanding

 

-

 

 

100

 

 

-

 

 

100

 

Series F Preferred stock- 10,000 shares outstanding, $.001 par value

 

-

 

 

-

 

 

10

 

 

10

 

Series G Preferred stock- 10,000 shares outstanding, $.001 par value

 

-

 

 

-

 

 

10

 

 

10

 

Common stock, par value $.0001, 25,000,000,000 shares authorized, 3,001,563,744 shares outstanding

 

-

 

 

300,156

 

 

-

 

 

300,156

 

Additional paid-in capital

 

-

 

 

1,560,920

 

 

(20)

 

 

1,560,900

 

Accumulated deficit

 

(224,190)

 

 

(2,649,315)

 

 

-

 

 

(2,873,505)

Total stockholders’ deficit

 

(224,190)

 

 

(788,129)

 

 

-

 

 

(1,012,319)

Total Liabilities & Equity

$

500,629

 

$

52,869

 

$

-

 

$

553,498


F-37


 

Harrison Vickers and Waterman, Inc.

Consolidated Statement of Operations

Twelve months ended June 30, 2022

(Unaudited)

(Pro-Forma)

 

 

 

Pacific Energy

Network, LLC

 

Harrison Vickers

&

Waterman, Inc.

 

ELIMINATIONS

 

June 30,

2022

Revenues

 

 

 

 

 

 

 

 

 

Net Sales

 

$

16,560,280

 

$

-

 

$

-

 

$

16,560,280

 

Cost of goods sold

 

 

(12,048,335)

 

 

 

 

 

 

 

 

(12,048,335)

 

Gross Profit

 

 

4,511,945

 

 

-

 

 

-

 

 

4,511,945

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Wages and related expenses

 

 

3,944,236

 

 

210,000

 

 

-

 

 

4,154,236

 

Sales and marketing expenses

 

 

374,135

 

 

-

 

 

-

 

 

374,135

 

General and administrative

 

 

2,854,114

 

 

40,353

 

 

-

 

 

2,894,466

 

Depreciation and Amortization

 

 

79,568

 

 

-

 

 

-

 

 

79,568

 

Consulting expense

 

 

-

 

 

200,000

 

 

-

 

 

200,000

 

Bad debt expense

 

 

-

 

 

-

 

 

-

 

 

-

 

Total Operating Expenses

 

 

7,252,052

 

 

450,353

 

 

-

 

 

7,702,405

 

Net operating profit (loss)

 

 

(2,740,107)

 

 

(450,353)

 

 

-

 

 

(3,190,460)

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

(55,500)

 

 

-

 

 

-

 

 

(55,500)

 

Interest expense

 

 

(426,116)

 

 

(236,687)

 

 

-

 

 

(662,803)

 

Loss on disposal of asset

 

 

(13,297)

 

 

-

 

 

-

 

 

(13,297)

 

Forgiveness of PPP note

 

 

74,982

 

 

-

 

 

-

 

 

74,982

 

Gain on retirement of debt

 

 

 

 

 

35,000

 

 

-

 

 

35,000

 

Total Other Income (Expense)

 

 

(419,931)

 

 

(201,687)

 

 

-

 

 

(621,618)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income before income taxes

 

 

(3,160,039)

 

 

(652,040)

 

 

-

 

 

(3,812,078)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for Income Taxes

 

 

-

 

 

-

 

 

-

 

 

-

Net loss

 

$

(3,160,039)

 

$

(652,040)

 

$

-

 

$

(3,812,078)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

5,045,998,498

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share

 

 

 

 

 

 

 

 

 

 

$

(0.00)


F-38


 

Harrison Vickers and Waterman, Inc.

Consolidated Statement of Operations

Twelve months ended June 30, 2022

(Pro-Forma)

(Unaudited)

 

 

Pacific Energy

Network, LLC

 

Harrison Vickers

& Waterman, Inc.

 

ELIMINATIONS

 

June 30,

2021

Continuing Operations:

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

Net Sales

$

3,400,037

 

$

-

 

$

-

 

$

3,400,037

 

Cost of goods sold

 

(696,500)

 

 

 

 

 

 

 

 

(696,500)

 

Gross Profit

 

2,703,537

 

 

-

 

 

-

 

 

2,703,537

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Wages and related expenses

 

2,083,074

 

 

338,694

 

 

-

 

 

2,421,768

 

Sales and marketing expenses

 

369,449

 

 

 

 

 

-

 

 

369,449

 

General and administrative

 

618,782

 

 

19,581

 

 

-

 

 

638,363

 

Owner related expenses

 

-

 

 

 

 

 

-

 

 

-

 

Consulting expense

 

-

 

 

 

 

 

-

 

 

-

 

Bad debt expense

 

 

 

 

-

 

 

-

 

 

-

 

Total Operating Expenses

 

3,092,586

 

 

358,275

 

 

-

 

 

3,450,861

 

Net operating profit (loss)

 

(389,048)

 

 

(358,275)

 

 

-

 

 

(747,323)

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

3,000

 

 

 

 

 

-

 

 

3,000

 

Interest expense

 

 

 

 

(200,675)

 

 

-

 

 

(200,675)

 

Amortization of debt discounts

 

 

 

 

(59,394)

 

 

-

 

 

(59,394)

 

Gain on change of accounting methodology for debt

instruments with equity characteristics

 

 

 

 

623,403

 

 

-

 

 

623,403

 

Change in fair value of derivative liability

 

 

 

 

 

 

 

 

 

 

-

 

Gain on retirement of debt

 

 

 

 

 

 

 

 

 

 

-

 

Change in derivative liability

 

 

 

 

(890,309)

 

 

-

 

 

(890,309)

 

Total Other Income (Expense)

 

3,000

 

 

(526,975)

 

 

-

 

 

(523,975)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income before income taxes from continuing operations

 

(386,048)

 

 

(885,250)

 

 

-

 

 

(1,271,298)

Provision for Income Taxes

 

-

 

 

-

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from continuing operations

$

(386,048)

 

$

(885,250)

 

$

-

 

$

(1,271,298)

Net income from Discontinued operations:

 

 

 

 

 

 

 

 

 

 

 

Net income from Discontinued operations

 

-

 

 

(10,660)

 

 

-

 

 

(10,660)

Gain on disposition of net assets

 

-

 

 

19,403,003

 

 

-

 

 

19,403,003

Net income from Discontinued operations

 

-

 

 

19,392,343

 

 

-

 

 

19,392,343

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

(386,048)

 

$

18,507,093

 

$

-

 

$

18,121,045

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding- Basic

 

 

 

 

 

 

 

 

 

 

2,833,665,964

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding- fully diluted

 

 

 

 

 

 

 

 

 

 

41,395,531,445

Net income per share- Basic

 

 

 

 

 

 

 

 

 

$

0.01

Net income per share- Fully diluted

 

 

 

 

 

 

 

 

 

$

0.00


F-39


 

Harrison, Vickers & Waterman, Inc.

Statement of Change in Stockholders’ Deficiency

June 30, 2021 through June 30, 2022

(Unaudited)

 

 

Preferred Stock

 

Common Stock

 

 

 

 

 

 

 

 

 

Series A

Par Value $.0001

 

Series B

Par Value $.0001

 

Series C

Par Value $.001

 

Series D

Par Value $.001

 

Series F

Par Value $.001

 

Series G

Par Value $.001

 

Par Value $.0001

 

 

 

 

 

 

 

 

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Shares

Amount

 

Additional

Paid-In

Capital

 

Dividends on

Preferred stock

 

Accumulated

Deficit

 

Total

Stockholders’

Deficiency

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2021

98,000

$ 10

 

51

$ 0

 

100,000

$ 100

 

-

$      -

 

10,000

$ 10

 

10,000

$ 10

 

3,001,563,744

$ 300,156

 

$ 1,560,900

 

$                  -

 

$ (2,873,505)

 

$ (1,012,318)

Issuance of shares for extinguishment of convertible preferred stock and accrued dividends

-

-

 

-

-

 

(12,492)

(12)

 

-

-

 

-

-

 

-

-

 

3,371,095,980

337,110

 

(225,990)

 

(111,107)

 

-

 

-

Exchange of Series A and Series C Preferred stock for newly issued Series D Preferred stock

(12,836)

(1)

 

 

 

 

(85,008)

(85)

 

2,000,000

2,000

 

-

-

 

-

-

 

-

 

 

(1,914)

 

-

 

-

 

-

Exchange of Series A and Series C Preferred stock for newly issued Series D Preferred stock

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

192,179,195

19,218

 

(9,609)

 

-

 

-

 

9,609

Warrants issued on consulting notes

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

6,217

 

-

 

-

 

6,217

Net income, twelve months ended June 30, 2022

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

-

 

-

 

-

 

(3,812,078)

 

(3,812,078)

Balance at June 30, 2022

85,164

$  9

 

51

$ 0

 

2,500

$   3

 

2,000,000

$ 2,000

 

10,000

$ 10

 

10,000

$ 10

 

6,564,838,919

$ 656,484

 

$ 1,329,605

 

$ (111,107)

 

$ (6,685,583)

 

$ (4,808,570)


F-40


 

Pacific Energy Network, LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Twelve months ended June 30, 2022 and 2021

(Unaudited) (Pro-Forma)

 

 

Pacific Energy Network, LLC

 

Harrison Vickers &

Waterman, Inc.

 

ELIMINATIONS

 

June 30,

2022

OPERATING ACTIVITIES

 

 

 

 

 

 

 

Cash flow from Operations from Discontinued operations

$

-

 

$

-

 

$

-

 

$

-

Net income from continuing operations

 

(3,160,039)

 

 

(652,040)

 

 

-

 

 

(3,812,078)

Depreciation Expense

 

79,568

 

 

-

 

 

-

 

 

79,568

Expenses incurred on extinguishment of debt

 

 

 

 

1,500

 

 

-

 

 

1,500

Gain in change of methodology for debt instruments with equity characteristics

 

 

 

 

-

 

 

-

 

 

-

Note issued for legal services

 

 

 

 

25,000

 

 

 

 

 

-

Change in fair value of derivative liability’

 

 

 

 

-

 

 

 

 

 

-

Amortization of discount on convertible debt

 

 

 

 

-

 

 

-

 

 

-

Notes issued for consulting services

 

 

 

 

200,000

 

 

 

 

 

200,000

Accrued interest on debt

 

 

 

 

49,514

 

 

-

 

 

49,514

Original issue discount and legal fees expensed

 

 

 

 

12,300

 

 

-

 

 

12,300

PPP loan forgiveness

 

(74,982)

 

 

-

 

 

-

 

 

(74,982)

Gain on retirement of note

 

13,297

 

 

(35,000)

 

 

-

 

 

(21,703)

Put premium on stock settled debt

 

 

 

 

177,872

 

 

-

 

 

177,872

Accrued compensation expense

 

 

 

 

153,000

 

 

-

 

 

-

Change in Working capital items:

 

 

 

 

 

 

 

 

 

 

 

Due from related party

 

(71,137)

 

 

-

 

 

-

 

 

(71,137)

Employee cash advances

 

24,850

 

 

-

 

 

-

 

 

24,850

Accounts receivable

 

-

 

 

-

 

 

-

 

 

-

PPP loan recorded as revenue

 

(148,215)

 

 

-

 

 

-

 

 

(148,215)

Other Current Assets

 

(20,427)

 

 

-

 

 

-

 

 

(20,427)

Accounts Payable

 

1,658,834

 

 

-

 

 

-

 

 

1,658,834

Accrued expenses

 

328,061

 

 

-

 

 

-

 

 

328,061

Capital lease liability

 

558,694

 

 

-

 

 

-

 

 

558,694

Net cash flows from Operating activities

 

-

 

 

(67,853)

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Purchase of fixed assets

 

(1,363,411)

 

 

-

 

 

-

 

 

(1,363,411)

Net cash flows from Investing activities

 

(1,363,411)

 

 

-

 

 

-

 

 

(1,363,411)

 

 

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Line of credit

 

1,400,000

 

 

-

 

 

 

 

 

1,400,000

Loan from shareholder

 

500,000

 

 

-

 

 

 

 

 

500,000

Notes payable, net of repayment

 

764,373

 

 

75,000

 

 

 

 

 

839,373

SBA loan

 

350,100

 

 

-

 

 

-

 

 

350,100

CASH FLOWS FROM FINANCING ACTIVITIES

 

3,014,473

 

 

75,000

 

 

-

 

 

3,089,473

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in Cash and Cash Equivalents

 

-

 

 

7,147

 

 

-

 

 

-

Cash and Equivalents, Beginning of period

 

356,200

 

 

52,869

 

 

-

 

 

409,069

Cash and Equivalents, End of period

 

356,200

 

$

60,016

 

$

-

 

 

409,069

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

 

 

$

-

Taxes

 

 

 

 

 

 

 

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

Cash issued for extinguishment of preferred stock

 

 

 

 

 

 

 

 

 

$

176,620

Cash issued for extinguishment of convertible debt

 

 

 

 

 

 

 

 

 

$

9,609


F-41


 

NEW AMERICA ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Twelve months ended June 30, 2021

(Pro-Forma)

(Unaudited)

 

 

Pacific Energy Network, LLC

 

Harrison Vickers

& Waterman, Inc.

 

ELIMINATIONS

 

June 30,

2021

OPERATING ACTIVITIES

 

 

 

 

 

 

 

Cash flow from Operations from Discontinued operations

$

-

 

$

21,098

 

$

-

 

$

21,098

Net income from continuing operations

 

(386,048)

 

 

18,507,093

 

 

-

 

 

18,121,045

Depreciation Expense

 

21,281

 

 

 

 

 

-

 

 

21,281

Expenses incurred on extinguishment of debt

 

 

 

 

6,500

 

 

-

 

 

6,500

Gain on disposition of net liabilities of taverns

 

 

 

 

(19,403,003)

 

 

 

 

 

 

Gain in change of methodology for

 

 

 

 

 

 

 

 

 

 

 

debt instruments with equity characteristics

 

 

 

 

(623,403)

 

 

-

 

 

(623,403)

Note issued for legal services

 

 

 

 

5,000

 

 

 

 

 

-

Change in fair value of derivative liability’

 

 

 

 

890,309

 

 

 

 

 

890,309

Amortization of discount on convertible debt

 

 

 

 

59,394

 

 

-

 

 

59,394

Accrued interest on debt

 

 

 

 

118,479

 

 

-

 

 

118,479

Original issue discount and legal fees expensed

 

 

 

 

5,500

 

 

-

 

 

5,500

Accrued expenses on legal fees

 

 

 

 

(42,000)

 

 

-

 

 

(42,000)

Accrued compensation expense

 

 

 

 

334,050

 

 

-

 

 

334,050

Put premium on stock settled debt

 

 

 

 

77,000

 

 

-

 

 

77,000

Change in Working capital items:

 

 

 

 

 

 

 

 

 

 

 

Due from related party

 

161,233

 

 

 

 

 

-

 

 

161,233

Employee cash advances

 

(26,000)

 

 

 

 

 

-

 

 

(26,000)

Prepaid Expense & Other

 

(14,560)

 

 

 

 

 

-

 

 

(14,560)

Other Current Assets

 

1,279

 

 

 

 

 

-

 

 

1,279

Accounts Payable

 

192,324

 

 

 

 

 

-

 

 

192,324

Accrued expenses

 

36,356

 

 

 

 

 

-

 

 

36,356

Change in working capital due to change from cash to accrual accounting

 

17,591

 

 

 

 

 

-

 

 

17,591

Net cash flows provided by Operating activities

 

3,456

 

 

(43,983)

 

 

-

 

 

(40,527)

 

 

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Purchase of fixed assets

 

(51,288)

 

 

-

 

 

-

 

 

(51,288)

Cash on hand at disposition of taverns

 

-

 

 

(80,550)

 

 

-

 

 

(80,550)

Net cash flows from Investing activities

 

(51,288)

 

 

(80,550)

 

 

-

 

 

(131,838)

 

 

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Factor payable

 

 

 

 

 

 

 

 

 

 

 

Payroll protection program

 

148,215

 

 

-

 

 

-

 

 

148,215

SBA loan

 

149,900

 

 

-

 

 

-

 

 

149,900

Proceeds from convertible notes payable

 

 

 

 

117,950

 

 

-

 

 

117,950

CASH FLOWS FROM FINANCING ACTIVITIES

 

298,115

 

 

117,950

 

 

-

 

 

416,065

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in Cash and Cash Equivalents

 

250,283

 

 

(6,583)

 

 

-

 

 

243,700

Cash and Equivalents, Beginning of period

 

105,917

 

 

59,452

 

 

-

 

 

165,369

Cash and Equivalents, End of period

$

356,200

 

$

52,869

 

$

-

 

$

409,069

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

 

 

 

 

 

 

 

$

-

Taxes

 

 

 

 

 

 

 

 

 

$

-


F-42


HARRISON, VIKERS & WATEMAN, INC.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2022

 

NOTE 1 - NATURE OF OPERATIONS

 

Corporate History

 

We were incorporated on June 5, 2008, under the laws of the State of Nevada under the name Sharp Performance Inc. From inception until September 2013, our business focus was on the provision of consulting services to the American automotive industry. From September 2013 until April 21, 2015, we were primarily engaged in the business of making commercial secured real estate loans. On October 24, 2013, we changed our name to Harrison, Vickers & Waterman Inc. in conjunction with the change in our business focus.  On April 21, 2015, we commenced operations in a new line of business, the ownership of World of Beer taverns that serve craft and imported beer along with food and other spirits. We no longer are involved in the commercial secured real estate loans. On October 24, 2018, the Company entered into a Securities Exchange Agreement with NJ Battery Energy Storage Project 1, LLC. In January 2020, the assets of NJ Battery Energy Storage Project 1, LLC were sold and in September 2020, the net assets of the taverns were sold. Currently the Company has no operating business and is looking for acquisitions.

 

Acquisition of World of Beer

 

In April 2015, we entered into a Purchase Agreement (the “Purchase Agreement”), with the original shareholders of Attitude Beer Holdings, Inc. (“ABH”), namely, Attitude Drinks Incorporated, a Delaware corporation (“Attitude Drinks”), and two significant investors of ABH, pursuant to which the shareholders sold to us all of the outstanding shares of stock of ABH, and ABH thereupon became our wholly owned subsidiary. In consideration for the purchase of the shares of common stock of ABH, we issued: (i) to Attitude Drinks, 51 shares of our newly created Series B Preferred Stock of the Company (the “Series B Preferred Stock”) and a seven year warrant (the “B Warrant”) to purchase 5,000,000 shares of our common stock, par value $.0001 per share (the “Common Stock”), at an exercise price of $0.075 per share (subject to customary anti-dilution adjustments); (ii) to the significant investors, a secured convertible note of  approximately $2.2 million and warrants to purchase approximately 1.7 billion shares at $.0025 per share. The warrants have a seven-year life commencing April 20, 2015. These investors also acquired an Additional Investment Right to invest up to $5,000,000 on the same terms.

 

One of the investors acquired 32,300 shares of our Series A Preferred Stock (convertible into 32,300,000 shares of Common Stock) from HVW Holdings LLC “HVW”, an entity of which Mr. James Giordano, our prior Chief Executive Officer and prior Chairman of the Board, was the managing member, subject to the terms of a Purchase Agreement. Attitude Drinks purchased 87,990,000 shares of Common Stock from HVW Holdings LLC at a price of $65,000.

 

Sale of World of Beer

 

On September 28, 2020, the Company sold its interests in the West Hartford World of Beer, and Cambridge Craft restaurants. Concurrent with this sale, the Purchaser also assumed all of the debt associated with the taverns with the exception of $5,000.

 

Acquisition of NJ Battery Energy Storage Project 1, LLC (NJB 1, LLC)

 

On October 24, 2018, the Company entered into a Securities Exchange Agreement (the “Securities Exchange Agreement”) with NJB 1, LLC, its Members, and various securities holders of the Company, under which the Company purchased approximately 80% of the LLC Membership Interest of NJB 1, LLC in exchange for the issuance of 100,000 Shares of newly issued Series C Convertible Preferred Stock.  With the exception of 2,500 shares, all the shares held by the former owners of NJB 1, LLC were sold in September and October 2021 per Note 7 below. On February 25, 2022, those shares were exchanged for newly issued Series D Preferred stock

 

Sale of NJ Battery Energy Storage Project 1, LLC

 

In January 2020, the Company sold its rights to the Battery Project and paid the proceeds of $75,000 to the prior owners of the Battery project.  All liabilities and assets were extinguished from the Company’s financial statements and the Battery project’s operations were deemed to be discontinued.  There had been some dispute in regards to the


F-43


Series C Preferred shares owned by the formers owners of the Battery project. During September 2021, 10,000 shares of the Series C Preferred stock owned by Chris Harrison were sold to outside investors, and in October 2021, 67,500 shares were sold to outside investors. (See Note 8)

 

Acquisition of MPS

 

On August 8, 2022, Harrison, Vickers & Waterman, Inc., a Wyoming corporation (“HVCW”), PEN Merger Sub, LLC, a California limited liability company (“Merger Sub”), Pacific Energy Network LLC, a California limited liability company (“PEN”), and Robert William Tetsch on behalf of the members of PEN, (the “Merger”) officially closed on the previously disclosed Agreement and Plan of Merger (the “Merger Agreement”) which was executed July 15, 2022.

 

Pacific Energy Network (PEN) is a California based parent company of several subsidiary LLC’s that manage solar, roofing, HVAC, security, distribution, consulting, lead generation, marketing, sales, data, software and mortgage divisions. Founded in 2018, PEN has quickly become one of the largest and most successful home services companies in the nation with a footprint across multiple states. With a focus on customer satisfaction and strategic business planning, PEN has grown into a multi-product business that has increased revenue year over year and expanded its reach into new markets across the United States.

 

The Merger Agreement provided that, upon the closing, the Merger Sub was merged with and into PEN, with PEN continuing as a wholly owned subsidiary of HVCW, but with the management of PEN taking over voting control of HVCW.

 

The Merger Agreement was forwarded to the California Secretary of State for filing and issuance of a Certificate of Merger.  The Merger was approved by the stockholders of HVCW and the members of PEN. The Merger Agreement was approved, authorized and agreed to by the boards of directors of each of HVCW and PEN.

 

Effective on August 8, 2022, Jeffrey M. Canouse, sole Officer and Director and Majority Shareholder of HVCW, appointed Robert W. Tetsch as sole Officer and Director of HVCW as his successor as his last official act and resigned as a condition of the Merger.

 

Also, effective on August 8, 2022, Jeffrey M. Canouse, assigned all 51 shares of HVCW’s Series B Preferred Stock, giving Robert Tetsch majority voting control of HVCW.

 

In consideration for the contribution of net assets of PEN, the Company issued 10,000 shares of Series F Preferred stock convertible into 85% of the Company’s outstanding common stock. In consideration for consulting and advisory services provided for the transaction, the Company issued 10,000 shares of Series G Preferred stock, convertible into 10% of the Company’s outstanding common stock.

 

Departure of Jeffrey M. Canouse and Appointment of Robert Tetsch

 

Effective on August 8, 2022, Jeffrey M. Canouse, Sole Officer and Director of HVCW resigned from his positions, and the Board of Directors accepted the appointment of Robert Tetsch, as the Company’s new Sole Officer and Director to replace Mr. Canouse on that date.

 

Mr. Canouse’s resignation was not due to any disagreement with the Company or its Board of Directors.

 

Robert Tetsch (35) is a self-taught business visionary. He founded Modern Pro Solutions (formerly Pacific Energy Network) in 2018 to leverage his nearly 20 years of field and managerial experience in all aspects of home and business services, maintenance, and owner support. Since starting Modern Pro Solutions, a full-service residential and commercial rooftop solar energy company, Mr. Tetsch has led an ambitious vertical integration. In 2021, Modern Pro Solutions expanded its footprint from residential solar and structured a parent company that manages subsidiary roofing, solar, HVAC, smart home, business consulting, distribution, and business financing. Born into an Army family that helped instill the virtues of hard work, discipline, accountability, and leadership, Mr. Tetsch is intent on pioneering the integrated home services industry. His plans include expansion of MPS’s territory and partnerships, and authorized dealer relationships, and scaling the company’s manufacturing and distribution capabilities to combat supply chain inconsistencies. Mr. Tetsch is also intent on adding a range of services such as integrating and mobilizing, building data collected from internet-of-things-connected devices, building inspections, maintenance consulting, control and monitoring software, green mortgages and bringing consumer financing in house.


F-44


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Accounting Method

 

The Company’s consolidated financial statements are prepared using the accrual method of accounting. The Company has elected a fiscal year ending of June 30.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, PEN, on a pro-forma basis and have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions and balances have been eliminated.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions 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. It is possible that accounting estimates and assumptions may be material to the Company due to the levels of subjectivity and judgment involved.

 

Cash and Cash Equivalents

 

Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

 

Accounts Receivable

 

The Company grants credit to customers under credit terms that it believes are customary in the industry. The Company assists the customer in finding the most economic financing terms available from outside lending forces. Loan terms vary based on the customer’s desires, system size and geographic deployment. However, the Company is usually paid within thirty days of signing a contract and bad debts have been minimal.

 

Net Fixed Assets

 

Our net Fixed assets are principally trucks and other equipment, which are used in installations of solar projects. While we consider the possibility unlikely, The Company reviews its net fixed assets for possible impairment or loss of value at least annually or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value.

 

Net fixed assets are stated at cost. Depreciation and amortization are provided using the straight-line method over the estimated useful asset lives (five years for vehicles and trailers, fifteen years for leasehold improvements.)

Discontinued operations

 

Pursuant to Accounting Standards Update No. 2014-08 the disposal of a component (including business activities) must be reported in discontinued operations only if the disposal represents a “strategic shift” that has or will have a major effect on the company’s operations and financial results. The sale of the Company’s battery project business and World of Beer taverns were determined to be a strategic shift and thusly its operations have been recorded as discontinued.

 

Accounting for Derivatives

 

The Company evaluates its convertible debt, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. The result of this accounting treatment is that under certain circumstances the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is


F-45


reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under this accounting standard are reclassified to liability at the fair value of the instrument on the reclassification date.

 

Convertible Notes with Fixed Rate Conversion Options

 

The Company may enter into convertible notes, some of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results in a fair value of the convertible note being equal to a fixed monetary amount. The Company records the convertible note liability at its fixed monetary amount by measuring and recording a premium, as applicable, on the note date with a charge to interest expense in accordance with ASC 480 - “Distinguishing Liabilities from Equity”.

 

Revenue Recognition

 

The Company recognizes revenue from interest income on consumer loans as the interest is earned. The Company’s revenue recognition policies comply with FASB ASC Topic 605. Revenue is recorded when earned, which is generally over the period services are provided and no contingencies exist.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes. ASC 740 requires a company to use the asset and liability method of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

 

Paycheck Protection Program Loan

 

The Company’s policy is to account for forgivable loans received through the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Paycheck Protection Program (PPP) as a contingent liability in accordance with Accounting Standards Codification (ASC) 450-30, Contingencies, and other related accounting pronouncements. The forgiveness of debt, in whole or in part, is recognized once the forgiveness is realized or realizable, which occurs when the Company believes all uncertainties regarding the final forgiveness of the loan are resolved. Any portion of debt forgiven, adjusted for accrued interest forgiven and unamortized debt issuance costs, is recorded as a gain on extinguishment of debt, and presented in the other income section of the statement of income. The Company has received two PPP loans (See Note 11). In 2021, the Company received partial forgiveness of $74,982 on one loan. The Company does not believe it is entitled to forgiveness on the existing notes.

 

Leases

 

In February 2016, the FASB updated the accounting guidance related to leases. The most significant change in the updated accounting guidance requires lessees to recognize lease assets and liabilities on the balance sheet for all operating leases with the exception of short-term leases. The standard also expands the disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. For a lessee, the recognition, measurement, and presentation of expenses and cash flows arising from a lease did not significantly change from previous guidance. We adopted the updated guidance on December 1, 2020 on a prospective basis and as a result, prior period amounts were not adjusted to reflect the impacts of the updated guidance.


F-46


 

 

Recent Accounting Pronouncements

 

Recent Accounting Pronouncements In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 removes, modifies and adds certain disclosure requirements in Topic 820 “Fair Value Measurement”. ASU 2018-13 eliminates certain disclosures related to transfers and the valuations process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty disclosure, and requires additional disclosures for Level 3 fair value measurements. ASU 2018-13 is effective for the Company for annual and interim reporting periods beginning January 1, 2020. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures. In December 2019, the FASB issued authoritative guidance intended to simplify the accounting for income taxes (ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”). This guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those annual periods. The Company is currently evaluating the potential impact of this guidance on its consolidated financial statements. In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which clarifies the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. The guidance clarifies how to account for the transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative. The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.

 

In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU amends the guidance on convertible instruments and the derivatives scope exception for contracts in an entity’s own equity, and also improves and amends the related EPS guidance for both Subtopics. The ASU will be effective for annual reporting periods after December 15, 2021 and interim periods within those annual periods and early adoption is permitted. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements. Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying consolidated financial statements.

 

In April 2020, the FASB issued a Staff Q&A, Topic 842 and 840: Accounting For Lease Concessions Related to the Effects of the COVID-19 Pandemic in order to provide clarity regarding the accounting treatment for lease concessions provided as a result of COVID-19. Under existing lease guidance, changes to certain lease terms not specified in the original lease agreement require modification accounting treatment. To provide relief, the FASB Staff Q&A permits alternatives to modification accounting under Topic 842. For concessions related to the effects of the COVID-19 pandemic that do not result in a substantial increase in the rights of the lessor or our obligations as the lessee, we are not required to analyze each contract to determine whether enforceable rights and obligations for concessions exist in the lease agreement and can elect to apply or not apply the lease modification guidance in Topic 842. In fiscal year 2020 and 2021, no financial concessions had been taken by the Company or any of its subsidiaries.

 

In August 2020, the FASB issued ASU 2020-06, which amends the measurement and disclosure of convertible instruments, contracts in an entity’s own equity, and EPS guidance. The guidance can be adopted using a modified retrospective method or a fully retrospective method. The amendments are effective for fiscal years beginning after December 15, 2021 for public entities, excluding those that are smaller reporting companies. For all other entities the amendments are effective for fiscal years beginning after December 15, 2023. The Company does not expect the update to have a material impact on its consolidated financial statements and related disclosures.

 

In June, 2020 the FASB issued ASU No. 2020-05, Revenue from Contracts with Customers (Topic 606). Topic 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. The Company adopted Topic 606 in September 2019,  and recognizes revenue when control of goods and services is transferred to customers. The Company recognizes revenue in accordance with ASC Topic 606. The Company recognizes revenue upon transfer of control of goods to customers.


F-47


In November, 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-10 Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance is effective for fiscal periods after December 15, 2021, for both public and private companies. The Company has not yet adopted this standard and has disclosed its financial assistance received in the form of Payroll Protection Program (PPP) and SBA Economic Injury Disaster (EIDL) Loans in accordance with Accounting Standards Codification (ASC) 470, Debt until the point of forgiveness and then as a government grant by analogy to International Accounting Standard (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance.

 

NOTE 3 – GOING CONCERN

 

The accompanying unaudited interim consolidated condensed financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company on a going-concern basis. The going concern basis assumes that assets are realized, and liabilities are extinguished in the ordinary course of business at amounts disclosed in the consolidated financial statements. The Company has incurred recurring losses from operations and has an accumulated deficit of ($6,685,583). The Company’s ability to continue as a going concern depends upon its ability to obtain adequate funding to support its operations through continuing investments of debt and/or equity by qualified investors/creditors, internally generated working capital and monetization of intellectual property assets. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management is currently pursuing a business strategy which includes raising the necessary funds to finance the Company’s development and marketing efforts.

 

NOTE 4 - ADVANCES TO RELATED PARTY

 

Advances to related party are amounts paid on behalf of our Chief Executive and Chief Financial Officer, Bobby Tetsch.  These amounts were lent at interest rates between 2.5% and 3.25% over a ten year term. and above the amount earned through his salary.  Mr. Tetsch has a management contract which pays him $400,000 per year It is anticipated that these amounts will be repaid in lieu of his salary.  Balances are as follows:

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Advances to related party

$134,099

 

$62,962

 

NOTE 5- ACCOUNTS RECEIVABLE

 

Accounts receivable are at the operating LLCs of PEN. The Company grants credit to customers under credit terms that it believes are customary in the industry. The Company assists the customer in finding the most economic financing terms available from outside lending forces. Loan terms vary based on the customer’s desires, system size and geographic deployment. However, the Company is usually paid within thirty days of signing a contract and bad debts have been minimal.

 

The Company considers all receivables over 45 days to be past due. Management of the Company has not provided an allowance for doubtful accounts receivable at June 30, 2022 and 2021. Generally, the Company requires deposits against orders of up to 100% of the order value. Management considers all receivables collectable and are reflected at net realizable value. As of June 30, 2022 and June 30, 2021, the balances were as follows:

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Accounts receivable

$722,460

 

$-

 

The increase in accounts receivable was principally due to the entrance into new markets and the change in business model.

 


F-48


 

 

NOTE 6 - NET FIXED ASSETS

 

The Company has the following fixed assets:

 

 

 

June 30,

 

June 30,

 

 

2022

 

2021

Furniture, fixtures and Equipment

 

$

47,082

 

$

17,782

Vehicles and Trailers

 

 

1,341,431

 

 

9,200

Leasehold improvements

 

 

121,922

 

 

-

Fixed assets gross

 

$

1,510,434

 

$

43,264

Accumulated depreciation

 

 

(82,739)

 

 

(6,156)

Fixed assets-net

 

$

1,427,695

 

$

37,107

 

Vehicles and furniture and fixtures are depreciated over a five year time frame. Leasehold improvements are depreciated over a fifteen year timeframe

 

NOTE 7 - ACCOUNTS PAYABLE

 

Accounts payable principally exist at our operating subsidiaries and are mostly for accrued wages and purchases of materials. As of June 30, 2022 and June 30, 2021, the balances were as follows:

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Accounts payable

$1,851,158

 

$192,234

 

The increase in accounts payable was principally due to greater purchases of materials due to entrance into new markets as well as the change in the Company’s business model from solely a sales organization to a full-service provider.

 

NOTE 8 - ACCRUED EXPENSES

 

Accrued expenses principally exist at our operating subsidiaries and are mostly for accrued wages and purchases of materials. As of June 30, 2022 and June 30, 2021, the balances were as follows:

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Accrued expenses

$492,642

 

$168,283

 

The increase in accrued expenses was principally due to greater accrued wages and fuel charges due to entrance into new markets and the change in business model from solely a sales organization to a full-service provider.

 

NOTE 9 - LINE OF CREDIT

 

On May 22, 2022, the Company established a line of credit with Trillium Partners, L.P. and J.P. Carey Limited Partners, L.P (collectively “the Lenders”).  Under the terms of the Line of Credit, the Company may draw up to $ 3,000,000 based upon 75% of eligible receivables from the Lenders.  The interest rate is .782% per seven days. Balances outstanding under the line of credit are as follows:

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Line of credit

$1,400,000

 

$-

 

The term of the line of credit is two years.


F-49


 

NOTE 10 - FACTOR PAYABLE

 

The Company has the following notes payable outstanding at June 30, 2022:

 

 

Execution

Original

Current

 

Creditor

Date

Amount

Amount

Weekly payment

 

 

 

 

 

Kalamata Capital

3-7-22

$  444,500

$309,426

$   8,549

Fresh Funding Solutions

4-7-22

387,000

286,044

8,413

IDEA 247, Inc.

3-3-22

300,000

168,903

7,712

 

 

 

 

 

Total

 

$1,131,500

$764,373

$ 24,674

 

NOTE 11 – CONVERTIBLE NOTES PAYABLE AND PUT PREMIUM ON STOCK SETTLED DEBT

 

The balances in convertible notes payable and put premium on stock settled debt at June 30, 2022 are as follows:

 

 

 

 

 

 

 

Amount

 

Percentage of

Put premium

 

Date

Maturity

Interest

Original

Current

Amount

Assigned

for

Carrying

Stock

price used

on

stock settled

Creditor

Issued

Date

Rate

amount

Outstanding

warrants

amount

for conversion

debt

 

 

 

 

 

 

 

 

 

 

Chris Harrison

4-Jan-21

4-Jan-22

8%

$

100,000

$

100,000

$

-

$

100,000

50%

$

100,000

Jeff Canouse

4-Jan-21

4-Jan-22

12%

 

150,000

 

150,000

 

-

 

150,000

50%

 

150,000

JP Carey Enterprises, LTD

19-Feb-21

19-Feb-22

8%

 

3,450

 

3,450

 

-

 

3,450

60%

 

2,300

JP Carey Enterprises, LTD

12-Mar-21

12-Mar-22

8%

 

4,500

 

4,500

 

-

 

4,500

60%

 

3,000

Trillium Partners, LP

3-Jun-21

3-Jun-22

12%

 

26,500

 

26,500

 

-

 

26,500

60%

 

17,667

JP Carey Enterprises

11-Jun-21

11-Jun-22

12%

 

26,500

 

26,500

 

-

 

26,500

60%

 

17,667

Trillium Partners, LP

14-Jun-21

14-Jun-22

12%

 

62,500

 

62,500

 

-

 

62,500

60%

 

41,667

Frondeur Partners LLC

1-Nov-21

30-Sep-22

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Frondeur Partners LLC

1-Dec-21

31-Oct-22

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Frondeur Partners LLC

1-Jan-22

30-Nov-22

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Jeffrey M Canouse

4-Jan-22

4-Jan-23

0%

 

156,702

 

156,702

 

-

 

156,702

70%

 

67,158

Frondeur Partners LLC

1-Feb-22

31-Dec-22

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Frondeur Partners LLC

1-Mar-22

31-Jan-23

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Frondeur Partners LLC

01-Apr-22

28-Feb-23

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Frondeur Partners LLC

01-May-22

31-Mar-23

10%

 

25,000

 

25,000

 

-

 

25,000

70%

 

10,714

Trillium Partners, LP

13-May-22

13-May-23

12%

 

51,150

 

51,150

 

-

 

51,150

-

 

-

JP Carey Limited Partners, LP

13-May-22

13-May-23

12%

 

51,150

 

51,150

 

-

 

51,150

-

 

-

Frondeur Partners LLC

01-Jun-22

30-Apr-23

10%

 

25,000

 

25,000

 

(6,217)

 

18,783

70%

 

10,714

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

$

832,452

$

832,452

$

(6,217)

$

826,235

 

$

485,172

 

Chris Harrison Note

 

Upon leaving the company, Mr. Harrison received a note for services rendered of $100,000. The note bears interest at a rate of 8% and matures on January 4, 2022.  The note was originally convertible into common stock of the Company at the lower of seventy five percent (75%) of the closing bid price for the Company’s common stock on the date of this Note, or (b) fifty percent (50%) (“Discount”) of the lowest closing bid price for the Company’s common stock during the thirty (30) trading days immediately preceding the date of delivery by Holder to Company of the Conversion Notice. On June 30, 2021, Mr. Harrison signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00005.

 

Jeffrey M. Canouse Note

 

Upon becoming Chief Executive of the Company, Mr. Canouse received a note of $150,000. The note bears interest at a rate of 12% and matures on January 4, 2022.  The note is convertible into common stock of the Company at the lower of seventy five percent (75%) of the closing bid price for the Company’s common stock on the date of this Note, or (b) fifty percent (50%) (“Discount”) of the lowest closing bid price for the Company’s common stock during the thirty (30) trading days immediately preceding the date of delivery by Holder to Company of the Conversion Notice.  


F-50


On June 30, 2021, Mr. Canouse signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00005.

 

JP Carey Enterprises, Inc. Note of February 19, 2021

 

On that date, the Company issued a note for $3,450 The Note is convertible into the Company’s common stock at a 40% discount to the lower of a) average of the lowest two closing bid price during the 10 trading days prior to conversion or b) $.001. On June 30, 2021, Management at JP Carey Enterprises, Inc. signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of March 31, 2022, the conversion price is $.00006. The interest rate on the note is 12%.

 

JP Carey Enterprises, Inc. Note of March 12, 2021

 

On that date, the Company issued a note for $4,500 The Note is convertible into the Company’s common stock at a 40% discount to the lower of a) average of the lowest two closing bid price during the 10 trading days prior to conversion or b) $.001. On June 30, 2021, Management at JP Carey Enterprises, Inc. signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00006. The interest rate on the note is 12%

 

Trillium Partners, LP. Note of June 3, 2021

 

On that date, the Company issued a note for $26,500 consisting of $25,000 in cash and $1,500 in Original issue discount (“OID”). The OID was charged to interest expense. The Note is convertible into the Company’s common stock at a 40% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. On June 30, 2021, Management at Trillium Partners, LP. signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00006. The interest rate on the note is 12%

 

JP Carey Limited Partners, LP. Note of June 3, 2021

 

On that date, the Company issued a note for $26,500 consisting of $25,000 in cash and $1,500 in Original issue discount (“OID”). The OID was charged to interest expense. The Note is convertible into the Company’s common stock at a 40% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. On June 30, 2021, Management at JP Carey Enterprises, Inc. signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00006. The interest rate on the note is 12%.

 

Trillium Partners, LP. Note of June 14, 2021

 

On that date, the Company issued a note for $62,500 consisting of $60,000 in cash and $2,500 in Original issue discount (“OID”). The OID was charged to interest expense. The Note is convertible into the Company’s common stock at a 40% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. On June 30, 2021, Management at Trillium Partners, LP signed an amendment to the Note eliminating the closing price on the date of issuance as a possible conversion mechanism. As of June 30, 2022, the conversion price is $.00006. The interest rate on the note is 12%.

 

Frondeur Partners, LLC Note of November 1, 2021

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2022, the conversion price is $.0007. The interest rate on the note is 10%.

 

Frondeur Partners, LLC Note of December 1, 2021

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2022, the conversion price is $.00007. The interest rate on the note is 10%.


F-51


 

 

Frondeur Partners, LLC Note of January 1, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2022, the conversion price is $.00007. The interest rate on the note is 10%.

 

Jeffrey M. Canouse Note of January 4, 2022

 

Mr. Canouse converted his accrued salary as of January 4, 2022, the one year anniversary of his becoming Chief Executive Officer into a note.  The balance of the liability on that date was $156,702.  The note is coverable into common stock at 30% discount to the average of the two low closing bid prices. As of June 30, 2022, the conversion price is $.00007. The note bears no interest.

 

Frondeur Partners, LLC Note of February 1, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2021, the conversion price is $.00007. The interest rate on the note is 10%.

 

Frondeur Partners, LLC Note of March 1, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2021, the conversion price is $.00007. The interest rate on the note is 10%.

 

Frondeur Partners, LLC Note of April 1, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2021, the conversion price is $.00007. The interest rate on the note is 10%.

 

Frondeur Partners, LLC Note of May 1, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2021, the conversion price is $.00007. The interest rate on the note is 10%.

 

Trillium Partners, LP. Note of May 13, 2022

 

On that date, the Company issued a note for $51,150 consisting of $45,000 in cash to the Company, $1,500 in legal fees and an Original issue discount (“OID”) of $4,650.   The OID was charged to interest expense. The Note is convertible into the Company’s common stock at $.00005 per share. The interest rate on the note is 12%

 

JP Carey Limited Partners, LP. Note of May 13, 2022

 

On that date, the Company issued a note for $51,150 consisting of $45,000 in cash to the Company, $1,500 in legal fees and an Original issue discount (“OID”) of $4,650. The OID was charged to interest expense. The Note is convertible into the Company’s common stock at $.00005 per share. The interest rate on the note is 12%.

 

Frondeur Partners, LLC Note of June, 2022

 

On that date, the Company issued a note for $25,000 for consulting services. The Note is convertible into the Company’s common stock at a 30% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. As of June 30, 2021, the conversion price is $.00007. The interest rate on the note is 10%.

 

At June 30, 2022, if all the convertible debt were converted, approximately 15 billion shares of common stock would be issued.


F-52


 

NOTE 12- PAYROLL PROTECTION PROGRAM

 

The Company took out two loans under the Payroll Protection Program as follows

 

 

Execution

June 30,

June 30,

 

Creditor

Date

2022

2021

Maturity Date

 

 

 

 

 

Note One

5-5-20

$  106,466

$    182,800

12-31-23

Note Two

2-18-21

148,215

148,215

2-18-26

 

 

 

 

 

Total

 

$  254,681

$    331,015

 

 

These loans bear interest at 1% and do not qualify for forgiveness. Note one was partially forgiven and Note two does not qualify for forgiveness.  Interest rates on the notes are 1% and have a five year term

 

NOTE 13- CAPITAL LEASE LIABILITY

 

Capital lease liability represent the leases on the Company’s vehicles.  Leases last for between 48 and 60 months.  All leases expire between May 31, 2026 and June 30, 2027.

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Capital Lease liability

$558,694

 

$-

 

NOTE 14 - SMALL BUSINESS ADMINISTRATION (SBA) LOAN

 

The SBA Loan was originally dated on January 5, 2021 and was amended on July 3, 2021

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

SBA Loan

$500,000

 

$149,900

 

Terms are as follows:

 

Interest rate:

3.75%

Term:

0 years

Monthly payment:

$2,486 (beginning 18 months after the date of the original note)

 

NOTE 15 - OTHER BORROWINGS

 

Between April and June 2022, the Company borrowed $500,000 in three specific transactions from Kensington Financial, LLC. Interest accrues at 20% per annum.

 

 

June 30,

 

June 30,

 

2022

 

2021

 

 

 

 

Other borrowings

$500,000

 

$-

 

 


F-53


 

NOTE 16 - STOCKHOLDERS’ DEFICIT

 

Common stock

 

There are 25,000,000,000 shares of common stock authorized of June 30, 2022. At June 30, 2022 and June 30, 2020, there were 6,564,838,949and 3,001,563,774, shares of Common stock outstanding, respectively. As of the date of this report, there are 6,564,838,949 shares of common stock outstanding. The Company increased its shares authorized from 5 billion to 12 billion on August 19, 2021. On December 15, 2021, the Company increased its authorized common shares outstanding from 12 billion to 25 billion.

 

Common shares outstanding -fully diluted as of June 30, 2022:

 

Shares outstanding

6,564,838,949

Conversion of convertible debt

15,334,398,317

Conversion of Series C Preferred stock

1,340,722,177

Conversion of Series D Preferred stock

30,769,230,769

 

54,009,190,212

 

For purposes of this calculation, shares to be issued under the remaining Series A and Series B Preferred stock issuances are omitted due to their immateriality.

 

Preferred Stock

 

Here is a summary of the Company’s outstanding preferred stock.

 

Series A 8% Convertible Preferred Stock

 

On September 17, 2013 the Company filed the Series A 8% Convertible Preferred Stock Certificate of Designation with the Secretary of State of Nevada (the “Certificate of Designation”) authorizing 100,000 shares of Series A Convertible Preferred Stock and establishing the rights, preferences, privileges and obligations thereof.

 

As set forth in the Certificate of Designation, the holders of Series A Convertible Preferred Stock are entitled to receive, when and as declared by the Board of Directors out of funds legally available therefore, and the Company is obligated to accrue, quarterly in arrears on June 30, September 30, September 30, and December 31 of each year, cumulative dividends on the Series A Preferred Stock at the rate per share equal to eight percent (8%) per annum on the Stated Value, payable in common stock valued at the closing trade price per share on the last trading day of the calendar quarter. Through the Balance sheet date, the holders of the Series A Preferred Stock have waived all dividends.  There is no guarantee they will do so going forward. The Series A Convertible Preferred Stock does not have the right to vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, either by written consent or by proxy. So long as any shares of Series A Preferred Stock are outstanding, the Company does not have the right to, and cannot cause its subsidiaries not to, without the affirmative vote of the Requisite Holders, (a) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock, (b) alter or amend this Certificate of Designation, (c) amend its certificate of incorporation, bylaws or other charter documents so as to affect adversely any rights of any Holders of the Series A Preferred Stock, (d) increase the authorized or designated number of shares of Series A Preferred Stock, (e) issue any additional shares of Series A Preferred Stock (including the reissuance of any shares of Series A Preferred Stock converted for Common Stock) or (f) enter into any agreement with respect to the foregoing. Each share of Series A Convertible Preferred Stock is convertible into 1,000 shares of Common Stock.  On February 25, 2022, an investor exchanged 12,836 shares of Series A Preferred stock for 333,333 shares of newly issued Series D Preferred stock

 

Series B Convertible Preferred Stock

 

On April 21, 2015, the Company issued 51 shares of Series B Convertible Preferred Stock to Attitude Drinks Incorporated.  At the time, the Company accounted for approximately $1,000,000 in additional paid in capital due to its issuance.  Each share has a par value of $0.0001 and a stated value of $1,000 per share. Unless in the event of liquidation, holders shall not be entitled to receive dividends. Each one (1) share of the Series B Preferred Stock shall have voting rights equal to (x) (i) 0.019607 multiplied by the aggregate total of (A) the issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote, plus (B) the number of votes which all other series or classes of securities other than this Series B Preferred Stock are entitled to cast together with the holders of Common


F-54


Stock at the time of the relevant vote (the amount determined by this clause (i), the “Numerator”), divided by (ii) 0.49, minus (y) the Numerator.

 

The series B Preferred stock was owned by Chief Executive Officer, Jeffrey M Canouse on June 30, 2022. Mr. Canouse assigned all 51 shares to our current Chief Executive Officer, Robert W. Tetsch, on August 8, 2022.

 

Series C Preferred stock

 

Originally, 100,000 shares of Series C Preferred stock were issued as part of the NJB1 LLC purchase. See Note 1 above. On February 25, 2022, 85,008 shares of those shares were exchanged for Series D preferred stock. See Note 8 above. Currently 2,500 shares of Series C preferred stock remain.

 

Series D Preferred stock

 

On February 25, 2022 the owners of the 77,500 shares of Series C preferred stock plus (See Note 7) plus another owner of 7,508 shares plus an owner of 12,836 shares of Series A Preferred stock exchanged their shares for newly issued Series D Preferred stock as follows:

 

Entity

 

Series A

Series C

Series D

JP Carey Limited Partners, LLC

 

-

(57,500)

1,000,000

Oscaleta Partners, LLC

 

-

(7,508)

333,333

Livingston Asset Management LLC

 

(12,836)

-

333,333

Trillium Partners, LP

 

-

(20,000)

333,334

Total

 

(12,836)

(85,008)

2,000,000

 

Series F and Series G Preferred stock

 

In consideration for the contribution of net assets of PEN, the Company issued 10,000 shares of Series F Preferred stock convertible into 85% of the Company’s outstanding common stock. In consideration for consulting and advisory services provided for the transaction, the Company issued 10,000 shares of Series G Preferred stock, convertible into 10% of the Company’s outstanding common stock.

 

Shares authorized and par value:

 

Preferred Series Class

 

Shares authorized

 

Par value

 

 

 

 

 

Series A

 

100,000

 

$.0001

Series B

 

51

 

$.0001

Series C

 

100,000

 

$.001

Series D

 

2,000,000

 

$.001

 

Shares outstanding:

 

Preferred Series Class

 

June 30, 2022

 

June 30, 2022

 

 

 

 

 

Series A

 

85,164

 

98,000

Series B

 

51

 

51

Series C

 

2,500

 

100,000

Series D

 

2,000,000

 

-0-

 

Common shares to be issued upon conversion:

 

Preferred Series Class

 

June 30, 2022

 

June 30, 2022

 

 

 

 

 

Series A

 

85 million

 

98 million

Series B

 

51

 

51

Series C (including accrued dividends)

 

1.3 billion

 

38.1 billion

Series D

 

31 billion

 

-


F-55


 

NOTE 17 - NET LOSS FROM DISCONTINUED OPERATIONS

 

For the period beginning July 1, 2020 through September 28, 2020, the operations of the taverns were part of the Company. Their results were as follows and are reported for the twelve months ended June 30, 2021:

 

Revenues

$

866,998

Food and Beverage costs

 

203,530

Gross profit

 

663,468

 

 

 

Operating expenses

 

 

Labor

 

277,402

General and Administrative

 

359,468

Depreciation

 

47,500

Total Operating expenses

 

684,370

 

 

 

Net loss before non-controlling interest

 

(20,902)

Non-controlling interest

 

10,242

 

 

 

Net income from discontinued operations

$

(10,660)

 

NOTE 18 - GAIN ON DISPOSITION OF NET ASSETS OF WORLD OF BEER TAVERNS

 

Upon the disposition of the net assets of the World of Beer taverns, the company recorded a net gain of $19,403,003 during the twelve months ended June 30, 2021 as follows:

 

Total assets disposed

 

 

 

 

 

Cash and Cash Equivalents

$

80,550

Inventories

 

56,831

Prepaid Expenses

 

184,692

Total Current Assets

 

322,073

 

 

 

Fixed Assets- net

 

2,019,312

Deposits

 

50,498

Total Other Assets

 

2,069,810

Total Assets disposed

$

2,391,883

 

 

 

Total liabilities disposed

 

 

 

 

 

Accounts Payable

$

153,608

Accrued liabilities

 

338,310

Deferred Expenses

 

252,723

Derivative liabilities

 

1,698,667

Put premium on convertible notes

 

10,741,206

Loan payable to minority owners

 

294,032

Convertible Notes payable

 

5,679,119

Paycheck Protection Program note payable

 

351,064

Non-convertible notes payable

 

3,400,211

Minority interest

 

(1,114,054)

Total liabilities disposed

$

21,794,886

 

 

 

Total liabilities disposed

$

21,794,886

Total assets disposed

 

2,391,883

Gain on disposition of net assets

$

19,403,003


F-56


 

 

NOTE 19 - COMMITMENTS AND CONTINGENCIES – LEASES

 

The Company’s commitments and contingencies are principally on the Company’s vehicles as stated in Note 12

 

NOTE 20 – LEGAL PROCEEDINGS

 

As a commercial enterprise and employer, the Company is subject to various claims and legal actions in the ordinary course of business. These matters can include professional liability, employment-relations issues, workers’ compensation, tax, payroll and employee-related matters, other commercial disputes arising in the course of its business, and inquiries and investigations by governmental agencies regarding our employment practices or other matters. The Company is not aware of any pending or threatened litigation that it believes is reasonably likely to have a material adverse effect on its results of operations, financial position or cash flows.

 

NOTE 21 - INCOME TAX

 

In accordance with ASC 740, we are required to recognize the impact of an uncertain tax position in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained upon examination by the tax authorities. It is also our policy, in accordance with authoritative guidance, to recognize interest and penalties related to income tax matters in interest and other expense in our Statements of Operations.

 

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. As a result of our cumulative losses, management has concluded that a full valuation allowance against our net deferred tax assets is appropriate.

 

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

 

The provision for income taxes on our loss from continuing operations for the fiscal years ended June 30, 2022 and 2021 is as follows:

 

 

 

Year ended

 

Year ended

Reconciliation of book and

 

June 30,

 

June 30,

taxable income and tax expense

 

2022

 

2022

 

 

 

 

 

Book net income

 

$

(3,160,039)

 

$

(386,048)

 

 

 

 

 

 

 

Gain on retirement of PPP note

 

 

74,982

 

 

-

 

 

 

 

 

 

 

Taxable net income

 

$

(3,085,057)

 

$

(386,048)

 

 

 

 

 

 

 

Change in Valuation allowance

 

 

806,280

 

 

100,894

 

 

 

 

 

 

 

Income tax expense based on taxable net income

 

 

(806,280)

 

 

(100,894)

 

 

 

 

 

 

 

Income tax expense

 

$

-

 

$

-


F-57


 

 

The Company’s Effective tax rate was 0.0% for each of the two fiscal years ended June 30, 2022 and June 30, 2021. A reconciliation of the valuation allowance follows below:

 

Federal income tax rate

 

21.0%

 

21.0%

Incremental state income tax rate

 

6.5%

 

6.5%

Impact of Federal rate on state rate

 

-1.4%

 

-1.4%

 

 

 

 

 

Marginal income tax rate

 

26.1%

 

26.1%

 

NOTE 22 - COVID-19

 

The Company, like all enterprises, is currently dealing with the impact of COVID-19 on future prospects. Recent events such as the vaccinations mitigate, but do not eliminate, the possible adverse consequences to the domestic and international economies.  Recent increases in the Delta Variant of COVID-19 and the onset of the Omicron variant have resulted in greater infections and its ultimate impact cannot be ascertained.

 

NOTE 23 - IMPACT OF CLIMATE CHANGE

 

The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information. The TCFD requires that the impact of climate change upon risk assessment, capital allocation and strategic planning be discussed.

 

At this time, the impact cannot be determined.

 

NOTE 24 – SUBSEQUENT EVENTS

 

Pursuant to ASC 855-10, the Company has evaluated all events or transactions that occurred from July 1, 2022 to the date of this report. The Company believes that the following events meet the criterion and require disclosure.

 

Incremental Borrowing

 

The Company borrowed $253,300 after June 30, 2022 as follows:

 

 

Execution

Original

Creditor

Date

Amount

 

 

 

Lend Bug, LLC

7-27-22

$  126,650

Advance Servicing, Inc.

7-27-22

126,650

 

 

 

Total

 

$  253,300

 

Issuance of Convertible debt

 

On August 1, 2022, the Company issued a note for $50,000 for consulting services to Frondeur Partners LLC. The Note is convertible into the Company’s common stock at a 70% discount to the lowest closing bid price during the thirty (30) trading days prior to conversion. The interest rate on the note is 10%.

 

 

 


F-58

Picture 1 


Picture 2 


Picture 3 


Picture 5 


Picture 6 


Picture 7 


Picture 8 


Picture 9 


Picture 10 


Picture 11 


Picture 12 


Picture 13 


Picture 14 


Picture 15 


Picture 16 

BYLAWS

OF

HARRISON, VICKERS & WATERMAN, INC.

 

ARTICLE I

 

Registered Office and Registered Agent

 

The registered office of the corporation shall be located in the State of Wyoming at such place as may be fixed from time to time by the board of directors upon filing of such notices as may be required by law, and the registered agent shall have a business office identical with such registered office. Any change in the registered agent or registered office shall be effective upon filing such change with the office of the Secretary of State of the State of Wyoming.

 

ARTICLE II

 

Shareholders’ Meeting

 

Section 1. Annual Meetings. The annual meeting of the shareholders of this corporation, for the purpose of election of directors and for such other business as may come before it, shall be held at the registered office of the corporation, or such other place as may be designated by the notice of the meeting, on the first Tuesday of February of each and every year, at the corporation offices, but in case such day shall be a legal holiday, the meeting shall be held at the same hour and place on the next succeeding day not a holiday.

 

Section 2. Special Meetings. Special meetings of the shareholders of this corporation may be called at any time by the holders of 51% of the voting shares of the corporation, or by the president, or by a majority of the board of directors. No business shall be transacted at any special meeting of shareholders except as is specified in the notice calling for said meeting. The board of directors may designate any place as the place of any special meeting called by the president or the board of directors, and special meetings called at the request of shareholders shall be held at such place as may be determined by the board of directors and placed in the notice of such meetings.

 

Section 3. Notice of Meetings. Written notice of annual or special meetings of shareholders stating the place, day, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given by the secretary or persons authorized to call the meeting to each shareholder of record entitled to vote at the meeting. Such notice shall be given not less than ten (10) nor more than sixty (60) days prior to the date of the meeting, except that notice of a meeting to act on an amendment to the Articles of Incorporation, a plan of merger or share exchange, a proposed sale, lease, exchange or other disposition of all or substantially all of the assets of the corporation other than in the usual or regular course of business, or the dissolution of corporation shall be given no fewer than twenty (20) days nor more than sixty (60) days before the meeting date. Notice may be transmitted by: Mail, private carrier, or personal delivery; telegraph or teletype; or telephone, wire or wireless equipment which transmits a facsimile of the notice. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the stock transfer books of the corporation.

 

Section 4. Waiver of Notice. Notice of the time, place, and purpose of any meeting may be waived in writing (either before or after such meeting) and will be waived by any shareholder by his attendance thereat in person or by proxy, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting. Any shareholder so waiving shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.

 

Section 5. Quorum and Adjourned Meetings. A majority of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. A majority of the shares represented at a meeting, even if less than a quorum, may adjourn the meeting from time to time without further notice. At such reconvened meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business at such meeting and at any adjournment of such meeting (unless a new record date is or must be set for the adjourned meeting), notwithstanding the withdrawal of enough shareholders from either meeting to leave less than a quorum.


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Section 6. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting. No proxy shall be valid after eleven (11) months from the date of its execution, unless otherwise provided in the proxy.

 

Section 7. Voting Record. After fixing a record date for a shareholders’ meeting, the corporation shall prepare an alphabetical list of the names of all shareholders on the record date who are entitled to notice of the shareholders’ meeting. The list shall be arranged by voting group, and within each voting group by class or series of shares and show the address of and number of shares held by each shareholder. A shareholder, shareholder’s agent, or a shareholder’s attorney may inspect the shareholder’s list, beginning ten days prior to the shareholders’ meeting and continuing through the meeting, at the corporation’s principal office or at a place identified in the meeting notice in the city where the meeting will be held during regular business hours and at the shareholder’s expense. The shareholders’ list shall be kept open for inspection during such meeting or any adjournment.

 

Section 8. Voting of Shares. Except as otherwise provided in the Articles of Incorporation or in these Bylaws, and except for non-voting preferred shares, every shareholder of record shall have the right at every shareholder’s meeting to one vote for every share standing in his name on the books of the corporation. If a quorum exists, action on a matter, other than election of directors, is approved by a voting group of shareholders if the votes cast within the voting group favoring the action exceed the votes cast within the voting group opposing the action, unless the Articles of Incorporation or the Wyoming General Corporation Law require a greater number of affirmative votes.

 

Section 9. Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or entitled to receive payment of any dividend, the board of directors may fix in advance a record date for any such determination of shareholders, such date to be not more than seventy (70) days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the day before the date on which notice of the meeting is mailed or the date on which the resolution of the board of directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof, unless the board of directors fixes a new record date, which it must do if the meeting is adjourned more than one hundred twenty (120) days after the date is fixed for the original meeting.

 

ARTICLE III

 

Directors

 

Section 1. General Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of, the board of directors except as otherwise provided by the laws under which this corporation is formed or in the Articles of Incorporation.

 

Section 2. Number. The number of directors of the corporation shall be one to five. The number of directors can be increased or decreased from time to time by amending this Section 2, provided that the number shall be not less than one nor more than seven directors, the specific number to be set by resolution of the board of directors or the shareholders; and provided further that no decrease shall shorten the term of any incumbent director.

 

Section 3. Tenure and Qualifications. Each director shall hold office until the next annual meeting of shareholders. Despite the expiration of a director’s term, the director continues to serve until the director’s successor shall have been elected and qualified or until there is a decrease in the number of directors. Directors need not be residents of the state or shareholders of the corporation.

 

Section 4. Election. The directors shall be elected by the shareholders at their annual meeting each year; and if, for any cause, the directors shall not have been elected at an annual meeting, they may be elected at a special meeting of shareholders called for that purpose in the manner provided by these Bylaws.


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Section 5. Vacancies. In case of any vacancy in the board of directors, including a vacancy resulting from an increase in the number of directors, the board of directors; a majority of the remaining directors, if they do not constitute a quorum; or the shareholders may fill the vacancy.

 

Section 6. Resignation. Any director may resign at any time by delivering written notice to the board of directors, its chairperson, the president, or the secretary of the corporation. A resignation shall be effective when the notice is delivered unless the notice specifies a later effective date.

 

Section 7. Removal of Directors. At a meeting of shareholders called expressly for that purpose, the entire board of directors, or any member thereof, may be removed, with or without cause, by a vote of the holders of a majority of shares then entitled to vote at an election of such directors. A director may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against the director’s removal.

 

Section 8. Meetings.

 

(a) The annual meeting of the board of directors shall be held immediately after the annual shareholders’ meeting at the same place as the annual shareholders’ meeting or at such other place and at such time as may be determined by the directors. No notice of the annual meeting of the board of directors shall be necessary.

 

(b) Special meetings may be called at any time and place upon the call of the president, secretary, or any one director. Notice of the time and place of each special meeting shall be given by the secretary, or the persons calling the meeting, by mail, private carrier, radio, telegraph, telegram, facsimile transmission, personal communication by telephone or otherwise at least two (2) days in advance of the time of the meeting. The purpose of the meeting need not be given in the notice. Notice of any special meeting may be waived in writing or by telegram (either before or after such meeting) and will be waived by any director by attendance thereat.

 

(c) Regular meetings of the board of directors shall be held at such place and on such day and hour as shall from time to time be fixed by resolution of the board of directors. No notice of regular meetings of the board of directors shall be necessary.

 

(d) At any meeting of the board of directors, any business may be transacted, and the board may exercise all of its powers.

 

Section 9. Quorum and Voting.

 

(a) A majority of the directors presently in office shall constitute a quorum, but a lesser number may adjourn any meeting from time to time until a quorum is obtained, and no further notice thereof need be given.

 

(b) If a quorum is present when a vote is taken, the affirmative vote of a majority of the directors present at the meeting is the act of the board of directors.

 

Section 10. Compensation. By resolution of the board of directors, the directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum for attendance at each meeting of the board of directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.

 

Section 11. Presumption of Assent. A director of the corporation who is present at a meeting of the board of directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless:

 

(a) The director objects at the beginning of the meeting, or promptly upon the director’s arrival, to holding it or transacting business at the meeting;

 

(b) The director’s dissent or abstention from the action taken is entered in the minutes of the meeting; or


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(c) The director delivers written notice of the director’s dissent or abstention to the presiding officer of the meeting before its adjournment or to the corporation within a reasonable time after adjournment of the meeting.

 

The right of dissent or abstention is not available to a director who votes in favor of the action taken.

 

Section 12. Committees. The board of directors, by resolution adopted by a majority of the full board of directors, may designate from among its member one or more committees, each of which must have two or more members and, to the extent provided in such resolution, shall have and may exercise all the authority of the board of directors, except that no such committee shall have the authority to: authorize or approve a distribution except according to a general formula or method prescribed by the board of directors; approve or propose to shareholders action that the Nevada General Corporation Law requires to be approved by shareholders; fill vacancies on the board of directors or on any of its committees; amend any Articles of Incorporation not requiring shareholder approval; adopt, amend or repeal Bylaws; approve a plan of merger not requiring shareholder approval; or authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares, except that the board of directors may authorize a committee, or a senior executive officer of the corporation, to do so within limits specifically prescribed by the board of directors.

 

ARTICLE IV

 

Special Measures for Corporate Action

 

Section 1. Actions by Written Consent. Any corporate action required or permitted by the Articles of Incorporation, Bylaws, or the laws under which this corporation is formed, to be voted upon or approved at a duly called meeting of the directors, committee of directors, or shareholders may be accomplished without a meeting if one or more unanimous written consents of the respective directors or shareholders, setting forth the actions so taken, shall be signed, either before or after the action taken, by all the directors, committee members, or shareholders, as the case may be. Action taken by unanimous written consent is effective when the last director or committee member signs the consent unless the consent specifies a later effective date. Action taken by unanimous written consent of the shareholders is effective when all consents are in possession of the corporation unless the consent specifies a later effective date.

 

Section 2. Meetings by Conference Telephone. Members of the board of directors, members of a committee of directors, or shareholders may participate in their respective meetings by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time; participation in a meeting by such means shall constitute presence in person at such meeting.

 

ARTICLE V

 

Officers

 

Section 1. Officers Designated. The officers of the corporation shall be a president, a secretary, and a treasurer, each of whom shall be elected by the board of directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the board of directors. Any two or more offices may be held by the same person. The board of directors may, in its discretion, elect a chairperson of the board of directors; and, if a chairperson has been elected, the chairperson shall, when present, preside at all meetings of the board of directors and the shareholders and shall have such other powers as the board may prescribe.

 

Section 2. Election. Qualification and Term of Office. Each of the officers shall be elected by the board of directors. None of said officers, except the president and the chairperson of the board of directors, need be a director, but a vice president who is not a director cannot succeed to or fill the office of president. The officers shall be elected by the board of directors at each annual meeting of the board of directors. Except as hereinafter provided, each of said officers shall hold office from the date of his election until the next annual meeting of the board of directors and until his successor shall have been duly elected and qualified, unless a different length of term is prescribed in such employment or consulting agreement.


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Section 3. Powers and Duties.

 

(a) President. The president shall be the chief executive officer of the corporation and, subject to the direction and control of the board of directors, shall have general charge and supervision over its property, business, and affairs. He shall, unless a chairperson of the board of directors has been elected and is present, preside at meetings of the shareholders and the board of directors.

 

(b) Secretary. The secretary shall: (l) keep the minutes of the shareholders’ and of the board of directors’ meetings in one or more books provided for that purpose; (2) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (3) be custodian of the corporate records and of the seal of the corporation and affix the seal of the corporation to all documents as may be required; (4) keep a register of the post office address of each shareholder which shall be furnished to the secretary by such shareholder; (5) sign with the president, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the board of directors; (6) have general charge of the stock transfer books of the corporation; and (7) in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him by the president or by the board of directors.

 

(c) Treasurer. Subject to the direction and control of the board of directors, the treasurer shall have the custody, control, and disposition of the funds and securities of the corporation and shall account for the same; and, at the expiration of his term of office, he shall turn over to his successor all property of the corporation in his possession.

 

Section 4. Assistant Secretaries and Assistant Treasurers. The assistant secretaries, when authorized by the board of directors, may sign with the president, or a vice president, certificates for shares of the corporation, the issuance of which shall have been authorized by resolution of the board of directors. The assistant treasurers shall, respectively, if required by the board of directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the board of directors shall determine. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or the treasurer, respectively, or by the president or the board of directors.

 

Section 5. Removal. The board of directors shall have the right to remove any officer whenever in its judgment the best interests of the corporation will be served thereby.

 

Section 6. Vacancies. The board of directors shall fill any office which becomes vacant with a successor who shall hold office for the unexpired term and until his successor shall have been duly elected and qualified.

 

Section 7. Salaries. The salaries of all officers of the corporation shall be fixed by the board of directors.

 

ARTICLE VI

 

Share Certificates

 

Section 1. Issuance Form and Execution of Certificates. No shares of the corporation shall be issued unless authorized by the board. Such authorization shall include the maximum number of shares to be issued, the consideration to be received for each share, the value of noncash consideration, and a statement that the board has determined that such consideration is adequate. Certificates for shares of the corporation shall be in such form as is consistent with the provisions of the Nevada General Corporation Law and shall state:

 

(a) The name of the corporation and that the corporation is organized under the laws of this state;

 

(b) The name of the person to whom issued; and

 

(c) The number and class of shares and the designation of the series, if any, which such certificate represents.


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They shall be signed by two officers of the corporation, and the seal of the corporation may be affixed thereto. Certificates may be issued for fractional shares. No certificate shall be issued for any share until the consideration established for its issuance has been paid.

 

 

Section 2. Transfers. Shares may be transferred by delivery of the certificate therefor, accompanied either by an assignment in writing on the back of the certificate or by a written power of attorney to assign and transfer the same, signed by the record holder of the certificate. The board of directors may, by resolution, provide that beneficial owners of shares shall be deemed holders of record for certain specified purposes. Except as otherwise specifically provided in these Bylaws, no shares shall be transferred on the books of the corporation until the outstanding certificate therefor has been surrendered to the corporation.

 

Section 3. Loss or Destruction of Certificates. In case of loss or destruction of any certificate of shares, another may be issued in its place upon proof of such loss or destruction and upon the giving of a satisfactory indemnity bond to the corporation. A new certificate may be issued without requiring any bond, when in the judgment of the board of directors it is proper to do so.

 

ARTICLE VII

 

Books and Records

 

Section 1. Books of Accounts Minutes and Share Register. The corporation shall keep as permanent records minutes of all meetings of its shareholders and board of directors, a record of all actions taken by the shareholders or board of directors without a meeting, and a record of all actions taken by a committee of the board of directors exercising the authority of the board of directors on behalf of the corporation. The corporation shall maintain appropriate accounting records. The corporation or its agent shall maintain a record of its shareholders, in a form that permits preparation of a list of the names and addresses of all shareholders, in alphabetical order by class of shares showing the number and class of shares held by each. The corporation shall keep a copy of the following records at its principal office: the Articles or Restated Articles of Incorporation and all amendments to them currently in effect; the Bylaws or Restated Bylaws and all amendments to them currently in effect; the minutes of all shareholders’ meetings, and records of all actions taken by shareholders without a meeting, for the past three years; its financial statements for the past three years, including balance sheets showing in reasonable detail the financial condition of the corporation as of the close of each fiscal year, and an income statement showing the results of its operations during each fiscal year prepared on the basis of generally accepted accounting principles or, if not, prepared on a basis explained therein; all written communications to shareholders generally within the past three years; a list of the names and business addresses of its current directors and officers; and its most recent annual list delivered to the Secretary of State of Nevada.

 

Section 2. Copies of Resolutions. Any person dealing with the corporation may rely upon a copy of any of the records of the proceedings, resolutions, or votes of the board of directors or shareholders, when certified by the president or secretary.

 

ARTICLE VIII

 

Corporate Seal

 

The board of directors may provide for a corporate seal which shall have inscribed thereon the name of the corporation, the year and state of incorporation and the words “corporate seal.”

 

ARTICLE IX

 

Amendment of Bylaws

 

Section 1. By the Shareholders. These Bylaws may be amended, altered, or repealed at any regular or special meeting of the shareholders if notice of the proposed alteration or amendment is contained in the notice of the meeting.


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Section 2. By the Board of Directors. These Bylaws may be amended, altered, or repealed by the affirmative vote of a majority of the whole board of directors at any regular or special meeting of the board.

 

ARTICLE X

 

Fiscal Year

 

The fiscal year of the corporation shall be a calendar year ending on December 31.

 

ARTICLE XI

 

Rules of Order

 

The rules contained in the most recent edition of Robert’s Rules of Order, Newly Revised, shall govern all meetings of shareholders and directors where those rules are not inconsistent with the Articles of Incorporation, Bylaws, or special rules of order of the corporation.

 

Adopted by resolution of the corporation’s Board.

 

/s/ Jeffrey M. Canouse

Jeffrey M. Canouse, Chairman of the Board, Secretary,

and Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 


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SUBSCRIPTION AGREEMENT

HARRISON, VICKERS & WATERMAN, INC.

 

This SUBSCRIPTION AGREEMENT (this “Agreement”) effective ___________________, by and between, HARRISON, VICKERS & WATERMAN, INC. a Wyoming Corporation (the “Seller”) and _________________________ (the “Purchaser”) with respect to the following facts and circumstances:

 

A. Seller is a publicly traded Wyoming Corporation, (“the Company”), and,

 

B. Purchaser desires to purchase the Securities at the purchase price and subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, representations and warranties set forth herein, each of the parties hereto hereby agrees as follows:

 

1.1 Purchase of Common Stock.

 

a) Purchase. Subject to the terms and conditions of this Agreement, Seller hereby agrees to sell to Purchaser the Securities, _____________________ shares at per share of $ _________ per shares and the Purchaser gives notice that Purchaser wishes to purchase said shares.

 

b) Receipt of Information: Purchaser represents that it has received all of the information it considers necessary or appropriate for deciding whether to purchase the Shares. The Purchaser further represents that it has had the opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the purchase of the Shares and the business, properties, prospects and financial condition of the Company and to obtain additional information necessary to verify the accuracy of any information furnished to him which he has access.

 

c) Purchase Entirely For Own Account: The Purchaser represents that the Shares to be purchased will be acquired for investment purposes for its own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof.

 

1.2 Delivery of Securities. The Securities shall be transferred upon payment by Purchaser to Seller at (the “Issue Date”), to the Purchaser.

 

1.4 Further Assurances. Each of the parties hereto shall execute any and all further documents and writings and perform such other reasonable actions that may be or become necessary or expedient to effectuate the purchase of the Securities as contemplated hereby.

 

2. Representations, Warranties and Covenants of Seller.

 

2.1 As an inducement for Purchaser to enter into this Agreement, as of the date hereof and as of the Issue Date, Seller represents, warrants, and agrees as follows:

 

2.1.1 This Agreement has been or, as of the Closing Date, will have been duly executed and delivered by Seller and constitutes or, upon execution, will constitute a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting creditors’ rights generally and by limitations on the availability of equitable remedies).

 

2.1.2 On the Issue Date, Seller will deliver the Securities free and clear of any liens, claims, security interest or other encumbrances created by or through Seller, and Seller has full power and right to issue the Securities pursuant to the terms hereof. On and at all times after the Issue Date, all of the Securities shall be duly authorized, validly issued, fully paid, and non-assessable.


3. Representations, Warranties and Covenants of the Purchaser. The Purchaser hereby represents, warrants and covenants to the Company and each officer, employee and agent of the Company that The Purchaser is an “accredited investor” within the meaning of SEC Regulation D, as presently in effect.

 

(a) The Purchaser has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Securities.

 

(b) The Purchaser recognizes that this investment in the Securities involves a high degree of risk which may result in the loss of the total amount of his/her investment. The Purchaser acknowledges that it has carefully considered all risks incident to the purchase of the Securities and that he/she has been advised and is fully aware that an investment in the Company is highly speculative.

 

(c) The Purchaser is acquiring the Securities for its own account (as principal) or for the account of his spouse (either in a joint tenancy, tenancy by the entirety or tenancy in common) or for his family trust for investment and not with a view to the distribution or resale thereof.

 

(d) The Purchaser is aware that it must bear the economic risk of its investment in the Securities for an indefinite period of time because the Securities have not been registered under the Securities Act of 1933, as amended, or under the securities laws of any state, and therefore cannot be sold unless they are subsequently registered under the Securities Act of 1933, as amended, and any applicable state securities laws or unless an exemption from such registration is available and, further that only the Company can take action to register the Securities and the Company is under no obligation and do not propose to attempt to do so.

 

(e) The Purchaser represents that it has never been guaranteed or warranted to the undersigned by the company, its officers or directors or by any other person, expressly or by implication, that the undersigned will receive any approximate or exact amount of return or other type of consideration, profit or loss as a result of any investment in the Securities; or that the past performance or experience on the part of the Company, any director, officer or any affiliate, will in any way indicate or predict the results of the ownership of Securities or of the overall success of the Company.

 

(f) The Purchaser understands and agrees that the following restrictions and limitations imposed by the Securities Act of 1933, as amended, and by applicable state securities laws, are applicable to his/her purchase and the resale, assignment, pledge, hypothecation or other transfer of the Securities:

 

(i) The Purchaser agrees that the Securities shall not be sold, assigned, pledged, hypothecated or otherwise transferred unless they are registered under the Securities Act of 1933, as amended, and applicable state securities laws or unless an exemption from such registration is available.

 

(ii) A legend in substantially the following form will be placed on each Certificate and will be placed on any certificate(s) or other document(s) evidencing the Securities:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS SUCH TRANSACTION IS DULY REGISTERED UNDER THE ACT OR UNLESS IN THE OPINION OF COUNSEL FOR THE COMPANY SUCH TRANSACTION IS EXEMPT FROM THE REGISTRATION PROVISION OF THE ACT. THE SALE, IF ANY, OF THESE SECURITIES SHALL BE GOVERNED BY THE PROVISIONS OF RULE 144 OR ANY OTHER RULE PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

(iii) Stop transfer instructions have been or will be issued with respect to the Securities so as to restrict the resale, assignment, pledge, hypothecation or other transfer thereof.


4. Indemnification. The undersigned acknowledges that he/she understands the meaning and legal consequences of the representations, warranties and covenants set forth in Section 3 hereof and that the Company has relied and will rely upon such representations, warranties, covenants and certifications, and he/she hereby agrees to indemnify and hold harmless the Company and its respective officers, directors, controlling persons, agents and employees, from and against any and all loss, damage or liability, joint or several, and any action in respect thereof, to which any such person may become subject due to or arising out of a breach of any such representation, warranty or covenant or the inaccuracy of such certifications. Notwithstanding the foregoing, however, no representation, warranty, acknowledgement, or agreement made herein by the undersigned shall in any manner be deemed to constitute a waiver of any rights granted to him/her under federal or state securities laws.

 

5. Miscellaneous.

 

5.1 All representations and warranties of Seller made under Section 2 of this Agreement shall survive for a period of one (1) year from execution hereon.

 

5.2 This Agreement constitutes the entire agreement among the parties and supersedes all prior agreements, representations, warranties, statements and understandings, whether oral or written, with respect to the subject matter hereof.

 

5.3 This Agreement shall be governed by the laws of the State of Wyoming, without giving effect to the conflict of law provisions thereof.

 

5.4 This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assign. This Agreement and the rights and obligations of the parties hereto shall not be assignable by any party hereto without the written consent of the other parties hereto.

 

5.5 The validity, legality, or enforceability of the remainder of this Agreement shall not be affected even if one or more of the provisions of this Agreement shall be held to be invalid, illegal, or unenforceable in any respect.

 

5.6 None of the terms or provisions of this Agreement shall be modified, waived, or amended, except by a written instrument signed by the party against which any modification, waiver, or amendment is to be enforced.

 

5.7 This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above.

 

Seller acknowledges receipt of funds this _________________day of ____________20__.

 

SELLER:

 

PURCHASER:

 

 

 

HARRISON, VICKERS & WATERMAN, INC.

 

 

 

 

 

 

 

 

 

 

 

Robert W. Tetsch, CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agreement and Plan of Merger

among

Harrison, Vickers & Waterman, Inc.

and

PEN Merger Sub, LLC

and

Pacific Energy Network LLC

and

The Members of Pacific Energy Network LLC

 

dated

July 15, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 


AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this “Agreement”), dated July 15, 2022 (“Effective Date”), is entered into among Harrison, Vickers & Waterman, Inc., a Wyoming corporation (“Parent”), PEN Merger Sub, LLC, a California limited liability company (“Merger Sub”), Pacific Energy Network LLC a California limited liability  company (“Target”), and Robert William Tetsch on behalf of the members of Target (as specifically set forth on Exhibit A attached hereto, collectively, “Target Members”).

RECITALS

WHEREAS, the parties intend that Merger Sub be merged with and into the Target, with the Target surviving that merger on the terms and subject to the conditions set forth herein (the “Merger”);

 

WHEREAS, pursuant to the Merger, all of the outstanding membership interests of Target (a “Target Membership Interest” or, collectively, the “Target Membership Interests”), will be converted into shares of Series F Preferred Stock, $0.001 par value, of Parent (“Parent Series F Preferred Stock”) which shall have the rights and preferences as set forth in the Certificate of Designation with respect to Series F Preferred Stock set forth on Exhibit B attached hereto (the “Series F Certificate of Designation”), including but not limited to: (i) aggregate voting rights that, after giving effect to the Merger, shall equal Eighty-Five Percent (85%) of the total shareholder votes of the Parent when voting together with all of the other issued and outstanding shares of Parent (common and preferred); and (ii) conversion rights into common stock of Parent (“Parent Common Shares”) equal to the voting rights of the Parent Series F Preferred Stock;

WHEREAS, Shareholder, Directors, Officers and/or affiliates of the Parent will receive 10,000 shares Series G Preferred Stock, $0.001 par value, of Parent (“Parent Series G Preferred Stock”) which shall have the rights and preferences as set forth in the Certificate of Designation with respect to Series G Preferred Stock set forth on Exhibit C attached hereto (the “Series G Certificate of Designation”), including but not limited to: (i) aggregate voting rights that, after giving effect to the Merger, shall equal Ten Percent (10%) of the total shareholder votes of the Parent when voting together with all of the other issued and outstanding shares of Parent (common and preferred); and (ii) conversion rights into common stock of Parent (“Parent Common Shares”) equal to the voting rights of the Parent Series G Preferred Stock.

WHEREAS, the Target Members have (a) determined that this Agreement and the transactions contemplated hereby, including the Merger, are in the best interests of the Target, (b) approved and declared advisable this Agreement and the transactions contemplated hereby, including the Merger, and (c) resolved to recommend adoption of this Agreement by the Target Member representing a majority of the issued and outstanding voting rights of the Target in accordance with the California Revised Uniform Limited Liability Company Act (the “CRULLCA”);

WHEREAS, prior to the execution of this Agreement, the Target shall seek to obtain, in accordance with the CRULLCA, a written consent of Target Members approving this Agreement, the Merger and the transactions contemplated hereby;

WHEREAS, the respective boards of directors of Parent and Merger Sub have unanimously (a) determined that this Agreement and the transactions contemplated hereby, including the Merger, are in the best interests of Parent, Merger Sub and their respective shareholders and members, and (b) approved and declared advisable this Agreement and the transactions contemplated hereby, including the Merger.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:


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ARTICLE I
Definitions

The following terms have the meanings specified or referred to in this ARTICLE I :

Acquisition Proposal” has the meaning set forth in Section 5.03(a) .

Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

Agreement” has the meaning set forth in the preamble.

Ancillary Documents” means any documents executed by the Parties in conjunction with this Agreement.

Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Delaware are authorized or required by Law to be closed for business.

Certificate” has the meaning set forth in Section 2.10(a) .

Certificate of Merger” has the meaning set forth in Section 2.05 .

Closing” has the meaning set forth in Section 2.03 .

Closing Date” has the meaning set forth in Section 2.03 .

Closing Merger Consideration” has the meaning set forth in Section 2.02

Code” means the Internal Revenue Code of 1986, as amended.

Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

Dollars or $” means the lawful currency of the United States.

Effective Time” has the meaning set forth in Section 2.05 .

Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

Environmental Claim” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and


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injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

Environmental Notice” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.

GAAP” means United States generally accepted accounting principles in effect from time to time.

Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

Indebtedness” means, without duplication and with respect to the Target, all (a) indebtedness for borrowed money; (b) obligations for the deferred purchase price of property or services, (c) long or short-term obligations evidenced by notes, bonds, debentures or other similar instruments; (d) obligations


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under any interest rate, currency swap or other hedging agreement or arrangement; (e) capital lease obligations; (f) reimbursement obligations under any letter of credit, banker’s acceptance or similar credit transactions; (g) guarantees made by the Target on behalf of any third party in respect of obligations of the kind referred to in the foregoing clauses (a) through (f); and (h) any unpaid interest, prepayment penalties, premiums, costs and fees that would arise or become due as a result of the prepayment of any of the obligations referred to in the foregoing clauses (a) through (g).

Intellectual Property” means any and all rights in, arising out of, or associated with any of the following in any jurisdiction throughout the world: (a) issued patents and patent applications (whether provisional or non-provisional), including divisional, continuations, continuations-in-part, substitutions, reissues, reexaminations, extensions, or restorations of any of the foregoing, and other Governmental Authority-issued indicia of invention ownership (including certificates of invention, petty patents, and patent utility models) (“Patents”); (b) trademarks, service marks, brands, certification marks, logos, trade dress, trade names, and other similar indicia of source or origin, together with the goodwill connected with the use of and symbolized by, and all registrations, applications for registration, and renewals of, any of the foregoing (“Trademarks”); (c) copyrights and works of authorship, whether or not copyrightable, and all registrations, applications for registration, and renewals of any of the foregoing (“Copyrights”); (d) internet domain names and social media account or user names (including “handles”), whether or not Trademarks, all associated web addresses, URLs, websites and web pages, social media sites and pages, and all content and data thereon or relating thereto, whether or not Copyrights; (e) trade secrets, know-how, inventions (whether or not patentable), discoveries, improvements, technology, business and technical information, databases, data compilations and collections, tools, methods, processes, techniques, and other confidential and proprietary information and all rights therein (“Trade Secrets”); (f) computer programs, operating systems, applications, firmware, and other code, including all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof; and (g) all other intellectual or industrial property and proprietary rights.

Knowledge” means the actual or constructive knowledge of any director or officer after due inquiry.

Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

Liabilities” has the meaning set forth in Section 3.04 .

Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include punitive damages, except to the extent actually awarded to a Governmental Authority or other third party.

Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Target, or (b) the ability of the Target to consummate the transactions contemplated hereby on a timely basis.

Material Contracts” has the meaning set forth in Section 3.06(a) .

Merger” has the meaning set forth in the recitals.

Merger Consideration” means the Closing Merger Consideration.

Merger Sub” has the meaning set forth in the preamble.


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Parent” has the meaning set forth in the preamble.

Parent Common Shares” has the meaning set forth in the recitals.

“Parent OTC Documents” has the meaning set forth in Section 4.08.

Parent Series F Preferred Stock” has the meaning set forth in the recitals.

Parent Series G Preferred Stock” has the meaning set forth in the recitals.

Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

Permitted Encumbrances” has the meaning set forth in Section 3.07(a) .

Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

Post-Closing Tax Period” means any taxable period beginning after the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period beginning after the Closing Date.

Post-Closing Taxes” means Taxes of the Target for any Post-Closing Tax Period.

Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.

Pre-Closing Taxes” means Taxes of the Target for any Pre-Closing Tax Period.

Real Property” means the real property owned, leased or subleased by the Target, together with all buildings, structures and facilities located thereon.

Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, without limitation, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

Requisite Target Vote” means a consenting vote of all of the Target Members representing all of the issued and outstanding Target Membership Interests.

SEC” means the Securities and Exchange Commission.

Series F Certificate of Designation” has the meaning set forth in the recitals.

Series G Certificate of Designation” has the meaning set forth in the recitals.

Target Member Indemnitees” has the meaning set forth in Section 8.02 .

Straddle Period” has the meaning set forth in Section 6.05 .


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Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests (a) having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions or (b) representing equal to or more than 50 percent of such securities or ownership interests are at the time directly or indirectly owned by such Person.

Surviving Corporation” has the meaning set forth in Section 2.01 .

Target” has the meaning set forth in the preamble.

Target Membership Interest” or, collectively, the “Target Membership Interests” has the meaning set forth in the recitals.

Target Intellectual Property” means all Intellectual Property that is owned or held for use by the Target.

Target IP Agreements” means all licenses, sublicenses, consent to use agreements, settlements, coexistence agreements, covenants not to sue, waivers, releases, permissions and other Contracts, whether written or oral, relating to Intellectual Property to which the Target is a party, beneficiary or otherwise bound.

Target IP Registrations” means all Target Intellectual Property that is subject to any issuance, registration or application by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including issued patents, registered trademarks, domain names and copyrights, and pending applications for any of the foregoing.

Target IT Systems” means all Software, computer hardware, servers, networks, platforms, peripherals, and similar or related items of automated, computerized, or other information technology (IT) networks and systems (including telecommunications networks and systems for voice, data, and video) owned, leased, licensed, or used (including through cloud-based or other third-party service providers) by the Target.

Target Members” has the meaning set forth in the preamble.

Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

Union” has the meaning set forth in Section 3.13(b) .

WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.

Written Consent” has the meaning set forth in Section 5.04 .


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ARTICLE II
The Merger

Section 2.01The Merger. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the Act, at the Effective Time, (a) Merger Sub will merge with and into the Target, and (b) the separate corporate existence of Merger Sub will cease and the Target will continue its corporate existence as the surviving corporation in the Merger (sometimes referred to herein as the “Surviving Corporation”). 

Section 2.02Closing Merger Consideration.  The consideration for the Merger (the “Closing Merger Consideration”) will be paid to Target Members on a 1 for 10,000 exchange basis such that each one percent (1%) interest in Target resulting from the Target Membership Interests shall be exchanged for 10,000 shares of Parent Series F Preferred Stock. As a result of the Merger, Parent will be the sole shareholder of Target and Target Members will become shareholders of Parent.  

Section 2.03Closing. Subject to the terms and conditions of this Agreement, the closing of the Merger (the “Closing”) shall take place at 11:00 a.m., Pacific time, no later than two (2) Business Days after the last of the conditions to Closing set forth in ARTICLE VII have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), remotely by exchange of documents and signatures (or their electronic counterparts), or at such other time or on such other date or at such other place as the Parties may mutually agree upon in writing (the day on which the Closing takes place being the “Closing Date”). 

Section 2.04Closing Deliverables.  

(a)At or prior to the Closing, the Target shall deliver to Parent the following: 

(i)a certificate, dated the Closing Date and signed by a duly authorized officer of the Target, that each of the conditions set forth in Section 7.02(a) and Section 7.02(b) have been satisfied; 

(ii)a certificate of an officer (or equivalent officer) of the Target certifying that (A) attached thereto are true and complete copies of (1) all resolutions adopted by the manager(s) of the Target authorizing the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby and (2) resolutions of the Target Members approving the Merger and adopting this Agreement, and (B) all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby; 

(iii)a good standing certificate (or its equivalent) from the secretary of state or similar Governmental Authority of the jurisdiction under the Laws in which the Target is organized; and 

(iv)such other documents or instruments as Parent reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement. 

(b)At the Closing, Parent shall deliver to the Target (or Target Members or such other Person as may be specified herein) the following: 


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(i)unanimous Written Consent of Parent’s Board of Directors authorizing and executing the issuance of the Closing Merger Consideration to Target Members, as the same will be recorded on the records of the Parent; and 

(ii)a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Parent and Merger Sub certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors of Parent and Merger Sub authorizing the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby; 

(iii)a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Parent and Merger Sub certifying the names and signatures of the officers of Parent and Merger Sub authorized to sign this Agreement, the Ancillary Documents and the other documents to be delivered hereunder and thereunder; 

(iv)a copy of the Series F and G Certificates of Designation as filed with the Secretary of State of the State of Wyoming; 

(v)stock certificates (or book entry) for each of the Target Members representing the Merger Consideration (Parent Series F and G Preferred Stock); 

(vi)such other documents or instruments as the Target reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement. 

Section 2.05Effective Time. Subject to the provisions of this Agreement, at the Closing, the Target, Parent and Merger Sub shall cause a certificate of merger (the “Certificate of Merger”) to be executed, acknowledged and filed in accordance with the relevant provisions of the law and shall make all other filings or recordings required. The Merger shall become effective at such time as the Certificate of Merger has been duly filed or at such later date or time as may be agreed by the Target and Parent in writing and specified in the Certificate of Merger (the effective time of the Merger being hereinafter referred to as the “Effective Time”). 

Section 2.06Effects of the Merger. The Merger shall have the effects set forth herein. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, all property, rights, privileges, immunities, powers, franchises, licenses and authority of the Target and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions and duties of each of the Target and Merger Sub shall become the debts, liabilities, obligations, restrictions and duties of the Surviving Corporation. 

Section 2.07Articles of Organization. If applicable, and approved by the Target Members, at the Effective Time, (a) the Articles of Organization of Merger Sub as in effect immediately prior to the Effective Time shall be the Articles of Organization of the Surviving Corporation until thereafter amended in accordance with the terms thereof or as provided by applicable Law, and (b) the by-laws of Merger Sub as in effect immediately prior to the Effective Time shall be the by-laws of the Surviving Corporation until thereafter amended in accordance with the terms thereof, the Articles of Organization of the Surviving Corporation or as provided by applicable Law; provided, however, in each case, that the name of the corporation set forth therein shall be changed to the name of the Target, or its designated name, which shall be Modern Pro Solutions, Inc. 


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Section 2.08Directors and Officers. The Managers, directors and officers of Target, in each case, immediately prior to the Effective Time shall, from and after the Effective Time, be the directors and officers, respectively, of the Surviving Corporation.  

Section 2.09Effect of the Merger on Common Stock. At the Effective Time, as a result of the Merger and without any action on the part of Parent, Merger Sub, the Target or any Target Members, the Target Membership Interests issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive the Closing Merger Consideration. 

Section 2.10Surrender and Payment.  

(a)At the Effective Time, all Target Membership Interests outstanding immediately prior to the Effective Time shall automatically be cancelled and retired and shall cease to exist and each holder of a certificate formerly representing any Target Membership Interests (each, a “Certificate”) shall cease to have any rights as a member of the Target. 

(b)If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition to such payment that (i) such Certificate shall be properly endorsed or shall otherwise be in proper form for transfer, and (ii) the Person requesting such payment shall pay to the Exchange Agent any transfer or other Tax required as a result of such payment to a Person other than the registered holder of such Certificate or establish to the reasonable satisfaction of the Exchange Agent that such Tax has been paid or is not payable. 

Section 2.11No Further Ownership Rights in Target Membership Interests. All Merger Consideration paid or payable upon the surrender of Certificates in accordance with the terms hereof shall be deemed to have been paid or payable in full satisfaction of all rights pertaining to the Target Membership Interests formerly represented by such Certificate, and from and after the Effective Time, there shall be no further registration of transfers of Target Membership Interests on the transfer books of the Surviving Corporation. If, after the Effective Time, Certificates are presented to the Surviving Corporation, they shall be cancelled and exchanged for the Merger Consideration provided for, and in accordance with the procedures set forth, in this ARTICLE II and elsewhere in this Agreement. 

ARTICLE III
Representations and Warranties of the Target

Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, the Target represents and warrants to Parent that the statements contained in this ARTICLE III are true and correct as of the date hereof.

Section 3.01Organization and Qualification of the Target. The Target is a limited liability company duly organized, validly existing and in good standing under the Laws of the state of California and has full power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted. The Target is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the properties owned or leased by it or the operation of its business as currently conducted makes such licensing or qualification necessary. 

Section 3.02Authority. Having obtained the Requisite Target Vote, Target has full power and authority to enter into and perform its obligations under this Agreement and the Ancillary Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by the Target of this Agreement and any Ancillary Document to which it is a party and the consummation by the Target of the transactions contemplated hereby and thereby have been duly authorized by all requisite company action on the part of the Target and no other  


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company proceedings on the part of the Target are necessary to authorize the execution, delivery and performance of this Agreement or to consummate the Merger and the other transactions contemplated hereby and thereby, subject only, in the case of consummation of the Merger, to the receipt of the Target Member consent, which is the only vote or consent of the Target Members required to approve and adopt this Agreement and the Ancillary Documents, approve the Merger and consummate the Merger and the other transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by the Target, and (assuming due authorization, execution and delivery by each other party hereto) this Agreement constitutes a legal, valid and binding obligation of the Target enforceable against the Target in accordance with its terms. When each Ancillary Document to which the Target is or will be a party has been duly executed and delivered by the Target (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of the Target enforceable against it in accordance with its terms.

Section 3.03No Conflicts; Consents. Having obtained the Requisite Target Vote, the execution, delivery and performance by the Target of this Agreement and the Ancillary Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, including the Merger, do not and will not: (i) conflict with or result in a violation or breach of, or default under, any provision of the Certificate of Formation, or other organizational documents of the Target (“Target Charter Documents”); (ii) subject to, in the case of the Merger, conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to the Target; (iii) require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Contract to which the Target is a party or by which the Target is bound or to which any of their respective properties and assets are subject (including any Material Contract) or any Permit affecting the properties, assets or business of the Target; or (iv) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any properties or assets of the Target. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to the Target in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, except for the filing of the Certificate of Merger with the Secretary of State of California and such filings as may be required. 

Section 3.04Undisclosed Liabilities. The Target has no liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise (“Liabilities”), except those previously disclosed to Parent, if any.  

Section 3.05Absence of Certain Changes, Events and Conditions. Other than in the ordinary course of business consistent with past practice, there has not been, with respect to the Target, any: 

(a)event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; 

(b)amendment of the charter, operating agreement or other organizational documents of the Target; 

(c)pledge, transfer, or assignment of any Target Membership Interests; 

(d)material change in any method of accounting or accounting practice of the Target, except as required by GAAP or as previously disclosed by Target to Parent; 


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(e)material change in the Target’s cash management practices and its policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits; 

(f)entry into any Contract that would constitute a Material Contract; 

(g)incurrence, assumption or guarantee of any indebtedness for borrowed money; 

(h)transfer, assignment, sale or other disposition of any Target assets; 

(i)transfer or assignment of or grant of any license or sublicense under or with respect to any Target Intellectual Property or Target IP Agreements; 

(j)abandonment or lapse of or failure to maintain in full force and effect any Target IP Registration, or failure to take or maintain reasonable measures to protect the confidentiality or value of any Trade Secrets included in the Target Intellectual Property; 

(k)material damage, destruction or loss (whether or not covered by insurance) to its property; 

(l)any capital investment in, or any loan to, any other Person; 

(m)acceleration, termination, material modification to or cancellation of any material Contract (including, but not limited to, any Material Contract) to which the Target is a party or by which it is bound; 

(n)any material capital expenditures; 

(o)imposition of any Encumbrance upon any of the Target properties, capital stock or assets, tangible or intangible; 

(p)(i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of its current or former employees, officers, directors, independent contractors or consultants, other than as provided for in any written agreements or required by applicable Law, (ii) change in the terms of employment for any employee or any termination of any employees, or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent contractor or consultant; 

(q)hiring or promoting any person as or to (as the case may be) an officer or hiring or promoting any employee below officer except to fill a vacancy in the ordinary course of business; 

(r)adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, director, independent contractor or consultant, (ii) benefit plan or (iii) collective bargaining or other agreement with a Union, in each case whether written or oral; 

(s)any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of its stockholders or current or former directors, officers and employees; 


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(t)entry into a new line of business or abandonment or discontinuance of existing lines of business; 

(u)except for the Merger, adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law; 

(v)purchase, lease or other acquisition of the right to own, use or lease any property or assets, except for purchases of inventory or supplies in the ordinary course of business consistent with past practice; 

(w)acquisition by merger or consolidation with, or by purchase of a substantial portion of the assets or stock of, or by any other manner, any business or any Person or any division thereof; 

(x)action by the Target to make, change or rescind any Tax election, amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of Parent in respect of any Post-Closing Tax Period; or 

(y)any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing. 

Section 3.06Material Contracts.  

(a)Prior to Closing, Target shall provide Parent with each of the following Contracts of the Target (such Contracts, together with all Contracts concerning the occupancy, management or operation of any Real Property (including without limitation, brokerage contracts) listed or otherwise disclosed in Section 3.07(b) of the Disclosure Schedules and all Target IP Agreements, being “Material Contracts”): 

(i)all Contracts that require the Target to purchase its total requirements of any product or service from a third party or that contain “take or pay” provisions; 

(ii)all Contracts that provide for the indemnification by the Target of any Person or the assumption of any Tax, environmental or other Liability of any Person; 

(iii)all Contracts that relate to the acquisition or disposition of any business, a material amount of stock or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise); 

(iv)all broker, distributor, dealer, manufacturer’s representative, franchise, agency, sales promotion, market research, marketing consulting and advertising Contracts to which the Target is a party; 

(v)all employment agreements and Contracts with independent contractors or consultants (or similar arrangements) to which the Target is a party and which are not cancellable without material penalty; 

(vi) except for Contracts relating to trade receivables, all Contracts relating to indebtedness (including, without limitation, guarantees) of the Target; 


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(vii)all Contracts with any Governmental Authority to which the Target is a party (“Government Contracts”); 

(viii)all Contracts that limit or purport to limit the ability of the Target to compete in any line of business or with any Person or in any geographic area or during any period of time; 

(ix)any Contracts to which the Target is a party that provide for any joint venture, partnership or similar arrangement by the Target;  

(x)all collective bargaining agreements or Contracts with any Union to which the Target is a party; and 

(xi)any other Contract that is material to the Target and not previously disclosed. 

(b)Each Material Contract is valid and binding on the Target in accordance with its terms and is in full force and effect. None of the Target or, to the Target’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Parent. 

Section 3.07Title to Assets; Real Property.  

(a)The Target has good and valid (and, in the case of owned Real Property, good and marketable fee simple) title to, or a valid leasehold interest in, all Real Property and personal property and other assets reflected in the Target’s financial statements.  All such properties and assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “Permitted Encumbrances”): 

(i)liens for Taxes not yet due and payable; 

(ii)mechanics, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the ordinary course of business; 

(iii)easements, rights of way, zoning ordinances and other similar encumbrances affecting Real Property which are not, individually or in the aggregate, material to the business of the Target; or 

(iv)other than with respect to owned Real Property, liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the ordinary course of business. 

(b)With respect to owned Real Property, the Target has delivered or made available to Parent true, complete and correct copies of the deeds and other instruments (as recorded) by which the Target acquired such Real Property, and copies of all title insurance policies, opinions, abstracts and surveys in the possession of the Target and relating to the Real Property. With respect to leased Real Property, the Target has delivered or made available to Parent true, complete and correct copies of any leases affecting the Real Property. The Target is not a  


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sublessor or grantor under any sublease or other instrument granting to any other Person any right to the possession, lease, occupancy or enjoyment of any leased Real Property. The use and operation of the Real Property in the conduct of the Target’s business do not violate in any material respect any Law, covenant, condition, restriction, easement, license, permit or agreement. No material improvements constituting a part of the Real Property encroach on real property owned or leased by a Person other than the Target. There are no Actions pending nor, to the Target’s Knowledge, threatened against or affecting the Real Property or any portion thereof or interest therein in the nature or in lieu of condemnation or eminent domain proceedings.

Section 3.08Intellectual Property. Target has disclosed a correct, current, and complete list of: (i) all Target IP Registrations (ii) all unregistered Trademarks included in the Target Intellectual Property; and (iii) all proprietary Software of the Target; and (iv) all other Target Intellectual Property used or held for use in the Target’s business as currently conducted and as proposed to be conducted. 

Section 3.09Accounts Receivable. Target accounts receivable (a) have arisen from bona fide transactions entered into by the Target involving the sale of goods or the rendering of services in the ordinary course of business consistent with past practice; and (b) constitute only valid, undisputed claims of the Target not subject to claims of set-off or other defenses or counterclaims other than normal cash discounts accrued in the ordinary course of business consistent with past practice 

Section 3.10Legal Proceedings; Governmental Orders.  

(a)There are no Actions pending or, to the Target’s Knowledge, threatened (a) against or by the Target affecting any of its properties or assets; or (b) against or by the Target that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action. 

(b)There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting the Target or any of its properties or assets.  

Section 3.11Compliance with Laws; Permits.  

(a)To the Target’s Knowledge, the Target has complied, and is now complying, with all Laws applicable to it or its business, properties or assets. 

(b)To the Target’s Knowledge, all Permits required for the Target to conduct its business have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit. 

Section 3.12Environmental Matters.  

(a)The Target is currently and has been in compliance with all Environmental Laws and has not received from any Person any: (i) Environmental Notice or Environmental Claim; or (ii) written request for information pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date. 

(b)The Target has obtained and is in material compliance with all Environmental Permits (each of which is disclosed in Section 3.12(b) of the Disclosure Schedules) necessary for the ownership, lease, operation or use of the business or assets of the Target and all such Environmental Permits are in full force and effect and shall be maintained in full force and effect  


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by the Target through the Closing Date in accordance with Environmental Law, and the Target is not aware of any condition, event or circumstance that might prevent or impede, after the Closing Date, the ownership, lease, operation or use of the business or assets of the Target as currently carried out.

(c)There has been no Release of Hazardous Materials in contravention of Environmental Law with respect to the business or assets of the Target or any real property currently or formerly owned, operated or leased by the Target, and the Target has not received an Environmental Notice that any real property currently or formerly owned, operated or leased in connection with the business of the Target (including soils, groundwater, surface water, buildings and other structure located on any such real property) has been contaminated with any Hazardous Material which could reasonably be expected to result in an Environmental Claim against, or a violation of Environmental Law or term of any Environmental Permit by, the Target. 

(d)The Target has not retained or assumed, by contract or operation of Law, any liabilities or obligations of third parties under Environmental Law. 

(e)The Target is not aware of or reasonably anticipates, as of the Closing Date, any condition, event or circumstance concerning the Release or regulation of Hazardous Materials that might, after the Closing Date, prevent, impede or materially increase the costs associated with the ownership, lease, operation, performance or use of the business or assets of the Target as currently carried out. 

Section 3.13Employment Matters.  

(a)Target has provided a true and accurate list of all persons who are employees, independent contractors or consultants of the Target as of the date hereof, including any employee who is on a leave of absence of any nature, paid or unpaid, authorized or unauthorized, and sets forth for each such individual the following: (i) name; (ii) title or position (including whether full-time or part-time); (iii) hire or retention date; (iv) current annual base compensation rate or contract fee; (v) commission, bonus or other incentive-based compensation; and (vi) a description of the fringe benefits provided to each such individual as of the date hereof. As of the date hereof, all compensation, including wages, commissions, bonuses, fees and other compensation, payable to all employees, independent contractors or consultants of the Target for services performed on or prior to the date hereof have been paid in full and there are no outstanding agreements, understandings or commitments of the Target with respect to any compensation, commissions, bonuses or fees. 

(b)The Target is not, and has not ever been bound by, or negotiating any collective bargaining agreement or other Contract with a union, works council or labor organization (collectively, “Union”), and there is not, and has not ever been any Union representing or purporting to represent any employee of the Target, and no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. There has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting the Target or any of its employees. The Target has no duty to bargain with any Union. 

(c)To the Target’s Knowledge, the Target is and has been in compliance with all applicable Laws pertaining to employment and employment practices, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence, paid sick leave and unemployment insurance.  


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to the Target’s Knowledge all individuals characterized and treated by the Target as independent contractors or consultants are properly treated as independent contractors under all applicable Laws. To the Target’s Knowledge, all employees of the Target classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified. The Target is in compliance with and has complied with all immigration laws, including Form I-9 requirements and any applicable mandatory E-Verify obligations. There are no Actions against the Target pending, or to the Target’s Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant, volunteer, intern or independent contractor of the Target, including, without limitation, any charge, investigation or claim relating to unfair labor practices, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, employee classification, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence, paid sick leave, unemployment insurance or any other employment-related matter arising under applicable Laws.

(d)The Target has complied with the WARN Act, and it has no plans to undertake any action that would trigger the WARN Act. 

Section 3.14Taxes.  

(a)to the Target’s Knowledge, all Tax Returns required to be filed on or before the Closing Date by the Target have been, or will be, timely filed. Such Tax Returns are, or will be, true, complete and correct in all respects. All Taxes due and owing by the Target (whether or not shown on any Tax Return) have been, or will be, timely paid. 

(b)The Target has withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, shareholder or other party, and complied with all information reporting and backup withholding provisions of applicable Law. 

(c)No claim has been made by any taxing authority in any jurisdiction where the Target does not file Tax Returns that it is, or may be, subject to Tax by that jurisdiction. 

(d)No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of the Target. 

(e)All deficiencies asserted, or assessments made, against the Target as a result of any examinations by any taxing authority have been fully paid. 

(f)The Target is not a party to any Action by any taxing authority. There are no pending or threatened Actions by any taxing authority. 

(g)There are no Encumbrances for Taxes (other than for current Taxes not yet due and payable) upon the assets of the Target. 

(h)The Target is not a party to, or bound by, any Tax indemnity, Tax sharing or Tax allocation agreement. 

(i)No private letter rulings, technical advice memoranda or similar agreement or rulings have been requested, entered into or issued by any taxing authority with respect to the Target. 


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(j)The Target will not be required to include any item of income in, or exclude any item or deduction from, taxable income for taxable period or portion thereof ending after the Closing Date as a result of: 

(i)any change in a method of accounting under Section 481 of the Code (or any comparable provision of state, local or foreign Tax Laws), or use of an improper method of accounting, for a taxable period ending on or prior to the Closing Date; 

(ii)an installment sale or open transaction occurring on or prior to the Closing Date; 

(iii)a prepaid amount received on or before the Closing Date; 

(iv)any closing agreement under Section 7121 of the Code, or similar provision of state, local or foreign Law; or 

(v)any election under Section 108(i) of the Code. 

(k)The Target is not, nor has it been, a United States real property holding corporation (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(a) of the Code.  

(l)The Target has not been a “distributing corporation” or a “controlled corporation” in connection with a distribution described in Section 355 of the Code. 

(m)The Target is not, and has not been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011 4(b). 

Section 3.15Books and Records. The minute books and stock record books of the Target, all of which have been made available to Parent, are complete and correct and have been maintained in accordance with sound business practices. The minute books of the Target contain accurate and complete records of all meetings, and actions taken by written consent of, the Target Members, the managers of the Target, and no meeting, or action taken by written consent, of any such Target Members, managers of the Target has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records will be in the possession of the Target. 

Section 3.16Related Party Transactions. Except as disclosed in Section 3.18 of the Disclosure Schedules, no executive officer or director of the Target or any person owning 5% or more of the Target Membership Interests (or any of such person’s immediate family members or Affiliates or associates) is a party to any Contract with or binding upon the Target or any of its assets, rights or properties or has any interest in any property owned by the Target or has engaged in any transaction with any of the foregoing within the last twelve (12) months. 

Section 3.17Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of the Target. 

Section 3.18No Other Representations and Warranties. Except for the representations and warranties contained in this ARTICLE III, the Target (including its Members and Affiliates) has not made and does not make any other express or implied representations or warranties to Parent or its Affiliates.  


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ARTICLE IV
Representations and Warranties of Parent and Merger Sub

Parent and Merger Sub represent and warrant to the Target that the statements contained in this ARTICLE IV are true and correct as of the date hereof.

Section 4.01Organization and Authority of Parent and Merger Sub. Each of Parent and Merger Sub is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation. Each of Parent and Merger Sub has full corporate power and authority to enter into and perform its obligations under this Agreement and the Ancillary Documents to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Parent and Merger Sub of this Agreement and any Ancillary Document to which they are a party and the consummation by Parent and Merger Sub of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Parent and Merger Sub and no other corporate proceedings on the part of Parent and Merger Sub are necessary to authorize the execution, delivery and performance of this Agreement or to consummate the Merger and the other transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by Parent and Merger Sub, and (assuming due authorization, execution and delivery by each other party hereto) this Agreement constitutes a legal, valid and binding obligation of Parent and Merger Sub enforceable against Parent and Merger Sub in accordance with its terms. When each Ancillary Document to which Parent or Merger Sub is or will be a party has been duly executed and delivered by Parent or Merger Sub (assuming due authorization, execution and delivery by each other party thereto), such Ancillary Document will constitute a legal and binding obligation of Parent or Merger Sub enforceable against it in accordance with its terms. 

Section 4.02No Conflicts; Consents. The execution, delivery and performance by Parent and Merger Sub of this Agreement and the Ancillary Documents to which they are a party, and the consummation of the transactions contemplated hereby and thereby, including the issuance of the Parent’s shares of capital stock as a portion of the Closing Merger Consideration, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of Parent or Merger Sub; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Parent or Merger Sub; or (c) require the consent, notice or other action by any Person under any Contract to which Parent or Merger Sub is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Parent or Merger Sub in connection with the execution, delivery and performance of this Agreement and the Ancillary Documents and the consummation of the transactions contemplated hereby and thereby, except for the filing of the Certificate of Merger with the Secretary of State of California, the filing of the Series F and G Certificate of Designation with the Secretary of State of Wyoming and such filings as may be required under the HSR Act. 

Section 4.03No Prior Merger Sub Operations. Merger Sub was formed solely for the purpose of effecting the Merger and has not engaged in any business activities or conducted any operations other than in connection with the transactions contemplated hereby. 

Section 4.04Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any Ancillary Document based upon arrangements made by or on behalf of Parent or Merger Sub. 

Section 4.05Sufficiency of Funds. Parent has sufficient capital to consummate the transactions contemplated by this Agreement. 

Section 4.06Legal Proceedings Concerning Merger. There are no Actions pending or, to Parent’s or Merger Sub’s knowledge, threatened against or by Parent, Merger Sub or any of their  


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respective Affiliates that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

Section 4.07Capitalization. The authorized capital stock of Parent consists of (a) 25,000,000,000 shares of Parent Common Stock, par value $0.0001 (“Parent Common Stock”), of which 6,564,838,949 are issued and outstanding; (b) 85,164 shares of 8% Class A Preferred Stock, stated value of $1,000.00 are issued and outstanding; (c) 51 shares of Class B Preferred Stock, stated value of $1,000.00 are issued and outstanding; (d) 2,500 shares of 8% Class C Preferred Stock, stated value of $1,000.00 are issued and outstanding; (e) 2,000,000 shares of 3% Class D Preferred Stock stated value of $1,000.00 are issued and outstanding. All of the issued and outstanding shares of Parent’s capital stock have been duly authorized, validly issued and are fully paid and nonassessable and were not issued in violation of the preemptive, subscription or similar rights of any Person.  

Section 4.08Filings. Since March 2021, Parent has filed with or furnished to the OTC Markets (“OTC”), all reports, schedules, forms, certifications, prospectuses, and registration, proxy and other statements required pursuant to the rules and policies of the OTC Markets in order to maintain the Pink Current information disclosure designation (“Parent OTC Documents”). 

Section 4.09Financial Statements. Each of the consolidated financial statements (including, in each case, any notes and schedules thereto) contained in or incorporated by reference into the Parent OTC Documents: (i) complied as to form in all material respects with the published rules and regulations of the OTC with respect thereto as of their respective dates; (ii) was prepared in accordance with GAAP applied on a consistent basis throughout the periods involved; and (iii) fairly presented in all material respects the consolidated financial position and the results of operations, changes in stockholders’ equity, and cash flows of Parent and its consolidated Subsidiaries as of the respective dates of and for the periods referred to in such financial statements, subject, in the case of unaudited interim financial statements, to normal and year-end audit adjustments as permitted by the applicable rules and regulations of the OTC (but only if the effect of such adjustments would not, individually or in the aggregate, be material). 

Section 4.10Litigation. Except as disclosed in the Parent OTC Documents, there is no Action pending, or to the Knowledge of Parent, threatened against Parent or any of its Subsidiaries or any of their respective properties or assets or, to the Knowledge of Parent, any officer or director of Parent or any of its Subsidiaries in their capacities as such other than any such Action that: (a) does not involve an amount that would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect; and (b) does not seek material injunctive or other material non-monetary relief. None of Parent or any of its Subsidiaries or any of their respective properties or assets is subject to any Governmental Order, whether temporary, preliminary, or permanent, which would reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. To the Knowledge of Parent, there are no SEC inquiries or investigations, other governmental inquiries or investigations, or internal investigations pending or, to the Knowledge of Parent, threatened, in each case regarding any accounting practices of Parent or any of its Subsidiaries or any malfeasance by any officer or director of Parent. 

Section 4.11Compliance; Permits. 

(a)To the Parent’s Knowledge, the Parent and each of its Subsidiaries has complied, and is now complying, with all Laws applicable to it or its business, properties or assets. 

(b)To the Parent’s Knowledge, all Permits required for the Parent and each of its Subsidiaries to conduct its business have been obtained by it and are valid and in full force and effect. All fees and charges with respect to such Permits as of the date hereof have been paid in full. No event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Parent Permit. 


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Section 4.12Independent Investigation. Parent and Merger Sub have conducted their own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Target, and each acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Target, consistent with ARTICLE III above, for such purpose. 

ARTICLE V
Covenants

Section 5.01Conduct of Business Prior to the Closing. From the date hereof until the Closing, except as otherwise provided in this Agreement or consented to in writing by Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Target shall (x) conduct the business of the Target in the ordinary course of business consistent with past practice; and (y) use reasonable best efforts to maintain and preserve intact the current organization, business and franchise of the Target and to preserve the rights, franchises, goodwill and relationships of its employees, customers, lenders, suppliers, regulators and others having business relationships with the Target. Without limiting the foregoing, from the date hereof until the Closing Date, the Target shall: 

(a)preserve and maintain all of its Permits; 

(b)pay its debts, Taxes and other obligations when due; 

(c)maintain the properties and assets owned, operated or used by it in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear; 

(d)continue in full force and effect without modification all Insurance Policies, except as required by applicable Law; 

(e)defend and protect its properties and assets from infringement or usurpation; 

(f)perform all of its obligations under all Contracts relating to or affecting its properties, assets or business; 

(g)maintain its books and records in accordance with past practice; 

(h)comply in all material respects with all applicable Laws; and 

(i)not take or permit any action that would cause any of the changes, events or conditions described in Section 3.05 to occur. 

Section 5.02Access to Information. From the date hereof until the Closing, the Target shall (a) afford Parent and its Representatives full and free access to and the right to inspect all of the Real Property, properties, assets, premises, books and records, Contracts and other documents and data related to the Target; (b) furnish Parent and its Representatives with such financial, operating and other data and information related to the Target as Parent or any of its Representatives may reasonably request; and (c) instruct the Representatives of the Target to cooperate with Parent in its investigation of the Target. Any investigation pursuant to this Section 5.02 shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of the Target. No investigation by Parent or other information received by Parent shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the Target in this Agreement. 

Section 5.03No Solicitation of Other Bids.  


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(a)The Target shall not, and shall not authorize or permit any of its Affiliates or any of its or their Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. The Target shall immediately cease and cause to be terminated, and shall cause its Affiliates and all of its and their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to, or that could lead to, an Acquisition Proposal. For purposes hereof, “Acquisition Proposal” shall mean any inquiry, proposal or offer from any Person (other than Parent or any of its Affiliates) concerning (i) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving the Target; (ii) the issuance or acquisition of shares of capital stock, membership interests or other equity securities of the Target; or (iii) the sale, lease, exchange or other disposition of any significant portion of the Target’s properties or assets. 

(b)In addition to the other obligations under this Section 5.03 , the Target shall promptly (and in any event within three (3) Business Days after receipt thereof by the Target or its Representatives) advise Parent orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the Person making the same. 

(c)The Target agrees that the rights and remedies for noncompliance with this Section 5.03 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Parent and that money damages would not provide an adequate remedy to Parent. 

Section 5.04Target Member Consent. The Target shall obtain, immediately following the execution and delivery of this Agreement, the Target Members’ consent pursuant to written consent (the “Written Consent”). Promptly following receipt of the Written Consent, the Target shall deliver a copy of such Written Consent to Parent. 

Section 5.05Notice of Certain Events.  

(a)From the date hereof until the Closing, each Party shall promptly notify the other Party in writing of: 

(i) any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by the Target hereunder not being true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 7.02 to be satisfied; 

(ii)any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement; 

(iii)any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and 


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(iv)any Actions commenced or, to the Target’s Knowledge, threatened against, relating to or involving or otherwise affecting the Target that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.10 or that relates to the consummation of the transactions contemplated by this Agreement. 

(b)Receipt of information by one Party pursuant to this Section 5.05 shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the other Party in this Agreement (including Section 9.01(b) ) and shall not be deemed to amend or supplement the Disclosure Schedules. 

Section 5.06Governmental Approvals and Consents.  

(a)If applicable, each party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions (including those under the HSR Act) required under any Law applicable to such party or any of its Affiliates; and (ii) use reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the Ancillary Documents. Each party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals. 

(b)Without limiting the generality of the parties’ undertakings pursuant to subsection (a) above, each of the parties hereto shall use all reasonable best efforts to: 

(i)respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by this Agreement or any Ancillary Document; 

(ii)avoid the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this Agreement or any Ancillary Document; and 

(iii)in the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by this Agreement or any Ancillary Document has been issued, to have such Governmental Order vacated or lifted. 

(c)All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between the Target and Governmental Authorities in the ordinary course of business, any disclosure which is not permitted by Law or any disclosure containing confidential information) shall be disclosed to the other party hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Each party shall give notice to the other party with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other party with the opportunity to attend and participate in such meeting, discussion, appearance or contact. 


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(d)Notwithstanding the foregoing, nothing in this Section 5.06 shall require, or be construed to require, Parent or any of its Affiliates to agree to (i) sell, hold, divest, discontinue or limit, before or after the Closing Date, any assets, businesses or interests of Parent, the Target or any of their respective Affiliates; (ii) any conditions relating to, or changes or restrictions in, the operations of any such assets, businesses or interests which, in either case, could reasonably be expected to result in a Material Adverse Effect or materially and adversely impact the economic or business benefits to Parent of the transactions contemplated by this Agreement; or (iii) any material modification or waiver of the terms and conditions of this Agreement. 

Section 5.07Closing Conditions From the date hereof until the Closing, each party hereto shall use reasonable best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in ARTICLE VII hereof. 

Section 5.08Registration/Offering Statement.  Not later than sixty (60) days following the date of Closing; Parent shall file either: (i) a Form 1-A offering statement pursuant to Regulation A of the Securities Act; or (ii) a Form S-1 Registration Statement pursuant to the Securities Act with the SEC in an aggregate offering amount of at least Ten Million Dollars ($10,000,000.00) (the “Offering Amount”) and use its best efforts to cause the SEC to qualify the offering, in the case of the Regulation A Offering, or effect the registration statement in the case of the Form S-1 filing ((i) and (ii) shall be collectively referred to as the “Initial SEC Offering Statement”).  

Section 5.09Advisory Services Agreement.  At the Closing, Parent shall enter into an Advisory Services Agreement (“Trillium Agreement”) with Trillium Partners L.P. (“Trillium”) which provides generally that Trillium shall provide general management, financial and other corporate advisory services to Parent and its subsidiaries, including consummation, with commercially reasonable efforts, subject to market conditions, to directly invest in Parent pursuant to the Initial SEC Offering Statement following qualification or effectiveness of same (“Qualification”).  Pursuant to the Trillium Agreement, Trillium shall receive 6,500 shares of Series G Preferred Stock, $0.001 par value, of Parent (“Parent Series G Preferred Stock”) which shall have the rights and preferences as set forth in the Certificate of Designation with respect to Series G Preferred Stock set forth on Exhibit C attached hereto (the “Series G Certificate of Designation”) including but not limited to aggregate conversion rights into Six and One Half Percent (6.5%) of the issued and outstanding Parent Common Stock at the time of conversion (calculated on a fully diluted basis up to the date which is eighteen (18) months from the date of issuance).  Furthermore, Jeffrey M. Canouse (or its affiliates as directed by Mr. Canouse) shall receive 3,500 shares of Parent Series G Preferred Stock which shall equal aggregate conversion rights into Three and One Half Percent (3.5%) of the issued and outstanding Parent Common Stock at the time of conversion (calculated on a fully diluted basis up to the date which is eighteen (18) months from the date of issuance). 

Section 5.10Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and behalf of the Target or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Target or Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets of the Target acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger. 

ARTICLE VI
Tax matters

Section 6.01Tax Covenants.  

(a)Without the prior written consent of Parent, prior to the Closing, the Target, its Representatives and the Target Members shall not make, change or rescind any Tax election,  


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amend any Tax Return or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of Parent or the Surviving Corporation in respect of any Post-Closing Tax Period. The Target agrees that Parent is to have no liability for any Tax resulting from any action of the Target, any of its Representatives or the Target Members. The Target Members shall indemnify and hold harmless Parent against any such Tax or reduction of any Tax asset.

(b)All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the Ancillary Documents (including any real property transfer Tax and any other similar Tax) shall be borne and paid by the Target Members when due. Target Members shall timely file any Tax Return or other document with respect to such Taxes or fees (and Parent shall cooperate with respect thereto as necessary). 

Section 6.02Termination of Existing Tax Sharing Agreements. Any and all existing Tax sharing agreements (whether written or not) binding upon the Target shall be terminated as of the Closing Date. After such date neither the Target nor any of its Representatives shall have any further rights or liabilities thereunder. 

Section 6.03Tax Indemnification. The Target Members shall indemnify the Target, Parent, and each Parent Indemnitee and hold them harmless from and against (a) any Loss attributable to any breach of or inaccuracy in any representation or warranty made in Section 3.14 ; (b) any Loss attributable to any breach or violation of, or failure to fully perform, any covenant, agreement, undertaking or obligation in ARTICLE VI ; (c) all Taxes of the Target or relating to the business of the Target for all Pre-Closing Tax Periods; (d) all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the Target (or any predecessor of the Target) is or was a member on or prior to the Closing Date by reason of a liability under Treasury Regulation Section 1.1502-6 or any comparable provisions of foreign, state or local Law; and (e) any and all Taxes of any person imposed on the Target arising under the principles of transferee or successor liability or by contract, relating to an event or transaction occurring before the Closing Date. In each of the above cases, together with any out-of-pocket fees and expenses (including attorneys’ and accountants’ fees) incurred in connection therewith, the Target Members shall reimburse Parent for any Taxes of the Target that are the responsibility of the Target Members pursuant to this Section 6.03 within ten Business Days after payment of such Taxes by Parent or the Target. 

Section 6.04Tax Returns.  

(a)The Target shall prepare and timely file, or cause to be prepared and timely filed, all Tax Returns required to be filed by it that are due on or before the Closing Date (taking into account any extensions), and shall timely pay all Taxes that are due and payable on or before the Closing Date (taking into account any extensions), and shall timely pay all Taxes that are due and payable on or before the Closing Date. Any such Tax Return shall be prepared in a manner consistent with past practice (unless otherwise required by Law). 

Section 6.05Straddle Period. In the case of Taxes that are payable with respect to a taxable period that begins before and ends after the Closing Date (each such period, a “Straddle Period”), the portion of any such Taxes that are treated as Pre-Closing Taxes for purposes of this Agreement shall be: 

(a)in the case of Taxes (i) based upon, or related to, income, receipts, profits, wages, capital or net worth, (ii) imposed in connection with the sale, transfer or assignment of property, or (iii) required to be withheld, deemed equal to the amount which would be payable if the taxable year ended with the Closing Date; and 


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(b)in the case of other Taxes, deemed to be the amount of such Taxes for the entire period multiplied by a fraction the numerator of which is the number of days in the period ending on the Closing Date and the denominator of which is the number of days in the entire period. 

Section 6.06Survival. Notwithstanding anything in this Agreement to the contrary, the provisions of Section 3.14 and this ARTICLE VI shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus 60 days. 

Section 6.07Overlap. To the extent that any obligation or responsibility pursuant to ARTICLE VIII may overlap with an obligation or responsibility pursuant to this ARTICLE VI , the provisions of this ARTICLE VI shall govern. 

ARTICLE VII
Conditions to closing

Section 7.01Conditions to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions: 

(a)This Agreement shall have been duly adopted by the Written Consent of all of the Target Members (the “Requisite Target Vote”). 

(b)The filings of Parent and the Target pursuant to the HSR Act, if any, shall have been made and the applicable waiting period and any extensions thereof shall have expired or been terminated. 

(c)No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof. 

Section 7.02Conditions to Obligations of Parent and Merger Sub. The obligations of Parent and Merger Sub to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Parent’s waiver, at or prior to the Closing, of each of the following conditions: 

(a)The representations and warranties of the Target contained in this Agreement, the Ancillary Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).  

(b)The Target shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the Ancillary Documents to be performed or complied with by it prior to or on the Closing Date. 

(c)No Action shall have been commenced against Parent, Merger Sub or the Target, which would prevent the Closing. No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated hereby. 


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(d)All approvals, consents and waivers that are listed on Section 3.02 of the Disclosure Schedules shall have been received, and executed counterparts thereof shall have been delivered to Parent at or prior to the Closing. 

(e)From the date of this Agreement, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material Adverse Effect. 

(f)The Target shall have delivered each of the closing deliverables set forth in Section 2.04(a) . 

Section 7.03Conditions to Obligations of the Target and Target Members.  The Obligations of the Target and its Target Members to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions: 

(a)The representations and warranties of the Parent and Merger Sub contained in this Agreement, the Ancillary Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).  

(b)Parent and Merger Sub shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the Ancillary Documents to be performed or complied with by it prior to or on the Closing Date. 

(c)Parent shall have delivered each of the closing deliverables set forth in Section 2.04(b). 

ARTICLE VIII
Indemnification

Section 8.01Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is two (2) years from the Closing Date. All covenants and agreements of the parties contained herein (other than any covenants or agreements contained in ARTICLE VI which are subject to ARTICLE VI ) shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the Indemnified Party to the Indemnifying Party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved. 

Section 8.02Indemnification By Parent. Subject to the other terms and conditions of this ARTICLE VIII , Parent shall indemnify and defend the Target Members and its Affiliates and their respective Representatives (collectively, the “Target Member Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Target Member Indemnitees based upon, arising out of, with respect to or by reason of: 


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(a)any inaccuracy in or breach of any of the representations or warranties of Parent and Merger Sub contained in this Agreement or in any certificate or instrument delivered by or on behalf of Parent or Merger Sub pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date); or  

(b)any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Parent or Merger Sub pursuant to this Agreement (other than ARTICLE VI , it being understood that the sole remedy for any such breach thereof shall be pursuant to ARTICLE VI ). 

Section 8.03Indemnification of Officers and Managers. From and after the Effective Time, the Parent agrees to cause the Surviving Corporation, and the Surviving Corporation immediately following the Closing agrees, to indemnify, defend and hold harmless, as set forth as of the date hereof in the Target Charter Documents and to the fullest extent permitted under applicable Law, all Target Member Indemnitees with respect to all acts and omissions arising out of such individuals’, if natural persons, services as officers or managers of Target occurring prior to the Effective Time, including the execution of, and the transactions contemplated by, this Agreement. Without limitation of the foregoing, in the event any such Target Member Indemnitee is or becomes involved, in any capacity, in any action, proceeding or investigation in connection with any matter, including the transactions contemplated by this Agreement, occurring prior to, on or after the Effective Time, the Surviving Corporation, from and after the Effective Time, shall pay, as incurred, such Target Member Indemnitee’s legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith. The Surviving Corporation shall pay, within thirty (30) days after any request for advancement, all expenses, including attorneys’ fees, which may be incurred by any Target Member Indemnitee in enforcing this Section or any action involving a Target Member Indemnitee resulting from the transactions contemplated by this Agreement. 

Section 8.04Certain Limitations. The indemnification provided for Section 8.02 shall be subject to the following limitations: 

(a)Parent shall not be liable to the Target Members Indemnitees for indemnification under Section 8.02(a) until the aggregate amount of all Losses in respect of indemnification under Section 8.02(a) exceeds 100% of the value of the Parent Common Stock (the “Basket”), in which event Parent shall be required to pay or be liable for all such Losses from the first dollar.  

(b)For purposes of this ARTICLE VIII , any inaccuracy in or breach of any representation or warranty shall be determined without regard to any materiality, Material Adverse Effect or other similar qualification contained in or otherwise applicable to such representation or warranty. 

Section 8.05Exclusive Remedies. Subject to Section 10.11 , the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud, criminal activity or willful misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in ARTICLE VI and this ARTICLE VIII . In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except pursuant to the indemnification provisions set forth in ARTICLE VI and this ARTICLE VIII . Nothing in this Section 8.05 shall limit any Person’s right to seek and obtain any  


28


equitable relief to which any Person shall be entitled or to seek any remedy on account of any party’s fraudulent, criminal or intentional misconduct.

ARTICLE IX
Termination

Section 9.01Termination. This Agreement may be terminated at any time prior to the Closing: 

(a)by the mutual written consent of the Target and Parent; 

(b)by Parent by written notice to the Target if: 

(i)neither Parent nor Merger Sub is then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Target pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VII and such breach, inaccuracy or failure has not been cured by the Target within fifteen (15) days of the Target’s receipt of written notice of such breach from Parent; or 

(ii)any of the conditions set forth in Section 7.01 or Section 7.02 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by July 30, 2022, unless such failure shall be due to the failure of Parent to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; 

(c)by the Target by written notice to Parent if: 

(i)the Target is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Parent or Merger Sub pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VII and such breach, inaccuracy or failure has not been cured by Parent or Merger Sub within fifteen (15) days of Parent’s or Merger Sub’s receipt of written notice of such breach from the Target; or 

(ii)any of the conditions set forth in Section 7.01 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by July 30, 2022, unless such failure shall be due to the failure of the Target to perform or comply with any of the covenants, agreements or conditions hereof to be performed or complied with by it prior to the Closing; or 

(d)by Parent or the Target if: 

(i)there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable; or 

Section 9.02Effect of Termination. In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except: 


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(a)as set forth in this ARTICLE IX and ARTICLE X hereof;  

(b)that nothing herein shall relieve any party hereto from liability for any willful breach of any provision hereof. 

ARTICLE X
Miscellaneous

Section 10.01Expenses. Each Party to this Agreement shall bear all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred. 

Section 10.02Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02 ): 


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If to Parent or Merger Sub:

 

Harrison, Vickers & Waterman, Inc.

240 Vaughan Drive Suite C

Alpharetta, GA 30009

Attention:

Jeffrey M Canouse

Chief Executive Officer

jeffcanouse@gmail.com

 

If to the Target or Target Members:

 

Pacific Energy Network LLC

5781 Schaefer Avenue

Chino, California 91710

Attention:

Robert William Tetsch

President/Managing Member

bobby@pacificenergynetwork.com

 

Section 10.03Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. 

Section 10.04Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement. 

Section 10.05Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible. 

Section 10.06Entire Agreement. This Agreement and the Ancillary Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the Ancillary Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control. 


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Section 10.07Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder. 

Section 10.08No Third-party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 

Section 10.09Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by Parent, Merger Sub and the Target at any time prior to the Effective Time; provided, however, that after the Requisite Target Vote is obtained, there shall be no amendment or waiver that, pursuant to applicable Law, requires further approval of the Target Members, without the receipt of such further approvals. Any failure of Parent or Merger Sub, on the one hand, or the Target, on the other hand, to comply with any obligation, covenant, agreement or condition herein may be waived by the Target (with respect to any failure by Parent or Merger Sub) or by Parent or Merger Sub (with respect to any failure by the Target), respectively, only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. 

Section 10.10Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.  

(a)This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction). 

(b)ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF DELAWARE AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 


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(c)EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE ANCILLARY DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10(c). 

Section 10.11Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity. 

Section 10.12Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. 

[signature page follows]

 

 

 

 

 

 

 

 

 


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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

PARENT:

Harrison, Vickers & Waterman, Inc.

 

By: /s/

Jeffrey M. Canouse

Chief Executive Officer

 

MERGER SUB:

PEN Merger Sub, LLC

 

By: /s/

Jeffrey M. Canouse

Managing Member

 

TARGET:

Pacific Energy Network LLC

By: /s/

Robert William Tetsch

Managing Member

 

TARGET MEMBERS:

 

By: /s/

Robert William Tetsch

 

 

By: /s/

John Carter, Trustee

The Orpheus Irrevocable Trust

 

 

 

 

 


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Stout Law Group, P.A.

201 International Circle, Suite 230

Hunt Valley, Maryland 21030

 

October 11, 2022

 

Robert W. Tetsch

Chief Executive Officer

Harrison, Vickers & Waterman, Inc.

5781 Schaefer Avenue

Chino, CA 91710

 

Re: Offering Statement on Form 1-A (the “Offering Statement”)

 

Mr. Tetsch:

 

I have acted as counsel to Harrison, Vickers & Waterman, Inc. (the “Company”) in connection with its filing with the Securities and Exchange Commission of an Offering Statement on Form 1-A (the “Offering Statement”), pursuant to Regulation A of the Securities Act of 1933, as amended (the “Act”). The Offering Statement relates to the proposed sale of up to 50,000,000,000 shares of common stock held by the Company (the “Shares”).

 

In connection therewith, I have examined and relied upon original, certified, conformed, photostat or other copies of (a) the Articles of Incorporation and Bylaws of the Company; (b) Resolutions of the Board of Directors of the Company; (c) the Offering Statement and the exhibits thereto; and (d) such corporate records of the Company, certificates of public officials, certificates of officers of the Company and other documents, agreements and instruments as I have deemed necessary as a basis for the opinions herein contained. In all such examinations, I have assumed the genuineness of all signatures on original documents, and the conformity to originals or certified documents of all copies submitted to us as conformed, photostat or other copies. In passing upon certain corporate records and documents of the Company, I have necessarily assumed the correctness and completeness of the statements made or included therein by the Company, and I express no opinion thereon.

 

Based on my examination mentioned above, I am of the opinion that the 50,000,000,000 shares of common stock being offered by the company, when sold, will be legally issued, fully paid and non-assessable.

 

I am an attorney admitted to practice in Maryland. I am familiar with the applicable provisions of the Wyoming Revised Statutes, the applicable provisions of the Wyoming Constitution and reported judicial decisions interpreting these laws, and I have made such inquiries with respect thereto as I consider necessary to render this opinion with respect to a Wyoming corporation. This opinion letter is opining upon and is limited to the current federal securities laws of the United States and, Wyoming law, including the statutory provisions, all applicable provisions of the Wyoming Constitution and reported judicial decisions interpreting those laws, as such laws presently exist and to the facts as they presently exist. I express no opinion with respect to the effect or applicability of the laws of any other jurisdiction.

 

I hereby consent to the filing of this opinion as an exhibit to the Offering Statement and to the reference to my firm under the caption “Legal Matters” in the prospectus forming a part of the Offering Statement. In giving such consent, I do not thereby admit that I am included within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations promulgated thereunderr.

 

Sincerely,

 

/s/ Matheau J. W. Stout, Esq.