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 |
Issuer CIK | 0000924095 |
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? | ☐ |
Name | |
Phone | |
E-Mail Address |
Exact name of issuer as specified in the issuer's charter | Metavesco, Inc. |
Jurisdiction of Incorporation / Organization |
NEVADA
|
Year of Incorporation | 1996 |
CIK | 0000924095 |
Primary Standard Industrial Classification Code | SERVICES-EMPLOYMENT AGENCIES |
I.R.S. Employer Identification Number | 54-1694665 |
Total number of full-time employees | 1 |
Total number of part-time employees | 0 |
Address 1 | 410 Peachtree Pkwy |
Address 2 | Suite 4245 |
City | Cumming |
State/Country |
GEORGIA
|
Mailing Zip/ Postal Code | 30041 |
Phone | 6783415898 |
Name | Eric Newlan |
Address 1 | |
Address 2 | |
City | |
State/Country | |
Mailing Zip/ Postal Code | |
Phone |
Industry Group (select one) | ☐ Banking ☐ Insurance ☒ Other |
Cash and Cash Equivalents |
$
35987.00 |
Investment Securities |
$
0.00 |
Total Investments |
$
|
Accounts and Notes Receivable |
$
166682.00 |
Loans |
$
|
Property, Plant and Equipment (PP&E): |
$
340276.00 |
Property and Equipment |
$
|
Total Assets |
$
678717.00 |
Accounts Payable and Accrued Liabilities |
$
92669.00 |
Policy Liabilities and Accruals |
$
|
Deposits |
$
|
Long Term Debt |
$
717076.00 |
Total Liabilities |
$
1314584.00 |
Total Stockholders' Equity |
$
-635867.00 |
Total Liabilities and Equity |
$
678717.00 |
Total Revenues |
$
609791.00 |
Total Interest Income |
$
|
Costs and Expenses Applicable to Revenues |
$
388077.00 |
Total Interest Expenses |
$
|
Depreciation and Amortization |
$
0.00 |
Net Income |
$
-384977.00 |
Earnings Per Share - Basic |
$
-0.00 |
Earnings Per Share - Diluted |
$
-0.00 |
Name of Auditor (if any) |
Name of Class (if any) Common Equity | Common Stock |
Common Equity Units Outstanding | 3712384860 |
Common Equity CUSIP (if any): | 00E941872 |
Common Equity Units Name of Trading Center or Quotation Medium (if any) | OTC Pink |
Preferred Equity Name of Class (if any) | Series X Preferred Stock |
Preferred Equity Units Outstanding | 51 |
Preferred Equity CUSIP (if any) | 0000000na |
Preferred Equity Name of Trading Center or Quotation Medium (if any) | Na |
Debt Securities Name of Class (if any) | None |
Debt Securities Units Outstanding | 0 |
Debt Securities CUSIP (if any): | 0000000na |
Debt Securities Name of Trading Center or Quotation Medium (if any) | Na |
Check this box to certify that all of the following statements are true for the issuer(s)
☒
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.
☐
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 | 1000000000 |
Number of securities of that class outstanding | 3712384860 |
Price per security |
$
0.0007 |
The portion of the aggregate offering price attributable to securities being offered on behalf of the issuer |
$
700000.00 |
The portion of the aggregate offering price attributable to securities being offered on behalf of selling securityholders |
$
82500.00 |
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) |
$
782500.00 |
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 | Newlan Law Firm, PLLC | Legal - Fees |
$
22500.00 |
Promoters - Name of Service Provider | Promoters - Fees |
$
| |
Blue Sky Compliance - Name of Service Provider | State Regulators | Blue Sky Compliance - Fees |
$
2500.00 |
CRD Number of any broker or dealer listed: | |
Estimated net proceeds to the issuer |
$
757500.00 |
Clarification of responses (if necessary) |
Selected States and Jurisdictions |
ALABAMA
ALASKA
ARIZONA
ARKANSAS
CALIFORNIA
COLORADO
CONNECTICUT
DELAWARE
FLORIDA
GEORGIA
HAWAII
IDAHO
ILLINOIS
INDIANA
IOWA
KANSAS
KENTUCKY
LOUISIANA
MAINE
MARYLAND
MASSACHUSETTS
MICHIGAN
MINNESOTA
MISSISSIPPI
MISSOURI
MONTANA
NEBRASKA
NEVADA
NEW HAMPSHIRE
NEW JERSEY
NEW MEXICO
NEW YORK
NORTH CAROLINA
NORTH DAKOTA
OHIO
OKLAHOMA
OREGON
PENNSYLVANIA
RHODE ISLAND
SOUTH CAROLINA
SOUTH DAKOTA
TENNESSEE
TEXAS
UTAH
VERMONT
VIRGINIA
WASHINGTON
WEST VIRGINIA
WISCONSIN
WYOMING
DISTRICT OF COLUMBIA
PUERTO RICO
|
None | ☒ |
Same as the jurisdictions in which the issuer intends to offer the securities | ☐ |
Selected States and Jurisdictions |
None ☐
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 | Metavesco, Inc. |
(b)(1) Title of securities issued | Series X Preferred Stock |
(2) Total Amount of such securities issued | 51 |
(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. | $370,000; share exchange; Board of Directors determination |
(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)). |
(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 |
File No. 024-_____________
As filed with the Securities and Exchange Commission on April 29, 2025
PART II - INFORMATION REQUIRED IN OFFERING CIRCULAR
Preliminary Offering Circular dated April 29, 2025
An offering statement pursuant to Regulation A relating to these securities has been filed with the United States Securities and Exchange Commission (the “SEC”). 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 SEC 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.
OFFERING CIRCULAR
Metavesco Inc.
1,000,000,000 Shares of Common Stock
By this Offering Circular, Metavesco Inc., a Nevada corporation, is offering for sale a maximum of 1,000,000,000 shares of its common stock (the “Offered Shares”), at a fixed price of $__[0.0005-0.001] per share (to be fixed by post-qualification supplement), pursuant to Tier 1 of Regulation A of the United States Securities and Exchange Commission (the “SEC”). A minimum purchase of $5,000 of the Company Offered Shares is required in this offering; any additional purchase must be in an amount of at least $1,000. This offering is being conducted on a best-efforts basis, which means that there is no minimum number of Offered Shares that must be sold by us for this offering to close; thus, we may receive no or minimal proceeds from this offering. All proceeds from this offering will become immediately available to us and may be used as they are accepted. Purchasers of the Offered Shares will not be entitled to a refund and could lose their entire investments. Please see the “Risk Factors” section, beginning on page 5, for a discussion of the risks associated with a purchase of the Company Offered Shares.
After the qualification of this offering by the SEC, up to $82,500 of principal amount convertible notes (the “Subject Convertible Notes”) will, by their terms, be eligible for conversion into Offered Shares (the Offered Shares issued upon conversion of the Subject Convertible Notes are referred to as the “Conversion Shares”), at the election of their respective holders (the “Selling Shareholders”), at the offering price for all of the Offered Shares, $__[0.0005-0.001] per share converted. Following each issuance of Conversion Shares, we intend to file a supplement to this Offering Circular pursuant to Rule 253(g)(2), wherein the exact number of Conversion Shares issued in payment of the Subject Convertible Notes will be disclosed. References herein to the “Offered Shares” include the Conversion Shares, the Selling Shareholder Offered Shares, unless the context requires otherwise. We will not receive any of the proceeds from the sale of the Selling Shareholder Offered Shares in this offering. We will pay all of the expenses of this offering (other than discounts and commissions payable with respect to the Selling Shareholder Offered Shares sold in the offering, if any). (See “Use of Proceeds,” “Plan of Distribution” and “Selling Shareholders”).
Please see the “Risk Factors” section, beginning on page 5, for a discussion of the risks associated with a purchase of the Offered Shares.
We estimate that this offering will commence within two days of the SEC’s qualification of the Offering Statement of which this Offering Circular forms a part; this offering will terminate at the earliest of (a) the date on which the maximum offering has been sold, (b) the date which is one year from this offering being qualified by the SEC or (c) the date on which this offering is earlier terminated by us, in our sole discretion. (See “Plan of Distribution”).
Title of Class of Securities Offered and Offering Party | Number of Offered Shares |
Price to Public |
Commissions(1) |
Proceeds to Offeror of Common Stock |
||||||||||||
Common
Stock offered by our company |
1,000,000,000 | $ | [0.0005-0.001] | $ | -0- | $ | [500,000-1,000,000] | (2)(3) | ||||||||
Common
Stock offered by the Selling Shareholders |
110,000,000 | (4)(5) | $ | [0.0005-0.001] | $ | -0- | $ |
82,500 |
(6) |
(1) |
Our company will not pay any commissions for the sale of Offering Shares in this Offering. We do not intend to offer and sell the Offered Shares through registered broker-dealers or utilize finders. However, should we determine to employ a registered broker-dealer of finder, information as to any such broker-dealer or finder shall be disclosed in an amendment to this Offering Circular. |
(2) | Does not account for payment of expenses of this offering, which are estimated to not exceed $25,000 and which include, among other expenses, legal fees, accounting costs, administrative services, Blue Sky compliance and actual out-of-pocket expenses incurred by us in selling the Offered Shares. (See “Plan of Distribution”). |
(3) | Includes the value of Offered Shares that are expected to be issued in payment of the Subject Convertible Notes following the date of qualification of the Offering Statement of which this Offering Circular forms a part. (See “Use of Proceeds” and “Plan of Distribution”). |
(4) | Based on an assumed conversion price of $0.00075 per share, which represents the midpoint of the offering price range herein. |
(5) | As of the date of this Offering Circular, none of these Offered Shares has been issued. It is expected, however, that such Offered Shares will be issued in payment of the Subject Convertible Notes following the date of qualification of the Offering Statement of which this Offering Circular forms a part. Following all such issuance, we intend to file a supplement to this Offering Circular pursuant to Rule 253(g)(2), wherein the exact number of Offered Shares issued in payment of the Subject Convertible Notes to be offered by the Selling Shareholder in his offering will be disclosed. References herein to the “Offered Shares” include the Selling Shareholder Offered Shares, unless the context requires otherwise. (See “Use of Proceeds,” “Plan of Distribution” and “Selling Shareholders”). |
(6) | We will not receive any of the proceeds from the sale of the Selling Shareholder Offered Shares in this offering. (See “Selling Shareholders”). |
The terms of this offering were determined arbitrarily by our company. The offering price for the Offered Shares does not necessarily bear any relationship to our company’s assets, book value, earnings or other established criteria of valuation. Accordingly, the offering price of the Offered Shares should not be considered as an indication of any intrinsic value of such securities. (See “Risk Factors—Risks Related to a Purchase of Offered Shares” and “Dilution”).
There is no escrow established for the proceeds of this offering. (See “Risk Factors—Risks Related to a Purchase of Offered Shares”).
Our common stock is quoted in the over-the-counter under the symbol “MVCO” in the OTC Pink marketplace of OTC Link. On April 29, 2025, the closing price of our common stock was $0.0008 per share.
Investing in the Offered Shares is speculative and involves substantial risks, including the superior voting rights of our outstanding shares of Series X Preferred Stock (the “Series X Preferred Stock”), which effectively preclude current and future owners of our common stock, including the Offered Shares, from influencing any corporate decision. The Series X Preferred Stock has, as a class, a number of votes equal to the total number of issued and outstanding shares of our common stock eligible to vote at the time of the respective vote multiplied by 1.041, in all matters requiring shareholder approval.
Ryan Schadel, our Chief Executive Officer, is the owner of all outstanding shares of our Series X Preferred Stock. As the owner of all outstanding shares of Series X Preferred Stock, Mr. Schadel will, therefore, be able to control the management and affairs of our company, as well as matters requiring the approval by our shareholders, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, and any other significant corporate transaction. (See “Risk Factors—Risks Related to a Purchase of the Offered Shares” and “Security Ownership of Certain Beneficial Owners and Management”).
THE SEC 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 SOLICITATION MATERIALS. THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE SEC. HOWEVER, THE SEC HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED ARE EXEMPT FROM REGISTRATION.
The use of projections or forecasts in this offering is prohibited. No person is permitted to make any oral or written predictions about the benefits you will receive from an investment in Offered Shares.
No sale may be made to you in this offering if you do not satisfy the investor suitability standards described in this Offering Circular under “Plan of Distribution–State Law Exemption and Offerings to Qualified Purchasers” (page 21). Before making any representation that you satisfy the established investor suitability standards, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
This Offering Circular follows the disclosure format of Form S-1, pursuant to the General Instructions of Part II(a)(1)(ii) of Form 1-A.
The date of this Offering Circular is ______, 2025.
TABLE OF CONTENTS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information contained in this Offering Circular includes some statements that are not historical and that are considered forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding our development plans for our business; our strategies and business outlook; anticipated development of our company; and various other matters (including contingent liabilities and obligations and changes in accounting policies, standards and interpretations). These forward-looking statements express our expectations, hopes, beliefs and intentions regarding the future. In addition, without limiting the foregoing, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words anticipates, believes, continue, could, estimates, expects, intends, may, might, plans, possible, potential, predicts, projects, seeks, should, will, would and similar expressions and variations, or comparable terminology, or the negatives of any of the foregoing, may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this Offering Circular are based on current expectations and beliefs concerning future developments that are difficult to predict. We cannot guarantee future performance, or that future developments affecting our company will be as currently anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
All forward-looking statements attributable to us are expressly qualified in their entirety by these risks and uncertainties. These risks and uncertainties, along with others, are also described below in the Risk Factors section. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. You should not place undue reliance on any forward-looking statements and should not make an investment decision based solely on these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
The following summary highlights material information contained in this Offering Circular. This summary does not contain all of the information you should consider before purchasing our common stock. Before making an investment decision, you should read this Offering Circular carefully, including the Risk Factors section and the unaudited consolidated financial statements and the notes thereto. Unless otherwise indicated, the terms we, us and our refer and relate to Metavesco, Inc., a Nevada corporation.
Our Company
The Company was incorporated in the Commonwealth of Virginia on July 13, 1993, and was a closed-end investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment Company (“SBIC”). The Company previously made equity investments in and provided loans to small businesses to finance their growth, expansion, and development. Under applicable SBA regulations, the Company was restricted to investing only in qualified small businesses as contemplated by the Small Business Investment Act of 1958. As a registered investment company under the Act, the Company’s investment objective was to provide its shareholders with a high level of income, with capital appreciation as a secondary objective. The Company made its first investment in a small business in October 1996.
1 |
On March 30, 2010, the SBA notified the Company that its account had been transferred to liquidation status and that the outstanding debentures of $16.1 million-plus accrued interest (the “Debentures”) were due and payable within fifteen days of the date of the letter. The Company did not possess adequate liquid assets to make this payment. The Company negotiated terms of a settlement agreement with the SBA effective September 1, 2010. The Debentures were repurchased by the SBA in September 2010, represented by a Note Agreement between the SBA and the Company. The Note Agreement had a maturity of March 31, 2013. In the event of a default, the SBA had the ability to seek receivership.
On May 24, 2012, the SBA delivered to the Company a notice of an event of default for failure to meet the principal repayment schedule under the Note Agreement (the “Notice”). Under the terms of the Notice and the Note Agreement, the SBA maintained a continuing right to terminate the Note Agreement and appoint a receiver to manage the Company’s assets.
On November 20, 2013, the SBA filed a complaint in the United States District Court for the Eastern District of Virginia (the “District Court”) seeking, among other things, receivership for the Company and judgment in the amount outstanding under the Note Agreement plus continuing interest. The complaint alleged that as of October 31, 2013, there remained an outstanding balance of $11,762,634.58 under the Note Agreement, including interest, which continued to accrue at the rate of $2,021.93 per day. In filing the complaint, the SBA requested that the District Court take exclusive jurisdiction of the Company and all of its assets wherever located and appoint the SBA as permanent receiver of the Company to liquidate all of the Company’s assets and satisfy the claims of its creditors in the order of priority as determined by the District Court.
On May 28, 2014, the District Court entered a Consent Order and Judgment Dismissing Counterclaim, Appointing Receiver, Granting Permanent Injunctive Relief and Granting Money Judgment (the “Order”). The Order appointed the SBA as receiver of the Company, and the SBA designated Charles Fulford as its principal agent to act on its behalf as the receiver (the “Receiver”). The Order authorized the Receiver to marshal and liquidate all of the Company’s assets in an orderly manner. The Order also served to enter judgment in favor of the United States of America, on behalf of the SBA, against the Company for $11,770,722. Such amount represented $11,700,000 in principal and $70,722 in accrued interest. The District Court assumed jurisdiction over the Company, and the SBA was appointed Receiver effective May 28, 2014.
The Company effectively stopped conducting an active business upon the appointment of the SBA as Receiver and the commencement of the receivership ordered by the District Court (the “Receivership”). Over the course of the Receivership, the activity of the Company was limited to the liquidation of the Company’s assets by the Receiver and the payment of the proceeds therefrom to the SBA and for the expenses of the Receivership.
The SBIC license granted to the Company by the SBA was revoked by the SBA effective March 20, 2017, in conjunction with the entry by the District Court of the Order Approving the Procedures for Winding Up and Terminating the Receivership Estate. On June 28, 2017, the Receivership was terminated pursuant to the entry of a Final Order by the District Court, further discharged all claims and obligations of the Company other than the judgment held by SBA (the “Final Order”). Prior to the Final Order, the Receiver provided notice to all shareholders of the Company. The Receiver also initiated separate contact with the largest shareholders of the Company in an attempt to identify a shareholder willing to assume responsibility for the control of the Company on behalf of the Company’s shareholders. Roran Capital, LLC (“Roran”), was the only shareholder willing to assume such control. As such, at the direction of the Receiver, paragraph 4 of the Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order”. At that time Roran owned 510,000 shares of the Company which represented 2.7% of the issued and outstanding common stock at that time (and owns 42,476,660 shares currently which represents 64.05% of the issued and outstanding shares of the Company at this time). 99% of the equity interests in Roran were at the time, and remain, beneficially owned by Yitzhak Zelmanovitch. At the time of the Final Order, the Company had no assets, and a sole remaining liability owed to the SBA in an amount exceeding $10,000,000.
Upon termination of the Receivership, Roran took possession of all books and records made available to it by the Receiver. The termination of the Receivership, and the termination of the power and authority of the Receiver, left the Company with no Board of Directors and no officers. It was impossible to convene a shareholders meeting as there were no corporate officers or directors to provide (i) notice, or (ii) the administrative oversight required for such a meeting. Roran, in reliance on and in compliance with the Final Order, sought to appoint a new board of directors (the “New Board”). Without a New Board, the Company would be unable to operate as a viable business, and appointment by Roran was the only manner in which the New Board could be constituted.
Roran expended a good faith effort to seek out qualified third parties to serve on the New Board. Because of the liability exposure inherent in serving on the board of a public company, the Company’s lack of financial resources, and the Company’s loss of its SBIC license, Roran was unable to locate any qualified individuals to serve on the New Board and thus appointed Zindel Zelmanovitch, the father of Yitzhak Zelmanovitch, as the sole director and officer of the Company. Zindel is an experienced business person who has previously served as the CEO and director of a public company; thus, although related to the 99% owner of Roran, he has objectively acceptable qualifications to serve in this dual position. Zindel Zelmanovitch has never owned any shares of stock of the Company and has not been compensated for any of his services as a director or officer of the Company to date.
2 |
In his capacity as the sole director and officer of the Company, Zindel Zelmanovitch considered a variety of options for the Company, including bankruptcy and liquidation, neither of which would have yielded any economic benefit for the Company’s shareholders. Thus, Zindel Zelmanovitch negotiated with Roran to provide a loan or loans to fund reasonable expenses of the Company, on arm’s length terms, so long as progress was being made to reorganize the Company and to identify either (i) a new business to enter into; or, (ii) an active business with which to merge or otherwise acquire, which would benefit from operating as a public entity. The New Board (Zindel Zelmanovitch) has continued to work toward achieving that goal. With no assets and no SBIC license from the SBA, no income, and liabilities in excess of $10,000,000 (which has now been forgiven in full, as stated below), the New Board (Zindel Zelmanovitch) concluded that continuing to operate as a registered investment company was impossible; furthermore, the consistent feedback from third parties with which the New Board has sought to consummate a transaction to commence a new business or acquire or merge a new business into the Company has been that until the Company’s Application Pursuant to Section 8(f) of the Investment Company Act of 1940 for an order declaring that the Company has ceased to be an Investment Company is approved, no such transaction was feasible. On April 22, 2020, the SEC issued an order declaring that the Company had ceased to be an investment company.
Since the entry of the Final Order (June 28, 2017) and the termination of the Receivership, the Company has been maintained for the benefit of its shareholders and pursuant to, and in compliance with, the Final Order. The Company has no assets, and the Company no longer has the SBIC license from the SBA. The Company is no longer operating as a registered investment company under the Investment Company Act. While it would have been possible for the Company to merely dissolve, the Company has instead decided to endeavor to reconstitute itself as a viable business. The Company has engaged and intends to continue to engage, qualified professionals and personnel to bring the Company current in its SEC filings and audits. The Company filed a Form 10-K for the period ending June 30, 2017 and has subsequently timely filed all periodic reports on Forms 10-Q and Forms 10-K.
The Company’s outstanding judgment payable owed to the SBA was purchased by Roran from the SBA in July 2017. As such, all amounts due under the outstanding judgment payable were owed to Roran rather than the SBA. Upon purchase, the Company began to accrue interest that was due under the original terms of the judgment payable. The statutory interest rate was 0.094%. The Company accrued $163,991 in interest on the judgment payable as of March 31, 2019. On May 16, 2019, Roran forgave the entire principal amount and interest due thereon of $10,609,635.
On September 19, 2017, the Company issued a Convertible Promissory Note in an amount up to $150,000 in favor of Roran which was increased to $200,000 on June 17, 2019 and $250,000 on December 13, 2019 (the “Note”), and as of June 30, 2021, $149,838 has been drawn by the Company under the Note (exclusive of accrued interest). The Note was issued pursuant to a Convertible Loan Agreement with Roran (the “Loan Agreement”). All outstanding principal and accrued interest on the Note is due and payable on the maturity date, which was March 19, 2019 and then extended to September 19, 2019 and then June 19, 2020. Roran has agreed to extend the loan and advance additional funds until further negotiations regarding the loan have concluded. Amounts borrowed under the Note bear interest at 12% per annum. Roran has the right to convert all or any portion of the Note into shares of the Company’s common stock at a conversion price equal to 60% of the 20 day trailing lowest share price. The use of proceeds of this loan has been and continues to be the payment by the Company of its reasonable operational expenses payable to third-party service providers (consisting solely of third party expenses such as legal, accounting, transfer agent and edgarization costs, all at the actual cost for such services). The loan is not a senior or a secured instrument.
On April 22, 2020, the SEC issued an order declaring that the Company had ceased to be an investment company.
On June 8, 2020, Roran converted $124,500 principal amount of its promissory note with the Company and $25,500 of accrued and unpaid interest thereon, totaling $150,000, into 41,666,660 shares of Company Common Stock at the stated conversion price per share of $0.0036. The remaining balance due on the promissory note, as of the conversion date, was $104,838 in principal and $19,988 in interest.
On September 2, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) Ryan Schadel (“Buyer”) and (iii) Roran. Roran agreed to sell to the Buyer 42,476,660 shares of common stock of the Company held by Roran for a total purchase price of $385,000. In conjunction with the SPA, Roran agreed to forgive all amounts due to Roran by the Company totaling $207,644, which is comprised of convertible note payable – related party, accrued interest payable – related party, and advances from related party. The Buyer acquired 42,476,660 shares of the Company’s Common Stock, representing 69.7% of the issued and outstanding shares of Common Stock. As such, the SPA resulted in a change of control of the Company.
Effective November 29, 2021, the Company converted from a Virginia corporation to a Nevada corporation.
On December 15, 2021, the Company filed with the Nevada Secretary of State amended and restated articles of incorporation. The amended and restated articles had the effect of (i) increasing the Company’s authorized common stock to 100 million shares, (ii) increasing the Company’s authorized preferred stock to 20 million shares, and (iii) reducing the par value of each of the Company’s common stock and preferred stock to $0.0001 per share. Common stock and additional paid-in capital for all periods presented in these financial statements have been adjusted retroactively to reflect the reduction in par value.
3 |
On December 17, 2021, the majority shareholder and board of directors approved an amendment to the amended and restated articles of incorporation that would change the Company’s name from Waterside Capital Corporation to Metavesco, Inc. The name change was cleared by Financial Industry Regulatory Authority (“FINRA”) and was effective June 3, 2022.
In March 2022, the Company commenced operations as a web3 enterprise. The Company generates income as a liquidity provider, via decentralized exchanges such as Uniswap. Additionally, the Company farms tokens via Proof of Stake protocols on decentralized exchanges as well as centralized exchanges including Coinbase exchange. The Company also invests in promising NFT projects and virtual land, primarily on EVM protocols.
On June 12, 2023, the Company entered into a Limited Liability Company Interest Purchase Agreement (the “Purchase Agreement”) with Eddy Rodrigeuz (the “Seller”). The Seller is the sole owner of Boring Brew LLC (“Boring”) and Bored Coffee Lab, LLC (“Bored”). Under the terms of the Purchase Agreement, the Seller sold to the Company, all of the outstanding limited liability company interests in Boring and Bored. The Company paid the Seller total consideration with a fair value of $249,245, paid as follows: (i) $9,245 in cash and (ii) 5,000,000 shares of the Company’s common stock at a fair value of $240,000 ($0.048 per share based on the closing price of the Company common stock on June 12, 2023).
On September 27, 2024, the Company entered into an Asset Purchase Agreement (“Agreement”) with Epic Labor Inc. a Georgia corporation (“Seller”). Mr. Schadel is the Chief Executive Officer of the Seller. Also, Mr. Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and majority stockholder. Under the terms of the Agreement, the Seller sold its customer lists in the markets of Nashville and Knoxville, Tennessee connected to temporary workforce services. In consideration for the customer lists, the Company agreed to pay $88,800 in cash in monthly installment of $7,400 over the next twelve months and assume trade payable liabilities totaling $6,996.
Our Business
We operate in three business sectors:
● | Epic Labor provides staffing solutions known for connecting businesses with top-tier, on-demand temporary workforce services. |
● | Bitcoin mining operations at a hosted facility in Kentucky and Iowa. |
● | Boring Brew, a web3 startup known for its unique and limited edition coffee bags partners with influential NFT holders to transform their intellectual property into an exquisite collection of specialty coffee. (See “Business”). |
Offering Summary
Securities Offered | 1,000,000,000 shares of common stock, par value $0.001 (the Offered Shares). | |
Offering Price |
$ [0.0005-0.001] per Offered Share. | |
Shares Outstanding Before This Offering |
3,712,384,860 shares issued and outstanding as of the date hereof. | |
Shares Outstanding After This Offering |
4,712,384,860 shares issued and outstanding, assuming the sale of all of the Offered Shares hereunder. | |
Minimum Number of Shares to Be Sold in This Offering | None | |
Selling Shareholders | After the qualification of this offering by the SEC, up to $82,500 of Subject Convertible Notes will, by their terms, be eligible for conversion into Conversion Shares, at the election of their respective holders (the Selling Shareholders), at the offering price for all of the Offered Shares, $__[0.0005-0.001] per share converted. Following each issuance of Conversion Shares, we intend to file a supplement to this Offering Circular pursuant to Rule 253(g)(2), wherein the exact number of Conversion Shares issued in payment of the Subject Convertible Notes will be disclosed. We will pay all of the expenses of this offering (other than discounts and commissions payable with respect to the Selling Shareholder Offered Shares sold in the offering, if any). (See “Use of Proceeds,” “Plan of Distribution” and “Selling Shareholders”). |
4 |
Disparate Voting Rights | Our outstanding shares of Series X Preferred Stock possess superior voting rights, which preclude current and future owners of our common stock, including the Offered Shares, from influencing any corporate decision. The Series X Preferred Stock has the following voting rights: The Series X Preferred Stock has, as a class, a number of votes equal to the total number of issued and outstanding shares of our common stock eligible to vote at the time of the respective vote multiplied by 1.041, in all matters requiring shareholder approval. Ryan Schadel, our Chief Executive Officer, is the owner of all outstanding shares of our Series X Preferred Stock. As the owner of all outstanding shares of Series X Preferred Stock, Mr. Schadel will, therefore, be able to control the management and affairs of our company, as well as matters requiring the approval by our shareholders, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, and any other significant corporate transaction. (See “Risk Factors—Risks Related to a Purchase of the Offered Shares,” “Security Ownership of Certain Beneficial Owners and Management” and “Certain Relationships and Related Transactions”). | |
Investor Suitability Standards | The Offered Shares may only be purchased by investors residing in a state in which this Offering Circular is duly qualified who have either (a) a minimum annual gross income of $70,000 and a minimum net worth of $70,000, exclusive of automobile, home and home furnishings, or (b) a minimum net worth of $250,000, exclusive of automobile, home and home furnishings. | |
Market for our Common Stock | Our common stock is quoted in the over-the-counter market under the symbol “MVCO” in the OTC Pink marketplace of OTC Link. | |
Termination of this Offering | This offering will terminate at the earliest of (a) the date on which the maximum offering has been sold, (b) the date which is one year from this offering circular being qualified by the SEC and (c) the date on which this offering is earlier terminated by us, in our sole discretion. | |
Use of Proceeds | We will apply the cash proceeds of this offering for inventory, marketing and advertising, trade shows, product development, store expansion, warehouse expense, payroll and working capital. (See “Use of Proceeds”). | |
Risk Factors | An investment in the Offered Shares involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investments. You should carefully consider the information included in the Risk Factors section of this Offering Circular, as well as the other information contained in this Offering Circular, prior to making an investment decision regarding the Offered Shares. | |
Corporate Information | Our principal executive offices are located at 410 Peachtree Parkway, Suite 4245, Cumming, Georgia 30041; our telephone number is (678) 341-5898; our corporate website is located at www.metavesco.com. No information found on our company’s website is part of this Offering Circular. |
Continuing Reporting Requirements Under Regulation A
As a Tier 1 issuer under Regulation A, we will be required to file with the SEC a Form 1-Z (Exit Report Under Regulation A) upon the termination of this offering. We will not be required to file any other reports with the SEC following this offering.
However, during the pendency of this offering and following this offering, we intend to file quarterly and annual financial reports and other supplemental reports with OTC Markets, which will be available at www.otcmarkets.com.
All of our future periodic reports, whether filed with OTC Markets or the SEC, will not be required to include the same information as analogous reports required to be filed by companies whose securities are listed on the NYSE or NASDAQ, for example.
An investment in the Offered Shares involves substantial risks. You should carefully consider the following risk factors, in addition to the other information contained in this Offering Circular, before purchasing any of the Offered Shares. The occurrence of any of the following risks might cause you to lose a significant part of your investment. The risks and uncertainties discussed below are not the only ones we face, but do represent those risks and uncertainties that we believe are most significant to our business, operating results, prospects and financial condition. Some statements in this Offering Circular, including statements in the following risk factors, constitute forward-looking statements. (See “Cautionary Statement Regarding Forward-Looking Statements”).
5 |
Risks Related to Our Company
We have incurred losses in prior periods, and losses in the future could cause the quoted price of our common stock to decline or have a material adverse effect on our financial condition, our ability to pay our debts as they become due, and on our cash flows. We have incurred losses in prior periods. For the six months ended December 31, 2024 and 2023, we incurred a net loss of $384,977 (unaudited) and $249,093 (unaudited), respectively, and, as of December 31, 2024, we had an accumulated deficit of $20,600,663 (unaudited). For the years ended June 30, 2024 and 2023, we incurred a net loss of $596,639 (unaudited) and $572,845 (unaudited), respectively, and, as of June 30, 2024, we had an accumulated deficit of $20,215,686 (unaudited). Any losses in the future could cause the quoted price of our common stock to decline or have a material adverse effect on our financial condition, our ability to pay our debts as they become due, and on our cash flows.
There is doubt about our ability to continue as a viable business. We have not earned a profit from our operations during recent financial periods. There is no assurance that we will ever earn a profit from our operations in future financial periods.
We may be unable to obtain sufficient capital to implement our full plan of business. Currently, we do not have sufficient financial resources with which to establish our growth strategies. There is no assurance that we will be able to obtain sources of financing, including in this offering, in order to satisfy our working capital needs.
We do not have a successful operating history. We have never earned a profit and an investment in the Offered Shares speculative in nature. Because of this lack of operating success, it is difficult to forecast our future operating results. Additionally, our operations will be subject to risks inherent in the implementation of new business strategies, including, among other factors, efficiently deploying our capital, developing and implementing our marketing campaigns and strategies and developing greater awareness. Our performance and business prospects will suffer if we are unable to overcome the following challenges, among others:
- | our dependence upon external sources for the financing of our operations, particularly given that there are concerns about our ability to continue as a going concern; |
- | our ability to execute our business strategies; |
- | our ability to manage our expansion, growth and operating expenses; |
- | our ability to finance our business; |
- | our ability to compete and succeed in highly competitive industries; and |
- | future geopolitical events and economic crisis. |
There are risks and uncertainties encountered by under-capitalized companies. As an under-capitalized company, we are unable to offer assurance that we will be able to overcome our lack of capital, among other challenges.
We may not be successful in establishing our temporary workforce services business model. We are unable to offer assurance that we will be successful in expanding our temporary workforce services business model. Should we fail to do so, you can expect to lose your entire investment in the Offered Shares.
We may never earn a profit in future financial periods. Because we lack a successful operating history, we are unable to offer assurance that we will ever earn a profit in future financial periods.
If we are unable to manage future expansion effectively, our business may be adversely impacted. In the future, we may experience rapid growth in our operations, which could place a significant strain on our company’s infrastructure, in general, and our internal controls and other managerial, operating and financial resources, in particular. If we are unable to manage future expansion effectively, our business would be harmed. There is, of course, no assurance that we will enjoy rapid development in our business.
We currently depend on the efforts of Chief Executive Officer; the loss of this executive officer could disrupt our operations and adversely affect the further development of our business. Our success in establishing implementing our business strategies will depend, primarily, on the continued service of our Chief Executive Officer, Ryan Schadel. The loss of service of Mr. Schadel, for any reason, could seriously impair our ability to execute our business plan, which could have a materially adverse effect on our business and future results of operations. We have not entered into employment agreements with Mr. Schadel. We have not purchased any key-man life insurance.
If we are unable to recruit and retain key personnel, our business may be harmed. If we are unable to attract and retain key personnel, our business may be harmed. Our failure to enable the effective transfer of knowledge and facilitate smooth transitions with regard to our key employees could adversely affect our long-term strategic planning and execution.
6 |
None of our business strategies is not based on independent market studies. We have not commissioned any independent market studies with respect to the temporary workforce services industry. Rather, our plans for implementing our business and achieving profitability are based on the experience, judgment and assumptions of our management. If these assumptions prove to be incorrect, we may not be successful in establishing our business.
Our Board of Directors may change our policies without shareholder approval. Our policies, including any policies with respect to investments, leverage, financing, growth, debt and capitalization, will be determined by our Board of Directors or officers to whom our Board of Directors delegates such authority. Our Board of Directors will also establish the amount of any dividends or other distributions that we may pay to our shareholders. Our Board of Directors or officers to which such decisions are delegated will have the ability to amend or revise these and our other policies at any time without shareholder vote. Accordingly, our shareholders will not be entitled to approve changes in our policies, which policy changes may have a material adverse effect on our financial condition and results of operations.
Risks Related to Our Staffing Business
Our results of operations have been and may in the future be materially adversely affected by volatile, negative or uncertain economic conditions. Our business is sensitive to changes in macroeconomic conditions. Our profitability is sensitive to decreases in demand. When demand drops or remains low, our operating profit is impacted unfavorably as we experience a deleveraging of our selling and administrative expense base as expenses do not decline as quickly as revenues. In periods of decline, we may not be able to reduce selling and administrative expenses without negatively impacting the long-term potential of our network. Additionally, some clients may slow the rate at which they pay us or become unable to pay their obligations, which may cause our cash flow and profitability to suffer.
Even without uncertainty and volatility, it is difficult for us to forecast future demand for our services due to the inherent difficulty in forecasting the direction and strength of economic cycles, and the short-term nature of many of our staffing assignments. When it is difficult for us to accurately forecast future demand, we may not be able to determine the optimal level of personnel and office investments necessary to profitably operate our business or take advantage of growth opportunities.
We may lack the ability to respond to the needs of our clients. There is a risk we may not be able to respond to the needs of our clients, whose needs may change rapidly as their businesses and industries evolve. The lack of size and breadth of our company may make it difficult for us to effectively manage our resources, to drive service improvements and to provide coordinated solutions to our clients who require our services in multiple locations. If we are not effective at anticipating or meeting the widely ranging needs of our current and prospective clients, or our competitors are more agile or effective at doing so, our business and financial results could be materially adversely affected.
The employment services industry is highly competitive with limited barriers to entry, which could limit our ability to maintain or increase our market share or profitability. The employment services industry is highly competitive with limited barriers to entry, and in recent years has undergone significant consolidation. We compete against full-service and specialized employment services agencies. Several of our competitors have very substantial marketing and financial resources and may be better positioned in markets. Portions of our industry may become increasingly commoditized, with the result that competition in key areas could become more focused on pricing. We expect that we will continue to experience pressure on price from competitors and clients. There is a risk that we will not compete effectively, including on price, which could limit our ability to maintain or increase our market share and could materially adversely affect our financial results. This may worsen as clients increasingly take advantage of low-cost alternatives including using their own in-house resources rather than engaging a third party.
We could incur liabilities or suffer reputational damage from a cyberattack or improper disclosure or loss of personal or confidential data, and our use of data is subject to complex and ever-changing privacy and cybersecurity legal requirements that could negatively impact our business or subject us to claims and/or fines for non-compliance. In connection with the operation of our business, we store, process and transmit a large amount of data, including personnel and payment data, about our employees, clients, associates and candidates, a portion of which is personal data and/or confidential data. We expect our use of data to increase, including through the use of analytics, artificial intelligence (AI) and machine learning (ML). In engaging in these data-related activities, we rely on our own technology systems and software, and those of third-party vendors we use for a variety of processes, including, but not limited to cloud-based technology and systems, mobile technologies and social media. Unauthorized access to, disclosure, modification, use or loss of personal data and/or confidential data may occur through a variety of methods. These include, but are not limited to, ransomware, systems failure, employee negligence or malfeasance, fraud or misappropriation, or unauthorized access to or through our information systems, whether by our employees, vendors or third parties, including a cyberattack by hackers, members of organized crime and/or state-sponsored organizations, who may develop and deploy supply chain interruptions, social engineering attacks, viruses, worms or other malicious software programs, or obtain credentials to our systems through other unrelated cyberattacks.
7 |
An incident involving disclosure, system failure, data modification, loss or security breach could harm our reputation and subject us to significant monetary damages or losses, litigation, negative publicity, regulatory enforcement actions, fines, criminal prosecution, as well as liability under our contracts and laws that protect personal and/or confidential data, resulting in increased costs or loss of revenues. Cybersecurity threats continue to increase in frequency and sophistication, thereby increasing the difficulty of detecting and defending against them. In the past, we have experienced data security breaches resulting from unauthorized access to our systems and other fraudulent activities, such as social engineering, which to date have not had a material impact on our operations or financial results. We regularly engage an independent external security firm to assess our defenses to a potential cyberattack, and these assessments may uncover new or additional vulnerabilities and weaknesses that could lead to a compromise of our systems and/or a loss of personal data. In a recent evaluation, vulnerabilities were identified that could facilitate or contribute to a security incident involving personal data. The assessment firm was able to penetrate defensive protections adopted by us, as well as protections that we obtain from third party providers. We are prioritizing the resolution of security gaps that could lead to a loss of personal data or to other damage. Despite our efforts to identify and address vulnerabilities in our systems, vulnerabilities in software products used by us are disclosed by our software providers on a daily basis, and attackers grow continuously more sophisticated in their attack methods, making it impossible to give assurance that our cybersecurity efforts will be successful.
There is a risk that our and our third-party vendors’ preventative security controls and practices will be inadequate to prevent unauthorized access to, disclosure of, or loss of personal and/or confidential data, or fraudulent activity, especially given that third party attacks have become more common. In the past, our data has been exposed due to data security breaches at our third-party vendors, but to date none of these incidents have had a material impact on our operations or financial results. Any such future events, such as unauthorized access or fraudulent activity with our third parties could have a material adverse effect on our business and financial results.
A loss or reduction in revenues from large client accounts could have a material adverse effect on our business. Our client mix consists of both small- and medium-sized businesses, which are based upon a local relationship with a market. The deterioration of the financial condition or business prospects of our clients, as a group, or a change in their strategy around the use of our services, could reduce their need for our services and result in a significant decrease in the revenues and earnings we derive from them. A loss or reduction in revenues from any of our clients could have a material adverse effect on our business.
Intense competition may limit our ability to attract, train and retain the qualified personnel necessary for us to meet our clients’ staffing needs. Our business depends on our ability to attract and retain qualified associates who possess the skills and experience necessary to meet the requirements of our clients. Currently, we are experiencing a tight labor market, with historically low levels of unemployment, and there is a risk that we may be unable to meet our clients’ requirements in identifying an adequate number of associates. We must continually evaluate and upgrade our base of available qualified personnel through recruiting and training programs to keep pace with changing client needs and emerging technologies. This is especially acute for individuals with IT and other technology skills, as competition for such individuals with proven professional skills is intense, and we expect demand for such individuals to remain very strong for the foreseeable future. Qualified personnel may not be available to us in sufficient numbers and on terms of employment acceptable to us. If we fail to recruit, train and retain qualified associates who meet the needs of our clients, our reputation, business and financial results could be materially adversely affected.
Changes in sentiment toward the staffing industry could affect the marketplace for our services. From time to time, the staffing industry has come under criticism from unions, works councils, regulatory agencies and other constituents that maintain that labor and employment protections, such as wage and benefits regulations, are subverted when clients use contingent staffing services. Our business is dependent on the continued acceptance of contingent staffing arrangements as a source of flexible labor for our clients. If attitudes or business practices in some locations change due to pressure from organized labor, political groups or regulatory agencies, it could have a material adverse effect on our business, results of operations and financial condition.
Our results of operations and ability to grow could be materially negatively affected if we cannot successfully keep pace with technological changes in the development and implementation of our services and solutions. Our success depends on our ability to keep pace with rapid technological changes in the development and implementation of our services and solutions. For example, rapid changes in the use of artificial intelligence and robotics are having a significant impact on some of the industries we serve and could have significant and unforeseen consequences for the workforce services industry and for our business. There is a risk that these, or other developments, could result in significant rapid disruption to our business model, and that we will be unprepared to compete effectively.
Additionally, our business is reliant on a variety of technologies, including those which support applicant on-boarding and tracking systems, order management, billing, payroll, and client data analytics. There is a risk we will not sufficiently invest in technology or industry developments, or evolve our business with the right strategic investments, or at sufficient speed and scale, to adapt to changes in our marketplace. Similarly, from time to time we make strategic commitments to particular technologies to recruit, manage or analyze our workforce or support our business, and there is a risk they will be unsuccessful. These and similar risks could have a negative effect on our services and solutions, our results of operations, and our ability to develop and maintain a competitive advantage in the marketplace.
8 |
Our acquisition strategy may be unsuccessful and may introduce unexpected costs. While we currently have not agreement for an acquisition, we make additional acquisitions of other companies or operating assets. These activities involve significant strategic and operational risks, including:
● | they may fail to achieve our strategic objectives or fail to meet our performance expectations, including as a result of challenges integrating the acquired company and assimilating their corporate culture; | |
● | over-valuation by us of any companies or assets that we acquire; | |
● | we may have difficulties integrating the operations, leadership, personnel, financial reporting, services or other functions of acquired companies; | |
● | we may experience disputes that arise with the sellers; | |
● | we may fail to effectively monitor compliance with corporate policies as well as regulatory requirements; | |
● | we may face unanticipated risks and liabilities in connection with the acquired company’s operations; | |
● | we may obtain insufficient indemnification from the selling parties for liabilities incurred by the acquired companies prior to the acquisitions; and | |
● | acquisition transactions, and the integration of acquired entities, may result in a diversion of our management’s attention from other business concerns. |
These risks could have a material adverse effect on our business because they may result in substantial costs to us and disrupt our business. The integration of prior acquisitions, as well as entry into future acquisition transactions, could materially adversely affect our business, financial condition, results of operations and liquidity. We could also incur impairment losses on goodwill and intangible assets with an indefinite life or restructuring charges as a result of acquisitions we make.
We may be exposed to legal claims, including employment-related claims that could materially adversely affect our business, financial condition and results of operations. We are subject to a wide variety of potential litigation and other legal claims that arise in the ordinary course of our business. The results of litigation and other legal proceedings are inherently uncertain, and adverse judgments or settlements in some, or all of these legal disputes may result in materially adverse monetary damages, fines, penalties or injunctive relief against us.
We are in the business of employing people and placing them in the workplaces of other businesses. Risks relating to these activities could include possible claims of or relating to:
● | discrimination or harassment; | |
● | employee pay, including wage and hour requirements; | |
● | wrongful termination or retaliation; | |
● | actions or inactions of our workers, including matters for which we may have to indemnify a client; | |
● | laws governing employment screening and privacy; | |
● | classification of workers as employees or independent contractors; | |
● | employment of undocumented or illegal workers; | |
● | issues relating to health and safety, including workers’ compensation; | |
● | employee benefits, including leave and healthcare coverage; | |
● | errors and omissions relating to the performance of professional roles such as IT professionals, accountants, engineers and the like; and | |
● | our workers’ misuse of proprietary information, misappropriation of funds, other criminal activity or torts or other similar claims. |
We may incur fines and other losses or negative publicity with respect to the above risks. In addition, some or all of these claims may give rise to litigation, which could be time-consuming to our management team and costly and could have a negative impact on our business regardless of the merits of the claim.
We cannot be certain our insurance will be sufficient in amount or scope to cover all claims that may be asserted against us. Should the ultimate judgments or settlements exceed our insurance coverage, they could have a material effect on our results of operations, financial position and cash flows. We cannot be certain we will be able to obtain appropriate types or levels of insurance in the future, that adequate replacement policies will be available on acceptable terms, if at all, or that the companies from which we have obtained insurance will be able to pay claims we make under such policies.
Our future success depends upon brand awareness and the effectiveness of our marketing programs. Our future success depends upon our ability to effectively define, evolve and promote our services. In order to achieve and maintain desirable recognition, we will need to invest in the development of our brands. Certain external costs may be subject to price fluctuations, such as increases in the cost of mailing or advertising on the internet. We can provide no assurance that the marketing strategies we implement and the investments we make will be successful in building significant brand awareness or attracting new customers.
Risks Related to Our Bitcoin Mining Business
There are significant risk factors relating to our Bitcoin mining business plan.
● | Extreme volatility of trading prices that many digital assets, including Bitcoin, have experienced in recent periods and may continue to experience, could have a material adverse effect on our operations; |
9 |
● | Our success is dependent on the acceptance of Bitcoin which represent a new and rapidly evolving industry; | |
● | Bitcoin may have concentrated ownership and large sales or distributions by holders of such digital assets could have an adverse effect on the market price of Bitcoin; | |
● | Recent developments in the digital asset economy have led to extreme volatility and disruption in digital asset markets, including Bitcoin, a loss of confidence in participants of the digital asset ecosystem, significant negative publicity surrounding digital assets broadly and market-wide declines in liquidity; | |
● | The value of our common stock, including the Offered Shares, could relate directly to the value of Bitcoin we are able to mine and sell, the value of which may be highly volatile and subject to fluctuations; | |
● | The unregulated nature and lack of transparency surrounding the operations of digital asset exchanges may adversely affect the value of Bitcoin and, consequently, the value of our common stock, including the Offered Shares; | |
● | Regulatory changes or actions by the U.S. Congress or any U.S. federal or state agencies may affect the value of our common stock or restrict the use of Bitcoin, mining activity or the operation of the Bitcoin Network in a manner that adversely affects the value of our common stock, including the Offered Shares; | |
● | A determination that Bitcoin or any other digital asset is a “security” may adversely affect the value of Bitcoin and, thus, the value of our common stock, including the Offered Shares; | |
● | Changes in the policies of the SEC could adversely impact the value of our common stock, including the Offered Shares; | |
● | Regulatory changes or other events in foreign jurisdictions may affect the value of our common stock or restrict the use of Bitcoin, mining activity or the operation of the Bitcoin Network in a manner that adversely affects the value of our common stock, including the Offered Shares; | |
● | Regulatory changes or interpretations could obligate our company to register and comply with new regulations, to the economic detriment of our company; and | |
● | We rely on third party service providers to perform certain functions essential to the affairs of our company, including the co-location and administration of our Bitcoin miners and the replacement of such service providers could pose a challenge to the safekeeping of our mined Bitcoin and to the operations of our company overall. |
The trading prices of Bitcoin have experienced extreme volatility in recent periods and may continue to do so. Extreme volatility in the future, including further declines in the trading prices of Bitcoin, could have a material adverse effect on the value of our common stock, including the Offered Shares, including the loss of all or substantially all of their value. The trading prices of Bitcoin have experienced extreme volatility in recent periods and may continue to do so. Declines in the trading prices of Bitcoin could have a detrimental impact on our operating results and could impair our ability to pay dividends to our shareholders.
Extreme volatility in the future, including further declines in the trading prices of Bitcoin, could have a material adverse effect on the value of our common stock and our common stock could lose all or substantially all of its value. Furthermore, negative perception, a lack of stability and standardized regulation in the digital asset economy may reduce confidence in the digital asset economy and may result in greater volatility in the price of Bitcoin and other digital assets, including a depreciation in value.
Digital assets, such as Bitcoin, were only introduced within the past decade, and the medium-to-long term value of our common stock is subject to a number of factors relating to the capabilities and development of blockchain technologies and to the fundamental investment characteristics of digital assets. Digital assets, such as Bitcoin, were only introduced within the past decade, and the medium-to-long term value of the Shares is subject to a number of factors relating to the capabilities and development of blockchain technologies, such as the recentness of their development, their dependence on the internet and other technologies, their dependence on the role played by users, developers and miners and the potential for malicious activity.
Moreover, because digital assets, including Bitcoin, have been in existence for a short period of time and are continuing to develop, there may be additional risks in the future that are impossible to predict as of the date of this Memorandum.
Digital assets represent a new and rapidly evolving industry, and the value of our common stock and the amount of funds available to pay dividends depends on the acceptance of Bitcoin. The Bitcoin Network was first launched in 2009 and Bitcoins were the first cryptographic digital assets created to gain global adoption and critical mass. Although the Bitcoin Network is the most established digital asset network, the Bitcoin Network and other cryptographic and algorithmic protocols governing the issuance of digital assets represent a new and rapidly evolving industry that is subject to a variety of factors that are difficult to evaluate.
Changes in the governance of Bitcoin may not receive sufficient support from users and miners, which may negatively affect the Bitcoin Network’s ability to grow and respond to challenges. The governance of decentralized networks, such as the Bitcoin Network, is by voluntary consensus and open competition. As a result, there may be a lack of consensus or clarity on the governance of any particular decentralized digital asset network, which may stymie such network’s utility and ability to grow and face challenges. The foregoing notwithstanding, the protocols for some decentralized networks, such as the Bitcoin Network, are informally managed by a group of core developers that propose amendments to the relevant network’s source code. Core developers’ roles evolve over time, largely based on self-determined participation. If a significant majority of users and miners adopt amendments to the Bitcoin Network based on the proposals of such core developers, the Bitcoin Network will be subject to new protocols that may adversely affect the value of Bitcoin.
10 |
The Bitcoin Network may face significant scaling challenges and efforts to increase the volume and speed of transactions may not be successful. Many digital asset networks face significant scaling challenges due to the fact that public blockchains generally face a tradeoff between security and scalability. One means through which public blockchains achieve security is decentralization, meaning that no intermediary is responsible for securing and maintaining these systems. For example, a greater degree of decentralization generally means a given digital asset network is less susceptible to manipulation or capture. In practice, this typically means that every single node on a given digital asset network is responsible for securing the system by processing every transaction and maintaining a copy of the entire state of the network. As a result, a digital asset network may be limited in the number of transactions it can process by the capabilities of each single fully participating node. Many developers are actively researching and testing scalability solutions for public blockchains that do not necessarily result in lower levels of security or decentralization, such as off-chain payment channels and sharding. Off-chain payment channels would allow parties to transact without requiring the full processing power of a blockchain. Sharding can increase the scalability of a database, such as a blockchain, by splitting the data processing responsibility among many nodes, allowing for parallel processing and validating of transactions. The Bitcoin Network has been, at times, at capacity, which has led to increased transaction fees. Increased fees and decreased settlement speeds could preclude certain uses for Bitcoin (e.g., micropayments), and could reduce demand for, and the price of, Bitcoin, which could adversely impact the value of our common stock. There is no guarantee that any of the mechanisms in place or being explored for increasing the scale of settlement of Bitcoin Network transactions will be effective, or how long these mechanisms will take to become effective, which could adversely impact the value of our common stock.
Bitcoin may have concentrated ownership and large sales or distributions by holders of Bitcoin could have an adverse effect on the market price of Bitcoin. As of December 31, 2024, the largest 100 Bitcoin wallets held approximately 15.6% of the Bitcoins in circulation. Moreover, it is possible that other persons or entities control multiple wallets that collectively hold a significant number of Bitcoins, even if they individually only hold a small amount, and it is possible that some of these wallets are controlled by the same person or entity. As a result of this concentration of ownership, large sales or distributions by such holders could have an adverse effect on the market price of Bitcoin and on the market price of our common stock.
If a malicious actor or botnet obtains control of more than 50% of the processing power on the Bitcoin Network, or otherwise obtains control over the Bitcoin Network through its influence over core developers or otherwise, such actor or botnet could manipulate the Blockchain to adversely affect the value of our common stock, including the Offered Shares, or the ability of our company to operate. Although there are no known reports of malicious activity on, or control of, the Bitcoin Network, it is believed that certain mining pools may have exceeded the 50% threshold on the Bitcoin Network. The possible crossing of the 50% threshold indicates a greater risk that a single mining pool could exert authority over the validation of Bitcoin transactions, and this risk is heightened if over 50% of the processing power on the network falls within the jurisdiction of a single governmental authority. If network participants, including the core developers and the administrators of mining pools, do not act to ensure greater decentralization of Bitcoin mining processing power, the feasibility of a malicious actor obtaining control of the processing power on the Bitcoin Network will increase, which may adversely affect the value of our common stock.
A malicious actor may also obtain control over the Bitcoin Network through its influence over core developers by gaining direct control over a core developer or an otherwise influential programmer. To the extent that the Bitcoin ecosystem does not grow, the possibility that a malicious actor may be able to obtain control of the processing power on the Bitcoin Network in this manner will remain heightened.
A temporary or permanent “fork” or a “clone” could adversely affect our company and reduce the value of our common stock, including the Offered Shares. The Bitcoin Network operates using open-source protocols, meaning that any user can download the software, modify it and then propose that the users and miners of Bitcoin adopt the modification. When a modification is introduced and a substantial majority of users and miners’ consent to the modification, the change is implemented and the network remains uninterrupted. However, if less than a substantial majority of users and miners’ consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “hard fork” of the Bitcoin Network, with one group running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of Bitcoin running in parallel, yet lacking interchangeability. For example, in August 2017, Bitcoin “forked” into Bitcoin and a new digital asset, Bitcoin Cash, as a result of a several-year dispute over how to increase the rate of transactions that the Bitcoin Network can process. A fork may also occur as a result of an unintentional or unanticipated software flaw in the various versions of otherwise compatible software that users run. Such a fork could lead to users and miners abandoning the digital asset with the flawed software. It is possible, however, that a substantial number of users and miners could adopt an incompatible version of the digital asset while resisting community-led efforts to merge the two chains. This could result in a permanent fork.
11 |
Forks may also occur as a network community’s response to a significant security breach. For example, in July 2016, Ethereum “forked” into Ethereum and a new digital asset, Ethereum Classic, as a result of the Ethereum network community’s response to a significant security breach. In June 2016, an anonymous hacker exploited a smart contract running on the Ethereum network to syphon approximately $60 million of ETH held by The DAO, a distributed autonomous organization, into a segregated account. In response to the hack, most participants in the Ethereum community elected to adopt a “fork” that effectively reversed the hack. However, a minority of users continued to develop the original blockchain, referred to as “Ethereum Classic” with the digital asset on that blockchain now referred to as ETC. ETC now trades on several digital asset exchanges. A fork may also occur as a result of an unintentional or unanticipated software flaw in the various versions of otherwise compatible software that users run. Such a fork could lead to users and miners abandoning the digital asset with the flawed software. It is possible, however, that a substantial number of users and miners could adopt an incompatible version of the digital asset while resisting community-led efforts to merge the two chains. This could result in a permanent fork, as in the case of Ethereum and Ethereum Classic.
In addition, many developers have previously initiated hard forks in the Blockchain to launch new digital assets, such as Bitcoin Cash, Bitcoin Gold, Bitcoin Silver and Bitcoin Diamond. To the extent such digital assets compete with Bitcoin, such competition could impact demand for Bitcoin and could adversely impact the value of our common stock.
Furthermore, a hard fork can lead to new security concerns. For example, when the Ethereum and Ethereum Classic networks, two other digital asset networks, split in July 2016, replay attacks, in which transactions from one network were rebroadcast to nefarious effect on the other network, plagued Ethereum exchanges through at least October 2016. An Ethereum exchange announced in July 2016 that it had lost 40,000 Ethereum Classic, worth about $100,000 at that time, as a result of replay attacks. Similar replay attack concerns occurred in connection with the Bitcoin Cash and Bitcoin Satoshi’s Vision networks split in November 2018. Another possible result of a hard fork is an inherent decrease in the level of security due to significant amounts of mining power remaining on one network or migrating instead to the new forked network. After a hard fork, it may become easier for an individual miner or mining pool’s hashing power to exceed 50% of the processing power of a digital asset network that retained or attracted less mining power, thereby making digital assets that rely on proof-of-work more susceptible to attack.
Protocols may also be cloned. Unlike a fork, which modifies an existing blockchain, and results in two competing networks, each with the same genesis block, a “clone” is a copy of a protocol’s codebase, but results in an entirely new blockchain and new genesis block. Tokens are created solely from the new “clone” network and, in contrast to forks, holders of tokens of the existing network that was cloned do not receive any tokens of the new network. A “clone” results in a competing network that has characteristics substantially similar to the network it was based on, subject to any changes as determined by the developer(s) that initiated the clone.
A hard fork may adversely affect the price of Bitcoin at the time of announcement or adoption. For example, the announcement of a hard fork could lead to increased demand for the pre-fork digital asset, in anticipation that ownership of the pre-fork digital asset would entitle holders to a new digital asset following the fork. The increased demand for the pre-fork digital asset may cause the price of the digital asset to rise. After the hard fork, it is possible the aggregate price of the two versions of the digital asset running in parallel would be less than the price of the digital asset immediately prior to the fork which could adversely affect the value of our common stock. A clone may also adversely affect the price of Bitcoin at the time of announcement or adoption.
A future fork in or clone of the Bitcoin Network could adversely affect the value of our common stock, including the Offered Shares, or the ability of our company to operate.
The value of our common stock, including the Offered Shares, may, in the future, relate directly to the value of Bitcoins, the value of which may be highly volatile and subject to fluctuations due to a number of factors. The value of our common stock may, in the future, relate directly to the value of the Bitcoins mined, held and sold by our company and fluctuations in the price of Bitcoin could adversely affect the value of our common stock, including the Offered Shares. The market price of Bitcoin may be highly volatile, and subject to a number of factors, including:
● | An increase in the global Bitcoin supply; | |
● | Manipulative trading activity on digital asset exchanges, which, in many cases, are largely unregulated; | |
● | The adoption of Bitcoin as a medium of exchange, store-of-value or other consumptive asset and the maintenance and development of the open-source software protocol of the Bitcoin Network; | |
● | Forks in the Bitcoin Network; | |
● | Investors’ expectations with respect to interest rates, the rates of inflation of fiat currencies or Bitcoin, and digital asset exchange rates; | |
● | Consumer preferences and perceptions of Bitcoin specifically and digital assets generally; | |
● | Fiat currency withdrawal and deposit policies on digital asset exchanges; | |
● | The liquidity of digital asset markets and any increase or decrease in trading volume on digital asset markets; | |
● | Investment and trading activities of large investors that invest directly or indirectly in Bitcoin; | |
● | An active derivatives market for Bitcoin or for digital assets generally; | |
● | Monetary policies of governments, trade restrictions, currency devaluations and revaluations and regulatory measures or enforcement actions, if any, that restrict the use of Bitcoin as a form of payment or the purchase of Bitcoin on the digital asset markets; | |
● | Global or regional political, economic or financial conditions, events and situations, such as the novel coronavirus outbreak; |
12 |
● | Fees associated with processing a Bitcoin transaction and the speed at which Bitcoin transactions are settled; | |
● | Interruptions in service from or closures or failures of major digital asset exchanges; | |
● | Decreased confidence in digital asset exchanges due to the unregulated nature and lack of transparency surrounding the operations of digital asset exchanges; | |
● | Increased competition from other forms of digital assets or payment services; and | |
● | Our company’s own mining and dispositions of Bitcoin, since there is no limit on the number of Bitcoin that we may acquire. |
In addition, there is no assurance that Bitcoin will maintain its value in the long or intermediate term. In the event that the price of Bitcoin declines, it is possible that the value of our common stock would also decline. However, no predictions can be made, in this regard.
Due to the unregulated nature and lack of transparency surrounding the operations of digital asset exchanges, they may experience fraud, business failures, security failures or operational problems, which may adversely affect the value of Bitcoin and, consequently, the value of the Offered Shares. Digital asset exchanges are relatively new and, in many ways, unregulated. While many prominent digital asset exchanges provide the public with significant information regarding their ownership structure, management teams, corporate practices and regulatory compliance, many digital asset exchanges do not provide this information. Furthermore, while digital asset exchanges are and may continue to be subject to federal and state licensing requirements in the United States, digital asset exchanges do not appear to be subject to regulation in a similar manner as other regulated trading platforms, such as national securities exchanges or designated contract markets. As a result, the marketplace may lose confidence in digital asset exchanges, including prominent exchanges that handle a significant volume of Bitcoin trading.
Competition from the emergence or growth of other digital assets or methods of investing in Bitcoin could have a negative impact on the price of Bitcoin and adversely affect the value of our common stock. Bitcoin was the first digital asset to gain global adoption and critical mass, and as a result, it has a “first to market” advantage over other digital assets. As of December 31, 2024, Bitcoin was the largest digital asset by market capitalization, as tracked by CoinMarketCap.com, and had the largest user base and largest combined mining power. Despite this first to market advantage, as of December 31, 2024, there were over 10,000 alternative digital assets tracked by CoinMarketCap.com, having a total market-capitalization of approximately $3.25 trillion (including the approximately $1.85 trillion market cap of Bitcoin), as calculated using market prices and total available supply of each digital asset, excluding tokens pegged to other assets. In addition, many consortiums and financial institutions are also researching and investing resources into private or permissioned blockchain platforms rather than open platforms like the Bitcoin Network. Competition from the emergence or growth of alternative digital assets and smart contracts platforms, such as Ethereum, Solana, Avalanche or Cardano, could have a negative impact on the demand for, and price of, Bitcoin and thereby adversely affect the value of our common stock, including the Offered Shares.
Risks Related to Our Specialty Coffee and Beverages Business
Our specialty coffee and beverage products business strategies are not based on independent market studies. We have not commissioned any independent market studies with respect to the beverage industry, in general, and the coffee industry, in particular. Rather, our plans for implementing our business and achieving profitability are based on the experience, judgment and assumptions of our management. If these assumptions prove to be incorrect, we may not be successful in establishing our business.
Online store features could fail to attract new customers, retain existing customers, or generate revenue. Our business strategy is dependent on our ability to develop online store features to attract new customers and retain existing ones. Staffing changes, changes in customer behavior or development of competing networks may cause customers to switch to competing online stores or decrease their use of our online store. To date, our online retail platform is only in its beginning stages and it has not begun to generate revenue. There is no guarantee that individual customers will use these features and as a result, we may fail to generate revenue. Additionally, any of the following events may cause decreased use of our online store:
● | Emergence of competing websites and online retail stores; | |
● | Inability to convince potential customers to shop at our online store; | |
● | A decrease or perceived decrease in the quality of products at our online store; | |
● | An increase in content that is irrelevant to our users; | |
● | Technical issues on certain platforms or in the cross-compatibility of multiple platforms; | |
● | An increase in the level of advertisements may discourage user engagement; | |
● | A rise in safety or privacy concerns; and | |
● | An increase in the level of spam or undesired content on the network. |
If our trademarks and other proprietary rights are not adequately protected to prevent use or appropriation by competitors, the value of the our brand or intellectual property may be diminished, and our business adversely affected. We rely, and expect to continue to rely, on a combination of confidentiality and license agreements with employees, consultants and third parties with whom we have relationships, as well as trademark, copyright, patent and trade secret protection laws, to protect our proprietary rights. If the protection of our intellectual property rights is inadequate to prevent use or misappropriation by third parties, the value of our company may be diminished, competitors may be able to more effectively mimic our technologies and methods of operations, the perception of our business and service to customers and potential customers may become confused in the marketplace, and our ability to attract customers may be adversely affected.
13 |
Introduction of new products by competitors could harm our competitive position and results of operations. The markets for our products are characterized by severe competition, evolving industry standards, evolving business and distribution models, price cutting, with resulting downward pressure on gross margins, and price sensitivity on the part of customers. In particular, we face the risk that there exist minimal barriers to the entry of competitors into the market segment.
Our future success will depend on our ability to gain product name recognition and customer loyalty, as well as our being able to anticipate and respond to emerging standards and other unforeseen changes. If we fail to satisfy such standards of operation, our operating results could suffer. Further, intra-industry consolidations may result in stronger competitors and may, therefore, also harm our future results of operations.
If we fail to maintain a positive reputation with consumers concerning our products, we may not be able to develop loyalty to our products, and our operating results may be adversely affected. We believe a positive reputation with customers to be highly important in developing loyalty to our products. To the extent our products are perceived as low quality or otherwise not compelling to potential customers, our ability to establish and maintain a positive reputation and product loyalty may be adversely impacted.
We may not be able to compete effectively in our intended markets. None of our products enjoys name recognition and many of our competitors possess substantially greater resources, financial and otherwise, than does our company. There is no assurance that we will be able to establish our business and compete successfully in this environment.
Unfavorable publicity or consumer perception of our products or any similar products distributed by other companies could have a material adverse effect on our business and financial condition. We believe our product sales will be highly dependent on consumer perception of the safety, quality and efficacy of our products as well as similar or other products distributed and sold by other companies. Consumer perception of our products can be significantly influenced by scientific research or findings, regulatory investigations, litigation, national media attention, and other publicity including publicity regarding the legality, safety or quality of particular ingredients or products and cannabis markets in general. From time to time, there is unfavorable publicity, scientific research or findings, litigation, regulatory proceedings and other media attention regarding our industry. There can be no assurance that future publicity, scientific research or findings, litigation, regulatory proceedings, or media attention will be favorable to our products’ markets or any particular product or ingredient, or consistent with earlier publicity, scientific research or findings, litigation, regulatory proceedings or media attention. Adverse publicity, scientific research or findings, litigation, regulatory proceedings or media attention, whether or not accurate, could have a material adverse effect on our business and financial condition.
We are subject to payment processing risk. All purchases of our specialty coffee and beverage products are made online by customers using credit/debit cards. For the foreseeable future, we intend to rely on third parties to process payment. Acceptance and processing of these payment methods are subject to certain rules and regulations and require payment of interchange and other fees. To the extent there are disruptions in our payment processing systems, our revenue, operating expenses and results of operation could be adversely impacted.
Our business and operations would be adversely impacted in the event of a failure or interruption of our information technology infrastructure or as a result of a cybersecurity attack. The proper functioning of our own information technology (IT) infrastructure is critical to the efficient operation and management of our business. We may not have the necessary financial resources to update and maintain our IT infrastructure, and any failure or interruption of our IT system could adversely impact our operations. In addition, our IT is vulnerable to cyberattacks, computer viruses, worms and other malicious software programs, physical and electronic break-ins, sabotage and similar disruptions from unauthorized tampering with our computer systems. We believe that we have adopted appropriate measures to mitigate potential risks to our technology infrastructure and our operations from these IT-related and other potential disruptions. However, given the unpredictability of the timing, nature and scope of any such IT failures or disruptions, we could potentially be subject to downtimes, transactional errors, processing inefficiencies, operational delays, other detrimental impacts on our operations or ability to provide products to our customers, the compromising of confidential or personal information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks, financial losses from remedial actions, loss of business or potential liability, and/or damage to our reputation, any of which could have a material adverse effect on our cash flows, competitive position, financial condition or results of operations.
14 |
If we fail to comply with personal data protection and privacy laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which could negatively affect our business and operating results. In the ordinary course of our business, we receive, process, transmit and store information relating to identifiable individuals (“personal data”), primarily employees, former employees and consumers with whom we interact. As a result, we are subject to various U.S. federal and state and foreign laws and regulations relating to personal data. These laws have been subject to frequent changes, and new legislation in this area may be enacted in other jurisdictions at any time. These laws impose operational requirements for companies receiving or processing personal data, and many provide for significant penalties for noncompliance. These requirements with respect to personal data have subjected and may continue in the future to subject our company to, among other things, additional costs and expenses and have required and may in the future require costly changes to our business practices and information security systems, policies, procedures and practices. Our security controls over personal data, the training of employees and vendors on data privacy and data security, and the policies, procedures and practices we implemented or may implement in the future may not prevent the improper disclosure of personal data by us or the third-party service providers and vendors whose technology, systems and services we use in connection with the receipt, storage and transmission of personal data. Unauthorized access or improper disclosure of personal data in violation of personal data protection or privacy laws could harm our reputation, cause loss of consumer confidence, subject us to regulatory enforcement actions (including fines), and result in private litigation against us, which could result in loss of revenue, increased costs, liability for monetary damages, fines and/or criminal prosecution, all of which could negatively affect our business and operating results.
If our third-party service providers and business partners do not satisfactorily fulfill their commitments and responsibilities, our financial results could suffer. In the conduct of our business, we rely on relationships with third parties, including cloud data storage and other information technology service providers, suppliers, distributors, contractors, joint venture partners and other external business partners, for certain functions or for services in support of key portions of our operations. These third-party service providers and business partners are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems and employee failures, and are subject to legal, regulatory and market risks of their own. Our third-party service providers and business partners may not fulfill their respective commitments and responsibilities in a timely manner and in accordance with the agreed-upon terms. In addition, while we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational and operational risk. If we are unable to effectively manage our third-party relationships, or for any reason our third-party service providers or business partners fail to fulfill their commitments and responsibilities, our financial results could suffer.
Risks Related to Compliance and Regulation
We will not have reporting obligations under Sections 14 or 16 of the Securities Exchange Act of 1934, nor will any shareholders have reporting requirements of Regulation 13D or 13G, nor Regulation 14D. So long as our common shares are not registered under the Exchange Act, our directors and executive officers and beneficial holders of 10% or more of our outstanding common shares will not be subject to Section 16 of the Exchange Act. Section 16(a) of the Exchange Act requires executive officers and directors and persons who beneficially own more than 10% of a registered class of equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of common shares and other equity securities, on Forms 3, 4 and 5, respectively. Such information about our directors, executive officers and beneficial holders will only be available through periodic reports we file with OTC Markets.
Our common stock is not registered under the Exchange Act and we do not intend to register our common stock under the Exchange Act for the foreseeable future; provided, however, that we will register our common stock under the Exchange Act if we have, after the last day of any fiscal year, more than either (1) 2,000 persons; or (2) 500 shareholders of record who are not accredited investors, in accordance with Section 12(g) of the Exchange Act.
Further, as long as our common stock is not registered under the Exchange Act, we will not be subject to Section 14 of the Exchange Act, which, among other things, prohibits companies that have securities registered under the Exchange Act from soliciting proxies or consents from shareholders without furnishing to shareholders and filing with the SEC a proxy statement and form of proxy complying with the proxy rules.
15 |
The reporting required by Section 14(d) of the Exchange Act provides information to the public about persons other than the company who is making the tender offer. A tender offer is a broad solicitation by a company or a third party to purchase a substantial percentage of a company’s common stock for a limited period of time. This offer is for a fixed price, usually at a premium over the current market price, and is customarily contingent on shareholders tendering a fixed number of their shares.
In addition, as long as our common stock is not registered under the Exchange Act, our company will not be subject to the reporting requirements of Regulation 13D and Regulation 13G, which require the disclosure of any person who, after acquiring directly or indirectly the beneficial ownership of any equity securities of a class, becomes, directly or indirectly, the beneficial owner of more than 5% of the class.
There may be deficiencies with our internal controls that require improvements. Our company is not required to provide a report on the effectiveness of our internal controls over financial reporting. We are in the process of evaluating whether our internal control procedures are effective and, therefore, there is a greater likelihood of undiscovered errors in our internal controls or reported financial statements as compared to issuers that have conducted such independent evaluations.
Risks Related to Our Organization and Structure
As a non-listed company conducting an exempt offering pursuant to Regulation A, we are not subject to a number of corporate governance requirements, including the requirements for independent board members. As a non-listed company conducting an exempt offering pursuant to Regulation A, we are not subject to a number of corporate governance requirements that an issuer conducting an offering on Form S-1 or listing on a national stock exchange would be. Accordingly, we are not required to have (a) a board of directors of which a majority consists of independent directors under the listing standards of a national stock exchange, (b) an audit committee composed entirely of independent directors and a written audit committee charter meeting a national stock exchange’s requirements, (c) a nominating/corporate governance committee composed entirely of independent directors and a written nominating/ corporate governance committee charter meeting a national stock exchange’s requirements, (d) a compensation committee composed entirely of independent directors and a written compensation committee charter meeting the requirements of a national stock exchange, and (e) independent audits of our internal controls. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of a national stock exchange.
Our holding company structure makes us dependent on our subsidiaries for our cash flow and could serve to subordinate the rights of our shareholders to the rights of creditors of our subsidiaries, in the event of an insolvency or liquidation of any such subsidiary. Our company acts as a holding company and, accordingly, substantially all of our operations are conducted through our subsidiaries. Such subsidiaries will be separate and distinct legal entities. As a result, substantially all of our cash flow will depend upon the earnings of our subsidiaries. In addition, we will depend on the distribution of earnings, loans or other payments by our subsidiaries. No subsidiary will have any obligation to provide our company with funds for our payment obligations. If there is an insolvency, liquidation or other reorganization of any of our subsidiaries, our shareholders will have no right to proceed against their assets. Creditors of those subsidiaries will be entitled to payment in full from the sale or other disposal of the assets of those subsidiaries before our company, as a shareholder, would be entitled to receive any distribution from that sale or disposal.
16 |
Risks Related to a Purchase of the Offered Shares
The outstanding shares of Series X Preferred Stock preclude current and future owners of our common stock from influencing any corporate decision. Our Chief Executive Officer, Ryan Schadel, owns 100% of the outstanding shares of our Series X Preferred Stock. Each share of Series X Preferred Stock has a number of votes equal to the total number of issued and outstanding shares of our common stock eligible to vote at the time of the respective vote multiplied by 1.041, in all matters requiring shareholder approval. Mr. Schadel will, therefore, be able to control the management and affairs of our company, as well as matters requiring the approval by our shareholders, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, and any other significant corporate transaction. (See “Security Ownership of Certain Beneficial Owners and Management”).
The outstanding shares of our Series A Preferred Stock represent potential significant future dilution in ownership of our common stock, including the Offered Shares. The outstanding shares of our Series A Preferred Stock are convertible, at any time, into a total of two billion shares of our common stock. At such time as these shares of Series A Preferred Stock may be converted into shares of common stock, holders of our common stock, including the Offered Shares, will incur significant dilution in their ownership of our company. The effect of the conversion rights of the Series A Preferred Stock is that, were all such shares be converted, the then-holder(s) of the Series A Preferred Stock, as a group, would be issued a number of shares of common stock equal to approximately 33% of the issued and outstanding shares of all of our capital stock, as measured after such conversion. We are unable to predict the effect that any such conversion event would have on the market price of our common stock. (See “Dilution”).
There is no minimum offering and no person has committed to purchase any of the Offered Shares. We have not established a minimum offering hereunder, which means that we will be able to accept even a nominal amount of proceeds, even if such amount of proceeds is not sufficient to permit us to achieve any of our business objectives. In this regard, there is no assurance that we will sell any of the Offered Shares or that we will sell enough of the Offered Shares necessary to achieve any of our business objectives. Additionally, no person is committed to purchase any of the Offered Shares.
We may seek additional capital that may result in shareholder dilution or that may have rights senior to those of our common stock. From time to time, we may seek to obtain additional capital, either through equity, equity-linked or debt securities. The decision to obtain additional capital will depend on, among other factors, our business plans, operating performance and condition of the capital markets. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, which could negatively affect the market price of our common stock or cause our shareholders to experience dilution.
You may never realize any economic benefit from a purchase of Offered Shares. Because our common stock is volatile and thinly traded, there is no assurance that you will ever realize any economic benefit from your purchase of Offered Shares.
We do not intend to pay dividends on our common stock. We intend to retain earnings, if any, to provide funds for the implementation of our business strategy. We do not intend to declare or pay any dividends in the foreseeable future. Therefore, there can be no assurance that holders of our common stock will receive cash, stock or other dividends on their shares of our common stock, until we have funds which our Board of Directors determines can be allocated to dividends.
Our shares of common stock are Penny Stock, which may impair trading liquidity. Disclosure requirements pertaining to penny stocks may reduce the level of trading activity in the market for our common stock and investors may find it difficult to sell their shares. Trades of our common stock will be subject to Rule 15g-9 of the SEC, which rule imposes certain requirements on broker-dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule, broker-dealers must make a special suitability determination for purchasers of the securities and receive the purchaser’s written agreement to the transaction prior to sale. The SEC also has rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.
17 |
Our common stock is thinly traded and its market price may become highly volatile. There is currently only a limited market for our common stock. A limited market is characterized by a relatively limited number of shares in the public float, relatively low trading volume and a small number of brokerage firms acting as market makers. The market for low priced securities is generally less liquid and more volatile than securities traded on national stock markets. Wide fluctuations in market prices are not uncommon. No assurance can be given that the market for our common stock will continue. The price of our common stock may be subject to wide fluctuations in response to factors such as the following, some of which are beyond our control:
- | quarterly variations in our operating results; |
- | operating results that vary from the expectations of investors; |
- | changes in expectations as to our future financial performance, including financial estimates by investors; |
- | reaction to our periodic filings, or presentations by executives at investor and industry conferences; |
- | changes in our capital structure; |
- | announcements of innovations or new services by us or our competitors; |
- | announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; |
- | lack of success in the expansion of our business operations; |
- | announcements by third parties of significant claims or proceedings against our company or adverse developments in pending proceedings; |
- | additions or departures of key personnel; |
- | asset impairment; |
- | rumors or public speculation about any of the above factors. |
The terms of this offering were determined arbitrarily. The terms of this offering were determined arbitrarily by us. The offering price for the Offered Shares does not necessarily bear any relationship to our company’s assets, book value, earnings or other established criteria of valuation. Accordingly, the offering price of the Offered Shares should not be considered as an indication of any intrinsic value of such securities. (See “Dilution”).
Our common stock is subject to price volatility unrelated to our operations. The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our company’s competitors or our company itself. In addition, the over-the-counter stock market is subject to extreme price and volume fluctuations in general. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.
Future sales of our common stock, or the perception in the public markets that these sales may occur, could reduce the market price of our common stock. In general, our officers and directors and major shareholders, as affiliates, under Rule 144 may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of our common stock under Rule 144 or otherwise could reduce prevailing market prices for our common stock.
You will suffer dilution in the net tangible book value of the Offered Shares you purchase in this offering. If you acquire any Offered Shares, you will suffer immediate dilution, due to the lower book value per share of our common stock compared to the purchase price of the Offered Shares in this offering. (See “Dilution”).
As an issuer of penny stock, the protection provided by the federal securities laws relating to forward looking statements does not apply to us. Although federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this safe harbor protection in the event of any legal action based upon a claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading. Such an action could hurt our financial condition.
Ownership Dilution
The information under “Investment Dilution” below does not take into account the potential conversion of the outstanding shares of Series A Preferred Stock into at a total of two billion shares of our common stock. By the terms of the Series A Preferred Stock, no conversion may be made that would cause the converting party’s ownership of our common stock to exceed 9.9%. However, the conversion of the share of Series A Preferred Stock into shares of our common stock would cause holders of our common stock, including the Offered Shares, to incur significant dilution in their ownership of our company. (See “Risk Factors—Risks Related to a Purchase of the Offered Shares,” “Description of Securities—Series A Preferred Stock” and “Security Ownership of Certain Beneficial Owners and Management”).
18 |
Investment Dilution
Dilution in net tangible book value per share to purchasers of our common stock in this offering represents the difference between the amount per share paid by purchasers of the Offered Shares in this offering and the net tangible book value per share immediately after completion of this offering. In this offering, dilution is attributable primarily to our negative net tangible book value per share.
If you purchase Offered Shares in this offering, your investment will be diluted to the extent of the difference between your purchase price per Offered Share and the net tangible book value of our common stock after this offering. Our net tangible book value as of December 31, 2024, was $(749,221) (unaudited), or $(0.00010) per share. Net tangible book value per share is equal to total assets minus the sum of total liabilities and intangible assets divided by the total number of shares outstanding.
The tables below illustrate the dilution to purchasers of Offered Shares in this offering, on a pro forma basis, assuming 100%, 75%, 50% and 25% of the Offered Shares are sold at a per share offering price of $0.00075, which represents the midpoint of the price range herein.
Assuming the Sale of 100% of the Offered Shares | ||||
Assumed
offering price per share | $ | 0.00075 | ||
Net tangible book value per share as of December 31, 2024 (unaudited) | $ | (0.00010 | ) | |
Increase
in net tangible book value per share after giving effect to this offering | $ | 0.00010 | ||
Pro
forma net tangible book value per share as of December 31, 2024 (unaudited) | $ | 0.00000 | ||
Dilution in net tangible book value per share to purchasers of Offered Shares in this offering | $ | 0.00065 | ||
Assuming the Sale of 75% of the Offered Shares | ||||
Assumed
offering price per share | $ | 0.00075 | ||
Net tangible book value per share as of December 31, 2024 (unaudited) | $ | (0.00010 | ) | |
Increase
in net tangible book value per share after giving effect to this offering | $ | 0.00008 | ||
Pro
forma net tangible book value per share as of December 31, 2024 (unaudited) | $ | (0.00002 | ) | |
Dilution in net tangible book value per share to purchasers of Offered Shares in this offering | $ | 0.00077 | ||
Assuming the Sale of 50% of the Offered Shares | ||||
Assumed
offering price per share | $ | 0.00075 | ||
Net tangible book value per share as of December 31, 2024 (unaudited) | $ | (0.00010 | ) | |
Increase
in net tangible book value per share after giving effect to this offering | $ | 0.00005 | ||
Pro
forma net tangible book value per share as of December 31, 2024 (unaudited) | $ | (0.00005 | ) | |
Dilution in net tangible book value per share to purchasers of Offered Shares in this offering | $ | 0.00080 | ||
Assuming the Sale of 25% of the Offered Shares | ||||
Assumed
offering price per share | $ | 0.00075 | ||
Net tangible book value per share as of December 31, 2024 (unaudited) | $ | (0.00010 | ) | |
Increase
in net tangible book value per share after giving effect to this offering | $ | 0.00003 | ||
Pro
forma net tangible book value per share as of December 31, 2024 (unaudited) | $ | (0.00007 | ) | |
Dilution in net tangible book value per share to purchasers of Offered Shares in this offering | $ | 0.00082 |
The table below sets forth the estimated proceeds we would derive from this offering, assuming the sale of 25%, 50%, 75% and 100% of the Offered Shares at a per share offering price of $0.00075, which represents the midpoint of the price range herein, and assuming the payment of no sales commissions or finder’s fees. There is, of course, no guaranty that we will be successful in selling any of the Offered Shares in this offering.
Assumed Percentage of Offered Shares Sold in This Offering | ||||||||||||||||
25% | 50% | 75% | 100% | |||||||||||||
Offered Shares sold | 250,000,000 | 500,000,000 | 750,000,000 | 1,000,000,000 | ||||||||||||
Gross proceeds | $ | 187,500 | $ | 375,000 | $ | 562,500 | $ | 750,000 | ||||||||
Offering expenses(1) | 25,000 | 25,000 | 25,000 | 25,000 | ||||||||||||
Net proceeds | $ | 162,500 | $ | 350,000 | $ | 537,500 | $ | 725,000 |
______________________
(1) | Offering expenses include the following items, certain of which are estimated for purposes of this table: administrative expenses, legal and accounting fees, publishing/EDGAR and Blue-Sky compliance. |
19 |
The table below sets forth the manner in which we intend to apply the net proceeds derived by us in this offering, including the sale and issuance of the Conversion Shares, assuming the sale of 25%, 50%, 75% and 100% of the Offered Shares at a per share offering price of $0.00075, which represents the midpoint of the price range herein. All amounts set forth below are estimates.
Use of Proceeds for Assumed Percentage of Offered Shares Sold in This Offering | ||||||||||||||||
25% | 50% | 75% | 100% | |||||||||||||
Staffing Client Acquisition | $ | 20,000 | $ | 80,000 | $ | 150,000 | $ | 200,000 | ||||||||
Working Capital | 60,000 | 187,500 | 305,000 | 442,500 | ||||||||||||
80,000 | 267,500 | 455,000 | 642,500 | |||||||||||||
Plus the cash value of the amount (principal and accrued interest) attributable to the conversion of the Subject Convertible Notes(1)(2)(3) | 82,500 | 82,500 | 82,500 | 82,500 | ||||||||||||
Total | $ | 162,500 | $ | 350,000 | $ | 537,500 | $ | 725,000 |
(1) | The Subject Convertible Notes were issued, as follows: |
(a) | On March 21, 2025, we issued a $65,000 principal amount convertible promissory note to Pinnacle Consulting Services, Inc., that bears interest at 8% per annum, is due on September 21, 2025, and is convertible at this holder’s election, into Conversion Shares. This convertible promissory note was issued in consideration of a $50,000 loan. (See “Selling Shareholders”) | |
(b) | On March 18, 2025, we issued a $17,500 principal amount convertible promissory note to NLF Support Services, LLC, a wholly-owned services subsidiary of our legal counsel, Newlan Law Firm, PLLC, that bears interest at 8% per annum, is due on March 18, 2026, and is convertible at this holder’s election, into Conversion Shares. This convertible promissory note was issued in payment of legal services. (See “Selling Shareholders”) |
(2) | To the extent the Subject Convertible Notes are not converted into Conversion Shares, all unissued Conversion Shares would be available for sale by us hereunder. Any proceeds derived from such sales would be applied to working capital for our voice business. |
We reserve the right to change the foregoing use of proceeds, should our management believe it to be in the best interest of our company. The allocations of the proceeds of this offering presented above constitute the current estimates of our management and are based on our current plans, assumptions made with respect to the beverage industry, general economic conditions and our future revenue and expenditure estimates.
Investors are cautioned that expenditures may vary substantially from the estimates presented above. Investors must rely on the judgment of our management, who will have broad discretion regarding the application of the proceeds of this offering. The amounts and timing of our actual expenditures will depend upon numerous factors, including market conditions, cash generated by our operations (if any), business developments and the rate of our growth. We may find it necessary or advisable to use portions of the proceeds of this offering for other purposes.
In the event we do not obtain the entire offering amount hereunder, we may attempt to obtain additional funds through private offerings of our securities or by borrowing funds. Currently, we do not have any committed sources of financing.
In General
Our company is offering a maximum of 1,000,000,000 Offered Shares on a best-efforts basis, at a fixed price of $__[0.0005-0.001] per Offered Share; any funds derived from this offering will be immediately available to us for our use. There will be no refunds.
This offering will terminate at the earliest of (a) the date on which the maximum offering has been sold, (b) the date which is one year from this offering being qualified by the SEC or (c) the date on which this offering is earlier terminated by us, in our sole discretion.
There is no minimum number of Offered Shares that we are required to sell in this offering. All funds derived by us from this offering will be immediately available for use by us, in accordance with the uses set forth in the Use of Proceeds section of this Offering Circular. No funds will be placed in an escrow account during the offering period and no funds will be returned, once an investor’s subscription agreement has been accepted by us.
Upon qualification of this offering by the SEC, a total of $82,500 of principal amount convertible notes (the Subject Convertible Notes) will, by their terms, be eligible for conversion into Offered Shares (the Offered Shares issued upon conversion of the Subject Convertible Notes are referred to as the Conversion Shares), at the election of their holders, at the offering price for all of the Offered Shares, $__[0.0005-0.001] per share. Following such issuances, we intend to file a supplement to this Offering Circular pursuant to Rule 253(g)(2), wherein the exact number of Offered Shares issued in payment of the Subject Convertible Notes will be disclosed. We will not receive any of the proceeds from the sale of the Selling Shareholder Offered Shares in this offering. We will pay all of the expenses of this offering (other than discounts and commissions payable with respect to the Selling Shareholder Offered Shares sold in the offering, if any). (See “Use of Proceeds” and “Selling Shareholders”).
We intend to sell the Offered Shares in this offering through the efforts of our Chief Executive Officer, Ryan Schadel. Mr. Schadel will not receive any compensation for offering or selling the Offered Shares. We believe that Mr. Schadel is exempt from registration as a broker-dealer under the provisions of Rule 3a4-1 promulgated under the Securities Exchange Act of 1934 (the Exchange Act). In particular, Mr. Schadel:
- | is not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Securities Act; and | |
- | is not to be compensated in connection with his participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities; and | |
- | is not an associated person of a broker or dealer; and | |
- | meets the conditions of the following: | |
- | primarily performs, and will perform at the end of this offering, substantial duties for us or on our behalf otherwise than in connection with transactions in securities; and | |
- | was not a broker or dealer, or an associated person of a broker or dealer, within the preceding 12 months; and | |
- | did not participate in selling an offering of securities for any issuer more than once every 12 months other than in reliance on paragraphs (a)(4)(i) or (iii) of Rule 3a4-1 under the Exchange Act. |
20 |
As of the date of this Offering Circular, we have not entered into any agreements with selling agents for the sale of the Offered Shares. However, we reserve the right to engage FINRA-member broker-dealers. In the event we engage FINRA-member broker-dealers, we expect to pay sales commissions of up to 8.0% of the gross offering proceeds from their sales of the Offered Shares. In connection with our appointment of a selling broker-dealer, we intend to enter into a standard selling agent agreement with the broker-dealer pursuant to which the broker-dealer would act as our non-exclusive sales agent in consideration of our payment of commissions of up to 8.0% on the sale of Offered Shares effected by the broker-dealer.
Procedures for Subscribing
If you are interested in subscribing for Offered Shares in this offering, please submit a request for information by e-mail to Ms. Schadel at: rschadel@metavesco.com; all relevant information will be delivered to you by return e-mail.
Thereafter, should you decide to subscribe for Offered Shares, you are required to follow the procedures described therein, which are:
- | Electronically execute and deliver to us a subscription agreement; and | |
- | Deliver funds directly by check or by wire or electronic funds transfer via ACH to our specified bank account. |
Right to Reject Subscriptions. After we receive your complete, executed subscription agreement and the funds required under the subscription agreement have been transferred to us, we have the right to review and accept or reject your subscription in whole or in part, for any reason or for no reason. We will return all monies from rejected subscriptions immediately to you, without interest or deduction.
Acceptance of Subscriptions. Upon our acceptance of a subscription agreement, we will countersign the subscription agreement and issue the Offered Shares subscribed. Once you submit the subscription agreement and it is accepted, you may not revoke or change your subscription or request your subscription funds. All accepted subscription agreements are irrevocable.
This Offering Circular will be furnished to prospective investors upon their request via electronic PDF format and will be available for viewing and download 24 hours per day, 7 days per week on our company’s page on the SEC’s website: www.sec.gov.
An investor will become a shareholder of our company and the Offered Shares will be issued, as of the date of settlement. Settlement will not occur until an investor’s funds have cleared and we accept the investor as a shareholder.
By executing the subscription agreement and paying the total purchase price for the Offered Shares subscribed, each investor agrees to accept the terms of the subscription agreement and attests that the investor meets certain minimum financial standards. (See “State Law Exemption and Offerings to Qualified Purchasers” below).
An approved trustee must process and forward to us subscriptions made through IRAs, Keogh plans and 401(k) plans. In the case of investments through IRAs, Keogh plans and 401(k) plans, we will send the confirmation and notice of our acceptance to the trustee.
Minimum Purchase Requirements
You must initially purchase at least $5,000 of the Offered Shares in this offering. If you have satisfied the minimum purchase requirement, any additional purchase must be in an amount of at least $1,000.
State Law Exemption and Offerings to Qualified Purchasers
State Law Exemption. This Offering Circular does not constitute an offer to sell or the solicitation of an offer to purchase any Offered Shares in any jurisdiction in which, or to any person to whom, it would be unlawful to do so. An investment in the Offered Shares involves substantial risks and possible loss by investors of their entire investments. (See “Risk Factors”).
The Offered Shares have not been qualified under the securities laws of any state or jurisdiction. Currently, we plan to sell the Offered Shares in Colorado, Connecticut, Delaware, Georgia and New York. However, we may, at a later date, decide to sell Offered Shares in other states. In the case of each state in which we sell the Offered Shares, we will qualify the Offered Shares for sale with the applicable state securities regulatory body or we will sell the Offered Shares pursuant to an exemption from registration found in the applicable state’s securities, or Blue Sky, law.
21 |
Certain of our offerees may be broker-dealers registered with the SEC under the Exchange Act, who may be interested in reselling the Offered Shares to others. Any such broker-dealer will be required to comply with the rules and regulations of the SEC and FINRA relating to underwriters.
Investor Suitability Standards. The Offered Shares may only be purchased by investors residing in a state in which this Offering Circular is duly qualified who have either (a) a minimum annual gross income of $70,000 and a minimum net worth of $70,000, exclusive of automobile, home and home furnishings, or (b) a minimum net worth of $250,000, exclusive of automobile, home and home furnishings.
Issuance of the Offered Shares
Upon settlement, that is, at such time as an investor’s funds have cleared and we have accepted an investor’s subscription agreement, we will either issue such investor’s purchased Offered Shares in book-entry form or issue a certificate or certificates representing such investor’s purchased Offered Shares.
Transferability of the Offered Shares
The Offered Shares will be generally freely transferable, subject to any restrictions imposed by applicable securities laws or regulations.
Advertising, Sales and Other Promotional Materials
In addition to this Offering Circular, subject to limitations imposed by applicable securities laws, we expect to use additional advertising, sales and other promotional materials in connection with this offering. These materials may include information relating to this offering, articles and publications concerning industries relevant to our business operations or public advertisements and audio-visual materials, in each case only as authorized by us. In addition, the sales material may contain certain quotes from various publications without obtaining the consent of the author or the publication for use of the quoted material in the sales material. Although these materials will not contain information in conflict with the information provided by this Offering Circular and will be prepared with a view to presenting a balanced discussion of risk and reward with respect to the Offered Shares, these materials will not give a complete understanding of our company, this offering or the Offered Shares and are not to be considered part of this Offering Circular. This offering is made only by means of this Offering Circular and prospective investors must read and rely on the information provided in this Offering Circular in connection with their decision to invest in the Offered Shares.
Upon qualification of this offering by the SEC, a total of $82,500 of principal amount convertible notes (the Subject Convertible Notes) will, by their terms, be eligible for conversion into Offered Shares (the Offered Shares issued upon conversion of the Subject Convertible Notes are referred to as the Conversion Shares), at the election of their holders, at the offering price for all of the Offered Shares, $__[0.0005-0.001] per share. Following such issuances, we intend to file a supplement to this Offering Circular pursuant to Rule 253(g)(2), wherein the exact number of Offered Shares issued in payment of the Subject Convertible Notes will be disclosed.
The shareholders named in the table below are the “Selling Shareholders.” The Selling Shareholders intend to sell, based on an assumed conversion price of $0.00075 per share, which represents the midpoint of the offering price range herein, a total of 110,000,000 shares of our common stock (the Selling Shareholder Offered Shares) in this offering. The Selling Shareholders are third parties.
We will pay all of the expenses of this offering (other than the selling commissions payable with respect to the Selling Shareholder Offered Shares sold in this offering, if any), but will not receive any of the proceeds from the sale of Selling Shareholder Offered Shares in this offering.
Neither of the Selling Shareholders is a broker-dealer nor is affiliated with a broker-dealer. The Selling Shareholders may be deemed to be underwriters of the shares of our common stock offered by the Selling Shareholder in this offering.
The Selling Shareholders intend to sell the Selling Shareholder Offered Shares in market transactions or in negotiated private transactions at the per share offering price of the Offered Shares, $[0.0005-0.001].
22 |
The table below assumes that all of the Offered Shares offered in this offering will be sold.
Prior to this Offering | After this Offering | |||||||||||||||||||||||
Name of Selling Shareholder | Position, Office or Other Material Relationship | # of Shares Beneficially Owned(1) | % Beneficially Owned (2) | # of Shares to be Offered for the Account of the Selling Shareholder | # of Shares Beneficially Owned | % Beneficially Owned (3) | ||||||||||||||||||
Pinnacle Consulting Services, Inc.(4) | None | 86,666,667 | 2.33 | % | 86,666,667 | 0 | 0 | % | ||||||||||||||||
Newlan Support Services, LLC(5) | See Note 4 | 23,333,333 | * | 23,333,333 | 0 | 0 | % |
* | Less than 1% |
(1) | Based on an assumed conversion price of $0.00075 per share, which represents the midpoint of the offering price range herein. |
(2) | Based on 3,712,384,860 shares outstanding, before this offering. |
(3) | Based on 4,712,384,860 shares outstanding, assuming the sale of all of the Offered Shares, after this offering. |
(4) | Robert L. Hymers III is the owner of this entity. The address of this Selling Shareholder is 3604 520 S. Grand Avenue, Suite 320 Los Angeles, California 90071. |
(5) | This entity is a wholly-owned services subsidiary of our legal counsel, Newlan Law Firm, PLLC, the Managing Member of which is Eric Newlan. The address of this Selling Shareholder is 13680 CR 306, Buena Vista, Colorado 81211. |
General
Our authorized capital stock consists of (a) 15,000,000,000 shares of common stock, $.0001 par value per share; and (b) 20,000,000 shares of Preferred Stock, $.0001 par value per share, (1) 100 of which have been designated Series A Convertible Preferred Stock and (2) 51 of which has been designated Series X Preferred Stock.
As of the date of this Offering Circular, there were (x) 3,712,384,860 shares of our common stock issued and outstanding held by approximately 33 holders of record; (y) 20 shares of Series A Convertible Preferred Stock issued and outstanding held by two holders of record; and (z) 51 shares of Series X Preferred Stock issued and outstanding held by one (1) holder of record.
Common Stock
General. The holders of our common stock currently have (a) equal ratable rights to dividends from funds legally available therefore, when, as and if declared by our Board of Directors; (b) are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of the affairs of our company; (c) do not have preemptive, subscriptive or conversion rights and there are no redemption or sinking fund provisions or rights applicable thereto; and (d) are entitled to one non-cumulative vote per share on all matters on which shareholders may vote. Our Bylaws provide that, at all meetings of the shareholders for the election of directors, a plurality of the votes cast shall be sufficient to elect. On all other matters, except as otherwise required by Nevada law or our Articles of Incorporation, as amended, a majority of the votes cast at a meeting of the shareholders shall be necessary to authorize any corporate action to be taken by vote of the shareholders.
Non-cumulative Voting. Holders of shares of our common stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of our directors.
Further, the outstanding shares of Series X Preferred Stock is beneficially owned by our Chief Executive Officer, Ryan Schadel. Mr. Schadel, thus, controls all corporate matters of our company. (See “Security Ownership of Certain Beneficial Owners and Management” and “Certain Relationships and Related Transactions”).
Pre-emptive Rights. As of the date of this Offering Circular, no holder of any shares of our capital stock has pre-emptive or preferential rights to acquire or subscribe for any unissued shares of any class of our capital stock not otherwise disclosed herein.
Series A Convertible Preferred Stock
Each share of Series A Convertible Preferred Stock has a stated value of $50,000 and is convertible into 100,000 shares of our common stock, subject to a 9.99% equity blocker provision. The Series A Convertible Preferred Stock has no voting rights are not entitled to receive dividends or distributions.
23 |
Series X Preferred Stock
Each share of Series X Preferred Stock has a number of votes equal to (a) (1) the total number of issued and outstanding shares of our common stock eligible to vote at the time of the respective vote, multiplied by (2) 1.041; divided by (b) 51, and thereafter rounded to the nearest whole vote per share of Series X Preferred Stock. The shares of Series X Preferred Stock have no rights of conversion and are not entitled to receive dividends or distributions. (See “Risk Factors—Risks Related to a Purchase of the Offered Shares,” “Security Ownership of Certain Beneficial Owners and Management” and “Certain Relationships and Related Transactions”).
Dividend Policy
We have never declared or paid any dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
Shareholder Meetings
Our bylaws provide that special meetings of shareholders may be called only by our Board of Directors, the chairman of the board, or our president, or as otherwise provided under Nevada law.
Transfer Agent
We have retained the services of Computershare U.S. as the transfer agent for our common stock. Computershare U.S.’s website is located at: www.computershare.com No information found on Computershare U.S.’s website is part of this Offering Circular.
History
The Company was incorporated in the Commonwealth of Virginia on July 13, 1993, and was a closed-end investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment Company (“SBIC”). The Company previously made equity investments in and provided loans to small businesses to finance their growth, expansion, and development. Under applicable SBA regulations, the Company was restricted to investing only in qualified small businesses as contemplated by the Small Business Investment Act of 1958. As a registered investment company under the Act, the Company’s investment objective was to provide its shareholders with a high level of income, with capital appreciation as a secondary objective. The Company made its first investment in a small business in October 1996.
On March 30, 2010, the SBA notified the Company that its account had been transferred to liquidation status and that the outstanding debentures of $16.1 million-plus accrued interest (the “Debentures”) were due and payable within fifteen days of the date of the letter. The Company did not possess adequate liquid assets to make this payment. The Company negotiated terms of a settlement agreement with the SBA effective September 1, 2010. The Debentures were repurchased by the SBA in September 2010, represented by a Note Agreement between the SBA and the Company. The Note Agreement had a maturity of March 31, 2013. In the event of a default, the SBA had the ability to seek receivership.
On May 24, 2012, the SBA delivered to the Company a notice of an event of default for failure to meet the principal repayment schedule under the Note Agreement (the “Notice”). Under the terms of the Notice and the Note Agreement, the SBA maintained a continuing right to terminate the Note Agreement and appoint a receiver to manage the Company’s assets.
On November 20, 2013, the SBA filed a complaint in the United States District Court for the Eastern District of Virginia (the “District Court”) seeking, among other things, receivership for the Company and judgment in the amount outstanding under the Note Agreement plus continuing interest. The complaint alleged that as of October 31, 2013, there remained an outstanding balance of $11,762,634.58 under the Note Agreement, including interest, which continued to accrue at the rate of $2,021.93 per day. In filing the complaint, the SBA requested that the District Court take exclusive jurisdiction of the Company and all of its assets wherever located and appoint the SBA as permanent receiver of the Company to liquidate all of the Company’s assets and satisfy the claims of its creditors in the order of priority as determined by the District Court.
24 |
On May 28, 2014, the District Court entered a Consent Order and Judgment Dismissing Counterclaim, Appointing Receiver, Granting Permanent Injunctive Relief and Granting Money Judgment (the “Order”). The Order appointed the SBA as receiver of the Company, and the SBA designated Charles Fulford as its principal agent to act on its behalf as the receiver (the “Receiver”). The Order authorized the Receiver to marshal and liquidate all of the Company’s assets in an orderly manner. The Order also served to enter judgment in favor of the United States of America, on behalf of the SBA, against the Company for $11,770,722. Such amount represented $11,700,000 in principal and $70,722 in accrued interest. The District Court assumed jurisdiction over the Company, and the SBA was appointed Receiver effective May 28, 2014.
The Company effectively stopped conducting an active business upon the appointment of the SBA as Receiver and the commencement of the receivership ordered by the District Court (the “Receivership”). Over the course of the Receivership, the activity of the Company was limited to the liquidation of the Company’s assets by the Receiver and the payment of the proceeds therefrom to the SBA and for the expenses of the Receivership.
The SBIC license granted to the Company by the SBA was revoked by the SBA effective March 20, 2017, in conjunction with the entry by the District Court of the Order Approving the Procedures for Winding Up and Terminating the Receivership Estate. On June 28, 2017, the Receivership was terminated pursuant to the entry of a Final Order by the District Court, further discharged all claims and obligations of the Company other than the judgment held by SBA (the “Final Order”). Prior to the Final Order, the Receiver provided notice to all shareholders of the Company. The Receiver also initiated separate contact with the largest shareholders of the Company in an attempt to identify a shareholder willing to assume responsibility for the control of the Company on behalf of the Company’s shareholders. Roran Capital, LLC (“Roran”), was the only shareholder willing to assume such control. As such, at the direction of the Receiver, paragraph 4 of the Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order”. At that time Roran owned 510,000 shares of the Company which represented 2.7% of the issued and outstanding common stock at that time (and owns 42,476,660 shares currently which represents 64.05% of the issued and outstanding shares of the Company at this time). 99% of the equity interests in Roran were at the time, and remain, beneficially owned by Yitzhak Zelmanovitch. At the time of the Final Order, the Company had no assets, and a sole remaining liability owed to the SBA in an amount exceeding $10,000,000.
Upon termination of the Receivership, Roran took possession of all books and records made available to it by the Receiver. The termination of the Receivership, and the termination of the power and authority of the Receiver, left the Company with no Board of Directors and no officers. It was impossible to convene a shareholders meeting as there were no corporate officers or directors to provide (i) notice, or (ii) the administrative oversight required for such a meeting. Roran, in reliance on and in compliance with the Final Order, sought to appoint a new board of directors (the “New Board”). Without a New Board, the Company would be unable to operate as a viable business, and appointment by Roran was the only manner in which the New Board could be constituted.
Roran expended a good faith effort to seek out qualified third parties to serve on the New Board. Because of the liability exposure inherent in serving on the board of a public company, the Company’s lack of financial resources, and the Company’s loss of its SBIC license, Roran was unable to locate any qualified individuals to serve on the New Board and thus appointed Zindel Zelmanovitch, the father of Yitzhak Zelmanovitch, as the sole director and officer of the Company. Zindel is an experienced business person who has previously served as the CEO and director of a public company; thus, although related to the 99% owner of Roran, he has objectively acceptable qualifications to serve in this dual position. Zindel Zelmanovitch has never owned any shares of stock of the Company and has not been compensated for any of his services as a director or officer of the Company to date.
In his capacity as the sole director and officer of the Company, Zindel Zelmanovitch considered a variety of options for the Company, including bankruptcy and liquidation, neither of which would have yielded any economic benefit for the Company’s shareholders. Thus, Zindel Zelmanovitch negotiated with Roran to provide a loan or loans to fund reasonable expenses of the Company, on arm’s length terms, so long as progress was being made to reorganize the Company and to identify either (i) a new business to enter into; or, (ii) an active business with which to merge or otherwise acquire, which would benefit from operating as a public entity. The New Board (Zindel Zelmanovitch) has continued to work toward achieving that goal. With no assets and no SBIC license from the SBA, no income, and liabilities in excess of $10,000,000 (which has now been forgiven in full, as stated below), the New Board (Zindel Zelmanovitch) concluded that continuing to operate as a registered investment company was impossible; furthermore, the consistent feedback from third parties with which the New Board has sought to consummate a transaction to commence a new business or acquire or merge a new business into the Company has been that until the Company’s Application Pursuant to Section 8(f) of the Investment Company Act of 1940 for an order declaring that the Company has ceased to be an Investment Company is approved, no such transaction was feasible. On April 22, 2020, the SEC issued an order declaring that the Company had ceased to be an investment company.
25 |
Since the entry of the Final Order (June 28, 2017) and the termination of the Receivership, the Company has been maintained for the benefit of its shareholders and pursuant to, and in compliance with, the Final Order. The Company has no assets, and the Company no longer has the SBIC license from the SBA. The Company is no longer operating as a registered investment company under the Investment Company Act. While it would have been possible for the Company to merely dissolve, the Company has instead decided to endeavor to reconstitute itself as a viable business. The Company has engaged and intends to continue to engage, qualified professionals and personnel to bring the Company current in its SEC filings and audits. The Company filed a Form 10-K for the period ending June 30, 2017 and has subsequently timely filed all periodic reports on Forms 10-Q and Forms 10-K.
The Company’s outstanding judgment payable owed to the SBA was purchased by Roran from the SBA in July 2017. As such, all amounts due under the outstanding judgment payable were owed to Roran rather than the SBA. Upon purchase, the Company began to accrue interest that was due under the original terms of the judgment payable. The statutory interest rate was 0.094%. The Company accrued $163,991 in interest on the judgment payable as of March 31, 2019. On May 16, 2019, Roran forgave the entire principal amount and interest due thereon of $10,609,635.
On September 19, 2017, the Company issued a Convertible Promissory Note in an amount up to $150,000 in favor of Roran which was increased to $200,000 on June 17, 2019 and $250,000 on December 13, 2019 (the “Note”), and as of June 30, 2021, $149,838 has been drawn by the Company under the Note (exclusive of accrued interest). The Note was issued pursuant to a Convertible Loan Agreement with Roran (the “Loan Agreement”). All outstanding principal and accrued interest on the Note is due and payable on the maturity date, which was March 19, 2019 and then extended to September 19, 2019 and then June 19, 2020. Roran has agreed to extend the loan and advance additional funds until further negotiations regarding the loan have concluded. Amounts borrowed under the Note bear interest at 12% per annum. Roran has the right to convert all or any portion of the Note into shares of the Company’s common stock at a conversion price equal to 60% of the 20 day trailing lowest share price. The use of proceeds of this loan has been and continues to be the payment by the Company of its reasonable operational expenses payable to third-party service providers (consisting solely of third party expenses such as legal, accounting, transfer agent and edgarization costs, all at the actual cost for such services). The loan is not a senior or a secured instrument.
On April 22, 2020, the SEC issued an order declaring that the Company had ceased to be an investment company.
On June 8, 2020, Roran converted $124,500 principal amount of its promissory note with the Company and $25,500 of accrued and unpaid interest thereon, totaling $150,000, into 41,666,660 shares of Company Common Stock at the stated conversion price per share of $0.0036. The remaining balance due on the promissory note, as of the conversion date, was $104,838 in principal and $19,988 in interest.
On September 2, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) Ryan Schadel (“Buyer”) and (iii) Roran. Roran agreed to sell to the Buyer 42,476,660 shares of common stock of the Company held by Roran for a total purchase price of $385,000. In conjunction with the SPA, Roran agreed to forgive all amounts due to Roran by the Company totaling $207,644, which is comprised of convertible note payable – related party, accrued interest payable – related party, and advances from related party. The Buyer acquired 42,476,660 shares of the Company’s Common Stock, representing 69.7% of the issued and outstanding shares of Common Stock. As such, the SPA resulted in a change of control of the Company.
Effective November 29, 2021, the Company converted from a Virginia corporation to a Nevada corporation.
On December 15, 2021, the Company filed with the Nevada Secretary of State amended and restated articles of incorporation. The amended and restated articles had the effect of (i) increasing the Company’s authorized common stock to 100 million shares, (ii) increasing the Company’s authorized preferred stock to 20 million shares, and (iii) reducing the par value of each of the Company’s common stock and preferred stock to $0.0001 per share. Common stock and additional paid-in capital for all periods presented in these financial statements have been adjusted retroactively to reflect the reduction in par value.
On December 17, 2021, the majority shareholder and board of directors approved an amendment to the amended and restated articles of incorporation that would change the Company’s name from Waterside Capital Corporation to Metavesco, Inc. The name change was cleared by Financial Industry Regulatory Authority (“FINRA”) and was effective June 3, 2022.
26 |
In March 2022, the Company commenced operations as a web3 enterprise. The Company generates income as a liquidity provider, via decentralized exchanges such as Uniswap. Additionally, the Company farms tokens via Proof of Stake protocols on decentralized exchanges as well as centralized exchanges including Coinbase exchange. The Company also invests in promising NFT projects and virtual land, primarily on EVM protocols.
On June 12, 2023, the Company entered into a Limited Liability Company Interest Purchase Agreement (the “Purchase Agreement”) with Eddy Rodrigeuz (the “Seller”). The Seller is the sole owner of Boring Brew LLC (“Boring”) and Bored Coffee Lab, LLC (“Bored”). Under the terms of the Purchase Agreement, the Seller sold to the Company, all of the outstanding limited liability company interests in Boring and Bored. The Company paid the Seller total consideration with a fair value of $249,245, paid as follows: (i) $9,245 in cash and (ii) 5,000,000 shares of the Company’s common stock at a fair value of $240,000 ($0.048 per share based on the closing price of the Company common stock on June 12, 2023).
On September 27, 2024, the Company entered into an Asset Purchase Agreement (“Agreement”) with Epic Labor Inc. a Georgia corporation (“Seller”). Mr. Schadel is the Chief Executive Officer of the Seller. Also, Mr. Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and majority stockholder. Under the terms of the Agreement, the Seller sold its customer lists in the markets of Nashville and Knoxville, Tennessee connected to temporary workforce services. In consideration for the customer lists, the Company agreed to pay $88,800 in cash in monthly installment of $7,400 over the next twelve months and assume trade payable liabilities totaling $6,996.
Overview
We operate in three business sectors:
● | Epic Labor provides temporary staffing solutions known for connecting businesses with top-tier, on-demand temporary workforce services. |
● | Bitcoin mining operations at hosted facilities in Texas, Kentucky and Iowa. |
● | Boring Brew, a web3 startup known for its unique and limited-edition coffee bags partners with influential NFT holders to transform their intellectual property into an exquisite collection of specialty coffee. |
Our Business
Epic Labor. Epic Labor provides temporary staffing solutions to companies in need of “blue collar” workers in the Nashville and Knoxville, Tennessee, markets.
Overview. While our company intends to maintain our ongoing Bitcoin mining operations and specialty coffee and beverages business, the focus of our plan of business for at least the next 12 months will be on expanding our temporary staffing business. Specifically, we intend to expand our current staffing operations in Nashville and Knoxville, Tennessee, as well as to enter other markets that we determine to hold significant opportunities within the staffing market. We believe this focus on our staffing business holds the greatest opportunity for increasing our revenues and, ultimately, our profitability.
Our Focus. We intend to become a consolidator of companies within the staffing industry in the United States. It is our intention to acquire either operating staffing businesses that present a strong financial position, growth prospects and/or a solid track record of new client acquisition and retention or to license client lists targeted in a market to be targeted by us. There is no assurance that we will be successful, in this regard.
Growth Strategy. We believe the proceeds of this offering will allow us to increase the size of our current staffing operations, through increased working capital and increased sales and marketing efforts. In addition, we believe there are significant acquisition opportunities within the staffing industry. Our management has established certain criteria for potential acquisition targets.
27 |
Government Regulations. The staffing industry is not closely regulated in the United States. However, our operations are generally subject to one or more of the following types of government regulation: regulation of the employer/employee relationship between the firm and its temporary and contract employees; registration, licensing, record keeping and reporting requirements; substantive limitations on the operations or the use of temporary and contract employees by clients; and regulation that requires new or additional benefits and pay parity for our employees.
Changes in applicable laws or regulations have occurred in the past and are expected, in the future, to affect the extent to which workforce solutions and services firms may operate. These changes could impose additional costs, taxes, record keeping or reporting requirements; restrict the tasks to which contingent workers may be assigned; limit the duration of or otherwise impose restrictions on the nature of the relationship (with us or the client); or otherwise adversely affect the industry.
Bitcoin Mining.
Background. Bitcoin, a cryptocurrency, is a specialized application of blockchain technology. Blockchains are encrypted distributed ledgers maintained on the internet. Bitcoin mining is the process of validating the authenticity of encrypted blocks of transactions and updating Bitcoin’s blockchain ledger. Bitcoin miners expend significant amounts of computer processing power - hash rate - to solve complicated mathematical problems required to validate the encrypted data block. The Bitcoin blockchain protocol rewards the first Bitcoin miner to solve the encryption and add a new block of validated transactions to the Bitcoin blockchain ledger with newly issued Bitcoins. Bitcoin miners compete for those rewards and a share of transaction fees. This creates a competitive environment where Bitcoin miners are constantly seeking to increase their hashing capacity by expansion or deployment of new higher-capacity mining equipment.
General. In February 2023, our company commenced Bitcoin mining operations at a hosted facility in Texas, in May 2023 at a hosted facility in Kentucky and, in November 2023, at a hosted facility in Iowa. As of December 31, 2024, we have 162 Bitcoin Miners in operation, yielding approximately between 0.3 and 0.4 Bitcoin per month.
We are committed to technological excellence and seek to leverage the potential of our diverse facilities to ensure the security and innovation of the digital currency landscape. With our cutting-edge technology, we mine Bitcoin with ease and confidence. Then, we convert our mined Bitcoin to cash, as needed for our overall company operations.
Competition. According to TheMinerMag, Bitcoin mining revenue maintained a steady pace with $1.4 billion earned in January 2025. Despite this consistency in revenue, the Bitcoin network experienced its first decline in difficulty since September, suggesting a slowdown in the hashrate growth.
Public mining firms, which are a significant force in the industry, contributed to about 30% of the network’s hashrate in January. The report indicates that public mining companies have continued to increase their hash power, yet their expansion wasn’t sufficient to offset the reduced activity from smaller operators who have left the market. As a result, January did not see the rapid hashrate growth that characterized previous months. These public companies currently hold approximately 99,000 Bitcoin, valued at approximately $9.7 billion.
Amid these developments, competition among the leading mining firms has intensified, with Marathon Digital (NASDAQ:MARA) holding the top position, achieving a hashrate of 41.65 EH/s. CleanSpark (NASDAQ:CLSK) follows closely with 34.77 EH/s, and Riot Platforms (NASDAQ:RIOT) is not far behind at 31.27 EH/s. Our company’s current hashrate is approximately 76.878 PH/s. [Note: EH/s (Exa hashes per second) represents a quintillion hashes per second, while PH/s (Peta hashes per second) represents a quadrillion hashes per second. EH/s is a larger unit of measurement than PH/s, with one EH/s being equivalent to 1,000 PH/s.] The report also notes that there is a significant competitive push within the top tier of mining firms, while a widening gap is observed between them and the next tier.
Last year’s halving event, which reduced Bitcoin mining rewards by half, has contributed to an increasingly challenging environment for miners, particularly small-scale operations, such those of our company. With the recent drop of price of Bitcoin, and the accompanying price volatility, larger mining companies are better positioned to withstand the pressures of reduced profit margins than are smaller mining companies, like our company.
Additionally, the import of mining hardware into the U.S. has slowed, with only a few firms, such as Blockchain Power Corp. and AcroHash, importing substantial cooling systems from Bitmain. This deceleration in hardware imports further contributes to the stabilization of the hashrate growth.
TheMinerMag anticipates another decline in the network’s difficulty adjustment in February, driven by the exit of smaller mining operators who are struggling to remain profitable.
If there are technological advances in the hardware, software or other aspects of the Bitcoin mining technology, our operations could suffer reduction or elimination of our profits, accelerated depreciation of our assets and force us to increase investments in newer technologies to maintain operations. These operating variables could adversely affect an investment in our company.
28 |
Government Regulations.
No Federal Ban. There is no federal law in the United States that explicitly prohibits Bitcoin mining. In fact, the Trump Administration has indicated it supports Bitcoin mining activities in the United States.
State-Level Variations. Regulation of Bitcoin mining varies significantly by state, with some states enacting legislation to encourage mining activities and others taking steps to limit or restrict them.
Encouraging Mining. Some states, including Montana and Wyoming, have introduced legislation to attract Bitcoin mining operations, offering tax breaks and regulatory sandboxes (a controlled environment that allows businesses to test new products and services without the full force of regulation).
Limiting Mining. Other states, including New York and Washington, have placed limits on energy policy, particularly regarding high-density data centers, which can include Bitcoin mining operations.
Boring Brew. Through our online store located at www.boringbrew.com, Boring Brew is all about bringing to life NFT’s one cup at a time. We’ve partnered with some of the most influential NFT holders to bring their IP to life in the form of unique and limited coffee bags. Our Specialty Coffee is freshly roasted on demand and with every purchase we give back to the community by donating 3% from each sale to Non-profits, local artists and NFT holders. Our coffee is sorted from multiple places around the world, from Latin America, all the way to Asia and Africa, bringing different flavors while supporting local farms.
Our coffee bags come in limited editions that once sold out are discontinued and removed from the market - making them a collectible item.
Competition. The markets for our products are characterized by severe competition, evolving industry standards, evolving business and distribution models, price cutting, with resulting downward pressure on gross margins, and price sensitivity on the part of customers. In particular, we face the risk that there exist minimal barriers to the entry of competitors into the market segment.
Our future success will depend on our ability to gain product name recognition and customer loyalty, as well as our being able to anticipate and respond to emerging standards and other unforeseen changes. If we fail to satisfy such standards of operation, our operating results could suffer. Further, intra-industry consolidations may result in stronger competitors and may, therefore, also harm our future results of operations.
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 our business. These matters may include product liability, intellectual property, employment, personal injury cause by our employees, and other general claims. 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 outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Properties
We do not currently own any property. We rent office space month to month from Regus Management Group LLC at 410 Peachtree Parkway, Cumming, Georgia, for $299 per month.
Employees
In addition to our sole officer and director, we currently have no full-time employees. Upon our obtaining additional funding, including through this offering, we expect that we would hire a small number of additional employees. We have used, and, in the future, expect to use, the services of certain outside consultants and advisors as needed on a consulting basis.
29 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement
The following discussion and analysis should be read in conjunction with our unaudited financial statements and related notes, beginning on page F-1 of this Offering Circular.
Our actual results may differ materially from those anticipated in the following discussion, as a result of a variety of risks and uncertainties, including those described under Cautionary Statement Regarding Forward-Looking Statements and Risk Factors. We assume no obligation to update any of the forward-looking statements included herein.
Results of Operations
Six Months Ended December 31, 2024 (“Interim 2024”), and December 31, 2023 (“Interim 2023”). During Interim 2024, we generated $609,791 (unaudited) in revenues, including $480,068 from temporary workforce services, $123,328 (unaudited) from Bitcoin mining operations and $6,395 (unaudited) from sales, and recognized $388,077 (unaudited) in cost of revenues, resulting in a gross profit of $221,714 (unaudited).
Our operating expenses for Interim 2024 totaled $620,915 (unaudited), which were comprised of $483,819 (unaudited) in administrative expense, $128,410 (unaudited) in interest expense and $8,695 (unaudited) in impairment of digital assets held. Other income during Interim 2024 totaled $14,224 (unaudited), which were comprised of $17,864 (unaudited) in other rewards and $10,530 (unaudited) in realized gains on sale/exchange of digital assets held (unaudited), offset by $14,170 (unaudited) in other net losses, resulting in a net loss of $384,977 (unaudited).
During Interim 2023, we generated $66,009 (unaudited) in revenues, including $53,936 (unaudited) from Bitcoin mining operations, $7,323 (unaudited) in liquidity pool fees, $23 (unaudited) in staking fees and $4,722 (unaudited) from sales, and recognized $-0- (unaudited) in cost of revenues, resulting in a gross profit of $66,009 (unaudited).
Our operating expenses for Interim 2023 totaled $418,397 (unaudited), which were comprised of $319,918 (unaudited) in administrative expense, $62,484 (unaudited) in interest expense and $35,995 (unaudited) in impairment of digital assets held. Other income during Interim 2024 totaled $103,295 (unaudited), which were comprised of $4,591 (unaudited) in other rewards, $34,048 (unaudited) in realized gains on sale/exchange of digital assets held (unaudited) and $66,599 (unaudited) in other net gains, offset by $(1,943) (unaudited) in change in fair value of derivative, resulting in a net loss of $384,977 (unaudited).
Segment Information.
For the Six Months Ended December 31, 2024
Digital Assets | Specialty Coffee and Beverages | Temporary Workforce Services | Total | |||||||||||||
Total revenue | $ | 123,328 | $ | 6,395 | $ | 480,068 | $ | 609,791 | ||||||||
Segment (loss) profit | $ | (266,877 | ) | $ | (28,241 | ) | $ | (89,859 | ) | $ | (384,977 | ) |
For the Six Months Ended December 31, 2023
Digital Assets | Specialty Coffee and Beverages | Temporary Workforce Services | Total | |||||||||||||
Total revenue | $ | 61,282 | $ | 4,727 | $ | 0 | $ | 66,009 | ||||||||
Segment (loss) profit | $ | (225,181 | ) | $ | (23,912 | ) | $ | 0 | $ | (249,093 | ) |
Years Ended June 30, 2024 (“Fiscal 2024”), and June 30, 2023 (“Fiscal 2023”). During Fiscal 2024, we generated $609,791 (unaudited) in revenues, including $480,068 from temporary workforce services, $123,328 (unaudited) from Bitcoin mining operations and $6,395 (unaudited) from sales, and recognized $388,077 (unaudited) in cost of revenues, resulting in a gross profit of $221,714 (unaudited).
Our operating expenses for Interim 2024 totaled $620,915 (unaudited), which were comprised of $483,819 (unaudited) in administrative expense, $128,410 (unaudited) in interest expense and $8,695 (unaudited) in impairment of digital assets held. Other income during Interim 2024 totaled $14,224 (unaudited), which were comprised of $17,864 (unaudited) in other rewards and $10,530 (unaudited) in realized gains on sale/exchange of digital assets held (unaudited), offset by $14,170 (unaudited) in other net losses, resulting in a net loss of $384,977 (unaudited).
During Interim 2023, we generated $66,009 (unaudited) in revenues, including $53,936 (unaudited) from Bitcoin mining operations, $7,323 (unaudited) in liquidity pool fees, $23 (unaudited) in staking fees and $4,722 (unaudited) from sales, and recognized $-0- (unaudited) in cost of revenues, resulting in a gross profit of $66,009 (unaudited).
Our operating expenses for Interim 2023 totaled $418,397 (unaudited), which were comprised of $319,918 (unaudited) in administrative expense, $62,484 (unaudited) in interest expense and $35,995 (unaudited) in impairment of digital assets held. Other income during Interim 2024 totaled $103,295 (unaudited), which were comprised of $4,591 (unaudited) in other rewards, $34,048 (unaudited) in realized gains on sale/exchange of digital assets held (unaudited) and $66,599 (unaudited) in other net gains, offset by $(1,943) (unaudited) in change in fair value of derivative, resulting in a net loss of $384,977 (unaudited).
30 |
Plan of Business
In General. We believe that the proceeds of this offering will satisfy our cash requirements for the next twelve months. However, to continue expanding operations and opening new facilities, we may need to raise additional funds in the next twelve months if our growth cannot be sustained by the revenue generated from increased sales.
Overview. While our company intends to maintain our ongoing Bitcoin mining operations and specialty coffee and beverages business, the focus of our plan of business for at least the next 12 months will be on expanding our staffing business. Specifically, we intend to expand our current staffing operations in Nashville and Knoxville, Tennessee, as well as to enter other markets that we determine to hold significant opportunities within the staffing market. We believe this focus on our staffing business holds the greatest opportunity for increasing our revenues and, ultimately, our profitability.
Our Focus. We intend to become a consolidator of companies within the staffing industry in the United States. It is our intention to acquire either operating staffing businesses that present a strong financial position, growth prospects and/or a solid track record of new client acquisition and retention or to license client lists targeted in a market to be targeted by us.
Growth Strategy. We believe the proceeds of this offering will allow us to increase the size of our current staffing operations, through working capital and increased sales and marketing efforts. In addition, we believe there are significant acquisition opportunities within the staffing industry. Our management has established certain criteria for potential acquisition targets.
As of the date of this Offering Circular, we have no agreement or understanding with respect to any acquisition. There is no assurance that we will be successful in completing an acquisition or that, if completed, that any such acquisition will prove to be profitable.
Financial Condition, Liquidity and Capital Resources
December 31, 2024. At December 31, 2024, our company had cash of $35,987 (unaudited) and a working capital deficit of $372,421 (unaudited), compared to $4,366 (unaudited) in cash and a working capital deficit of $164,981 (unaudited) at June 30, 2024. The deterioration in our working capital position is the result of the demand of our temporary workforce services business places on available working capital.
The following table summarizes the Company’s total assets by segment.
December 31, 2024 | June 30, 2024 | |||||||
Digital assets | $ | 380,515 | $ | 425,514 | ||||
Specialty coffee and beverages | 16,902 | 24,616 | ||||||
Temporary workforce services | 281,300 | 0 | ||||||
Total assets | $ | 678,717 | $ | 450,130 |
Our company’s current cash position of approximately $5,000 is adequate for our company to maintain its present level of operations through at least the first quarter of 2026. However, we must obtain additional capital from third parties, including in this offering, to implement our full business plans. There is no assurance that we will be successful in obtaining such additional capital.
June 30, 2024. At June 30, 2024, our company had cash of $4,366 (unaudited) and a working capital deficit of $164,981 (unaudited), compared to $17,086 (unaudited) in cash and a working capital deficit of $213,380 (unaudited) at June 30, 2024.
Off-Balance Sheet Arrangements
As of December 31, 2024, there were no off-balance sheet arrangements.
Contractual Obligations
To date, except for our retail leases, we have not entered into any significant long-term obligations that require us to make monthly cash payments.
Capital Expenditures
We made no capital expenditures during the six months ended December 31, 2024, and the year ended June 30, 2024. However, should be obtain proceeds in this offering, or otherwise, we expect to make capital expenditures during the next twelve months. We are unable to predict the amount or timing of any such expenditures.
31 |
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
The following table sets forth certain information concerning our company’s executive management.
Name | Age | Position(s) | |||
Ryan Schadel | 47 | President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director |
Our directors serve until a successor is elected and qualified. Our officers are elected by the Board of Directors to a term of one (1) year and serve until their successor(s) is duly elected and qualified, or until they are removed from office.
Certain information regarding the backgrounds of each of our officers and directors is set forth below.
Ryan Schadel, President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director. Mr. Schadel has served our company in his positions since 2021. From 2011 to 2021, Mr. Schadel owned and operated Labor Smart, Inc., a staffing company.
Conflicts of Interest
At the present time, we do not foresee any direct conflict between our sole director, his other business interests and his involvement in our company.
Corporate Governance
We do not have a separate Compensation Committee, Audit Committee or Nominating Committee. These functions are conducted by our Board of Directors acting as a whole.
During the year ended June 30, 2024, our Board of Directors, did not hold a meeting, but took needed actions by unanimous written consent.
Independence of Board of Directors
Our sole director is not independent, within the meaning of definitions established by the SEC or any self-regulatory organization. We are not currently subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include independent directors.
Shareholder Communications with Our Board of Directors
Our company welcomes comments and questions from our shareholders. Shareholders should direct all communications to our Chief Executive Officer, Ryan Schadel, at our executive offices. However, while we appreciate all comments from shareholders, we may not be able to respond individually to all communications. We attempt to address shareholder questions and concerns in our press releases and documents filed with OTC Markets, so that all shareholders have access to information about us at the same time. Mr. Schadel collects and evaluates all shareholder communications. All communications addressed to our directors and executive officers will be reviewed by those parties, unless the communication is clearly frivolous.
Code of Ethics
As of the date of this Offering Circular, our Board of Directors has not adopted a code of ethics with respect to our directors, officers and employees.
32 |
In General
As of the date of this Offering Circular, there are no annuity, pension or retirement benefits proposed to be paid to officers, directors or employees of our company, pursuant to any presently existing plan provided by, or contributed to, our company.
Compensation Summary
The following table summarizes information concerning the compensation awarded, paid to or earned by, our executive officers.
Name and Principal Position | Year Ended June 30, | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Non-qualified Deferred Compensation Earnings ($) | All Other Compen- sation ($) | Total ($) | |||||||||||||||||||||||||
Ryan Schadel President, Chief Executive Officer, Secretary | 2024 2023 | - - | - - | - - | - - | - - | - - | - - | - - |
Outstanding Option Awards
The following table provides certain information regarding unexercised options to purchase common stock, stock options that have not vested and equity-incentive plan awards outstanding as of the date of this Offering Circular, for each named executive officer.
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||||||||||||||||||
Ryan Schadel | - | - | - | - | n/a | - | n/a | - | - |
Employment Agreements
We have not entered into employments agreements with either of our executive officers.
Outstanding Equity Awards
During the years ended December 31, 2024 and 2023, our Board of Directors made no equity awards and no such award is pending.
Long-Term Incentive Plans
We currently have no long-term incentive plans.
Director Compensation
Our directors receive no compensation for their serving as directors of our company.
33 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below does not give effect to certain events, as follows:
Series A Convertible Preferred Stock Conversion. The table below does not give effect to the issuance of shares of our common stock upon conversion of the outstanding shares of Series A Convertible Preferred Stock, which convertible into a total of two billion shares of our common stock. (See “Risk Factors—Risks Related to a Purchase of the Offered Shares” and “Dilution—Ownership Dilution”).
In light of the caveat stated in the foregoing paragraph, the following table sets forth, as of the date of this Offering Circular, information regarding beneficial ownership of our common stock by the following: (a) each person, or group of affiliated persons, known by our company to be the beneficial owner of more than five percent of any class of our voting securities; (b) each of our directors; (c) each of the named executive officers; and (d) all directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC, based on voting or investment power with respect to the securities. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock underlying convertible instruments, if any, held by that person are deemed to be outstanding if the convertible instrument is exercisable within 60 days of the date hereof.
Share Ownership Before This Offering | Share Ownership After This Offering | |||||||||||||||||||
Name of Shareholder | Number of Shares Beneficially Owned | % Beneficially Owned(1) | Number of Shares Beneficially Owned | % Beneficially Owned(2) | Effective Voting Power | |||||||||||||||
Common Stock | ||||||||||||||||||||
Executive Officers and Directors | ||||||||||||||||||||
Ryan Schadel | 487,836,860 | 13.14 | % | 487,836,860 | 10.35 | % | See Note 3 | |||||||||||||
Officers and directors, as a group (1 person) | 487,836,860 | 13.14 | % | 487,836,860 | 10.35 | % | and Note 5 | |||||||||||||
5% Owner Eddy Rodriquez | 500,000,000 | 13.47 | % | 500,000,000 | 10.61 | % | ||||||||||||||
Series A Convertible Preferred Stock(4) | ||||||||||||||||||||
Series X Preferred Stock(5) | ||||||||||||||||||||
Ryan Schadel | 51 | 100 | % | 51 | 100 | % |
(1) | Based on (a) 3,712,384,860 shares of common stock outstanding, (b) 20 shares of Series A Convertible Preferred Stock issued and outstanding and (c) 51 shares of Series X Preferred Stock, before this offering. |
(2) | Based on (a) 4,712,384,860 shares of common stock outstanding, assuming all Offered Shares are sold, (b) 20 shares of Series A Convertible Preferred Stock issued and outstanding and (c) 51 shares of Series X Preferred Stock, after this offering. |
(3) | Our Chief Executive Officer, Ryan Schadel, owns all of the outstanding shares of Series X Preferred Stock. Mr. Schadel will, therefore, be able to control the management and affairs of our company, as well as matters requiring the approval by our shareholders, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, and any other significant corporate transaction. See Note 5. |
(4) | The Series A Convertible Preferred Stock is convertible at anytime into 100,000,000 shares of our common stock. |
(5) | The Series X Preferred Stock has, as a class, a number of votes equal to the total number of issued and outstanding shares of our common stock eligible to vote at the time of the respective vote multiplied by 1.041. See Note (3). |
34 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Issuance of Series X Preferred Stock
On February 6, 2025, the Company and Ryan Schadel entered into a Redemption and Exchange Agreement, pursuant to which the Company redeemed and exchanged 3,759,829,140 shares of Common Stock for the issuance to Ryan Schadel 51 shares of Series X Preferred Stock.
Acquisition Transaction
On September 27, 2024, the Company entered into an Asset Purchase Agreement (“Agreement”) with Epic Labor Inc. a Georgia corporation (“Seller”). Mr. Schadel is the Chief Executive Officer of the Seller. Also, Mr. Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and majority stockholder. Under the terms of the Agreement, the Seller sold its customer lists in the markets of Nashville and Knoxville, Tennessee connected to temporary workforce services. In consideration for the customer lists, the Company agreed to pay $88,800 in cash in monthly installment of $7,400 over the next twelve months and assume trade payable liabilities totaling $6,996.
Sale of Common Stock
On January 27, 2025, the Company issued Meliori Incorporated 50,000,000 shares of common stock of the Company for $50,000 in cash. Meliori Incorporated is owned by Katelyn Schadel, Ryan Schadel’s adult daughter. Mr. Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and controlling shareholder.
Certain legal matters with respect to the Offered Shares offered by this Offering Circular will be passed upon by Newlan Law Firm, PLLC, Flower Mound, Texas. Newlan Law Firm, PLLC is the beneficial holder of a convertible promissory note in the principal amount of $17,500. This note was issued by our company in payment of legal services, pursuant to a legal services agreement, and is convertible into Offered Shares in this offering. (See “Use of Proceeds” and “Selling Shareholders”).
WHERE YOU CAN FIND MORE INFORMATION
We have filed an offering statement on Form 1-A with the SEC under the Securities Act with respect to the common stock offered by this Offering Circular. This Offering Circular, which constitutes a part of the offering statement, does not contain all of the information set forth in the offering statement or the exhibits and schedules filed therewith. For further information with respect to us and our common stock, please see the offering statement and the exhibits and schedules filed with the offering statement. Statements contained in this Offering Circular regarding the contents of any contract or any other document that is filed as an exhibit to the offering statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the offering statement. The offering statement, including its exhibits and schedules, may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and copies of all or any part of the offering statement may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet website that contains all information regarding companies that file electronically with the SEC. The address of the site is www.sec.gov.
35 |
Unaudited Financial Statements For the Six Months Ended December 31, 2024 and 2023
36 |
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, 2024 | June 30, 2024 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 35,987 | $ | 4,366 | ||||
Deposits | 3,297 | 499 | ||||||
Accounts receivable | 166,682 | - | ||||||
Inventory | 14,006 | 9,070 | ||||||
Prepaid expenses | 5,115 | 1,996 | ||||||
Total current assets | 225,087 | 15,931 | ||||||
Digital assets held, net of impairment | 17,907 | 35,741 | ||||||
Equipment, net | 340,276 | 384,723 | ||||||
Customer list, net | 85,296 | - | ||||||
Intangible assets, net | 10,151 | 13,735 | ||||||
Total assets | $ | 678,717 | $ | 450,130 | ||||
Liabilities and Stockholders’ (Deficit) Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 92,669 | $ | 87,003 | ||||
Due to related parties | 159,801 | - | ||||||
Loan payable to factor | 189,062 | |||||||
Promissory notes, accrued interest (net of debt discount of $0 and $0, respectively), current portion | 155,976 | 93,909 | ||||||
Total current liabilities | 597,508 | 180,912 | ||||||
Long-term liabilities | ||||||||
Promissory note, accrued interest (net of debt discount of $28,753 and $35,844, respectively) less current portion | 54,303 | 98,322 | ||||||
Promissory notes - related parties, accrued interest (net of debt discount of $89,944 and $101,749, respectively) | 571,532 | 552,915 | ||||||
Convertible promissory note, accrued interest (net of debt discount of $0 and $11,434, respectively) | - | 9,959 | ||||||
Convertible promissory notes - related party, accrued interest (net of debt discount of $93,921 and $114,074, respectively) | 91,241 | 69,312 | ||||||
Total long-term liabilities | 717,076 | 730,508 | ||||||
Total liabilities | 1,314,584 | 911,420 | ||||||
Stockholders’ (Deficit) Equity | ||||||||
Preferred stock: $0.0001 par value; 20,000,000 shares authorized | - | - | ||||||
Series A Convertible Preferred Stock: $0.0001 par value; 100 shares designated; 20 shares issued and outstanding at December 31, 2024 and June 30, 2024 | - | - | ||||||
Series X Preferred Stock: $0.0001 par value; 51 shares designated; 0 shares issued and outstanding at December 31, 2024 and June 30, 2024 | - | - | ||||||
Common stock: $0.0001 par value; 15,000,000,000 shares authorized; 7,322,214,000 and 6,932,214,000 shares issued and outstanding at December 31, 2024 and June 30, 2024, respectively | 732,200 | 693,200 | ||||||
Additional paid-in capital | 19,223,596 | 19,052,196 | ||||||
Shares to be issued | 9,000 | 9,000 | ||||||
Accumulated deficit | (20,600,663 | ) | (20,215,686 | ) | ||||
Total stockholders’ (deficit) equity | (635,867 | ) | (461,290 | ) | ||||
Total liabilities and stockholders’ (deficit) equity | $ | 678,717 | $ | 450,130 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-1 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended December 31, | Six months ended December 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Revenue | ||||||||||||||||
Temporary workforce services | $ | 472,299 | $ | - | $ | 480,068 | $ | - | ||||||||
Mining pool fees | 98,237 | 44,735 | 123,328 | 53,936 | ||||||||||||
Liquidity pool fees | - | - | - | 7,323 | ||||||||||||
Staking fees | - | 23 | - | 23 | ||||||||||||
Sales | 2,503 | 3,066 | 6,395 | 4,727 | ||||||||||||
Total revenue | 573,039 | 47,824 | 609,791 | 66,009 | ||||||||||||
Cost of services | 388,077 | - | 388,077 | - | ||||||||||||
Expense | ||||||||||||||||
Administrative expenses | 332,041 | 192,623 | 483,819 | 319,918 | ||||||||||||
Interest expense | 71,184 | 38,618 | 128,401 | 62,484 | ||||||||||||
Impairment of digital assets held | 2,961 | 11,682 | 8,695 | 35,995 | ||||||||||||
Total expense | 406,186 | 242,923 | 620,915 | 418,397 | ||||||||||||
Other income | ||||||||||||||||
Change in fair value of derivative | - | (2,821 | ) | - | (1,943 | ) | ||||||||||
Other rewards | 14,789 | 4,591 | 17,864 | 4,591 | ||||||||||||
Realized gains on sale/ exchange of digital assets held | 6,884 | 26,641 | 10,530 | 34,048 | ||||||||||||
Other net (losses) gains | 701 | 65,878 | (14,170 | ) | 66,599 | |||||||||||
Total other income | 22,374 | 94,289 | 14,224 | 103,295 | ||||||||||||
Net loss | $ | (198,850 | ) | $ | (100,810 | ) | $ | (384,977 | ) | $ | (249,093 | ) | ||||
Net loss per share - basic and diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
Weighted average number of common shares outstanding - basic and diluted | 7,305,040,089 | 6,632,214,000 | 7,132,409,650 | 6,632,214,000 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-2 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
For the three and six months ended December 31, 2024 and 2023
(Unaudited)
Series A Convertible Preferred Stock ($0.0001 par value) | Common Stock ($0.0001 par value) | Additional paid-in | Shares to be | Accumulated | Total stockholders’ | |||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | capital | issued | deficit | equity | |||||||||||||||||||||||||
Balance at September 30, 2024 | 20 | $ | - | 7,164,214,000 | $ | 716,400 | $ | 19,154,996 | $ | 41,400 | $ | (20,401,813 | ) | $ | (489,017 | ) | ||||||||||||||||
Issue of common stock for cash | - | - | 104,000,000 | 10,400 | 41,600 | - | - | 52,000 | ||||||||||||||||||||||||
Issue of common stock for services | - | - | 54,000,000 | 5,400 | 27,000 | (32,400 | ) | - | - | |||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (198,850 | ) | (198,850 | ) | ||||||||||||||||||||||
Balance at December 31, 2024 | 20 | $ | - | 7,322,214,000 | $ | 732,200 | $ | 19,223,596 | $ | 9,000 | $ | (20,600,663 | ) | $ | (635,867 | ) |
Series A Convertible Preferred Stock ($0.0001 par value) | Common Stock ($0.0001 par value) | Additional paid-in | Shares to be | Accumulated | Total stockholders’ | |||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | capital | issued | deficit | equity | |||||||||||||||||||||||||
Balance at June 30, 2024 | 20 | $ | - | 6,932,214,000 | $ | 693,200 | $ | 19,052,196 | $ | 9,000 | $ | (20,215,686 | ) | $ | (461,290 | ) | ||||||||||||||||
Issue of common stock for cash | - | - | 336,000,000 | 33,600 | 144,400 | - | - | 178,000 | ||||||||||||||||||||||||
Issue of common stock for services | - | - | 54,000,000 | 5,400 | 27,000 | - | - | 32,400 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (384,977 | ) | (384,977 | ) | ||||||||||||||||||||||
Balance at December 31, 2024 | 20 | $ | - | 7,322,214,000 | $ | 732,200 | $ | 19,223,596 | $ | 9,000 | $ | (20,600,663 | ) | $ | (635,867 | ) |
Series A Convertible Preferred Stock ($0.0001 par value) | Common Stock ($0.0001 par value) | Additional paid-in | Shares to be | Accumulated | Total stockholders’ | |||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | capital | issued | deficit | equity | |||||||||||||||||||||||||
Balance at September 30, 2023 | 22 | $ | - | 6,632,214,000 | $ | 663,200 | $ | 18,953,248 | $ | 9,000 | $ | (19,767,330 | ) | $ | (141,882 | ) | ||||||||||||||||
Shares to be issued | - | - | - | - | - | 83,000 | - | 83,000 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (100,810 | ) | (100,810 | ) | ||||||||||||||||||||||
Balance at December 31, 2023 | 22 | $ | - | 6,632,214,000 | $ | 663,200 | $ | 18,953,248 | $ | 92,000 | $ | (19,868,140 | ) | $ | (159,692 | ) |
Series A Convertible Preferred Stock ($0.0001 par value) | Common Stock ($0.0001 par value) | Additional paid-in | Shares to be | Accumulated | Total stockholders’ | |||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | capital | issued | deficit | equity | |||||||||||||||||||||||||
Balance at June 30, 2023 | 22 | $ | - | 6,632,214,000 | $ | 663,200 | $ | 18,953,248 | $ | 9,000 | $ | (19,619,047 | ) | $ | 6,401 | |||||||||||||||||
Shares to be issued | - | - | - | - | - | 83,000 | - | 83,000 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (249,093 | ) | (249,093 | ) | ||||||||||||||||||||||
Balance at December 31, 2023 | 22 | $ | - | 6,632,214,000 | $ | 663,200 | $ | 18,953,248 | $ | 92,000 | $ | (19,868,140 | ) | $ | (159,692 | ) |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-3 |
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-4 |
NOTES TO UNAUDITED FINANCIAL STATEMENTS
December 31, 2024
NOTE 1 – ORGANIZATION AND OPERATIONS
Metavesco, Inc. (formerly Waterside Capital Corporation) (the “Company”) was incorporated in the Commonwealth of Virginia on July 13, 1993 and was a closed-end investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment Company (“SBIC”). The Company previously made equity investments in, and provided loans to, small businesses to finance their growth, expansion, and development. Under applicable SBA regulations, the Company was restricted to investing only in qualified small businesses as contemplated by the Small Business Investment Act of 1958. As a registered investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), the Company’s investment objective was to provide its shareholders with a high level of income, with capital appreciation as a secondary objective. The Company made its first investment in small business in October 1996.
On May 28, 2014, with the Company’s consent, the United States District Court for the Eastern District of Virginia, having jurisdiction over an action filed by the SBA (the “Court”), entered a Consent Order and Judgment Dismissing Counterclaim, Appointing Receiver, Granting Permanent Injunctive Relief and Granting Money Judgment (the “Order”). The Order appointed the SBA receiver of the Company for the purpose of marshaling and liquidating in an orderly manner all of the Company’s assets and entered judgment in favor of the United States of America, on behalf of the SBA, against the Company in the amount of $11,770,722. The Court assumed jurisdiction over the Company and the SBA was appointed receiver effective May 28, 2014.
The Company effectively stopped conducting an active business upon the appointment of the SBA as the receiver and the commencement of the court-ordered receivership (the “Receivership”). Over the course of the Receivership, the activity of the Company was limited to the liquidation of the Company’s assets by the receiver and the payment of the proceeds therefrom to the SBA and for the expenses of the Receivership. On June 28, 2017, the Receivership was terminated with the entry of a Final Order by the Court. The Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order”. Upon termination of the Receivership, Roran took possession of all books and records made available to it by the SBA.
The Company filed with the Securities and Exchange Commission (the “SEC”) an application pursuant to Section 8(f) of the Investment Company Act for an order declaring that the Company had ceased to be a registered investment company. On April 22, 2020, the SEC issued an order under Section 8(f) of the Investment Company Act declaring that the Company had ceased to be an investment company. As a result, the Company is now a reporting company under the Securities Exchange Act of 1934, as amended.
On September 2, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) Mr. Schadel (“Buyer”) and (iii) Roran. Roran agreed to sell to the Buyer 4,276,666,000 shares of common stock of the Company held by Roran for a total purchase price of $385,000. In conjunction with the SPA, Roran agreed to forgive all amounts due to Roran by the Company totaling $207,644, which is comprised of convertible note payable – related party, accrued interest payable – related party, and advances from related party. The Buyer acquired 4,276,666,000 shares of the Company’s Common Stock, representing 69.7% of the issued and outstanding shares of Common Stock. As such, the SPA resulted in a change of control of the Company.
Effective November 29, 2021, the Company converted from a Virginia corporation to a Nevada corporation.
On December 17, 2021, the majority shareholder and board of directors approved an amendment to the amended and restated articles of incorporation that would change the Company’s name from Waterside Capital Corporation to Metavesco, Inc. The name change was effective June 3, 2022, following clearance by the Financial Industry Regulatory Authority (“FINRA”).
In March 2022, the Company commenced operations as a web3 enterprise. The Company generates income as a liquidity provider, via decentralized exchanges such as Uniswap. Additionally, the Company farms tokens via Proof of Stake protocols on decentralized exchanges, as well as centralized exchanges including the Coinbase, Inc. (“Coinbase”) exchange. The Company also invests in what it considers promising non-fungible token (“NFT”) projects and virtual land, primarily on Ethereum virtual machine (“EVM”) protocols.
On June 12, 2023, the Company entered into a Limited Liability Company Interest Purchase Agreement the (“Purchase Agreement”) with Eddy Rodrigeuz (the “Seller”). The Seller is the sole owner of Boring Brew LLC (“Boring”) and Bored Coffee Lab, LLC (“Bored”). Under the terms of the Purchase Agreement, the Seller sold to the Company all of the outstanding limited liability company interests in Boring and Bored for a total purchase price of $9,245 in cash and 500,000,000 shares of common stock of the Company.
In February 2023, the Company commenced bitcoin mining operations at a hosted facility in Texas, in May 2023, at a hosted facility in Kentucky and in November 2023, at a hosted facility in Iowa.
On November 13, 2023, the Company filed Form 15 with the SEC which terminated its duty to file reports under the Securities Exchange Act of 1934, as amended.
On September 27, 2024, the Company entered into an Asset Purchase Agreement (“Agreement”) with Epic Labor Inc. a Georgia corporation (“Seller”). Mr. Schadel is the Chief Executive Officer of the Seller. Also, Mr. Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and majority stockholder. Under the terms of the Agreement, the Seller sold its customer lists in the markets of Nashville and Knoxville, Tennessee connected to temporary workforce services. In consideration for the customer lists, the Company agreed to pay $88,800 in cash in monthly installment of $7,400 over the next twelve months and assume trade payable liabilities totaling $6,996.
Going Concern
The Company’s consolidated financial statements have been prepared in accordance with GAAP applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the six months ended December 31, 2024, the Company incurred a net loss of $384,977 and used cash in operating activities of $459,419, and on December 31, 2024, had an accumulated deficit of $20,600,663. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date that the consolidated financial statements are issued. The Company will be dependent upon the raising of additional capital through placement of debt and its common stock in order to implement its business plan. There can be no assurance that the Company will be successful in this situation. The Company expects over the next twelve months cash held at a consolidated financial institution will be spent on professional fees, transfer agent and other administrative costs. The cash held at Coinbase will be deployed to purchase crypto assets to generate mining pool fees. We hope to pay some of our suppliers and contractors in digital assets in the coming months. However, there can be no assurance we will be able to pay any of our suppliers and contractors in digital assets.
F-5 |
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year-End
The Company elected June 30 as its fiscal year-end date.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries (1) Boring Brew LLC (2) Bored Coffee Lab, LLC and (3) Epic Labor, Inc., a Wyoming corporation. All significant intercompany transactions are eliminated.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with GAAP 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 revenues and expenses during the reporting periods.
These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the consolidated financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Significant matter requiring use of estimates and assumptions include, but may not be limited to, evaluation of impairment of digital assets, equipment, identifiable intangible assets and goodwill, recognition and valuation of revenue, valuation allowance for deferred tax assets and fair value used in business acquisitions.
Actual results could differ from those estimates.
Business Acquisitions
The Company accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805 “Business Combinations.” The cost of acquisition is measured at the aggregate of the acquisition date fair value of the assets transferred to the sellers and liabilities incurred by the Company and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated income statements. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated income statements.
Cash and cash equivalents
Cash and cash equivalents include cash and interest-bearing highly liquid investments held at financial institutions, cash on hand that is not restricted as to withdrawal or use with an initial maturity of three months or less, and cash held in accounts at crypto trading venues. On December 31, 2024, $35,987 of cash was held at financial institutions which are members of the Federal Deposit Insurance Corporation (“FDIC”) and $0 was held at Coinbase. The contract with Coinbase requires USD balances in a client’s fiat wallet be held in an omnibus custodial account for the benefit of Coinbase’s customers. These accounts are either omnibus bank accounts insured by the FDIC (currently up to $250,000 per entity) or trust accounts holding short term U.S. treasuries.
Factoring Agreement and Accounts Receivable
The Company entered into a factoring agreement with Encore Funding (“Encore”). Advances to the Company from Encore are with recourse and are secured by assets of the Company and are treated as a secured financing arrangement. As of December 31, 2024 and June 30, 2024, factored accounts receivable total $166,682 and $0, respectively.
Digital Assets
Digital assets held by the Company are accounted for as intangible assets with indefinite useful lives and are initially measured at cost. The Company assigns costs to transactions on a first-in, first-out basis (FIFO).
F-6 |
An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital assets at the time its fair value is being measured.
Tokens are subject to impairment losses if the fair value of a token decreases below the carrying value at any time during the period. The fair value is measured using the quoted price in the principal market of the tokens. The Company currently obtains the quoted price of tokens from www.cryptocompare.com.
Liquidity pool tokens and NFTs are subject to impairment losses if the fair value of a token decreases below the carrying value at the end of each quarterly accounting period. The fair value of liquidity pool tokens is based on the quoted price on the last day of the quarter at 4PM Eastern Time. The fair value of NFTs is based on the average trading price on the last day of each quarter.
Impairment for liquidity pool tokens and NFTs is assessed quarterly due to each token being a unique asset and due to the illiquid markets in which these tokens trade. The Company is continuously reviewing available markets and information and its methodology when determining the fair value of digital assets.
The Company currently reviews quoted prices of its liquidity pool tokens, NFTs and comparable tokens at https://uniswap.org/ and https://opensea.io. Impairment expense is reflected in total expense in the consolidated statements of operations. Subsequent reversal of impairment losses is not permitted.
The sales of digital assets held are included within investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in other income (expense) in the consolidated statements of operations.
Identifiable Intangible Assets
Identifiable intangible assets consist primarily of customer lists, design and websites. These assets are tested for impairment using undiscounted cash flow methodology annually and whenever there is an indicator of impairment. Estimating future cash flows requires significant judgment and projections may vary from cash flows eventually realized. Several impairment indicators are beyond the Company’s control and determining whether or not they will occur cannot be predicted with any certainty. Design and websites are amortized on a straight-line basis over an estimated life of three years.
The website development costs of the Company are accounted for in accordance with ASC 350-50, Website Development Costs. These costs are included in intangible assets in the accompanying consolidated financial statements. Upgrades or enhancements that add functionality are capitalized while other costs during the operating stage are expensed as incurred. The Company amortizes the capitalized website development costs over an estimated useful life of three years.
Customer lists are amortized on a straight-line basis over three years.
December 31, 2024 | ||||
Customer lists | $ | 95,796 | ||
Less: accumulated amortization | (10,500 | ) | ||
$ | 85,296 |
Amortization expense for the six months ended December 31, 2024 and 2023 is $10,500 and $0, respectively.
Goodwill
Goodwill represents the premium paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company’s business combinations. The Company performs a goodwill impairment test on at least an annual basis at the reporting unit level. Application of the goodwill impairment test requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the businesses, the useful life over which cash flows will occur and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. The Company will conduct its annual goodwill impairment test as of June 30 of each year or more frequently if indicators of impairment exist. The Company periodically analyzes whether any such indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a sustained significant decline in our stock price and market capitalization, a significant adverse change in legal factors or in the business climate, unanticipated competition and/or slower expected growth rates, adverse actions or assessments by a regulator, among others. The Company compares the fair value of its reporting unit to its respective carrying value, including related goodwill.
Revenue recognition
The Company recognizes revenue under the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
● | Step 1: Identify the contract with the customer | |
● | Step 2: Identify the performance obligations in the contract | |
● | Step 3: Determine the transaction price | |
● | Step 4: Allocate the transaction price to the performance obligations in the contract | |
● | Step 5: Recognize revenue when the Company satisfies a performance obligation |
Revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company generates revenue through temporary workforce services, sale of specialty coffee and beverages, mining pools fees and liquidity pool fees.
Temporary Workforce Service
Temporary workforce service revenues are recognized when services are rendered.
F-7 |
Mining Pools
The Company earns transaction fees with its crypto mining machines by validating requesting customers’ transactions to a distributing ledger. We joined a mining pool and receive a pro-rata share of a bitcoin award for completing a blockchain.
The Company has entered into digital asset mining pools by executing an agreement with one mining pool operator The agreement is terminable at any time by either party. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are immaterial and are recorded as a deduction from revenue), for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.
Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions.
Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of receipt.
Liquidity Pools
Liquidity pools are a collection of digital assets locked in a smart contract that provide liquidity to decentralized exchanges. Liquidity allows digital assets to be converted to cash quickly and efficiently without drastic price swings. An important component of a liquidity pool are automated market makers (“AMMs”). An AMM is a protocol that uses liquidity pools to allow digital assets to be traded by a mathematical formula rather than though a traditional market of buyers and sellers.
The Company earns fees by providing liquidity on Uniswap V2 and Uniswap V3. The Company earns fees proportionate to the liquidity they have supplied to the exchange. The fee for each trade is set at 0.05% for stable coins, 0.3% for most pairs and 1.0% for exotic pairs. The fees earned by the Company depend on the risk characteristics of each pair of tokens selected and the price range liquidity is provided. Uniswap V2 requires users to provide liquidity over the entire price curve, whereas Uniswap V3 provides users with liquidity over a price range.
Revenue is recognized from liquidity pools when the award is claimed and deposited in the Company wallet. The transaction consideration the Company receives is noncash in the form of digital assets. Revenue is measured at the fair value of the digital asset awards received.
Staking Rewards
Staking rewards are granted to holders of a crypto asset when the holders lock up that crypto asset as collateral to secure fairness when validating transactions or other network actions.
The Company participates in networks with proof-of-stake consensus algorithms, through creating or validating blocks on the network. In exchange for participating in the consensus mechanism of these networks, the Company earns rewards in the form of the native token of the network. Each block creation or validation is a performance obligation. Revenue is recognized at the point when the block creation or validation is complete and the rewards are transferred into a digital wallet that the Company controls. Revenue is measured based on the number of tokens received and the fair value of the token at contract inception.
Airdrops
Airdrops are the distribution of tokens without compensation generally undertaken with a view of increasing awareness of a new token, to encourage adoption of a new token and to increase liquidity in the early stages of a token project.
The Company recognizes crypto assets received through an airdrop if the crypto asset is expected to generate probable future benefit and if the Company is able to support the trading, custody, or withdrawal of these assets.
Airdrops are accounted for in accordance with ASC 610-20, Sales and Transfer of Nonfinancial Assets, Receipt of a airdrops are classified as other income in the statement of operations.
Equipment
Equipment is stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred, while renewals and betterments that materially extend the life of an asset are capitalized.
The costs of assets sold, retired, or otherwise disposed of, and the related allowance for depreciation, are eliminated from the accounts, and any resulting gain or loss is recognized in the results from operations. Depreciation is provided over the estimated useful lives of the assets, which are as follows:
Mining equipment | Straight-line over 36 months |
Convertible Financial Instruments
The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP.
When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.
F-8 |
Beneficial conversion feature – The issuance of the convertible debt generated a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with a non-separated embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The Company recognized the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of common stock per share on the commitment date, resulting in a discount on the convertible debt (recorded as a component of additional paid-in capital). The BCF is amortized into interest expense over the life of the related debt.
Related Parties
The Company follows subtopic 850-10 of the ASC for the identification of related parties and disclosure of related party transactions.
The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and, (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
Commitments and Contingencies
The Company follows ASC 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the consolidated 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. Management 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, management evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, 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.
Deferred Tax Assets and Income Taxes Provision
The Company follows the provisions of ASC 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under ASC 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if 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. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25-13 also provides guidance on de-recognition, classification, interest, and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carrybacks and carryforwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Tax years that remain subject to examination by major tax jurisdictions are generally the prior three years for federal purposes, and the prior four years for state purposes; however, as a result of the Company’s operating losses, all tax years remain subject to examination by tax authorities.
Net Income (Loss) Per Common Share
The Company computes net income or loss per share in accordance with ASC 260 Earnings Per Share. Under the provisions of ASC 260, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, on December 31, 2024 and 2023, we excluded the common stock issuable upon conversion of Series A Convertible Preferred Stock, warrants and shares to be issued of 2,022,620,000 shares and 2.321.620.000 shares, respectively, as their effect would have been anti-dilutive.
F-9 |
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of ASC for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of ASC (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. | |
Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. | |
Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Transactions involving related parties cannot be presumed to be carried out on an arms-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Segment reporting
The Company reports each material operating segment in accordance with ASC 280, “Segment Reporting”. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is the chief executive officer. The Company has determined that it has only three operating segments: digital assets, specialty coffee and beverages and temporary workforce services.
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. The Company is currently evaluating the provisions of the amendments and the impact on its financial statements.
In December 2023, the FASB issued ASU No. 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60), Accounting for and Disclosure of Crypto Assets, that changes the accounting for crypto assets from a cost-less-impairment model to fair value, with changes recognized in net income each reporting period. The ASU also requires enhanced disclosures including, among other things, the name, cost basis, fair value, and number of units for each significant holding, and a rollforward of annual activity including additions, dispositions, gains, and losses. The Company will adopt the amendments in this ASU for its fiscal year beginning on July 1, 2025. The ASU requires a cumulative-effect adjustment to the opening balance of retained earnings as of adoption. The Company is evaluating the impact that this ASU will have on its consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the provisions of the amendments and the impact on its financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
NOTE 3 – DIGITAL ASSETS HELD, NET OF IMPAIRMENT
Digital assets held; net of impairment have consisted of:
Balance, June 30, 2024 | $ | 35,741 | ||
Purchase of digital assets | 99,203 | |||
Proceeds from sale of digital assets | (205,428 | ) | ||
Realized gain on sale/ exchange of digital assets held | 10,530 | |||
Other gain (loss) | (14,170 | ) | ||
Acquired digital assets by mining pools and other digital rewards | 141,192 | |||
Digital assets used to pay deposit and expenses | (40,466 | ) | ||
Impairment charges | (8,695 | ) | ||
Balance, December 31, 2024 | $ | 17,907 |
As of December 31, 2024, the Company’s holdings of digital assets held, net of impairment comprise of:
Units held | Carrying value, at cost less impairment | |||||||
Cryptocurrency | ||||||||
BTC | 0.27 | $ | 16,552 | |||||
ETH | 0.52 | 1,227 | ||||||
Other | 128 | |||||||
$ | 17,907 |
F-10 |
NOTE 4 – EQUIPMENT
Cost | Accumulated Depreciation | December 31, 2024 Net Book Value | June 30, 2024 Net Book Value | |||||||||||||
Mining equipment | $ | 438,046 | $ | 97,770 | $ | 340,276 | $ | 384,723 |
Depreciation expense for six months ended December 31, 2024 and 2023 was $44,448 and $20,761, respectively.
NOTE 5 – CUSTOMER LISTS, NET
On September 27, 2024, the Company entered into an Asset Purchase Agreement (“Agreement”) with Epic Labor Inc. a Georgia corporation (“Seller”). Mr. Schadel is the Chief Executive Officer of the Seller. Also, Mr. Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and majority stockholder. Under the terms of the Agreement, the Seller sold its customer lists in the markets of Nashville and Knoxville, Tennessee connected to temporary workforce services. In consideration for the customer lists, the Company agreed to pay $88,800 in cash in monthly installment of $7,400 over the next twelve months and assume trade payable liabilities totaling $6,996.
The determination of the estimated fair value of the acquired assets and liabilities assumed required management to make significant estimates and assumptions. We determined fair value by applying established valuation techniques, based on information that management believed to be relevant to this determination. The following table summarizes the purchase price allocation of the fair value of the assets acquired and liabilities assumed at the date of purchase:
Customer lists | $ | 95,796 | ||
Net assets acquired | $ | 95,796 | ||
Due to Epic Labor Inc, a Georgia corporation | $ | 88,800 | ||
Assumption of trade payable liabilities | 6,996 | |||
Consideration paid | $ | 95,796 |
NOTE 6 – IDENTIFIED INTANGIBLE ASSETS
Intangible assets comprise website development and design which are recorded at cost.
December 31, 2024 | June 30, 2024 | |||||||
Website development | $ | 12,500 | $ | 12,500 | ||||
Design | 9,000 | 9,000 | ||||||
21,500 | 21,500 | |||||||
Accumulated amortization | (11,349 | ) | (7,765 | ) | ||||
Identifiable Intangible Assets | $ | 10,151 | $ | 13,735 |
During the six months ended December 31, 2024 and 2023, $3,584 (comprising website of $2,084 and design of $1,500) and $3,584 (comprising website of $2,084 and design of $1,500, respectively, was recorded as amortization. The Company estimates amortization over the remainder of the current fiscal year is $3,583 and amortization of $6,568 in the second year.
NOTE 7 – DUE TO RELATED PARTIES
On December 31, 2024 and June 30, 2024, $88,800 and $0, respectively, is due to Epic Labor, Inc., a Georgia corporation. The amount is non-interest bearing, unsecured and payable in monthly installments of $7,400. Mr. Ryan Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and majority stockholder. Ms. Ryan Schadel serves as Epic Labor, Inc., a Georgia corporation, Chief Executive Officer.
On December 31, 2024 and June 30, 2024, $46,001 and $0, respectively, is due to Mr. Ryan Schadel. The amount due is non-interest bearing, unsecured and has no specific terms of repayment.
On December 31, 2024 and June 30, 2024, $25,000 and $0, respectively, is due to Labor Smart, Inc. (“Laborsmart”). Laborsmart is owned by Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The amount due is non-interest bearing, unsecured and has no specific terms of repayment.
F-11 |
NOTE 8 – LOAN PAYABLE TO FACTOR
The Company entered into a factoring agreement with Encore Funding (“Encore”). Under the terms of factoring agreement, Encore shall have the right, but not the obligation, to purchase accounts receivable of the Company. For each account receivable purchased, the Company pays Encore a 1.5% fee of the total invoice amount we borrow against for the first 30 days plus an additional 0.50% fee of the invoice amount every 10 days for credit and collection services. If the customer does not pay an invoice within 90 days the Company is charged an additional 0.06% fee of the invoice amount per day. In addition, the Company pays various other administrative fees to Encore.
The loan payable to factor with Encore has been treated as a secured financing arrangement. Interest expense related to the factoring arrangement was $26,519 and $0 for the six months ended December 31, 2024 and 2023, respectively.
NOTE 9 – PROMISSORY NOTES
Promissory Note and Common Stock Purchase Warrant
On January 16, 2024 the Company issued a Promissory Note in the principal amount of $230,000 (the “Promissory Note”) for cash to Tom Zarro. The Promissory Note bears interest at the rate of 12.00% per annum. Following the date of issue, 36 monthly principal payments of $6,389 plus any accrued and unpaid interest are due. Any unpaid principal amount and any accrued interest is due on January 16, 2027. The Promissory Note is unsecured and there is no prepayment penalty. In the event the Promissory Note is not paid when due, any outstanding principal and interest will accrue interest of 12% per annum. In conjunction with the issue of the Promissory Note, the Company issued Mr. Zarro a common stock purchase warrant (the “Warrant”). The terms of the Warrant state that, Mr. Zarro may, at any time on or after January 16, 2024 and until January 16, 2029, exercise the Warrant to purchase 1,000,000 shares of the Company’s common stock for an exercise price per share of $0.0003, subject to adjustment as provided in the Warrant.”). The fair value of the Warrant of $45,948 was calculated using volatility of 167%, interest-free rate of 3.95%, nil expected dividend yield and expected life of 5 years. The fair value of the debt and warrant is allocated based on their relative fair values. During the six months ended December 31, 2024 and 2023, $7,092 and $0, respectively, of discount amortization is included in interest expense. On December 31, 2024 and June 30, 2024, there was outstanding principal of $217,222 and $217,222, respectively, an unamortized discount balance of $28,753 and $35,844, respectively, to be amortized through January 2027 and accrued interest payable of $21,809 and $10,853, respectively.
Demand Promissory Note – Related Parties
On November 2, 2023, the Company entered into a Securities Purchase Agreement (the “Meliori SPA”) by and between the Company and Meliori Incorporated (“Meliori”). Meliori is owned by Katelyn Schadel, Ryan Schadel’s adult daughter. Mr. Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and majority stockholder. Ms. Schadel serves as Meliori’s Chief Executive Officer, Secretary, Treasurer and sole director. Pursuant to the terms of the Meliori SPA, the Company issued and sold to Meliori (i) a secured promissory note, in the principal amount of $650,000, for a purchase price of $597,000, reflecting a $53,000 original issue discount (the “Meliori Note”), and (ii) 100,000,000 shares of the Company’s common stock, with a fair value of $83,000 for a purchase price of $1,000. The Company will use the proceeds from the Meliori Note for general working capital and investment purposes. The Company provided typical representations and agreed to standard covenants pursuant to the Meliori SPA. The Meliori SPA does not include any financial covenants. The Meliori Note bears interest at the rate of 12.5% per annum and matures on the fifth anniversary of the issue date, or November 2, 2028. In the event that any amount due under the Meliori Note is not paid as and when due, such amounts will accrue interest at the rate of 14% per year. On the first business day following each annual anniversary of the issue date, the Company agreed to pay Meliori all accrued and unpaid interest thereunder. Such payments may be made in cash, or, at the option of the Company, via the issuance to Meliori of shares of the Company’s common stock. The Company may, in its sole discretion, prepay any amount due and payable under the Meliori Note at any time, without penalty. During the six months ended December 31, 2024, the Company repaid $30,500 of principal in cash and, also, during the six months ended December 31, 2024 and 2023, $11,804 and $4,360, respectively, discount amortization is included in interest expense. On December 31, 2024 and June 30, 2024, there was outstanding principal of $572,000 and $602,500, respectively, an unamortized discount balance of $89,944 and $101,749, respectively, to be amortized through November 2028 and accrued interest payable of $89,476 and $52,164, respectively.
NOTE 10 – CONVERTIBLE PROMISSORY NOTES
Convertible Promissory Notes
On May 10, 2022, the Company issued a Convertible Promissory Note in the principal amount of $20,000 (the “Convertible Promissory Note”), for cash, to Timothy Hackbart. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 10, 2027. The Convertible Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Convertible Promissory Note is convertible into shares of the Company’s common stock at a conversion price of $0.0005 per share. The closing price of the Company’s common stock was $0.0014 per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $20,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the six months ended December 31, 2024 and 2023, $11,434 and $2,014, respectively, discount amortization is included in interest expense. On December 31, 2024 and June 30, 2024, there was an unamortized discount balance of $0 and $11,434, respectively. On September 24, 2024, the Company fully settled all unpaid principal and interest for $21,546 in cash. The Convertible Promissory Note is paid in full.
Convertible Promissory Notes – Related Party
On May 6, 2022, the Company issued a Convertible Promissory Note in the principal amount of $100,000 (the “Convertible Promissory Note”), for cash, to Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 6, 2027. The Convertible Promissory Note is unsecured and there is no prepayment penalty. At the option of Mr. Schadel, the Convertible Promissory Note is convertible into shares of the Company’s common stock at a conversion price of $0.0005 per share. The closing price of the Company’s common stock was $0.00145 per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $100,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the six months ended December 31, 2024, the Company repaid $1,200 of principal in cash and, also, during the six months ended December 31, 2024 and 2023, $10,077 and $10,077, respectively, discount amortization is included in interest expense. On December 31, 2024 and June 30, 2024, there was outstanding principal of $81,501 and $82,701, respectively, an unamortized discount balance of $46,878 and $56,955, respectively, to be amortized through May 2027 and accrued interest payable of $1,338 and $0, respectively.
F-12 |
On May 9, 2022, the Company issued a Convertible Promissory Note in the principal amount of $100,000 (the “Convertible Promissory Note”), for cash, to Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 9, 2027. The Convertible Promissory Note is unsecured and there is no prepayment penalty. At the option of Mr. Schadel, the Convertible Promissory Note is convertible into shares of the Company’s common stock at a conversion price of $0.0005 per share. The closing price of the Company’s common stock was $0.001415 per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $100,0000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the six months ended December 31, 2024 and 2023, $10,076 and $10,076, respectively, discount amortization is included in interest expense. On December 31, 2024 and June 30, 2024, there was outstanding principal of $100,000 and $100,000, respectively, an unamortized discount balance of $47,043 and $57,119, respectively, to be amortized through May 2027 and accrued interest payable of $2,324 and $686, respectively.
NOTE 11 – SHAREHOLDER DEFICIT
Series A Convertible Preferred Stock (“Series A Stock”) Certificate of Designations provides (i) the number of authorized shares will be 100, (ii) each share will have a stated value of $50,000, (iii) each share is convertible into 100,000,000 shares of Company common stock, subject to a 9.99% equity blocker, (iv) shares are non-voting, and (v) shares are not entitled to receive dividends or distributions.
Series X Preferred Stock (“Series X Stock”) Certificate of Designations provides (i) the number of authorized shares will be 51 (ii) each share of Series X Stock shall have a number of votes equal to (A) (i) the total number of issued and outstanding shares of Common Stock eligible to vote at the time of the respective vote, multiplied by (ii) 1.041; divided by (B) 51, and thereafter rounded to the nearest whole vote per share of Series X Stock, (iii) shares shall be non-convertible and (iv) shares are not entitled to receive dividends or distributions.
Stock Issued
On September 17, 2024, the Company issued Meliori Incorporated 72,000,000 shares of common stock of the Company for $36,000 in cash.
On September 20, 2024, the Company issued Meliori Incorporated 160,000,000 shares of common stock of the Company for $90,000 in cash.
On September 27, 2024, the Company agreed to issued 54,000,000 shares of common stock of the Company for services with a fair value of $32,400. On October 14, 2024, the Company issued 54,000,000 shares of common stock of the Company to satisfy an obligation to issue shares for services under a commitment incurred on September 27, 2024.
On October 4 2024, the Company issued Mr. Ryan Schadel 36,000,000 shares of common stock of the Company for $18,000 in cash.
On October 10 2024, the Company issued Mr. Ryan Schadel 68,000,000 shares of common stock of the Company for $34,000 in cash.
Meliori Incorporated is owned by Katelyn Schadel, Ryan Schadel’s adult daughter. Mr. Ryan Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and majority stockholder.
Warrants
On March 16, 2022, the Company entered into Stock Purchases Agreements whereby the Company issued 22 shares to Series A Stock and various Warrants for $1,100,000 in cash. The Warrants comprise 2,200,000 Company common stock issuable at $0.0013 per share, 2,200,000 Company common stock issuable at $0.00150 per share and 2,200,000 Company common stock issuable at $0.00175 per share. Upon issuance on March 16, 2022, the Warrant remains exercisable for a period of five years.
On August 12, 2022, the Company issued a common stock purchase warrant in conjunction with a Promissory Note. The Warrant comprises 20,000 Company common stock issuable at $0.00075 per share. Upon issuance on August 12, 2022, the Warrant remains exercisable for a period of three years.
On January 16, 2024, the Company issued a common stock purchase warrant in conjunction with a Promissory Note. The Warrant comprises 1,000,000 Company common stock issuable at $0.00030 per share. Upon issuance on January 16, 2024, the Warrant remains exercisable for a period of five years.
The weighted average remaining legal life of the warrants outstanding on December 31, 2024 is 2.44 years.
Forward Stock Split
On September 13 2024, the Company’s director and shareholders approved an amendment of the Company’s Articles of Incorporation that would effect a 100-for-1 forward stock split of the Company’s common stock and to increase the authorized shares of common stock to 15,000,000,000 shares. The forward split and increase in the authorized shares is subject to clearance by the Financial Industry Regulatory Authority (“FINRA”), and the Company will not effect the forward split and the increase in the authorized shares until it is cleared by FINRA.
On December 17, 2024, the “Company amended its articles of incorporation to increase the authorized number of its common shares from six-hundred million (600,000,000) to fifteen billion (15,000,000,000) shares.
On December 20, 2024, the Company announced the approval of a 100 for one forward split, whereby, shareholders of record as of the close of business on October 30, 2024, will have their shares reclassified such that each share of common stock will convert into 100 shares of common stock. This adjustment will take effect after the close of trading on December 23, 2024, with the Company’s common stock beginning to trade on a split-adjusted basis on December 24, 2024.
All common stock share and per-share amounts for all periods presented in these consolidated financial statements have been adjusted retroactively to reflect the forward stock split.
F-13 |
NOTE 12 – SEGMENT REPORTING
An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the CODM, or decision-making group, to evaluate performance and make operating decisions. The Company has identified its CODM as its Chief Executive Officer. Based on the methods used by the CODM to allocate resources, the Company has identified three operating segments which meet GAAP segment disclosure requirements, namely digital assets, specialty coffee and beverages and temporary workforce services.
For the Six Months Ended December 31, 2024
Digital Assets | Specialty Coffee and Beverages | Temporary Workforce Services | Total | |||||||||||||
Total revenue | $ | 123,328 | $ | 6,395 | $ | 480,068 | $ | 609,791 | ||||||||
Segment (loss) profit | $ | (266,877 | ) | $ | (28,241 | ) | $ | (89,859 | ) | $ | (384,977 | ) |
For the Six Months Ended December 31, 2023
Digital Assets | Specialty Coffee and Beverages | Temporary Workforce Services | Total | |||||||||||||
Total revenue | $ | 61,282 | $ | 4,727 | $ | 0 | $ | 66,009 | ||||||||
Segment (loss) profit | $ | (225,181 | ) | $ | (23,912 | ) | $ | 0 | $ | (249,093 | ) |
The following table summarizes the Company’s total assets by segment.
December 31, 2024 | June 30, 2024 | |||||||
Digital assets | $ | 380,515 | $ | 425,514 | ||||
Specialty coffee and beverages | 16,902 | 24,616 | ||||||
Temporary workforce services | 281,300 | 0 | ||||||
Total assets | $ | 678,717 | $ | 450,130 |
NOTE 13 – SUBSEQUENT EVENTS
On January 27, 2025, the Company issued Meliori Incorporated 50,000,000 shares of common stock of the Company for $50,000 in cash.
On February 6, 2025, the Company and Ryan Schadel entered into a Redemption and Exchange Agreement, pursuant to which the Company redeemed and exchanged 3,759,829,140 shares of Common Stock for the issuance to Ryan Schadel 51 shares of Series X Preferred Stock.
Meliori Incorporated is owned by Katelyn Schadel, Ryan Schadel’s adult daughter. Mr. Ryan Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and majority stockholder.
F-14 |
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, 2024 | June 30, 2023 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,366 | $ | 17,086 | ||||
Deposits | 499 | 603 | ||||||
Inventory | 9,070 | 7,788 | ||||||
Prepaid expenses | 1,996 | 8,602 | ||||||
Total current assets | 15,931 | 34,079 | ||||||
Digital assets held, net of impairment | 35,741 | 194,229 | ||||||
Equipment, net | 384,723 | 66,616 | ||||||
Intangible assets, net | 13,735 | 41,402 | ||||||
Total assets | $ | 450,130 | $ | 336,326 | ||||
Liabilities and Stockholders’ (Deficit) Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 87,003 | $ | 58,160 | ||||
Promissory notes, accrued interest (net of debt discount of | ||||||||
$0 and $933, respectively), current portion | 93,909 | 25,170 | ||||||
Promissory notes - related parties, accrued interest (net of debt discount of $0 and $2,386, respectively) | - | 164,129 | ||||||
Total current liabilities | 180,912 | 247,459 | ||||||
Long-term liabilities | ||||||||
Promissory note, accrued interest (net of debt discount of $35,844 and $0, respectively) less current portion | 98,322 | - | ||||||
Promissory notes - related parties, accrued interest (net of debt discount of $101,749 and $0, respectively) | 552,915 | - | ||||||
Convertible promissory note, accrued interest (net of debt discount of $11,434 and $15,442, respectively) | 9,959 | 5,299 | ||||||
Convertible promissory notes - related party, accrued interest (net of debt discount of $114,074 and $228,542, respectively) | 69,312 | 77,167 | ||||||
Total long-term liabilities | 730,508 | 82,466 | ||||||
Total liabilities | 911,420 | 329,925 | ||||||
Stockholders’ (Deficit) Equity | ||||||||
Preferred stock: $0.0001 par value; 20,000,000 shares authorized | - | - | ||||||
Series A Convertible Preferred Stock: $0.0001 par value; 100 shares designated; 20 and 22 shares issued and outstanding at June 30, 2024 and 2023, respectively | - | - | ||||||
Common stock: $0.0001 par value; 600,000,000 shares authorized; 69,322,140 and 66,322,140 shares issued and outstanding at June 30, 2024 and 2023, respectively | 6,932 | 6,632 | ||||||
Additional paid-in capital | 19,738,464 | 19,609,816 | ||||||
Shares to be issued | 9,000 | 9,000 | ||||||
Accumulated deficit | (20,215,686 | ) | (19,619,047 | ) | ||||
Total stockholders’ (deficit) equity | (461,290 | ) | 6,401 | |||||
Total liabilities and stockholders’ (deficit) equity | $ | 450,130 | $ | 336,326 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-15 |
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Years ended June 30, | ||||||||
2024 | 2023 | |||||||
Revenue | ||||||||
Mining pool fees | $ | 352,165 | $ | 18,911 | ||||
Liquidity pool fees | 7,323 | 102,403 | ||||||
Staking rewards | 23 | 5,348 | ||||||
Sales | 7,966 | 425 | ||||||
Total revenue | 367,477 | 127,087 | ||||||
Expense | ||||||||
Administrative expenses | 637,301 | 313,539 | ||||||
Interest expense | 241,634 | 97,432 | ||||||
Impairment of digital assets held | 80,368 | 591,125 | ||||||
Impairment of equipment | 44,058 | |||||||
Impairment of goodwill | 257,353 | |||||||
Total expense | 1,003,36 | 1,259,449 | ||||||
Other income | ||||||||
Other rewards | 4,816 | 12,900 | ||||||
Realized gains on sale/ exchange of digital assets held | 81,875 | 546,617 | ||||||
Other net gains | (47,446 | ) | - | |||||
Total other income | 39,245 | 559,517 | ||||||
Net loss | $ | (596,639 | ) | $ | (572,845 | ) | ||
Net loss per share - basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | ||
Weighted average number of common shares outstanding - basic | ||||||||
and diluted | 67,037,987 | 61,183,783 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-16 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY
For the years ended June 30, 2024 and 2023
(Unaudited)
Series A Convertible Preferred Stock ($0.0001 par value) | Common Stock ($0.0001 par value) | Additional paid-in | Shares to be | Accumulated | Total stockholders’ | |||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | capital | issued | deficit | equity | |||||||||||||||||||||||||
Balance at June 30, 2023 | 22 | $ | - | 66,322,140 | $ | 6,632 | $ | 19,609,816 | $ | 9,000 | $ | (19,619,047 | ) | $ | 6,401 | |||||||||||||||||
Warrants issued in conjunction with promissory | ||||||||||||||||||||||||||||||||
note | - | - | 45,948 | 45,948 | ||||||||||||||||||||||||||||
Shares to be issued | - | - | - | - | - | 83,000 | - | 83,000 | ||||||||||||||||||||||||
Issue of common stock | - | - | 1,000,000 | 100 | 82,900 | (83,000 | ) | - | - | |||||||||||||||||||||||
Series A Stock converted into shares of common | ||||||||||||||||||||||||||||||||
stock | (2 | ) | - | 2,000,000 | 200 | (200 | ) | - | - | - | ||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (596,639 | ) | (596,639 | ) | ||||||||||||||||||||||
Balance at June 30, 2024 | 20 | $ | - | 69,322,140 | $ | 6,932 | $ | 19,738,464 | $ | 9,000 | $ | (20,215,686 | ) | $ | (461,290 | ) |
Series A Convertible Preferred Stock ($0.0001 par value) | Common Stock ($0.0001 par value) | Additional paid-in | Shares to be | Accumulated | Total stockholders’ | |||||||||||||||||||||||||||
Shares | Par Value | Shares | Par Value | capital | issued | deficit | equity | |||||||||||||||||||||||||
Balance at June 30, 2022 | 22 | $ | - | 60,822,140 | $ | 6,082 | $ | 19,384,450 | $ | - | $ | (19,046,202 | ) | $ | 344,330 | |||||||||||||||||
Shares issued for website | - | - | 500,000 | 50 | 17,950 | - | - | 18,000 | ||||||||||||||||||||||||
Shares issued for investment in Boring Brew LLC and Bored Coffee Lab LLC | - | - | 5,000,000 | 500 | 239,500 | - | - | 240,000 | ||||||||||||||||||||||||
Warrants | - | - | - | - | 7,916 | - | - | 7,916 | ||||||||||||||||||||||||
Shares to be issued | - | - | - | - | - | 9,000 | - | 9,000 | ||||||||||||||||||||||||
Beneficial conversion feature | - | - | - | - | (40,000 | ) | - | - | (40,000 | ) | ||||||||||||||||||||||
Net loss | - | - | - | - | - | - | (572,845 | ) | (572,845 | ) | ||||||||||||||||||||||
Balance at June 30, 2023 | 22 | $ | - | 66,322,140 | $ | 6,632 | $ | 19,609,816 | $ | 9,000 | $ | (19,619,047 | ) | $ | 6,401 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-17 |
CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
The accompanying notes are an integral part of these unaudited consolidated financial statements.
F-18 |
METAVESCO, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
June 30, 2024
NOTE 1 – ORGANIZATION AND OPERATIONS
Metavesco, Inc. (formerly Waterside Capital Corporation) (the “Company”) was incorporated in the Commonwealth of Virginia on July 13, 1993 and was a closed-end investment company licensed by the Small Business Administration (the “SBA”) as a Small Business Investment Company (“SBIC”). The Company previously made equity investments in, and provided loans to, small businesses to finance their growth, expansion, and development. Under applicable SBA regulations, the Company was restricted to investing only in qualified small businesses as contemplated by the Small Business Investment Act of 1958. As a registered investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”), the Company’s investment objective was to provide its shareholders with a high level of income, with capital appreciation as a secondary objective. The Company made its first investment in a small business in October 1996.
On May 28, 2014, with the Company’s consent, the United States District Court for the Eastern District of Virginia, having jurisdiction over an action filed by the SBA (the “Court”), entered a Consent Order and Judgment Dismissing Counterclaim, Appointing Receiver, Granting Permanent Injunctive Relief and Granting Money Judgment (the “Order”). The Order appointed the SBA receiver of the Company for the purpose of marshaling and liquidating in an orderly manner all of the Company’s assets and entered judgment in favor of the United States of America, on behalf of the SBA, against the Company in the amount of $11,770,722. The Court assumed jurisdiction over the Company and the SBA was appointed receiver effective May 28, 2014.
The Company effectively stopped conducting an active business upon the appointment of the SBA as the receiver and the commencement of the court-ordered receivership (the “Receivership”). Over the course of the Receivership, the activity of the Company was limited to the liquidation of the Company’s assets by the receiver and the payment of the proceeds therefrom to the SBA and for the expenses of the Receivership. On June 28, 2017, the Receivership was terminated with the entry of a Final Order by the Court. The Final Order specifically stated that “Control of Waterside shall be unconditionally transferred and returned to its shareholders c/o Roran Capital, LLC (“Roran”) upon notification of entry of this Order”. Upon termination of the Receivership, Roran took possession of all books and records made available to it by the SBA.
The Company filed with the Securities and Exchange Commission (the “SEC”) an application pursuant to Section 8(f) of the Investment Company Act for an order declaring that the Company had ceased to be a registered investment company. On April 22, 2020, the SEC issued an order under Section 8(f) of the Investment Company Act declaring that the Company had ceased to be an investment company. As a result, the Company is now a reporting company under the Securities Exchange Act of 1934, as amended.
On September 2, 2021, the Company entered into a Stock Purchase Agreement (the “SPA”) by and between (i) the Company (ii) Mr. Schadel (“Buyer”) and (iii) Roran. Roran agreed to sell to the Buyer 42,476,660 shares of common stock of the Company held by Roran for a total purchase price of $385,000. In conjunction with the SPA, Roran agreed to forgive all amounts due to Roran by the Company totaling $207,644, which is comprised of convertible note payable – related party, accrued interest payable – related party, and advances from related party. The Buyer acquired 42,476,660 shares of the Company’s Common Stock, representing 69.7% of the issued and outstanding shares of Common Stock. As such, the SPA resulted in a change of control of the Company.
Effective November 29, 2021, the Company converted from a Virginia corporation to a Nevada corporation.
On December 17, 2021, the majority shareholder and board of directors approved an amendment to the amended and restated articles of incorporation that would change the Company’s name from Waterside Capital Corporation to Metavesco, Inc. The name change was effective June 3, 2022, following clearance by the Financial Industry Regulatory Authority (“FINRA”).
In March 2022, the Company commenced operations as a web3 enterprise. The Company generates income as a liquidity provider, via decentralized exchanges such as Uniswap. Additionally, the Company farms tokens via Proof of Stake protocols on decentralized exchanges, as well as centralized exchanges including the Coinbase, Inc. (“Coinbase”) exchange. The Company also invests in what it considers promising non-fungible token (“NFT”) projects and virtual land, primarily on Ethereum virtual machine (“EVM”) protocols.
On June 12, 2023, the Company entered into a Limited Liability Company Interest Purchase Agreement the (“Purchase Agreement”) with Eddy Rodrigeuz (the “Seller”). The Seller is the sole owner of Boring Brew LLC (“Boring”) and Bored Coffee Lab, LLC (“Bored”). Under the terms of the Purchase Agreement, the Seller sold to the Company, all of the outstanding limited liability company interests in Boring and Bored for a total purchase price of $9,245 in cash and 5,000,000 shares of common stock of the Company.
In February 2023, the Company commenced bitcoin mining operations at a hosted facility in Texas, in May 2023, at a hosted facility in Kentucky and in November 2023, at a hosted facility in Iowa.
On November 13, 2023, the Company filed Form 15 with the SEC which terminated its duty to file reports under the Securities Exchange Act of 1934, as amended.
Going Concern
The Company’s consolidated financial statements have been prepared in accordance with GAAP applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. During the year ended June 30, 2024, the Company incurred a net loss of $596,639 and used cash in operating activities of $445,389, and on June 30, 2024, had an accumulated deficit of $20,215,686. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date that the consolidated financial statements are issued. The Company will be dependent upon the raising of additional capital through placement of debt and its common stock in order to implement its business plan. There can be no assurance that the Company will be successful in this situation. The Company expects over the next twelve months, cash held at a consolidated financial institution will be spent on professional fees, transfer agent and other administrative costs. The cash held at Coinbase will be deployed to purchase crypto assets to generate staking rewards and liquidity pool fees. We hope to pay some of our suppliers and contractors in crypto assets in the coming months. However, there can be no assurance we will be able to pay any of our suppliers and contractors in digital assets.
F-19 |
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year-End
The Company elected June 30 as its fiscal year-end date.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries (1) Boring Brew LLC (2) Bored Coffee Lab, LLC and (3) Epic Labor, Inc. All significant intercompany transactions are eliminated.
Use of Estimates and Assumptions and Critical Accounting Estimates and Assumptions
The preparation of financial statements in conformity with GAAP 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 revenues and expenses during the reporting periods.
These significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to these estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the consolidated financial statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Management regularly evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates are adjusted accordingly.
Significant matter requiring use of estimates and assumptions include, but may not be limited to, evaluation of impairment of digital assets, equipment, identifiable intangible assets and goodwill, recognition and valuation of revenue, valuation allowance for deferred tax assets and fair value used in business acquisitions..
Actual results could differ from those estimates.
Business Acquisitions
The Company accounts for its business combinations using the acquisition method of accounting in accordance with ASC 805 “Business Combinations.” The cost of an acquisition is measured at the aggregate of the acquisition date fair value of the assets transferred to the sellers and liabilities incurred by the Company and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated income statements. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated income statements.
Cash and cash equivalents
Cash and cash equivalents include cash and interest-bearing highly liquid investments held at financial institutions, cash on hand that is not restricted as to withdrawal or use with an initial maturity of three months or less, and cash held in accounts at crypto trading venues. On June 30, 2024, $3,681 of cash was at held a financial institution which is a member of the Federal Deposit Insurance Corporation (“FDIC”) and $685 was held at Coinbase. The contract with Coinbase requires USD balances in a client’s fiat wallet be held in an omnibus custodial account for the benefit of Coinbase’s customers. These accounts are either omnibus bank accounts insured by the FDIC (currently up to $250,000 per entity) or trust accounts holding short term U.S. treasuries.
Digital Assets
Digital assets held by the Company are accounted for as intangible assets with indefinite useful lives and are initially measured at cost. The Company assigns costs to transactions on a first-in, first-out basis (FIFO).
An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital assets at the time its fair value is being measured.
Tokens are subject to impairment losses if the fair value of a token decreases below the carrying value at any time during the period. The fair value is measured using the quoted price in the principal market of the tokens. The Company currently obtains the quoted price of tokens from www.cryptocompare.com.
Liquidity pool tokens and NFTs are subject to impairment losses if the fair value of a token decreases below the carrying value at the end of each quarterly accounting period. The fair value of liquidity pool tokens is based on the quoted price on the last day of the quarter at 4PM Eastern Time. The fair value of NFTs is based on the average trading price on the last day of each quarter.
Impairment for liquidity pool tokens and NFTs is assessed quarterly due to each token being a unique asset and due to the illiquid markets in which these tokens trade. The Company is continuously reviewing available markets and information and its methodology when determining the fair value of digital assets.
F-20 |
The Company currently reviews quoted prices of its liquidity pool tokens, NFTs and comparable tokens at https://uniswap.org/ and https://opensea.io. Impairment expense is reflected in total expense in the consolidated statements of operations. Subsequent reversal of impairment losses is not permitted.
The sales of digital assets held are included within investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in other income (expense) in the consolidated statements of operations.
Identifiable Intangible Assets
Identifiable intangible assets consist primarily of design and websites. These assets are tested for impairment using undiscounted cash flow methodology annually and whenever there is an indicator of impairment. Estimating future cash flows requires significant judgment and projections may vary from cash flows eventually realized. Several impairment indicators are beyond the Company’s control and determining whether or not they will occur cannot be predicted with any certainty. Design and websites are amortized on a straight-line basis over an estimated life of three years.
The website development costs of the Company are accounted for in accordance with ASC 350-50, Website Development Costs. These costs are included in intangible assets in the accompanying consolidated financial statements. Upgrades or enhancements that add functionality are capitalized while other costs during the operating stage are expensed as incurred. The Company amortizes the capitalized website development costs over an estimated useful life of three years.
Goodwill
Goodwill represents the premium paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company’s business combinations. The Company performs a goodwill impairment test on at least an annual basis at the reporting unit level. Application of the goodwill impairment test requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the businesses, the useful life over which cash flows will occur and determination of our weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. The Company will conduct its annual goodwill impairment test as of June 30 of each year or more frequently if indicators of impairment exist. The Company periodically analyzes whether any such indicators of impairment exist. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a sustained significant decline in our stock price and market capitalization, a significant adverse change in legal factors or in the business climate, unanticipated competition and/or slower expected growth rates, adverse actions or assessments by a regulator, among others. The Company compares the fair value of its reporting unit to its respective carrying value, including related goodwill.
A goodwill impairment charge of $257,353 was recorded as of June 30, 2023. The impairment of goodwill was due to the inability of the Company to identify future cash flows with suitable reliability associated with Boring Brew LLC and Bored Coffee Lab LLC acquired on June 12, 2023. See Note 3 – Business Acquisition.
Opening balance on June 30, 2022 | $ | 0 | ||
Purchase of goodwill | 257,353 | |||
Impairment of goodwill | (257,353 | ) | ||
Closing balance on June 30, 2023 | $ | 0 |
Revenue recognition
The Company recognizes revenue under the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
● | Step 1: Identify the contract with the customer | |
● | Step 2: Identify the performance obligations in the contract | |
● | Step 3: Determine the transaction price | |
● | Step 4: Allocate the transaction price to the performance obligations in the contract | |
● | Step 5: Recognize revenue when the Company satisfies a performance obligation |
Revenue is recognized when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company generates revenue through liquidity pools and staking rewards.
Liquidity Pools
Liquidity pools are a collection of digital assets locked in a smart contract that provide liquidity to decentralized exchanges. Liquidity allows digital assets to be converted to cash quickly and efficiently without drastic price swings. An important component of a liquidity pool are automated market makers (“AMMs”). An AMM is a protocol that uses liquidity pools to allow digital assets to be traded by a mathematical formula rather than though a traditional market of buyers and sellers.
The Company earns fees by providing liquidity on Uniswap V2 and Uniswap V3. The Company earns fees proportionate to the liquidity they have supplied to the exchange. The fee for each trade is set at 0.05% for stable coins, 0.3% for most pairs and 1.0% for exotic pairs. The fees earned by the Company depend on the risk characteristics of each pair of tokens selected and the price range liquidity is provided. Uniswap V2 requires users to provide liquidity over the entire price curve, whereas Uniswap V3 provides users with liquidity over a price range.
Revenue is recognized from liquidity pools when the award is claimed and deposited in the Company wallet. The transaction consideration the Company receives is noncash in the form of digital assets. Revenue is measured at the fair value of the digital asset awards received.
F-21 |
Mining Pools
The Company earns transaction fees with its crypto mining machines by validating requesting customers’ transactions to a distributing ledger. We joined a mining pool and receive a pro-rata share of a bitcoin award for completing a blockchain.
The Company has entered into digital asset mining pools by executing an agreement with one mining pool operator The agreement is terminable at any time by either party. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less digital asset transaction fees to the mining pool operator which are immaterial and are recorded as a deduction from revenue), for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm.
Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators. The transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions.
Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of receipt.
Staking Rewards
Staking rewards are granted to holders of a crypto asset when the holders lock up that crypto asset as collateral to secure fairness when validating transactions or other network actions.
The Company participates in networks with proof-of-stake consensus algorithms, through creating or validating blocks on the network. In exchange for participating in the consensus mechanism of these networks, the Company earns rewards in the form of the native token of the network. Each block creation or validation is a performance obligation. Revenue is recognized at the point when the block creation or validation is complete and the rewards are transferred into a digital wallet that the Company controls. Revenue is measured based on the number of tokens received and the fair value of the token at contract inception.
Airdrops
Airdrops are the distribution of tokens without compensation generally undertaken with a view of increasing awareness of a new token, to encourage adoption of a new token and to increase liquidity in the early stages of a token project.
The Company recognizes crypto assets received through an airdrop if the crypto asset is expected to generate a probable future benefit and if the Company is able to support the trading, custody, or withdrawal of these assets.
Airdrops are accounted for in accordance with ASC 610-20, Sales and Transfer of Nonfinancial Assets, Receipt of a airdrops are classified as other income in the statement of operations.
Equipment
Equipment is stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs are charged to expense when incurred, while renewals and betterments that materially extend the life of an asset are capitalized.
The costs of assets sold, retired, or otherwise disposed of, and the related allowance for depreciation, are eliminated from the accounts, and any resulting gain or loss is recognized in the results from operations. Depreciation is provided over the estimated useful lives of the assets, which are as follows:
Mining equipment | Straight-line over 36 months |
Convertible Financial Instruments
The Company bifurcates conversion options from their host instruments and accounts for them as free-standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule is when the host instrument is deemed to be conventional, as that term is described under applicable GAAP.
When the Company has determined that the embedded conversion options should not be bifurcated from their host instruments, discounts are recorded for the intrinsic value of conversion options embedded in the instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the transaction and the effective conversion price embedded in the instrument.
Beneficial conversion feature – The issuance of the convertible debt generated a beneficial conversion feature (“BCF”), which arises when a debt or equity security is issued with a non-separated embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying stock at the commitment date. The Company recognized the BCF by allocating the intrinsic value of the conversion option, which is the number of shares of common stock available upon conversion multiplied by the difference between the effective conversion price per share and the fair value of common stock per share on the commitment date, resulting in a discount on the convertible debt (recorded as a component of additional paid-in capital). The BCF is amortized into interest expense over the life of the related debt.
Related Parties
The Company follows subtopic 850-10 of the ASC for the identification of related parties and disclosure of related party transactions.
The consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. The disclosures shall include: (a) the nature of the relationship(s) involved; (b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the consolidated financial statements; (c) the dollar amounts of transactions for each of the periods for which income statements are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and, (d) amounts due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement.
F-22 |
Commitments and Contingencies
The Company follows ASC 450-20 to report accounting for contingencies. Certain conditions may exist as of the date the consolidated 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. Management 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 un-asserted claims that may result in such proceedings, management evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, 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.
Deferred Tax Assets and Income Taxes Provision
The Company follows the provisions of ASC 740-10-25-13, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. Under ASC 740-10-25-13, the Company may recognize the tax benefit from an uncertain tax position only if 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. The tax benefits recognized in the consolidated financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. ASC 740-10-25-13 also provides guidance on de-recognition, classification, interest, and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits.
The estimated future tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carrybacks and carryforwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions. In management’s opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction varies from estimates, additional allowances or reversals of reserves may be necessary.
Tax years that remain subject to examination by major tax jurisdictions are generally the prior three years for federal purposes, and the prior four years for state purposes; however, as a result of the Company’s operating losses, all tax years remain subject to examination by tax authorities.
Net Income (Loss) Per Common Share
The Company computes net income or loss per share in accordance with ASC 260 Earnings Per Share. Under the provisions of ASC 260, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, on June 30, 2024 and 2023, we excluded the common stock issuable upon conversion of Series A Convertible Preferred Stock and warrants to 27,620,000 shares and 28,620,000 shares, respectively, as their effect would have been anti-dilutive.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of ASC for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37 of ASC (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.
Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.
The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
Transactions involving related parties cannot be presumed to be carried out on an arms-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
F-23 |
During the year ended June 30, 2024, the Company entered into forward contracts to purchase certain digital assets at an agreed price. The Company paid deposits of SUSD $133,264 to enter into these contracts, withdrew $101,813 from the contracts and realized net losses of $31,451.
Derivative asset | ||||
Balance, June 30, 2023 | $ | - | ||
Deposits | 133,264 | |||
Withdrawals | (101,813 | ) | ||
Realized net losses of futures contracts | (31,451 | ) | ||
Balance, June 30, 2024 | $ | - |
Derivative assets (liabilities) are measured at fair value on a recurring basis using Level 2 inputs.
The following tables present assets and liabilities that are measured and recognized at fair value as on a recurring basis:
June 30, 2024 | ||||||||||||
Description | Level 1 $ | Level 2 $ | Level 3 $ | |||||||||
Derivative assets (liabilities) | - | - | - |
June 30, 2023 | ||||||||||||
Description | Level 1 $ | Level 2 $ | Level 3 $ | |||||||||
Derivative assets (liabilities) | - | - | - |
Recently Issued Accounting Pronouncements
In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosures (Topic 280). This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is also permitted. The Company is currently evaluating the provisions of the amendments and the impact on its financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the provisions of the amendments and the impact on its financial statements.
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
NOTE 3 – BUSINESS ACQUISITION
On June 12, 2023, the Company entered into a Limited Liability Company Interest Purchase Agreement (the “Purchase Agreement”) with Eddy Rodrigeuz (the “Seller”). The Seller is the sole owner of Boring Brew LLC (“Boring”) and Bored Coffee Lab, LLC (“Bored”). Under the terms of the Purchase Agreement, the Seller sold to the Company, all of the outstanding limited liability company interests in Boring and Bored. The Company paid the Seller total consideration with a fair value of $249,245, paid as follows: (i) $9,245 in cash and (ii) 5,000,000 shares of the Company’s common stock at a fair value of $240,000 ($0.048 per share based on the closing price of the Company common stock on June 12, 2023).
Assets acquired and liabilities assumed in the Agreement were recorded on the Company’s Consolidated Balance Sheet as of the acquisition date of June 12, 2023 based upon their estimated fair values. The results of operations of businesses acquired by the Company have been included in the statements of operations since the date of acquisition. The excess of the purchase price over the estimated fair values of the underlying identifiable assets acquired and liabilities assumed were allocated to goodwill.
The preliminary allocation of the purchase price and the estimated fair market values of the assets acquired and liabilities assumed are shown below:
Fair value of assets acquired and liabilities assumed | ||||
Deposit | $ | 244 | ||
Inventory | 5,203 | |||
Design | 9,000 | |||
Web development | 12,500 | |||
Goodwill | 257,353 | |||
Advances payable | (35,055 | |||
Purchase Price | $ | 249,24 |
F-24 |
Unaudited pro forma results of operations information for the years ended June 30, 2023 and 2022 as if the Company and the entities described above had been combined on July 1, 2021 are as follows. The pro forma results include estimates and assumptions which management believes are reasonable. The pro forma results do not include any anticipated cost savings or other effects of the planned integration of these entities and are not necessarily indicative of the results that would have occurred if the business combinations had been in effect on the dates indicated, or which may result in the future.
For the Year Ended June 30, 2023 | For the Year Ended June 30, 2022 | |||||||
Revenue | $ | 148,182 | $ | 82,815 | ||||
Net loss | $ | (592,466 | )$ | (1,124,564 | ) | |||
Net loss per share | $ | (0.01 | )$ | (0.02 | ) |
NOTE 4 – DIGITAL ASSETS HELD, NET OF IMPAIRMENT
Digital assets held; net of impairment have consisted of:
Digital Assets | ||||
Balance, June 30, 2022 | $ | 434,642 | ||
Purchase of digital assets | 6,904,183 | |||
Proceeds from sale of digital assets | (7,107,258 | ) | ||
Realized gain on sale/ exchange of digital assets held | 546,617 | |||
Acquired digital assets by liquidity pools, mining pools and other digital rewards | 139,562 | |||
Digital assets used to pay prepaid, equipment and expenses | (124,890 | ) | ||
Digital assets used to repay promissory notes | (7,502 | ) | ||
Impairment charges | (591,125 | ) | ||
Balance, June 30, 2023 | 194,229 | |||
Purchase of digital assets | 1,484,176 | |||
Proceeds from sale of digital assets | (1,883,209 | ) | ||
Realized gain on sale/ exchange of digital assets held | 28,236 | |||
Acquired digital assets by liquidity pools, mining pools and other digital rewards | 364,327 | |||
Digital assets used to pay deposit and expenses | (71,650 | ) | ||
Impairment charges | (80,368 | ) | ||
Balance, June 30, 2024 | $ | 35,741 |
F-25 |
As of June 30, 2024, the Company’s holdings of digital assets held, net of impairment comprise of:
Units held | Carrying value, at cost less impairment | |||||||
Cryptocurrency | ||||||||
BTC | 0.32 | $ | 18,832 | |||||
INJ | 475.53 | 10,270 | ||||||
OP | 2,680.00 | 4,583 | ||||||
ETH | 0.46 | 1,294 | ||||||
Other | 129 | |||||||
$ | 35,108 | |||||||
Non-Fungible Tokens | ||||||||
Other NFT | $ | 633 | ||||||
$ | 633 | |||||||
Total digital assets, net of impairment | $ | 35,741 |
As of June 30, 2023, the Company’s holdings of digital assets held, net of impairment consists of:
Units held | Carrying value, at cost less impairment | |||||||
Cryptocurrency | ||||||||
APE | 20,356.45 | $ | 41,114 | |||||
ETH | 9.94 | 16,138 | ||||||
BTC | 0.61 | 14,904 | ||||||
JOE | 18,990.00 | 5,481 | ||||||
UNI | 933.08 | 2,816 | ||||||
RBNT | 5,567.49 | 1,733 | ||||||
USDC | 1,225.96 | 1,209 | ||||||
Other | 1,880 | |||||||
$ | 85,275 | |||||||
Liquidity Pool Tokens | 2.0 | $ | 65,287 | |||||
Uniswap V3 | 7,259.56 | 9,481 | ||||||
CAKE | $ | 74,768 | ||||||
Non-Fungible Tokens | ||||||||
Mutant Ape Yacht Club | 1 | $ | 13,247 | |||||
Meebits | 2 | 10,006 | ||||||
Bored Ape Kennel Club | 1 | 5,105 | ||||||
Nakamigos | 1 | 1,555 | ||||||
OnForce 1 | 1 | 1,506 | ||||||
Other NFTs | 2,767 | |||||||
$ | 34,186 | |||||||
Total digital assets, net of impairment | $ | 194,229 |
F-26 |
NOTE 5 –EQUIPMENT
Cost | Accumulated Depreciation | June 30, 2024 Net Book Value | June 30, 2023 Net Book Value | |||||||||||||
Mining equipment | $ | 438,046 | $ | 53,323 | $ | 384,723 | $ | 66,616 |
On August 22, 2022, the Company made a deposit of $72,095 with USD Coin (“USDC”) to purchase 18 Antminer S19j Pro 100TH Bitcoin mining machines. These machines were deployed, became operational and started to generate revenue on February 7, 2023.
Depreciation expense for year ended June 30, 2024 and 2023 was $71,217 and $10,143, respectively.
Impairment expense, related to the abandonment of mining equipment, for year ended June 30, 2024 and 2023 was $44,058 and $0, respectively.
NOTE 6 – IDENTIFIED INTANGIBLE ASSETS
Intangible assets comprise website development and design which are recorded at cost.
June 30, 2024 | June 30, 2023 | |||||||
Website development | $ | 12,500 | $ | 32,999 | ||||
Design | 9,000 | 9,000 | ||||||
21,500 | 41,999 | |||||||
Accumulated amortization | (7,765 | ) | (597 | ) | ||||
Identifiable Intangible Assets | $ | 13,735 | $ | 41,402 |
During the year ended June 30, 2023, $7,168 (comprising website of $4,168 and design of $3,000) and $597 (comprising website of $347 and design of $250, respectively, was recorded as amortization. The Company estimates amortization over the next two years is $7,168 per annum and amortization of $6,567 in the third year.
NOTE 7 – PROMISSORY NOTES
Demand Promissory Note and Common Stock Purchase Warrant
On August 12, 2022, the Company issued a Promissory Note in the principal amount of $25,000 (the “Promissory Note”) for cash to Tom Zarro. The Promissory Note bears interest at the rate of 5.00% per annum. Any unpaid principal amount and any accrued interest is due on August 12, 2023. Mr. Zarro may demand payment of all or any portion of the outstanding principal and interest at any time. The Promissory Note is unsecured and there is no prepayment penalty. In the event the Promissory Note is not paid when due, any outstanding principal and interest will accrue interest of 12% per annum. In conjunction with the issue of the Promissory Note, the Company issued Mr. Zarro a common stock purchase warrant (the “Warrant”). The terms of the Warrant state that, Mr. Zarro may, at any time on or after August 12, 2022 and until August 12, 2025, exercise the Warrant to purchase 20,000 shares of the Company’s common stock for an exercise price per share of $0.075, subject to adjustment as provided in the Warrant. The fair value of the Warrant was calculated using volatility of 157%, interest-free rate of 3.18%, nil expected dividend yield and expected life of 3 years. The fair value of the debt and warrant is allocated based on their relative fair values. During the year ended June 30, 2024 and 2023, $933 and $6,983, respectively, of discount amortization is included in interest expense. On June 30, 2024 and 2023, there was an unamortized discount balance of $0 and $933, respectively, and accrued interest payable of $0 and $1,103, respectively. On November 3, 2023, the Company made a payment in the amount of $26,934 to Tom Zarro, representing the principal and accrued interest due and payable pursuant to the Promissory Note as of such date. Accordingly, the Promissory Note was paid in full and terminated on November 6, 2023.
F-27 |
Promissory Note and Common Stock Purchase Warrant
On January 16, 2024 the Company issued a Promissory Note in the principal amount of $230,000 (the “Promissory Note”) for cash to Tom Zarro. The Promissory Note bears interest at the rate of 12.00% per annum. Following the issue date, 36 monthly principal payments of $6,389 plus any accrued and unpaid interest are due. Any unpaid principal amount and any accrued interest is due on January 16, 2027. The Promissory Note is unsecured and there is no prepayment penalty. In the event the Promissory Note is not paid when due, any outstanding principal and interest will accrue interest of 12% per annum. In conjunction with the issue of the Promissory Note, the Company issued Mr. Zarro a common stock purchase warrant (the “Warrant”). The terms of the Warrant state that, Mr. Zarro may, at any time on or after January 16, 2024 and until January 16, 2029, exercise the Warrant to purchase 1,000,000 shares of the Company’s common stock for an exercise price per share of $0.03, subject to adjustment as provided in the Warrant.”). The fair value of the Warrant of $45,948 was calculated using volatility of 167%, interest-free rate of 3.95%, nil expected dividend yield and expected life of 5 years. The fair value of the debt and warrant is allocated based on their relative fair values. During the year ended June 30, 2024, the Company repaid $12,778 in cash and, also, during the year ended June 30, 2024 and 2023, $10,104 and $0, respectively, of discount amortization is included in interest expense. On June 30, 2024 and 2023, there was an unamortized discount balance of $35,844 and $0, respectively, to be amortized through January 2027 and accrued interest payable of $10,853 and $0, respectively.
Demand Promissory Note – Related Parties
On October 18, 2021, the Company issued a Promissory Note in the principal amount of $100,000 (the “Promissory Note”) for cash to Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Promissory Note bears interest at the rate of 0.01% per annum. Any unpaid principal amount and any accrued interest was due on October 18, 2022. On August 29, 2022, the Company entered into an Amendment to Promissory Note, dated August 29, 2022, with the Holder. Pursuant to the terms of the note amendment, the maturity date of the Promissory Note was extended to October 23, 2023, and the interest rate of the Promissory Note was increased to 5% as of and following August 29, 2022. As consideration for extension of the maturity date, the Company agreed to issue to Mr. Schadel 150,000 shares of the Company’s common stock with a fair value of $9,000. These shares were payable and reported as shares to be issued as of the date of this Report. The note amendment resulted in a change in the cash flows of less than 10%. Therefore, the Promissory Note is not considered to be substantially different in accordance with ASC 470-50-10-10 and applied the modification accounting model in accordance with ASC- 50-40-17 (b). During the year ended June 30, 2024, the Company made payments of $106,527 to Mr. Schadel, representing the principal and accrued interest due and payable pursuant to the Promissory Note. During the year ended June 30, 2024 and 2023, $2,386 and $6,614, respectively, of discount amortization is included in interest expense. On June 30, 2024 and 2023, there was an unamortized discount balance of $0 and $2,386, respectively, to be amortized through October 2023 and accrued interest payable of $0 and $2,080, respectively. The Promissory Note was paid in full and terminated on December 26, 2023.
On June 29, 2022, the Company issued a Promissory Note in the principal amount of $40,000 (the “Promissory Note”) for cash to Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Promissory Note bears interest at the rate of 0.01% per annum. Any unpaid principal amount and any accrued interest is due on June 29, 2023. Mr. Schadel may demand payment of all or any portion of the outstanding principal and interest at any time. The Promissory Note is unsecured and there is no prepayment penalty. During the year ended June 30, 2023, digital assets with a fair value of $7,502 was transferred to the Promissory Note holder to repay principal. During the year ended June 30, 2024, the Company made payments of $32,503 to Mr. Schadel, representing the principal and accrued interest due and payable pursuant to the Promissory Note. On June 30, 2024 and 2023, there was accrued interest payable of $0 and $1, respectively. The Promissory Note was paid in full and terminated on November 9, 2023.
On August 12, 2022, the Company issued a Promissory Note in the principal amount of $50,000 (the “Promissory Note”) for cash to Labor Smart, Inc. (“Laborsmart”). Laborsmart is owned by Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Promissory Note bears interest at the rate of 5.00% per annum. Any unpaid principal amount and any accrued interest is due on August 12, 2024. Laborsmart may demand payment of all or any portion of the outstanding principal and interest at any time. The Promissory Note is unsecured and there is no prepayment penalty. In the event the Promissory Note is not paid when due, any outstanding principal and interest will accrue interest of 12% per annum. During the year ended June 30, 2023, the Company repaid $20,000 in cash for principal. During the year ended June 30, 2024, the Company repaid $32,426 in cash for principal and interest due and payable pursuant to the Promissory Note. On June 30, 2024 and 2023, there was accrued interest payable of $0 and $1,936, respectively. The Promissory Note was paid in full and terminated on November 17, 2023.
On July 10, 2023, the Company issued a Promissory Note in the principal amount of $30,000 (the “Promissory Note”) for cash to Restore Franchise Group, LLC (“Restore”). Restore is owned by Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Promissory Note bears interest at the rate of 3.00% per annum. Any unpaid principal amount and any accrued interest is due on July 10, 2024. During the year ended June 30, 2024, the Company repaid $30,485 in cash for principal of $30,000 and interest $485 due and payable pursuant to the Promissory Note. The Promissory Note is unsecured. The Promissory Note was paid in full and terminated on May 14, 2024.
On November 2, 2023, the Company entered into a Securities Purchase Agreement (the “Meliori SPA”) by and between the Company and Meliori Incorporated (“Meliori”). Meliori is owned by Katelyn Schadel, Ryan Schadel’s adult daughter. Mr. Schadel is the Company’s Chief Executive Officer, Chief Financial Officer, sole director and majority stockholder. Ms. Schadel serves as Meliori’s Chief Executive Officer, Secretary, Treasurer and sole director. Pursuant to the terms of the Meliori SPA, the Company issued and sold to Meliori (i) a secured promissory note, in the principal amount of $650,000, for a purchase price of $597,000, reflecting a $53,000 original issue discount (the “Meliori Note”), and (ii) 1,000,000 shares of the Company’s common stock, with a fair value of $83,000 for a purchase price of $1,000. These shares were payable and reported as shares to be issued as of the date of this Report. The Company will use the proceeds from the Meliori Note for general working capital and investment purposes. The Company provided typical representations and agreed to standard covenants pursuant to the Meliori SPA. The Meliori SPA does not include any financial covenants. The Meliori Note bears interest at the rate of 12.5% per annum and matures on the fifth anniversary of the issue date, or November 2, 2028. In the event that any amount due under the Meliori Note is not paid as and when due, such amounts will accrue interest at the rate of 14% per year. On the first business day following each annual anniversary of the issue date, the Company agreed to pay to Meliori all accrued and unpaid interest thereunder. Such payments may be made in cash, or, at the option of the Company, via the issuance to Meliori of shares of the Company’s common stock. The Company may, in its sole discretion, prepay any amount due and payable under the Meliori Note at any time, without penalty. During the year ended June 30, 2024, the Company repaid $47,500 of principal in cash and, also, during the year ended June 30, 2024 and 2023, $33,351 and $0, respectively, of discount amortization is included in interest expense. On June 30, 2024 and 2023, there was an unamortized discount balance of $101,749 and $0, respectively, to be amortized through November 2028 and accrued interest payable of $52,164 and $0, respectively.
F-28 |
NOTE 8 – CONVERTIBLE PROMISSORY NOTES
Convertible Promissory Notes
On May 10, 2022, the Company issued a Convertible Promissory Note in the principal amount of $20,000 (the “Convertible Promissory Note”), for cash, to Timothy Hackbart. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 10, 2027. The Convertible Promissory Note is unsecured and there is no prepayment penalty. At the option of the Holder, the Convertible Promissory Note is convertible into shares of the Company’s common stock at a conversion price of $0.05 per share. The closing price of the Company’s common stock was $0.14 per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $20,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2024 and 2023, $4,009 and $3,998, respectively, of discount amortization is included in interest expense. On June 30, 2024 and 2023, there was an unamortized discount balance of $11,434 and $15,442, respectively, to be amortized through May 2027 and accrued interest payable of $1,393 and $741, respectively.
Convertible Promissory Notes – Related Party
On March 4, 2022, the Company issued a Convertible Promissory Note in the principal amount of $40,874 (the “Convertible Promissory Note”), for value received being comprised of one bitcoin, to Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.5% per annum. Any unpaid principal amount and any accrued interest is due on March 4, 2027. The Convertible Promissory Note is unsecured and there is no prepayment penalty. At the option of Mr. Schadel, the Convertible Promissory Note is convertible into shares of the Company’s common stock at a conversion price of $0.05 per share. The closing price of the Company’s common stock was $0.125 per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $40,874 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2024 and 2023, $30,062 and 8,170, respectively, of discount amortization is included in interest expense. On June 30, 2024 and 2023, there was an unamortized discount balance of $0 and $30,062 and accrued interest payable of $0 and $659, respectively. The Convertible Promissory Note was paid in full and terminated on February 28, 2024.
On March 10, 2022, the Company issued a Convertible Promissory Note in the principal amount of $59,986 (the “Convertible Promissory Note”), for value received being comprised of 22.86012412 Ether, to Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on March 10, 2027. The Convertible Promissory Note is unsecured and there is no prepayment penalty. At the option of Mr. Schadel, the Convertible Promissory Note is convertible into shares of the Company’s common stock at a conversion price of $0.05 per share. The closing price of the Company’s common stock was $0.142 per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $59,986 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2024 and 2023, $44,316 and 11,991 respectively, of discount amortization is included in interest expense. On June 30, 2024 and 2023, there was an unamortized discount balance of $0 and $44,316 and accrued interest payable of $0 and $967, respectively. The Convertible Promissory Note was paid in full and terminated on March 15, 2024.
On May 6, 2022, the Company issued a Convertible Promissory Note in the principal amount of $100,000 (the “Convertible Promissory Note”), for cash, to Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 6, 2027. The Convertible Promissory Note is unsecured and there is no prepayment penalty. At the option of Mr. Schadel, the Convertible Promissory Note is convertible into shares of the Company’s common stock at a conversion price of $0.05 per share. The closing price of the Company’s common stock was $0.145 per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $100,000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2024, the Company repaid $17,299 of principal in cash and, also, during the year ended June 30, 2024 and 2023, $20,044 and $19,989, respectively, discount amortization is included in interest expense. On June 30, 2024 and 2023, there was an unamortized discount balance of $56,955 and $76,999, respectively, to be amortized through May 2027 and accrued interest payable of $0 and $1,612, respectively.
On May 9, 2022, the Company issued a Convertible Promissory Note in the principal amount of $100,000 (the “Convertible Promissory Note”), for cash, to Mr. Schadel, the Company’s Chief Executive Officer, sole director and majority stockholder. The Convertible Promissory Note bears interest at the rate of 3.25% per annum. Any unpaid principal amount and any accrued interest is due on May 9, 2027. The Convertible Promissory Note is unsecured and there is no prepayment penalty. At the option of Mr. Schadel, the Convertible Promissory Note is convertible into shares of the Company’s common stock at a conversion price of $0.05 per share. The closing price of the Company’s common stock was $0.1415 per share on the date the Convertible Promissory Note was issued. As a result of the conversion price being lower than the market price of the Company’s common stock on the date of issuance, the Company recognized a beneficial conversion feature of $100,0000 upon issuance. The Company recorded the beneficial conversion feature as a discount (up to the face amount of the applicable note) to be amortized over the life of the related note. During the year ended June 30, 2024 and 2023, $20,044 and $19,989, respectively, of discount amortization is included in interest expense. On June 30, 2024 and 2023, there was an unamortized discount balance of $57,119 and $77,165, respectively, to be amortized through May 2027 and accrued interest payable of $686 and $1,611, respectively.
F-29 |
NOTE 9 – SHAREHOLDER DEFICIT
Series A Convertible Preferred Stock (“Series A Stock”) Certificate of Designations provides (i) the number of authorized shares will be 100, (ii) each share will have a stated value of $50,000, (iii) each share is convertible into 1,000,000 shares of Company common stock, subject to a 9.99% equity blocker, (iv) shares are non-voting, and (v) shares are not entitled to receive dividends or distributions.
On April 7, 2023, the Company agreed to issue 500,000 shares of common stock with a fair value of $18,000 for website development services.
On June 12, 2023, the Company agreed to issue 5,000,000 shares of common stock with a fair value of $240,000 for an investment in Boring Brew LLC and Bored Coffee Lab LLC (See Note 3 – Business Acquisition).
On January 26, 2024, the Company issued 1,000,000 shares of common stock to satisfy its obligations for shares to be issued. On May 8, 2024, 2 shares of Series A Stock were converted into 2,000,000 shares of common stock.
Shares to be Issued
In conjunction with the Securities Purchase Agreement by and between the Company and Meliori Incorporated dated November 2, 2023, the Company agreed to issue Meliori Incorporated 1,000,000 shares of common stock of the Company with a fair value of $83,000 (Note 7).
Warrants
On March 16, 2022, the Company entered into Stock Purchases Agreements whereby the Company issued 22 shares to Series A Stock and various Warrants for $1,100,000 in cash. The Warrants comprise of 2,200,000 Company common stock issuable at $0.13 per share, 2,200,000 Company common stock issuable at $0.15 per share and 2,200,000 Company common stock issuable at $0.175 per share. Upon issuance on March 16, 2022, the Warrant remains exercisable for a period of five years.
On August 12, 2022, the Company issued a common stock purchase warrant in conjunction with a Promissory Note. The Warrant comprises 20,000 Company common stock issuable at $0.075 per share. Upon issuance on August 12, 2022, the Warrant remains exercisable for a period of three years.
On January 16, 2024, the Company issued a common stock purchase warrant in conjunction with a Promissory Note. The Warrant comprises 1,000,000 Company common stock issuable at $0.035 per share. Upon issuance on January 16, 2024, the Warrant remains exercisable for a period of five years.
The weighted average remaining legal life of the warrants outstanding on June 30, 2024 is 2.94 years.
Forward Stock Splits
On July 15, 2022, the Company’s director and shareholders approved an amendment of the Company’s Articles of Incorporation that would effect a 10-for-1 forward stock split of the Company’s common stock (the “Forward Split”). The Forward Split is subject to clearance by the Financial Industry Regulatory Authority (“FINRA”), and the Company will not affect the Forward Split until it is cleared by FINRA. On September 7, 2023, the Board ratified the Company’s prior approval, in favor of the implementation of a 10 for 1, stock split of all of the Company’s issued and outstanding common stock and to amend the Articles of Incorporation to increase the authorized shares of Common Stock from 100,000,000 shares of Common Stock to 300,000,000 shares of common stock. On September 11, 2023, the Financial Industry Regulatory Authority, Inc. notified us that the Forward Split would take effect on September 19, 2023. All common stock share and per-share amounts for all periods presented in these unaudited consolidated financial statements have been adjusted retroactively to reflect the Forward Split.
Authorized Shares
On August 8, 2024 the Company’s director and shareholders approved an amendment of the Company’s Articles of Incorporation to increase the authorized shares of common stock, par value $0.0001 per share, of common stock from 300,000,000 shares of common stock to 600,000,000 shares of common stock. Common stock has been presented in these unaudited consolidated financial statements have been adjusted retroactively to reflect the increase in authorized shares of common stock.
NOTE 10 – INCOME TAXES
The Company had no income tax expense due to operating losses incurred for the years ended June 30, 2024 and 2023.
United States
Modifications for net operating losses (NOL): Under Code Section 172(a) the amount of the NOL deduction is equal to the lesser of (a) the aggregate of the NOL carryovers to such year and NOL carrybacks to such year, or (b) 80% of taxable income computed without regard to the deduction allowable in this section. Thus, NOLs are currently subject to a taxable-income limitation and cannot fully offset income. The Act temporarily removes the taxable income limitation to allow an NOL to fully offset income.
Modifications of limitation on business interest: The 2017 Tax Cuts and Jobs Act of 2017 (TCJA) generally limited the amount of business interest allowed as a deduction to 30% of adjusted taxable income. The Act temporarily and retroactively increases the limitation on the deductibility of interest expense under Code Section 163(j)(1) from 30% to 50% for tax years beginning in 2019 and 2020. (Code Section 163(j)(10)(A)(i) as amended by Act Section 2306(a)).
The Company has not recorded the necessary provisional adjustments in the consolidated financial statements in accordance with its current understanding of the CARES Act and guidance currently available as of this filing. But is reviewing the CARES Act potential ramifications.
F-30 |
The tax effects of temporary differences and tax loss and credit carry forwards that give rise to significant portions of deferred tax assets and liabilities on June 30, 2024 and 2023 are comprised of the following:
Year Ended June 30, 2024 | Year Ended June 30, 2023 | |||||||
Deferred tax assets: | ||||||||
Net-operating loss carryforward | $ | 351,986 | $ | 287,503 | ||||
Total deferred tax assets | 351,986 | 287,503 | ||||||
Valuation allowance | (351,986 | ) | (287,503 | ) | ||||
Deferred tax assets, net of allowance | $ | - | $ | - |
Year Ended June 30, 2024 | Year Ended June 30, 2023 | |||||||
Federal | ||||||||
Current | $ | - | $ | - | ||||
Deferred | 351,986 | 287,503 | ||||||
State | - | - | ||||||
Current | - | |||||||
Deferred | - | - | ||||||
Change in valuation allowance | (351,986 | ) | (287,503 | ) | ||||
Income tax provision | $ | - | $ | - |
We have a net operating loss (“NOL”) carry forward for U.S. income tax purposes aggregating approximately $1,676,100 as of June 30, 2024, subject to the Internal Revenue Code Section 382/383, which places a limitation on the amount of taxable income that can be offset by net operating losses after a change in ownership.
In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and taxing strategies in making this assessment. In case the deferred tax assets will not be realized in future periods, the Company has provided a valuation allowance for the full amount of the deferred tax assets on June 30, 2024. The valuation allowance increased by approximately $64,483 as of June 30, 2024.
The expected tax expense (benefit) based on the U.S. federal statutory rate is reconciled with actual tax expense (benefit) as follows:
Year Ended | Year Ended | |||||||
June 30, 2024 | June 30, 2023 | |||||||
Statutory Federal Income Tax Rate | 21 | % | 21 | % | ||||
Non-deductible expenses | (10 | )% | (16 | )% | ||||
Change in valuation allowance | (11 | )% | (5 | )% | ||||
Income tax provision | $ | - | $ | - |
The Company has not identified any uncertain tax positions requiring a reserve as of June 30, 2024.
NOTE 11 – SUBSEQUENT EVENTS
Forward Stock Split
On September 13 2024, the Company’s director and shareholders approved an amendment of the Company’s Articles of Incorporation that would effect a 100- for-1 forward stock split of the Company’s common stock and to increase the authorized shares of common stock to 15,000,000,000 shares. The forward split and increase in the authorized shares is subject to clearance by the Financial Industry Regulatory Authority (“FINRA”), and the Company will not effect the forward split and the increase in the authorized shares until it is cleared by FINRA.
Shares to be Issued
In a Stock Purchase Agreement by and between the Company and Meliori Incorporated dated September 11, 2024, the Company agreed to issue Meliori Incorporated 720,000 shares of common stock of the Company for $36,000 in cash
In a Stock Purchase Agreement by and between the Company and Meliori Incorporated dated September 20, 2024, the Company agreed to issue Meliori Incorporated 1,600,000 shares of common stock of the Company for $90,000 in cash
Payment of Convertible Promissory Note
On September 24, 2024 the Company paid $21,546 to extinguish the Convertible Promissory Note issued to Timothy Hackbart.
F-31 |
PART III – EXHIBITS
Index to Exhibits
III-1 |
III-2 |
* Incorporated by reference as indicated.
+ Filed herewith.
# To be filed by amendment.
III-3 |
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 Cumming, State of Georgia, on April 30, 2025.
Metavesco Inc. | |||
By: | /s/ Ryan Schadel | ||
Ryan Schadel | |||
Chief Executive Officer |
This Offering Statement has been signed by the following persons in the capacities and on the dates indicated.
By: | /s/ Ryan Schadel | April 30, 2025 | |
Ryan Schadel | |||
President, Chief Executive Officer, Acting Chief Financial Officer [Principal Accounting Officer], Secretary and Director |
III-4 |
Exhibit 4.1
SUBSCRIPTION AGREEMENT |
Metavesco, Inc. |
NOTICE TO INVESTORS
The securities of Metavesco, Inc., a Nevada corporation (the “Company”), to which this Subscription Agreement relates, represent an investment that involves a high degree of risk, suitable only for persons who can bear the economic risk for an indefinite period of time and who can afford to lose their entire investments. Investors should further understand that this investment is illiquid and is expected to continue to be illiquid for an indefinite period of time. No public market exists for the securities to which this Subscription Agreement relates.
The securities offered hereby have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities or blue sky laws and are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act and state securities or blue sky laws. Although an Offering Statement has been filed with the Securities and Exchange Commission (the “SEC”), that Offering Statement does not include the same information that would be included in a Registration Statement under the Securities Act. The securities offered hereby have not been approved or disapproved by the SEC, any state securities commission or other regulatory authority, nor have any of the foregoing authorities passed upon the merits of the offering to which this Subscription Agreement relates or the adequacy or accuracy of this Subscription Agreement or any other materials or information made available to prospective investors in connection with the offering to which this Subscription Agreement. Any representation to the contrary is unlawful.
The securities offered hereby cannot be sold or otherwise transferred, except in compliance with the Securities Act. In addition, the securities offered hereby cannot be sold or otherwise transferred, except in compliance with applicable state securities or “blue sky” laws. Investors who are not “accredited investors” (as that term is defined in Section 501 of Regulation D promulgated under the Securities Act) are subject to limitations on the amount they may invest, as described in Section 4(g) of this Subscription Agreement.
To determine the availability of exemptions from the registration requirements of the Securities Act as such may relate to the offering to which this Subscription Agreement relates, the Company is relying on each investor’s representations and warranties included in this Subscription Agreement and the other information provided by each investor in connection herewith.
Prospective investors may not treat the contents of this Subscription Agreement, the Offering Circular or any of the other materials provided by the Company (collectively, the “Offering Materials”), or any prior or subsequent communications from the Company or any of its officers, employees or agents (including “Testing the Waters” materials), as investment, legal or tax advice. In making an investment decision, investors must rely on their own examinations of the Company and the terms of the offering to which this Subscription Agreement relates, including the merits and the risks involved. Each prospective investor should consult such investor’s own counsel, accountants and other professional advisors as to investment, legal, tax and other related matters concerning such investor’s proposed investment in the Company.
The Offering Materials may contain forward-looking statements and information relating to, among other things, the Company, its business plan, its operating strategy and its industries. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to, the Company’s management. When used in the Offering Materials, the words “estimate,” “project,” “believe,” “anticipate,” “intend,” “expect” and similar expressions are intended to identify forward-looking statements, which constitute forward-looking statements. These statements reflect management’s current views with respect to future events and are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from those contained in the forward-looking statements. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company does not undertake any obligation to revise or update these forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events.
1 |
SUBSCRIPTION AGREEMENT
This subscription agreement (the “Subscription Agreement” or the “Agreement”) is entered into by and between Metavesco, Inc., a Nevada corporation (the Company), and the undersigned investor (“Investor”), as of the date set forth on the signature page hereto. Any term used but not defined herein shall have the meaning set forth in the Offering Circular (defined below).
RECITALS
WHEREAS, the Company is offering for sale a maximum of 1,000,000,000 shares of its common stock (the “Offered Shares”), pursuant to Tier 1 of Regulation A promulgated under the Securities Act (the “Offering”) at a fixed price of $__[0.0005-0.001] per share (the “Share Purchase Price”), on a best-efforts basis.
WHEREAS, Investor desires to acquire that number of Offered Shares (the “Subject Offered Shares”) as set forth on the signature page hereto at the Share Purchase Price.
WHEREAS, the Offering will terminate at the earlier of: (a) the date on which all of the securities offered in the Offering shall have been sold, (b) the date which is one year from the Offering having been qualified by the SEC or (c) the date on which the Offering is earlier terminated by the Company, in its sole discretion (in each case, the “Termination Date”).
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows:
CHECK ONE: | Individual Investor | Custodian Entity | Tenants-in-Common* | ||||||
Community Property* | Corporation | Joint Tenants* | |||||||
LLC | Partnership | Trust |
* | If the Subject Offered Shares are intended to be held as Community Property, as Tenants-In-Common or as Joint Tenancy, then each party (owner) must execute this Subscription Agreement. |
1. Subscription.
(a) Investor hereby irrevocably subscribes for, and agrees to purchase, the Subject Offered Shares set forth on the signature page hereto at the Share Purchase Price, upon the terms and conditions set forth herein. The aggregate purchase price for the Subject Offered Shares subscribed by Investor (the “Purchase Price”) is payable to the Company in the manner provided in Section 2(a).
(b) Investor understands that the Offered Shares are being offered pursuant to the Offering Circular dated ______, 2025, and its exhibits, as supplemented from time to time (the “Offering Circular”), as filed with the SEC. By subscribing for the Subject Offered Shares, Investor acknowledges that Investor has received and reviewed a copy of the Offering Circular and any other information required by Investor to make an investment decision with respect to the Subject Offered Shares.
(c) This Subscription Agreement may be accepted or rejected in whole or in part, for any reason or for no reason, at any time prior to the Termination Date, by the Company in its sole and absolute discretion. The Company will notify Investor whether this Subscription Agreement is accepted or rejected. If rejected, Investor’s payment shall be returned to Investor without interest and all of Investor’s obligations hereunder shall terminate, except for Section 5 hereof, which shall remain in force and effect.
2 |
(d) The terms of this Subscription Agreement shall be binding upon Investor and Investor’s permitted transferees, heirs, successors and assigns (collectively, the “Transferees”); provided, however, that for any such transfer to be deemed effective, the proposed Transferee shall have executed and delivered to the Company, in advance, an instrument in form acceptable to the Company in its sole discretion, pursuant to which the proposed Transferee shall acknowledge and agree to be bound by the representations and warranties of Investor and the terms of this Subscription Agreement. No transfer of this Agreement may be made without the consent of the Company, which consent may be withheld by the Company in its sole and absolute discretion.
2. Payment and Purchase Procedure. The Purchase Price shall be paid simultaneously with Investor’s delivery of this Subscription Agreement. Investor shall deliver payment of the Purchase Price of the Subject Offered Shares in the manner set forth in Section 8 hereof. Investor acknowledges that, in order to subscribe for Offered Shares, Investor must comply fully with the purchase procedure requirements set forth in Section 8 hereof.
3. Representations and Warranties of the Company. The Company represents and warrants to Investor that each of the following is true and complete in all material respects as of the date of this Subscription Agreement:
(a) the Company is a corporation duly formed, validly existing and in good standing under the laws of the State of Nevada. The Company has all requisite power and authority to own and operate its properties and assets, to execute and deliver this Subscription Agreement, the Subject Offered Shares and any other agreements or instruments required hereunder. The Company is duly qualified and is authorized to do business and is in good standing as a foreign corporation in all jurisdictions in which the nature of its activities and of its properties (both owned and leased) makes such qualification necessary, except for those jurisdictions in which failure to do so would not have a material adverse effect on the Company or its business;
(b) The issuance, sale and delivery of the Subject Offered Shares in accordance with this Subscription Agreement have been duly authorized by all necessary corporate action on the part of the Company. The Subject Offered Shares, when issued, sold and delivered against payment therefor in accordance with the provisions of this Subscription Agreement, will be duly and validly issued, fully paid and non-assessable; and
(c) the acceptance by the Company of this Subscription Agreement and the consummation of the transactions contemplated hereby are within the Company’s powers and have been duly authorized by all necessary corporate action on the part of the Company. Upon the Company’s acceptance of this Subscription Agreement, this Subscription Agreement shall constitute a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except (1) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (2) as limited by general principles of equity that restrict the availability of equitable remedies.
4. Representations and Warranties of Investor. Investor represents and warrants to the Company that each of the following is true and complete in all material respects as of the date of this Subscription Agreement:
(a) Requisite Power and Authority. Investor has all necessary power and authority under all applicable provisions of law to execute and deliver this Subscription Agreement and to carry out the provisions hereof. Upon due delivery hereof, this Subscription Agreement will be a valid and binding obligation of Investor, enforceable in accordance with its terms, except (1) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors’ rights and (2) as limited by general principles of equity that restrict the availability of equitable remedies.
(b) Company Offering Circular; Company Information. Investor acknowledges the public availability of the Offering Circular which can be viewed on the SEC Edgar Database, under CIK number 0000924095, and that Investor has reviewed the Offering Circular. Investor acknowledges that the Offering Circular makes clear the terms and conditions of the Offering and that the risks associated therewith are described. Investor has had an opportunity to discuss the Company’s business, management and financial affairs with directors, officers and management of the Company and has had the opportunity to review the Company’s operations and facilities. Investor has also had the opportunity to ask questions of, and receive answers from, the Company and its management regarding the terms and conditions of the Offering. Investor acknowledges that, except as set forth herein, no representations or warranties have been made to Investor, or to any advisor or representative of Investor, by the Company with respect to the business or prospects of the Company or its financial condition.
(c) Investment Experience; Investor Suitability. Investor has sufficient experience in financial and business matters so as to be capable of evaluating the merits and risks of an investment in the Offered Shares, and to make an informed decision relating thereto. Alternatively, Investor has utilized the services of a purchaser representative and, together, they have sufficient experience in financial and business matters so as to be capable of evaluating the merits and risks of an investment in the Offered Shares, and to make an informed decision relating thereto. Investor has evaluated the risks of an investment in the Offered Shares, including those described in the section of the Offering Circular entitled “Risk Factors”, and has determined that such an investment is suitable for Investor. Investor has adequate financial resources for an investment of this character. Investor is capable of bearing a complete loss of Investor’s investment in the Offered Shares.
3 |
(d) No Registration. Investor understands that the Offered Shares are not being registered under the Securities Act on the ground that the issuance thereof is exempt under Regulation A promulgated under the Securities Act, and that reliance on such exemption is predicated, in part, on the truth and accuracy of Investor’s representations and warranties, and those of the other purchasers of the Offered Shares in the Offering.
Investor further understands that the Offered Shares are not being registered under the securities laws of any state, on the basis that the issuance thereof is exempt as an offer and sale not involving a registrable public offering in such state.
Investor covenants not to sell, transfer or otherwise dispose of any Offered Shares, unless such Offered Shares have been registered under the Securities Act and under applicable state securities laws or exemptions from such registration requirements are available.
(e) Illiquidity and Continued Economic Risk. Investor acknowledges and agrees that there is a limited public market for the Offered Shares and that there is no guarantee that a market for their resale will continue to exist. Investor must, therefore, bear the economic risk of the investment in the Subject Offered Shares indefinitely and Investor acknowledges that Investor is able to bear the economic risk of losing Investor’s entire investment in the Subject Offered Shares.
(f) Accredited Investor Status or Investment Limits. Investor represents that either:
(1) Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act; or
(2) that the Purchase Price, together with any other amounts previously used to purchase Offered Shares in the Offering, does not exceed ten percent (10%) of the greater of Investor’s annual income or net worth (or, in the case where Investor is a non-natural person, Investor’s revenue or net assets for such Investor’s most recently completed fiscal year end).
Investor represents that, to the extent Investor has any questions with respect to Investor’s status as an accredited investor, or the application of the investment limits, Investor has sought professional advice.
(g) Investor Information. Within five (5) days after receipt of a request from the Company, Investor hereby agrees to provide such information with respect to Investor’s status as a Company shareholder and to execute and deliver such documents as may reasonably be necessary to comply with any and all laws and regulations to which the Company is, or may become, subject, including, without limitation, the need to determine the accredited investor status of the Company’s shareholders. Investor further agrees that, in the event Investor transfers any Offered Shares, Investor will require the transferee of any such Offered Shares to agree to provide such information to the Company as a condition of such transfer.
(h) Valuation; Arbitrary Determination of Share Purchase Price by the Company. Investor acknowledges that the Share Purchase Price of the Offered Shares in the Offering was set by the Company on the basis of the Company’s internal valuation and no warranties are made as to value. Investor further acknowledges that future offerings of securities of the Company may be made at lower valuations, with the result that Investor’s investment will bear a lower valuation.
(i) Domicile. Investor maintains Investor’s domicile (and is not a transient or temporary resident) at the address provided herein.
(j) Foreign Investors. If Investor is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended), Investor hereby represents that Investor is in full compliance with the laws of Investor’s jurisdiction in connection with any invitation to subscribe for the Offered Shares or any use of this Subscription Agreement, including, without limitation, (1) the legal requirements within Investor’s jurisdiction for the purchase of the Subject Offered Shares, (2) any foreign exchange restrictions applicable to such purchase, (3) any governmental or other consents that may need to be obtained, and (4) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale or transfer of the Subject Offered Shares. Investor’s subscription and payment for and continued beneficial ownership of the Subject Offered Shares will not violate any applicable securities or other laws of Investor’s jurisdiction.
(k) Fiduciary Capacity. If Investor is purchasing the Subject Offered Shares in a fiduciary capacity for another person or entity, including, without limitation, a corporation, partnership, trust or any other juridical entity, Investor has been duly authorized and empowered to execute this Subscription Agreement and all other related documents. Upon request of the Company, Investor will provide true, complete and current copies of all relevant documents creating Investor, authorizing Investor’s investment in the Company and/or evidencing the satisfaction of the foregoing.
5. Indemnity. The representations, warranties and covenants made by Investor herein shall survive the consummation of this Subscription Agreement. Investor agrees to indemnify and hold harmless the Company and its officers, directors and agents, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all reasonable attorneys’ fees, including attorneys’ fees on appeal) and expenses reasonably incurred in investigating, preparing or defending against any false representation or warranty or breach of failure by Investor to comply with any covenant or agreement made by Investor herein or in any other document furnished by Investor to any of the foregoing in connection with the transaction contemplated hereby.
4 |
6. Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, applicable to agreements made in and wholly to be performed in that jurisdiction with regards to the choice of law rules of such state, except for matters arising under the Securities Act or the Securities Exchange Act of 1934, which matters shall be construed and interpreted in accordance with such laws.
7. Notices. Notice, requests, demands and other communications relating to this Subscription Agreement and the transactions contemplated herein shall be in writing and shall be deemed to have been duly given if and when (a) delivered personally, on the date of such delivery; or (b) mailed by registered or certified mail, postage prepaid, return receipt requested, in the third day after the posting thereof; or (c) e-mailed on the date of such delivery to the address of the respective parties as follows, if to the Company, to Metavesco, Inc., 410 Peachtree Parkway, Suite 4245, Cumming, Georgia 30041, Attention: Ryan Schadel, Chief Executive Officer. If to Investor, at Investor’s address supplied in connection herewith, or to such other address as may be specified by written notice from time to time by the party entitled to receive such notice. Any notices, requests, demands or other communications by email shall be confirmed by letter given in accordance with (a) or (b) above.
8. Purchase Procedure. Investor acknowledges that, in order to subscribe for the Subject Offered Shares, Investor must, and Investor does hereby, deliver (in a manner described below) to the Company:
(a) a single executed counterpart of the Subscription Agreement, which shall be delivered to the Company either by (1) physical delivery to: Metavesco, Inc., Attention: Ryan Schadel, Chief Executive Officer, 410 Peachtree Parkway, Suite 4245, Cumming, Georgia 30041; (2) e-mail to: rschadel@metavesco.com; and
(b) payment of the Purchase Price, which shall be delivered in the manner set forth in Annex I attached hereto and made a part hereof.
9. Miscellaneous. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or persons or entity or entities may require. Other than as set forth herein, this Subscription Agreement is not transferable or assignable by Investor. The representations, warranties and agreements contained herein shall be deemed to be made by, and be binding upon, Investor and Investor’s heirs, executors, administrators and successors and shall inure to the benefit of the Company and its successors and assigns. None of the provisions of this Subscription Agreement may be waived, changed or terminated orally or otherwise, except as specifically set forth herein or except by a writing signed by the Company and Investor. In the event any part of this Subscription Agreement is found to be void or unenforceable, the remaining provisions are intended to be separable and binding with the same effect as if the void or unenforceable part were never in this Subscription Agreement. This Subscription Agreement supersedes all prior discussions and agreements between the Company and Investor, if any, with respect to the subject matter hereof and contains the sole and entire agreement between the Company and Investor with respect to the subject matter hereof. The terms and provisions of this Subscription Agreement are intended solely for the benefit of each party hereto and their respective successors and assigns, and it is not the intention of the parties to confer, and no provision hereof shall confer, third-party beneficiary rights upon any other person. The headings used in this Subscription Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof. In the event that either party hereto shall commence any suit, action or other proceeding to interpret this Subscription Agreement, or determine to enforce any right or obligation created hereby, then such party, if it prevails in such action, shall recover its reasonable costs and expenses incurred in connection therewith, including, but not limited to, reasonable attorneys’ fees and expenses and costs of appeal, if any. All notices and communications to be given or otherwise made to Investor shall be deemed to be sufficient if sent by e-mail to such address provided by Investor herein. Unless otherwise specified in this Subscription Agreement, Investor shall send all notices or other communications required to be given hereunder to the Company via e-mail at rschadel@metavesco.com. Any such notice or communication shall be deemed to have been delivered and received on the first business day following that on which the e-mail has been sent (assuming that there is no error in delivery). As used in this Section 9, the term “business day” shall mean any day other than a day on which banking institutions in the State of Nevada are legally closed for business. This Subscription Agreement may be executed in one or more counterparts. No failure or delay by any party in exercising any right, power or privilege under this Subscription Agreement shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.
5 |
10. Consent to Electronic Delivery of Notices, Disclosures and Forms. Investor understands that, to the fullest extent permitted by law, any notices, disclosures, forms, privacy statements, reports or other communications (collectively, “Communications”) regarding the Company, Investor’s investment in the Company and the Subject Offered Shares (including annual and other updates and tax documents) may be delivered by electronic means, such as by e-mail. Investor hereby consents to electronic delivery as described in the preceding sentence. In so consenting, Investor acknowledges that e-mail messages are not secure and may contain computer viruses or other defects, may not be accurately replicated on other systems or may be intercepted, deleted or interfered with, with or without the knowledge of the sender or the intended recipient. Investor also acknowledges that an e-mail from the Company may be accessed by recipients other than Investor and may be interfered with, may contain computer viruses or other defects and may not be successfully replicated on other systems. Neither the Company, nor any of its respective officers, directors and affiliates, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act (collectively, the “Company Parties”), gives any warranties in relation to these matters. Investor further understands and agrees to each of the following: (a) other than with respect to tax documents in the case of an election to receive paper versions, none of the Company Parties will be under any obligation to provide Investor with paper versions of any Communications; (b) electronic Communications may be provided to Investor via e-mail or a website of a Company Party upon written notice of such website’s internet address to such Investor. In order to view and retain the Communications, Investor’s computer hardware and software must, at a minimum, be capable of accessing the Internet, with connectivity to an internet service provider or any other capable communications medium, and with software capable of viewing and printing a portable document format (“PDF”) file created by Adobe Acrobat. Further, Investor must have a personal e-mail address capable of sending and receiving e-mail messages to and from the Company Parties. To print the documents, Investor will need access to a printer compatible with his or her hardware and the required software; (c) if these software or hardware requirements change in the future, a Company Party will notify the Investor through written notification. To facilitate these services, Investor must provide the Company with his or her current e-mail address and update that information as necessary. Unless otherwise required by law, Investor will be deemed to have received any electronic Communications that are sent to the most current e-mail address that the Investor has provided to the Company in writing; (d) none of the Company Parties will assume liability for non-receipt of notification of the availability of electronic Communications in the event Investor’s e-mail address on file is invalid; Investor’s e-mail or Internet service provider filters the notification as “spam” or “junk mail”; there is a malfunction in Investor’s computer, browser, internet service or software; or for other reasons beyond the control of the Company Parties; and (e) solely with respect to the provision of tax documents by a Company Party, Investor agrees to each of the following: (1) if Investor does not consent to receive tax documents electronically, a paper copy will be provided, and (2) Investor’s consent to receive tax documents electronically continues for every tax year of the Company until Investor withdraws its consent by notifying the Company in writing.
Investor certifies that Investor has read this entire Subscription Agreement and that every statement made by Investor herein is true and complete.
The Company may not be offering the Offered Shares in every state. The Offering Materials do not constitute an offer or solicitation in any state or jurisdiction in which the Offered Shares are not being offered. The information presented in the Offering Materials was prepared by the Company solely for the use by prospective investors in connection with the Offering. Nothing contained in the Offering Materials is or should be relied upon as a promise or representation as to the future performance of the Company.
The Company reserves the right, in its sole discretion and for any reason whatsoever, to modify, amend and/or withdraw all or a portion of the Offering and/or accept or reject, in whole or in part, for any reason or for no reason, any prospective investment in the Offered Shares. Except as otherwise indicated, the Offering Materials speak as of their date. Neither the delivery nor the purchase of the Offered Shares shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since that date.
[ SIGNATURE PAGE FOLLOWS ]
6 |
IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on the date set forth below.
Dated: _______________________.
INDIVIDUAL INVESTOR | ||
|
|
|
(Signature) | (Subscription Amount) | |
(Printed Name) | (Number of Offered Shares Subscribed) | |
CORPORATION/LLC/TRUST INVESTOR | ||
|
|
|
(Name of Corporation/LLC/Trust) | (Subscription Amount) | |
(Signature) | (Number of Offered Shares Subscribed) | |
(Printed Name) | ||
(Title) | ||
PARTNERSHIP INVESTOR | ||
|
$ |
|
(Name of Partnership) | (Subscription Amount) | |
(Signature) | (Number of Offered Shares Subscribed) | |
(Printed Name) | ||
(Title) | ||
COMPANY ACCEPTANCE | ||
The foregoing subscription for ________________________ Offered Shares, a Subscription Amount of $________________, is hereby accepted on behalf of Metavesco, Inc., a Nevada corporation, this ______ day of ______________, 202___.
METAVESCO, INC. | ||
By: | ||
Ryan Schadel | ||
Chief Executive Officer |
7 |
Exhibit 6.33
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the “Agreement”) is dated as of March 21, 2025, by and between Metavesco, Inc., a Nevada corporation (the “Company”), and Pinnacle Consulting Services, Inc., a Nevada corporation (the “Buyer”).
RECITALS
WHEREAS, The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”); and
WHEREAS, Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement, a convertible promissory note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $65,000.00 (the “Note”).
NOW THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:
1. Purchase and Sale of the Securities.
(a) Purchase of the Securities. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company the Securities as is set forth immediately below the Buyer’s name on the signature pages hereto.
(b) Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price of $50,000.00 (the “Purchase Price”) for the Note to be issued and sold to it at the Closing (as defined below) by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Securities, and (ii) the Company shall deliver such duly executed Note on behalf of the Company against delivery of such Purchase Price.
(c) Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Securities pursuant to this Agreement (the “Closing Date”) shall be 1:00 p.m., Eastern Time, on or about March 24, 2025, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.
SECURITIES PURCHASE AGREEMENT | PAGE 1 OF 12 |
2. Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company that:
(a) Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act.
(b) Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).
(c) Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
(d) Information. The Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer.
(e) Legends. The Buyer understands that the Securities have not been registered under the 1933 Act; and may bear a restrictive legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR (2) THE ISSUER OF SUCH SECURITIES RECEIVES AN OPINION OF COUNSEL TO THE BUYER OF SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY ACCEPTABLE TO THE ISSUER’S TRANSFER AGENT, THAT SUCH SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the Buyer of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to an exemption from registration without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such Buyer provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not reasonably accept the opinion of counsel that properly conforms to applicable securities laws provided by the Buyer with respect to the transfer of any Securities pursuant to an exemption from registration, such as Rule 144, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.
SECURITIES PURCHASE AGREEMENT | PAGE 2 OF 12 |
(f) Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.
3. Representations and Warranties of the Company. The Company represents and warrants to the Buyer that:
(a) Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.
(b) Authorization; Enforcement. (1) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (2) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note has been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (3) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (4) this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.
(c) Capitalization. As of the date hereof, the authorized capital stock of the Company consists of 15,000,000,000 authorized shares of Common Stock, $0.001 par value per share, of which 3,712,384,860 shares are issued and outstanding, and 20,000,000 authorized shares of preferred stock, $0.001 par value per share, 100 shares of which are designated Series A Preferred Stock, of which 20 shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable.
SECURITIES PURCHASE AGREEMENT | PAGE 3 OF 12 |
(d) Issuance of Securities. The Securities are duly authorized and reserved for issuance in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the Buyer thereof.
(e) No Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby will not (1) conflict with or result in a violation of any provision of the Articles of Incorporation or Bylaws, or (2) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (3) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. “Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith.
(f) OTC Markets Documents; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with OTC Markets pursuant to its reporting requirements as an Alternative Reporting Standard company (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “OTC Documents”). Upon written request the Company will deliver to the Buyer true and complete copies of the OTC Documents, except for such exhibits and incorporated documents. As of their respective dates or if amended, as of the dates of the amendments, the OTC Documents complied in all material respects with applicable requirements relating to the OTC Documents, and none of the OTC Documents, at the time they were filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such OTC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates or if amended, as of the dates of the amendments, the financial statements of the Company included in the OTC Documents complied as to form in all material respects applicable thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The Company is not subject to the reporting requirements of the Securities Exchange Act of 1934 (the “1934 Act”)
SECURITIES PURCHASE AGREEMENT | PAGE 4 OF 12 |
(g) Absence of Certain Changes. Since June 30, 2024, except as set forth in the OTC Documents, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations or prospects of the Company or any of its Subsidiaries.
(h) Absence of Litigation. Except as set forth in the OTC Documents, there is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.
(i) No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.
(j) No Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.
(k) No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”). The Company is not controlled by an Investment Company.
(l) Breach of Representations and Warranties by the Company. If the Company breaches any of the material representations or warranties set forth in this Section 3 which is continuing after the applicable cure period as set forth in the Note, if any, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of default under Section 4.4 of the Note.
SECURITIES PURCHASE AGREEMENT | PAGE 5 OF 12 |
4. Covenants.
(a) Best Efforts. The Company shall use its reasonable commercial efforts to satisfy timely each of the conditions described in Section 7 of this Agreement.
(b) Use of Proceeds. The Company shall use the proceeds for legal fees and for general working capital purposes.
(c) Expenses. The parties shall be responsible for their own expenses associated with the transactions contemplated by this Agreement, including attorneys’ fees.
(d) Corporate Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except with the prior written consent of the Buyer.
(e) Breach of Covenants. If the Company breaches any of the material covenants set forth in this Section 4, and in addition to any other remedies available to the Buyer pursuant to this Agreement which is continuing after the applicable cure period as set forth in the Note, it will be considered an event of default under Section 4.4 of the Note.
(f) [Omitted].
(g) The Buyer is Not a “Dealer.” The Buyer and the Company hereby acknowledge and agree that the Buyer has not: (1) acted as an underwriter; (2) acted as a market maker or specialist; (3) acted as “de facto” market maker; or (4) conducted any other professional market activities such as providing investment advice, extending credit and lending securities in connection; and thus that the Buyer is not a “Dealer” as such term is defined in the 1934 Act.
SECURITIES PURCHASE AGREEMENT | PAGE 6 OF 12 |
5. Transfer Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the shares underlying any conversion of the Note upon default of the Note (the “Conversion Shares”) in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent, the Company shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to this Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount as such term is defined in the Note) signed by the successor transfer agent to Company and the Company. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to an exemption from registration, all such certificates shall bear the restrictive legend specified in Section 2(e) of this Agreement. The Company warrants that: (1) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (2) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (3) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and/or this Agreement. If the Buyer provides the Company and the Company’s transfer, at the cost of the Buyer, with an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.
6. Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Securities to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:
(a) The Buyer shall have executed this Agreement and delivered the same to the Company.
(b) The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.
(c) The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.
(d) No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
SECURITIES PURCHASE AGREEMENT | PAGE 7 OF 12 |
7. Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Securities at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:
(a) The Company shall have executed this Agreement and delivered the same to the Buyer.
(b) The Company shall have delivered to the Buyer the duly executed Note, in accordance with Section 1(b) above.
(c) The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the Buyer, shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent.
(d) The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited to certificates with respect to the Board of Directors’ resolutions relating to the transactions contemplated hereby.
(e) No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
(f) No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company.
SECURITIES PURCHASE AGREEMENT | PAGE 8 OF 12 |
8. Governing Law; Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of Georgia or in the federal courts located in Atlanta, Georgia. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Company and Buyer waive trial by jury. The Buyer shall be entitled to recover from the Company its reasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement, the Note or any related document or agreement by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
(b) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.
(c) Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.
(d) Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.
(e) Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.
SECURITIES PURCHASE AGREEMENT | PAGE 9 OF 12 |
(f) Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (1) personally served, (2) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (3) delivered by reputable air courier service with charges prepaid, or (4) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (A) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (B) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
Each party shall provide notice to the other party of any change in address.
(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, the Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.
(h) Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.
(i) Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
SECURITIES PURCHASE AGREEMENT | PAGE 10 OF 12 |
(j) No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
(k) Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
COMPANY: | ||
METAVESCO, INC. |
||
By: | /s/ Ryan Schadel | |
Ryan Schadel | ||
Chief Executive Officer | ||
BUYER: | ||
PINNACLE CONSULTING SERVICES, INC. | ||
By: | /s/ Robert L. Hymers, III | |
Robert L. Hymers, III | ||
President |
Aggregate Principal Amount of Note: $65,000.00
Original Issue Discount: $15,000.00
Aggregate Purchase Price: $50,000.00
SECURITIES PURCHASE AGREEMENT | PAGE 11 OF 12 |
EXHIBIT A
Form of Convertible Promissory Note
Delivered separately.
SECURITIES PURCHASE AGREEMENT | PAGE 12 OF 12 |
Exhibit 6.34
NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
Principal Amount: $65,000.00 | Issue Date: March 21, 2025 |
Purchase Price: $50,000.00 |
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Metavesco, Inc., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of Pinnacle Consulting Services, Inc., or registered assigns (the “Holder”), the sum of $65,000.00 together with any interest as set forth herein, on September 21, 2025 (the “Maturity Date”), including interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment. This note (the “Note”) shall contain an original issue discount (“OID”) of $15,000.00, which shall be included in the principal amount of this Note.
This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of eighteen percent (18%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Holder pays the full Purchase Price to the Borrower and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note.
Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).
This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
CONVERTIBLE PROMISSORY NOTE | PAGE 1 OF 11 |
The following terms shall apply to this Note:
Article I. Conversion Rights
1.1 Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the earlier of (a) the day immediately following the SEC’s qualification of a Regulation A Offering under the Securities Act of 1933, as amended (the “Securities Act”), of the Borrower and (b) the date that is 180 days immediately following the Issue Date to convert all or any part of the outstanding and unpaid amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or, in the event of a recapitalization or merger, any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”) [The foregoing is not a ratchet provision; in the event of a recapitalization or merger, if common shareholder receive any other shares or interests, i.e., shares of a different issuer in the event of a merger, the Note will convert into such shares. That is the Note conversion rights will follow the merger.]; provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (the “Conversion Date”); however, if the Notice of Conversion is sent after 6:00pm, New York, New York time the Conversion Date shall be the next business day. The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) accrued and unpaid interest, if any, on such principal amount at the interest rates provided in this Note to the Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.4 hereof.
1.1.1 Rights of Qualification. The Holder shall have the right, which may be exercised at the Holder’s sole discretion, to convert any amount due under this Note into shares of any qualified Regulation A Offering under the Securities Act of Borrower during the term of the any such Regulation A Offering. The number of shares to be issued upon any such conversion shall be in accordance with Section 1.2 of this Note. In conjunction with the rights granted to the Holder under this Section 1.1.1, Borrower shall, as may be required and while any amount due under this Note remains outstanding, (1) identify the Holder as a selling shareholder in each of its Regulation A Offering Circulars; and (2) qualify and allocate a sufficient number of shares of Common Stock to repay the remaining balance under the Note in full.
1.2 Conversion Price. The Conversion Price shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 75% multiplied by the Market Price (as defined herein) (representing a discount rate of 25%). “Market Price” means the closing price for the Common Stock on the trading day immediately preceding the date of any conversion. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.
Notwithstanding the foregoing paragraph, should the Holder exercise its conversion rights pursuant to Section 1.1.1 of this Note, the Conversion Price shall be equal to the then-current offering price of the applicable Regulation A Offering Statement.
CONVERTIBLE PROMISSORY NOTE | PAGE 2 OF 11 |
1.3 Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved four and one half times the number of shares that would be issuable upon full conversion of the Note (assuming that the 4.99% limitation set forth in Section 1.1 is not in effect) (based on the respective Conversion Price of the Note (as defined in Section 1.2) in effect from time to time, initially 65,000,000 shares) (the “Reserved Amount”). The Reserved Amount shall be increased (or decreased with the written consent of the Holder) from time to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Note. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note. If, at any time the Borrower does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.
1.4 Method of Conversion.
(a) Mechanics of Conversion. As set forth in Section 1.1 hereof, from time to time, and at any time, ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower (upon payment in full of any amounts owed hereunder).
(b) Surrender of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion.
(c) Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations hereunder, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion.
CONVERTIBLE PROMISSORY NOTE | PAGE 3 OF 11 |
(d) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions set forth herein, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.
(e) Failure to Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (3 business days after receipt of Conversion Notice) due to action and/or inaction of the Borrower, the Borrower shall pay to the Holder $500 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock (the “Fail to Deliver Fee”); provided; however that the Fail to Deliver Fee shall not be due if the failure is a result of a third party (i.e., transfer agent; and not the result of any failure to pay such transfer agent) despite the best efforts of the Borrower to effect delivery of such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly, the parties acknowledge that the liquidated damages provision contained in this Section 1.4(e) are justified.
1.5 Concerning the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless: (i) the Borrower or its transfer agent shall have been furnished by the Holder with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration (such as Rule 144 or a successor rule) (“Rule 144”); or (ii) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement).
1.6 Effect of Certain Events.
(a) Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III). “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.
CONVERTIBLE PROMISSORY NOTE | PAGE 4 OF 11 |
(b) Adjustment Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Note, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, ten (10) days prior written notice (but in any event at least five (5) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Note. The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.
(c) Adjustment Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution. [NOTE: This is not a ratchet provision, it simply prohibits the issuer from effecting a distribution of assets or stock while attempting to avoid conversion or payment of the note (i.e., in the event of an asset distribution which renders the company a shell company, without the foregoing language, although it would be a default, the note holder would be left with little other remedies to attempt to be repaid from the spin off entity). Note that the language does not change the conversion price formula.]
1.7 Prepayment. This Note may be prepaid at any time without penalty. The Holder’s conversion rights herein shall not be affected in any way until the Note is fully paid (funds received by the Holder).
CONVERTIBLE PROMISSORY NOTE | PAGE 5 OF 11 |
ARTICLE II. CERTAIN COVENANTS
2.1 Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may not be unreasonably withheld as long as such disposition does not render the Borrower a “shell company” as such term is defined in Rule 144.
2.2 Offering Statement on Form 1-A. The Borrower shall file with the SEC an Offering Statement on Form 1-A that includes the Conversion Shares on or before May 24, 2025 (the “Filing Obligation”). Should the Borrower fail to satisfy the Filing Obligation, then, for each day that such failure shall continue, there shall be added to the Principal Amount of this Note the amount of $1,000 (the “Daily Penalty Amount”), with each Daily Penalty Amount bearing interest in the manner prescribed herein with respect to the Principal Amount.
ARTICLE III. EVENTS OF DEFAULT
If any of the following events of default (each, an “Event of Default”) shall occur:
3.1 Failure to Pay Principal and Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity or upon acceleration and such breach continues for a period of five (5) days after written notice from the Holder.
3.1.1 Failure to Satisfy Filing Obligation. The Borrower fails to satisfy the Filing Obligation and such failure continues for a period of ten (10) days after written notice from the Holder.
3.2 Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty-eight (48) hours of a demand from the Holder.
3.3 Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents including but not limited to the Purchase Agreement and such breach continues for a period of twenty (20) days after written notice thereof to the Borrower from the Holder.
CONVERTIBLE PROMISSORY NOTE | PAGE 6 OF 11 |
3.4 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.5 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.
3.6 Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.
3.7 Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically includes the quotation platforms maintained by the OTC Markets Group) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.8 [Omitted].
3.9 Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.10 Cessation of Operations. Any cessation of operations by Borrower rendering the Borrower a “shell company” as such term is defined in Rule 144, or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.
3.11 Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with OTC Markets at any time after 180 days after the Issuance Date for any date or period until this Note is no longer outstanding, if the result of such restatement would, by comparison to the un-restated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.12 Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
3.13 Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.
CONVERTIBLE PROMISSORY NOTE | PAGE 7 OF 11 |
Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note or upon acceleration), 3.3, 3.4, 3.7, 3.8, 3.10, 3.11, 3.12, 3.13, and/or 3.14 exercisable through the delivery of written notice to the Borrower by such Holders (the “Default Notice”), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3,1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.
If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable and the details of the determination of such amount, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.
ARTICLE IV. MISCELLANEOUS
4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.
CONVERTIBLE PROMISSORY NOTE | PAGE 8 OF 11 |
4.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.
4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the Securities and Exchange Commission). Notwithstanding anything in this Note to the contrary, this Note may be assigned by the Holder without the consent of the Borrower.
4.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.
4.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of Georgia or in the federal courts located in Atlanta, Georgia. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury.
CONVERTIBLE PROMISSORY NOTE | PAGE 9 OF 11 |
The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Note, any agreement or any other document delivered in connection with this Note by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
4.7 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
4.8 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.
IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer on March 21, 2025.
METAVESCO, INC. | ||
By: | /s/ Ryan Schadel | |
Ryan Schadel | ||
Chief Executive Officer |
CONVERTIBLE PROMISSORY NOTE | PAGE 10 OF 11 |
EXHIBIT A
FORM OF NOTICE OF CONVERSION
The undersigned hereby elects to convert $________ principal amount and $________ of accrued interest of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of Metavesco, Inc., a Nevada corporation (the “Borrower”), according to the conditions of the convertible note of the Borrower dated as of March 21, 2025 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.
Box Checked as to applicable instructions:
☐ | The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”). |
Name of DTC Prime Broker: ___________________________________________
Account Number: _______________________________________________________
☐ | The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto: |
CONVERTIBLE PROMISSORY NOTE | PAGE 11 OF 11 |
Exhibit 6.35
LEGAL SERVICES AGREEMENT
This Legal Services Agreement (the “Agreement”) dated as of, and to be effective as of, March 18, 2025 (the “Effective Date”), is by and between Newlan Law Firm, PLLC, by and through its Managing Member, Eric Newlan (“Attorney”), and Metavesco, Inc., a Nevada corporation (“MVCO”).
RECITALS
WHEREAS, MVCO desires for Attorney to perform certain legal services as described herein on behalf of the Company (the “Corporate and Securities Work”); and
WHEREAS, Attorney desires to be responsible for the Corporate and Securities Work, as described in the foregoing Recital; and
WHEREAS, Attorney and MVCO desire to enter into an agreement for legal services, on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements, and considerations herein contained, the parties hereto agree as follows:
1. Corporate and Securities Work. The “Corporate and Securities Work” to be completed by Attorney under this Agreement shall include:
(a) funding transaction documentation for Pinnacle Consulting Services, Inc.;
(b) pre-offering funding documentation, as needed;
(c) the preparation, filing and qualification of an Offering Statement on Form 1-A (including Blue Sky matters) to be filed with the SEC (the “Offering Statement”), but not including any post-qualification amendments thereto; and
(d) the preparation of all necessary board and shareholder actions and minutes related to the foregoing.
LEGAL SERVICES AGREEMENT | PAGE 1 |
2. Payment to Attorney. In consideration of Attorney’s entering into this Agreement, MVCO shall deliver to Attorney, in consideration of the Corporate and Securities Work to be provided by Attorney at a turn-key cost, on the Effective Date:
(a) $7,500 in cash, payable by wire transfer in immediately available funds; and
(b) a $17,500 principal amount promissory note (the “Work Note”), in the form of Exhibit A attached hereto.
MVCO agrees and acknowledges that the Work Note is fully earned as of the Effective Date of this Agreement, in consideration of Attorney’s execution of this Agreement and concomitant acceptance of his duties as set forth in this Agreement, the full execution of which will limit Attorney’s ability to engage in other potential client relationships with other parties. MVCO hereby agrees to furnish any documentation necessary for Attorney to deposit the shares of common stock of MVCO underlying the Work Note (the “Conversion Shares”) with a FINRA-registered broker/dealer, once any applicable holding period shall have elapsed.
MVCO further agrees and acknowledges that the Work Note shall be issued in the name of “NLF Support Services, LLC,” a wholly-owned investment subsidiary of Newlan Law Firm, PLLC. The term “Attorney,” as defined herein, shall include NLF Support Services, LLC, unless the context shall require otherwise.
3. Term of Agreement. This Agreement shall extend from the Effective Date through the date of the SEC’s qualification of the Offering Statement (the “Term”).
4. Representations of MVCO. MVCO represents and warrants to Attorney that:
(a) MVCO will cooperate fully and timely with Attorney to enable Attorney to perform Attorney’s obligations hereunder.
(b) The execution and performance of this Agreement by MVCO has been duly authorized by the Board of Directors of MVCO.
(c) The performance by MVCO of this Agreement will not violate any applicable court decree, law or regulation, nor will it violate any provisions of the organizational documents of MVCO or any contractual obligation by which MVCO may be bound.
(d) MVCO will make its best efforts to qualify the Offering Statement.
5. Representations of Attorney. Attorney represents and warrants to MVCO that:
(a) Attorney is acquiring the Work Note and the Conversion Shares for Attorney’s own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the Securities Act of 1933, as amended (the “1933 Act”); provided, however, that by making the representations herein, Attorney does not agree to hold any of the Conversion Shares for any minimum or other specific term and reserves the right to dispose of the Conversion Shares at any time in accordance with, or pursuant to, a registration statement or an exemption under the 1933 Act.
LEGAL SERVICES AGREEMENT | PAGE 2 |
(b) Attorney is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.
(c) Attorney understands that the Work Note and the Conversion Shares are being issued to Attorney in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that MVCO is relying upon the truth and accuracy of, and Attorney’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of Attorney set forth herein, in order to determine the availability of such exemptions.
(d) Attorney understands that, until such time as the Work Note and the Conversion Shares shall have been registered under the 1933 Act, qualified under Regulation A, or may be sold pursuant to Rule 144, Rule 144A under the 1933 Act, Regulation S, or other applicable exemption without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Work Note and the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer thereof):
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A, REGULATION S, OR OTHER APPLICABLE EXEMPTION UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
(e) The execution and performance of this Agreement by Attorney has been duly authorized by the governing body of Attorney.
(f) The performance by Attorney of this Agreement will not violate any applicable court decree, law or regulation, nor will it violate any provisions of the organizational documents of Attorney or any contractual obligation by which Attorney may be bound.
6. Non-Public Information. Until such time as the same may become publicly known, the parties agree that any information provided to either of them by the other of a confidential nature will not be revealed or disclosed to any person or entity, except in the performance of this Agreement, and upon completion of Attorney’s services and upon the written request of MVCO, any original documentation provided by MVCO will be returned to it. Attorney will not directly or indirectly buy or sell any securities of MVCO at any time when Attorney is privy to non-public information.
LEGAL SERVICES AGREEMENT | PAGE 3 |
7. Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice.
Any notice or other communication required or permitted to be given hereunder shall be deemed effective (1) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (2) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:
If to MVCO, to: | Metavesco, Inc. |
Attention: Ryan Schadel
410 Peachtree Pkwy, Suite 4245
Cumming, Georgia 30041
E-mail: rschadel@metavesco.com
If to Attorney, to: | Newlan Law Firm, PLLC, Attention: Eric Newlan |
2201 Long Prairie Road, Suite 107-762
Flower Mound, Texas 75022
E-mail: eric@newlanpllc.com
8. Miscellaneous.
(a) In the event of a dispute between the parties, both Consultant and the Company agree to settle said dispute through the American Arbitration Association (the “Association”) at the Association’s Dallas, Texas, offices, in accordance with the then-current rules of the Association; the award given by the arbitrators shall be binding and a judgment can be obtained on any such award in any court of competent jurisdiction. It is expressly agreed that the arbitrators, as part of their award, can award attorneys fees to the prevailing party.
(b) This Agreement is not assignable in whole or in any part, and shall be binding upon the parties, their heirs, representatives, successors or assigns.
(c) This Agreement may be executed in multiple counterparts which shall be deemed an original. It shall not be necessary that each party execute each counterpart, or that any one counterpart be executed by more than one party, if each party executes at least one counterpart.
(d) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas.
LEGAL SERVICES AGREEMENT | PAGE 4 |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first written above.
MVCO: | ||
METAVESCO, INC. | ||
By: | /s/ Ryan Schadel | |
Ryan Schadel | ||
Chief Executive Officer | ||
ATTORNEY: | ||
NEWLAN LAW FIRM, PLLC | ||
By: | /s/ Eric Newlan | |
Eric Newlan | ||
Managing Member |
LEGAL SERVICES AGREEMENT | PAGE 5 |
EXHIBIT A
Form of Work Note
THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
METAVESCO, INC.
8% Convertible Promissory Note
Principal Amount: $17,500.00 | Issuance Date: March 18, 2025 |
FOR VALUE RECEIVED, Metavesco, Inc., a Nevada corporation (the “Company”), promises to pay to NLF Support Services, LLC (“Holder”), the Principal Amount, together with interest accrued thereon, as hereinafter provided.
Certain capitalized terms used herein are defined in Section 19.
1. Interest.
(a) Rate. Interest shall accrue on the Principal Amount at the rate of eight percent (8%) per annum (“Interest”) commencing as of the Issuance Date and continuing through the date on which this Note automatically converts as provided in Section 2 below or the Company otherwise fully satisfies all of its obligations under this Note. All computations of Interest hereunder shall be made on the basis of a 365-day year.
(b) Default Rate. If all or a portion of the Principal Amount or Interest shall not be paid when due (whether at its stated maturity, by acceleration or otherwise), the Company hereby promises to pay, on demand, interest on such overdue amount from and including the due date to, but excluding, the date such amount is paid in full, at twelve percent (12%) per annum until the date such overdue amount is paid in full.
2. Maturity; Conversion. This Note shall mature on the earlier of the date that is fifteen business days after the Qualification Date or March 18, 2026, as provided in this Section 2.
(a) Conversion.
(i) Automatic Conversion. On the date that is fifteen business days after the Qualification Date, the Outstanding Balance shall, without any action on the part of Holder, automatically convert into a number of Conversion Shares calculated by dividing the Outstanding Balance by the Conversion Rate (“Automatic Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Company Common Stock beneficially owned by the Holder and its affiliates and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Company Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. Any Conversion Shares not issued due to the application of the foregoing proviso shall be issued to the Holder as soon as any such issuance would not violate such proviso.
Upon issuance as provided in this Section 2, the Conversion Shares shall be fully paid and non-assessable shares of the Common Stock of the Company. Upon the Automatic Conversion, once fully completed, this Note shall be of no further force or effect and the Company’s only obligation to Holder shall be to deliver the Conversion Shares to Holder.
(ii) Mechanics of Conversion.
(1) Upon the Qualification Date, the Company shall provide Holder with written notice thereof and, within two (2) business days thereafter, Holder shall surrender this Note to the Company in the manner provided in such notice. Upon conversion and surrender of this Note, Holder hereby agrees to execute and deliver to the Company a subscription agreement (the “Subscription Agreement”), in the form included in the Offering Statement on Form 1-A that embodies the Regulation A Offering.
(2) The Company shall, as soon as practicable after the surrender of this Note and delivery of the Subscription Agreement as provided in Section 2(a)(ii)(1) above, issue and deliver to Holder, a certified book statement representing the number of Conversion Shares to which Holder shall be entitled. The Company shall not be obligated to issue any certificate or other instrument evidencing any Conversion Shares, unless this Note is either delivered to the Company or Holder notifies the Company that this Note has been lost, stolen or destroyed and executes an agreement reasonably satisfactory to the Company to indemnify the Company from any loss incurred by the Company in connection therewith.
(iii) No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. No fractional shares of equity securities shall be issued upon conversion of this Note into Conversion Shares. In lieu of fractional shares to which Holder would otherwise be entitled, the Company shall round up any fractional share to the next whole share.
(iv) Cancellation of Note. Upon the conversion of this Note pursuant to this Section 2(a), this Note shall be canceled and of no further force or effect and, Holder’s only remedy shall be to receive the Conversion Shares.
(b) Payment on Maturity. Unless sooner converted in accordance with Section 2(a), the Outstanding Balance shall become due and payable by the Company on March 18, 2026 (the “Maturity Date”). The Company shall pay to Holder the Outstanding Balance without deduction by reason of any set-off, defense or counterclaim in immediately available funds in lawful currency of the United States of America at Holder’s address on file with the Company or at such other place as Holder shall have designated to the Company in writing. Payment shall be credited first to any costs, expenses or charges then payable to Holder, then to accrued but unpaid interest then due and payable, and then to principal.
(c) Fundamental Transaction. If, prior to an Automatic Conversion or payment of the Outstanding Balance upon Maturity, the Company proposes to enter into or become a party to a Fundamental Transaction, then the Company shall transmit to Holder a Fundamental Transaction Notice not less than twenty (20) days prior to the closing date of such proposed Fundamental Transaction and Holder shall have the option to cause the Successor Entity to assume this Note as provided in Subsection 2(c)(i) or to convert this Note into shares of Common Stock as provided in Subsection 2(c)(ii) below. Holder shall communicate its election with respect to this Note not less than ten (10) days prior to the date of the Fundamental Transaction in the manner directed in the Fundamental Transaction Notice (the “Election Date”). If Holder fails to communicate its election to the Company prior to the Election Date, this Note automatically shall be assumed by the Successor Entity as provided in Section 2(c)(i) below.
(i) Assumption by Successor Entity upon Fundamental Transaction. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Note in accordance with the provisions of this Section 2(c)(i) pursuant to written agreements in form and substance reasonably satisfactory to Holder and approved by Holder (without unreasonable delay) prior to such Fundamental Transaction, including an agreement to deliver to Holder a promissory note made by the Successor Entity, which includes terms, provisions and conditions similar to the terms, provisions and conditions of this Note in all material respects, and shall provide for a principal amount and interest rate equal to the principal amount and the interest rate of this Note (the “New Note”), except that the New Note shall not include any conversion right. If Holder elects to cause the Successor Entity to issue the New Note upon the consummation of a Fundamental Transaction, upon the exchange by Holder of this Note for the New Note, this Note shall be of no further force or effect and the rights and obligations of Holder and the Successor Entity shall be as set forth in the New Note.
(ii) Conversion upon Fundamental Transaction. The Fundamental Transaction Notice shall allow for Holder to elect to convert the Outstanding Balance of this Note into Common Stock and set forth the manner in which Holder may make such election and receive Conversion Shares. The Outstanding Balance of this Note shall be convertible into a number of Conversion Shares determined by dividing the Outstanding Balance by either (x) $0.001 per share or (y) an amount equal to 80% of the aggregate fair market value of all consideration paid by the Successor Entity for each share of Common Stock acquired in the Fundamental Transaction or, if the Successor Entity did not acquire the capital stock of the Company directly from the Company’s stockholders, the amount distributed by the Company to the Company’s stockholders for each share of Common Stock outstanding, whichever yields to Holder the greatest number of Conversion Shares.
3. Reservation of Securities. The Company shall at all times reserve and keep available out of (a) its authorized but unissued shares of Common Stock and (b) the number of shares of Common Stock offered in the Regulation A Offering for the purpose of effecting the conversion of this Note, the full number of shares of Common Stock then issuable upon the conversion of this Note.
4. Restrictive Legend. Any securities issuable upon the conversion of this Note shall be stamped or imprinted with legends substantially the following form:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”
The certified book statement representing the Conversion Shares also will be imprinted with any legends required under the state securities laws of the jurisdiction in which Holder is domiciled or resides.
5. Events of Default. If any of the following events of default (collectively, “Events of Default”) shall occur prior to the Maturity Date:
(a) the Company shall fail to make the payment of any principal or interest for a period of thirty (30) days after the date such payment shall become due and payable hereunder;
(b) the Company shall fail to comply with any covenant, agreement or term contained in this Note in any material respect (other than the payment of principal or interest), and such failure has continued for thirty (30) days after the Company has been notified in writing of such failure by Holder;
(c) the liquidation, termination or dissolution of the Company or its ceasing to carry on actively its present business or the appointment of a receiver for a material portion of its property, or the making of an assignment for the benefit of creditors by the Company; or
(d) the institution of bankruptcy, reorganization, arrangement, liquidation, receivership, moratorium or similar proceedings by or against the Company, and, if so instituted against the Company, the pendency thereof for thirty (30) days, then, and in any such event the Company shall inform Holder in writing of, and promptly upon, occurrence of such event and thereupon and at any time thereafter while such Event of Default is continuing, Holder, by written notice to the Company (the “Default Notice”), may declare the entire unpaid principal amount of this Note, together with all accrued but unpaid interest thereon, to be immediately due and payable no later than thirty (30) days after receipt of such Default Notice by the Company; provided, however, that notwithstanding the above, if there shall occur an Event of Default under clause (c) or (d) or above, then this Note shall become immediately due and payable without the necessity of any action by Holder or notice to the Company.
6. Waiver. The Company waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement hereof and also waive any delay on the part of Holder hereof. No failure or delay on the part of Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.
7. Powers and Remedies Cumulative. No right or remedy herein conferred upon or reserved to Holder is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Every power and remedy given by the Transaction Documents or by law may be exercised from time to time, and as often as shall be deemed expedient, by Holder.
8. Parties in Interest. This Note shall be binding upon the Company and its successors and permitted assigns and the terms hereof shall inure to the benefit of Holder and its successors and permitted assigns.
9. Amendments. This Note may be amended, modified or terminated only by a written instrument executed by the Company and Holder. Any amendment, modification or termination so effected shall be binding upon the Company, Holder and all of its successors and permitted assigns, whether or not such party, assignee or other holder entered into or approved such amendment, modification or termination.
10. Binding Effect. The obligations of the Company and Holder set forth herein shall be binding upon the successors and permitted assigns of each such party.
11. Maximum Permissible Rate. Notwithstanding anything herein to the contrary, payment of any interest, expense or other amount shall not be required if such payment would be unlawful. In any such event, this Note shall automatically be deemed amended so that interest charges and all other payments required hereunder, individually and in the aggregate, shall be equal to but not greater than the maximum permitted by law.
12. Severability. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Note operate or would prospectively operate to invalidate this Note, then and in any such event, such provision(s) only shall be deemed null and void and shall not affect any other provision of this Note and the remaining provisions of this Note shall remain operative and in full force and effect and in no way shall be affected, prejudiced, or disturbed thereby.
13. Reserved.
14. Indemnity and Enforcement Expenses. The Company agrees:
(a) to indemnify and hold harmless Holder and each of officers, directors, members, employees, agents, Affiliates and successors from and against any and all claims, damages, demands, losses, obligations, judgments, suits, actions, threats and liabilities (including, without limitation, reasonable attorneys’ fees and expenses) in any way arising out of or in connection with this Note; and
(b) to pay and reimburse Holder upon demand for all costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) that Holder may incur in connection with (i) the exercise or enforcement of any rights or remedies (including, but not limited to, collection) granted hereunder or otherwise available to it (whether at law, in equity or otherwise), or (ii) the failure by the Company to perform or observe any of the provisions hereof.
The provisions of this Section 14 shall survive the execution and delivery of this Note, the repayment of any or all of the Principal Amount and/or Accrued Interest and the conversion of all or any portion of the Outstanding Balance.
15. Governing Law. All issues and questions concerning the application, construction, validity, interpretation and enforcement of this Agreement, including relating to the dissolution of the Company, whether sounding in contract, tort, equity or otherwise, shall be governed by and construed in accordance with the internal laws of the State of Nevada, without giving effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Nevada.
16. Replacement of Note. In case this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute and deliver a new note of like tenor and amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note. In the case of a mutilated or defaced Note, Holder shall surrender such Note to the Company. In the case of any destroyed, lost or stolen Note, Holder shall furnish to the Company: (a) evidence to its satisfaction of the destruction, loss or theft of such Note and (b) such security or indemnity as may be reasonably required by the Company to hold the Company harmless.
17. Headings. Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.
18. Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (ii) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
19. Definitions. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in this Section 1.
(a) “Common Stock” means the Company’s common stock, par value $0.001 per share.
(b) “Conversion Rate” means the rate at which the Outstanding Balance converts into shares of Common Stock, which shall be equal to the Offering Price.
(c) “Conversion Shares” means the shares of Common Stock issuable upon conversion of this Note, comprising shares of Common Stock offered in the Regulation A Offering and Holder shall be deemed to have purchased the Conversion Shares in the Regulation A Offering.
(d) “Exchange Act” means the Securities Exchange Act of 1934.
(e) “Fundamental Transaction” means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person or Persons, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the assets of the Company to another Person, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of capital stock (not including any shares of capital stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization or spin-off) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of capital stock of the Company, or (v) reorganize, recapitalize or reclassify its class of common stock or (vi) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate capital stock of the Company outstanding.
(f) “Fundamental Transaction Notice” means the written notice from the Company to Holder describing a proposed Fundamental Transaction which shall include all material nonpublic information then possessed by the Company pertaining to the Fundamental Transaction and the Successor Entity, including the fair market value of the consideration to be paid by the Successor for each share of Common Stock outstanding.
(g) “Note” shall mean this 8% Convertible Promissory Note.
(h) “Offering Price” shall mean the price at which the shares of Common Stock are offered in the Regulation A Offering.
(i) “Outstanding Balance” shall mean the Principal Amount and all interest accrued thereon at any time as calculated in accordance with this Note.
(j) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.
(k) “Qualification Date” shall mean the date on which the Company’s offering circular with respect to the offering of Common Stock pursuant to Regulation A is first “qualified” by the SEC and any other relevant state or other jurisdictional qualification.
(l) “Regulation A” shall mean Regulation A of the rules and regulations promulgated under the Securities Act.
(m) “Regulation A Offering” shall mean the first offering of shares of Common Stock to be undertaken by the Company pursuant to Regulation A after the Issuance Date of this Note.
(n) “Required Holders” means the holders of at least a majority of the principal amount of the Notes then outstanding.
(o) “SEC” shall mean the United States Securities and Exchange Commission.
(p) “Securities Act” shall mean the Securities Act of 1933, as amended.
(q) “Successor Entity” means the Person, which may be the Company, formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been made.
The Company has caused this 8% Convertible Promissory Note to be signed in its name and executed as of the date first written above.
METAVESCO, INC. | ||
Exemplar | ||
By: | ||
Ryan Schadel | ||
Chief Executive Officer |
Exhibit 6.36
THIS NOTE, AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE APPLICABLE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THE ACT AND UNDER APPLICABLE STATE SECURITIES LAWS, OR UNLESS AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE MAKER, IS OBTAINED TO THE EFFECT THAT SUCH PLEDGE, SALE, ASSIGNMENT OR TRANSFER IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH STATE SECURITIES LAWS.
METAVESCO, INC.
8% Convertible Promissory Note
Principal Amount: $17,500.00 | Issuance Date: March 18, 2025 |
FOR VALUE RECEIVED, Metavesco, Inc., a Nevada corporation (the “Company”), promises to pay to NLF Support Services, LLC (“Holder”), the Principal Amount, together with interest accrued thereon, as hereinafter provided.
Certain capitalized terms used herein are defined in Section 19.
1. Interest.
(a) Rate. Interest shall accrue on the Principal Amount at the rate of eight percent (8%) per annum (“Interest”) commencing as of the Issuance Date and continuing through the date on which this Note automatically converts as provided in Section 2 below or the Company otherwise fully satisfies all of its obligations under this Note. All computations of Interest hereunder shall be made on the basis of a 365-day year.
(b) Default Rate. If all or a portion of the Principal Amount or Interest shall not be paid when due (whether at its stated maturity, by acceleration or otherwise), the Company hereby promises to pay, on demand, interest on such overdue amount from and including the due date to, but excluding, the date such amount is paid in full, at twelve percent (12%) per annum until the date such overdue amount is paid in full.
2. Maturity; Conversion. This Note shall mature on the earlier of the date that is fifteen business days after the Qualification Date or March 18, 2026, as provided in this Section 2.
(a) Conversion.
(i) Automatic Conversion. On the date that is fifteen business days after the Qualification Date, the Outstanding Balance shall, without any action on the part of Holder, automatically convert into a number of Conversion Shares calculated by dividing the Outstanding Balance by the Conversion Rate (“Automatic Conversion”); provided, however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Company Common Stock beneficially owned by the Holder and its affiliates and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Company Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso. The beneficial ownership limitations on conversion as set forth in the section may NOT be waived by the Holder. Any Conversion Shares not issued due to the application of the foregoing proviso shall be issued to the Holder as soon as any such issuance would not violate such proviso.
8% CONVERTIBLE PROMISSORY NOTE | PAGE 1 |
Upon issuance as provided in this Section 2, the Conversion Shares shall be fully paid and non-assessable shares of the Common Stock of the Company. Upon the Automatic Conversion, once fully completed, this Note shall be of no further force or effect and the Company’s only obligation to Holder shall be to deliver the Conversion Shares to Holder.
(ii) Mechanics of Conversion.
(1) Upon the Qualification Date, the Company shall provide Holder with written notice thereof and, within two (2) business days thereafter, Holder shall surrender this Note to the Company in the manner provided in such notice. Upon conversion and surrender of this Note, Holder hereby agrees to execute and deliver to the Company a subscription agreement (the “Subscription Agreement”), in the form included in the Offering Statement on Form 1-A that embodies the Regulation A Offering.
(2) The Company shall, as soon as practicable after the surrender of this Note and delivery of the Subscription Agreement as provided in Section 2(a)(ii)(1) above, issue and deliver to Holder, a certified book statement representing the number of Conversion Shares to which Holder shall be entitled. The Company shall not be obligated to issue any certificate or other instrument evidencing any Conversion Shares, unless this Note is either delivered to the Company or Holder notifies the Company that this Note has been lost, stolen or destroyed and executes an agreement reasonably satisfactory to the Company to indemnify the Company from any loss incurred by the Company in connection therewith.
(iii) No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. No fractional shares of equity securities shall be issued upon conversion of this Note into Conversion Shares. In lieu of fractional shares to which Holder would otherwise be entitled, the Company shall round up any fractional share to the next whole share.
(iv) Cancellation of Note. Upon the conversion of this Note pursuant to this Section 2(a), this Note shall be canceled and of no further force or effect and, Holder’s only remedy shall be to receive the Conversion Shares.
(b) Payment on Maturity. Unless sooner converted in accordance with Section 2(a), the Outstanding Balance shall become due and payable by the Company on March 18, 2026 (the “Maturity Date”). The Company shall pay to Holder the Outstanding Balance without deduction by reason of any set-off, defense or counterclaim in immediately available funds in lawful currency of the United States of America at Holder’s address on file with the Company or at such other place as Holder shall have designated to the Company in writing. Payment shall be credited first to any costs, expenses or charges then payable to Holder, then to accrued but unpaid interest then due and payable, and then to principal.
8% CONVERTIBLE PROMISSORY NOTE | PAGE 2 |
(c) Fundamental Transaction. If, prior to an Automatic Conversion or payment of the Outstanding Balance upon Maturity, the Company proposes to enter into or become a party to a Fundamental Transaction, then the Company shall transmit to Holder a Fundamental Transaction Notice not less than twenty (20) days prior to the closing date of such proposed Fundamental Transaction and Holder shall have the option to cause the Successor Entity to assume this Note as provided in Subsection 2(c)(i) or to convert this Note into shares of Common Stock as provided in Subsection 2(c)(ii) below. Holder shall communicate its election with respect to this Note not less than ten (10) days prior to the date of the Fundamental Transaction in the manner directed in the Fundamental Transaction Notice (the “Election Date”). If Holder fails to communicate its election to the Company prior to the Election Date, this Note automatically shall be assumed by the Successor Entity as provided in Section 2(c)(i) below.
(i) Assumption by Successor Entity upon Fundamental Transaction. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Company under this Note in accordance with the provisions of this Section 2(c)(i) pursuant to written agreements in form and substance reasonably satisfactory to Holder and approved by Holder (without unreasonable delay) prior to such Fundamental Transaction, including an agreement to deliver to Holder a promissory note made by the Successor Entity, which includes terms, provisions and conditions similar to the terms, provisions and conditions of this Note in all material respects, and shall provide for a principal amount and interest rate equal to the principal amount and the interest rate of this Note (the “New Note”), except that the New Note shall not include any conversion right. If Holder elects to cause the Successor Entity to issue the New Note upon the consummation of a Fundamental Transaction, upon the exchange by Holder of this Note for the New Note, this Note shall be of no further force or effect and the rights and obligations of Holder and the Successor Entity shall be as set forth in the New Note.
(ii) Conversion upon Fundamental Transaction. The Fundamental Transaction Notice shall allow for Holder to elect to convert the Outstanding Balance of this Note into Common Stock and set forth the manner in which Holder may make such election and receive Conversion Shares. The Outstanding Balance of this Note shall be convertible into a number of Conversion Shares determined by dividing the Outstanding Balance by either (x) $0.001 per share or (y) an amount equal to 80% of the aggregate fair market value of all consideration paid by the Successor Entity for each share of Common Stock acquired in the Fundamental Transaction or, if the Successor Entity did not acquire the capital stock of the Company directly from the Company’s stockholders, the amount distributed by the Company to the Company’s stockholders for each share of Common Stock outstanding, whichever yields to Holder the greatest number of Conversion Shares.
8% CONVERTIBLE PROMISSORY NOTE | PAGE 3 |
3. Reservation of Securities. The Company shall at all times reserve and keep available out of (a) its authorized but unissued shares of Common Stock and (b) the number of shares of Common Stock offered in the Regulation A Offering for the purpose of effecting the conversion of this Note, the full number of shares of Common Stock then issuable upon the conversion of this Note.
4. Restrictive Legend. Any securities issuable upon the conversion of this Note shall be stamped or imprinted with legends substantially the following form:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”
The certified book statement representing the Conversion Shares also will be imprinted with any legends required under the state securities laws of the jurisdiction in which Holder is domiciled or resides.
5. Events of Default. If any of the following events of default (collectively, “Events of Default”) shall occur prior to the Maturity Date:
(a) the Company shall fail to make the payment of any principal or interest for a period of thirty (30) days after the date such payment shall become due and payable hereunder;
(b) the Company shall fail to comply with any covenant, agreement or term contained in this Note in any material respect (other than the payment of principal or interest), and such failure has continued for thirty (30) days after the Company has been notified in writing of such failure by Holder;
(c) the liquidation, termination or dissolution of the Company or its ceasing to carry on actively its present business or the appointment of a receiver for a material portion of its property, or the making of an assignment for the benefit of creditors by the Company; or
(d) the institution of bankruptcy, reorganization, arrangement, liquidation, receivership, moratorium or similar proceedings by or against the Company, and, if so instituted against the Company, the pendency thereof for thirty (30) days, then, and in any such event the Company shall inform Holder in writing of, and promptly upon, occurrence of such event and thereupon and at any time thereafter while such Event of Default is continuing, Holder, by written notice to the Company (the “Default Notice”), may declare the entire unpaid principal amount of this Note, together with all accrued but unpaid interest thereon, to be immediately due and payable no later than thirty (30) days after receipt of such Default Notice by the Company; provided, however, that notwithstanding the above, if there shall occur an Event of Default under clause (c) or (d) or above, then this Note shall become immediately due and payable without the necessity of any action by Holder or notice to the Company.
8% CONVERTIBLE PROMISSORY NOTE | PAGE 4 |
6. Waiver. The Company waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement hereof and also waive any delay on the part of Holder hereof. No failure or delay on the part of Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.
7. Powers and Remedies Cumulative. No right or remedy herein conferred upon or reserved to Holder is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. Every power and remedy given by the Transaction Documents or by law may be exercised from time to time, and as often as shall be deemed expedient, by Holder.
8. Parties in Interest. This Note shall be binding upon the Company and its successors and permitted assigns and the terms hereof shall inure to the benefit of Holder and its successors and permitted assigns.
9. Amendments. This Note may be amended, modified or terminated only by a written instrument executed by the Company and Holder. Any amendment, modification or termination so effected shall be binding upon the Company, Holder and all of its successors and permitted assigns, whether or not such party, assignee or other holder entered into or approved such amendment, modification or termination.
10. Binding Effect. The obligations of the Company and Holder set forth herein shall be binding upon the successors and permitted assigns of each such party.
11. Maximum Permissible Rate. Notwithstanding anything herein to the contrary, payment of any interest, expense or other amount shall not be required if such payment would be unlawful. In any such event, this Note shall automatically be deemed amended so that interest charges and all other payments required hereunder, individually and in the aggregate, shall be equal to but not greater than the maximum permitted by law.
12. Severability. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Note operate or would prospectively operate to invalidate this Note, then and in any such event, such provision(s) only shall be deemed null and void and shall not affect any other provision of this Note and the remaining provisions of this Note shall remain operative and in full force and effect and in no way shall be affected, prejudiced, or disturbed thereby.
13. Reserved.
8% CONVERTIBLE PROMISSORY NOTE | PAGE 5 |
14. Indemnity and Enforcement Expenses. The Company agrees:
(a) to indemnify and hold harmless Holder and each of officers, directors, members, employees, agents, Affiliates and successors from and against any and all claims, damages, demands, losses, obligations, judgments, suits, actions, threats and liabilities (including, without limitation, reasonable attorneys’ fees and expenses) in any way arising out of or in connection with this Note; and
(b) to pay and reimburse Holder upon demand for all costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) that Holder may incur in connection with (i) the exercise or enforcement of any rights or remedies (including, but not limited to, collection) granted hereunder or otherwise available to it (whether at law, in equity or otherwise), or (ii) the failure by the Company to perform or observe any of the provisions hereof.
The provisions of this Section 14 shall survive the execution and delivery of this Note, the repayment of any or all of the Principal Amount and/or Accrued Interest and the conversion of all or any portion of the Outstanding Balance.
15. Governing Law. All issues and questions concerning the application, construction, validity, interpretation and enforcement of this Agreement, including relating to the dissolution of the Company, whether sounding in contract, tort, equity or otherwise, shall be governed by and construed in accordance with the internal laws of the State of Nevada, without giving effect to any choice or conflict of law provision or rule (whether of the State of Nevada or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Nevada.
16. Replacement of Note. In case this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute and deliver a new note of like tenor and amount in exchange and substitution for the mutilated or defaced Note, or in lieu of and in substitution for the destroyed, lost or stolen Note. In the case of a mutilated or defaced Note, Holder shall surrender such Note to the Company. In the case of any destroyed, lost or stolen Note, Holder shall furnish to the Company: (a) evidence to its satisfaction of the destruction, loss or theft of such Note and (b) such security or indemnity as may be reasonably required by the Company to hold the Company harmless.
17. Headings. Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.
18. Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (ii) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.
8% CONVERTIBLE PROMISSORY NOTE | PAGE 6 |
The addresses for such communications shall be:
If to the Company, to: | Metavesco, Inc. | |
Attention: Ryan Schadel | ||
410 Peachtree Pkwy, Suite 4245 | ||
Cumming, Georgia 30041 | ||
E-mail: rschadel@metavesco.com |
If to Holder: | NLF Support Services, LLC | |
16380 County Road 306 | ||
Buena Vista, Colorado 81211 | ||
Attention: Director of Investments |
19. Definitions. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in this Section 1.
(a) “Common Stock” means the Company’s common stock, par value $0.001 per share.
(b) “Conversion Rate” means the rate at which the Outstanding Balance converts into shares of Common Stock, which shall be equal to the Offering Price.
(c) “Conversion Shares” means the shares of Common Stock issuable upon conversion of this Note, comprising shares of Common Stock offered in the Regulation A Offering and Holder shall be deemed to have purchased the Conversion Shares in the Regulation A Offering.
(d) “Exchange Act” means the Securities Exchange Act of 1934.
(e) “Fundamental Transaction” means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person or Persons, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the assets of the Company to another Person, or (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of capital stock (not including any shares of capital stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization or spin-off) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of capital stock of the Company, or (v) reorganize, recapitalize or reclassify its class of common stock or (vi) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate capital stock of the Company outstanding.
8% CONVERTIBLE PROMISSORY NOTE | PAGE 7 |
(f) “Fundamental Transaction Notice” means the written notice from the Company to Holder describing a proposed Fundamental Transaction which shall include all material nonpublic information then possessed by the Company pertaining to the Fundamental Transaction and the Successor Entity, including the fair market value of the consideration to be paid by the Successor for each share of Common Stock outstanding.
(g) “Note” shall mean this 8% Convertible Promissory Note.
(h) “Offering Price” shall mean the price at which the shares of Common Stock are offered in the Regulation A Offering.
(i) “Outstanding Balance” shall mean the Principal Amount and all interest accrued thereon at any time as calculated in accordance with this Note.
(j) “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.
(k) “Qualification Date” shall mean the date on which the Company’s offering circular with respect to the offering of Common Stock pursuant to Regulation A is first “qualified” by the SEC and any other relevant state or other jurisdictional qualification.
(l) “Regulation A” shall mean Regulation A of the rules and regulations promulgated under the Securities Act.
(m) “Regulation A Offering” shall mean the first offering of shares of Common Stock to be undertaken by the Company pursuant to Regulation A after the Issuance Date of this Note.
(n) “Required Holders” means the holders of at least a majority of the principal amount of the Notes then outstanding.
(o) “SEC” shall mean the United States Securities and Exchange Commission.
(p) “Securities Act” shall mean the Securities Act of 1933, as amended.
(q) “Successor Entity” means the Person, which may be the Company, formed by, resulting from or surviving any Fundamental Transaction or the Person with which such Fundamental Transaction shall have been made.
[ SIGNATURE PAGE FOLLOWS ]
8% CONVERTIBLE PROMISSORY NOTE | PAGE 8 |
[ Signature Page to 8% Convertible Promissory Note ]
The Company has caused this 8% Convertible Promissory Note to be signed in its name and executed as of the date first written above.
METAVESCO, INC. | ||
By: | /s/ Ryan Schadel | |
Ryan Schadel | ||
Chief Executive Officer |
8% CONVERTIBLE PROMISSORY NOTE | PAGE 9 |
Exhibit 12.1
NEWLAN LAW FIRM, PLLC
2201 Long Prairie Road – Suite 107-762
Flower Mound, Texas 75022
940-367-6154
April 30, 2025
Metavesco, Inc.
410 Peachtree Parkway
Suite 4245
Cumming, Georgia 30041
Re: Offering Statement on Form 1-A
Gentlemen:
We have been requested by Metavesco, Inc., a Nevada corporation (the “Company”), to furnish you with our opinion as to the matters hereinafter set forth in connection with its offering statement on Form 1-A (the “Offering Statement”), relating to the qualification of shares of the Company’s $.001 par value common stock (the “Common Stock”) under Regulation A promulgated under the Securities Act of 1933, as amended. Specifically, this opinion relates to 1,000,000,000 shares of the Company’s $.001 par value common stock (the “Subject Shares”) to be offered by the Company.
In addition, this opinion relates to Subject Shares that may be issued to NLF Support Services, LLC (the “Selling Shareholder”) in payment of a convertible promissory note. The Subject Shares that may be issued to the Seller Shareholder are the “Selling Shareholder Shares” and, if issued, are to be offered by the Selling Shareholder.
In connection with this opinion, we have examined the Offering Statement, the Company’s Articles of Incorporation and Bylaws (each as amended to date), copies of the records of corporate proceedings of the Company and such other documents as we have deemed necessary to enable us to render the opinion hereinafter expressed.
For purposes of this opinion, we have assumed the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as copies and the authenticity of the originals of all documents submitted to us as copies. We have also assumed the legal capacity of all natural persons, the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority of such persons signing on behalf of the parties thereto other than the Company and the due authorization, execution and delivery of all documents by the parties thereto other than the Company. We have not independently established or verified any facts relevant to the opinions expressed herein, but have relied upon statements and representations of officers and other representatives of the Company and others.
Based upon and subject to the foregoing qualifications, assumptions and limitations and the further limitations set forth below, we are of the opinion that the 50,000,000 Subject Shares being offered by the Company and the Selling Shareholder Shares that may be offered by the Selling Shareholder will, when issued in accordance with the terms set forth in the Offering Statement, be legally issued, fully paid and non-assessable shares of Common Stock of the Company.
Our opinions expressed above are subject to the qualification that we express no opinion as to the applicability of, compliance with, or effect of any laws except the Nevada Revised Statutes (including the statutory provisions and reported judicial decisions interpreting the foregoing).
We hereby consent to the use of this opinion as an exhibit to the Offering Statement and to the reference to our name under the caption “Legal Matters” in the Offering Statement and in the offering circular included in the Offering Statement.
As of the date hereof, our wholly-owned service subsidiary, NLF Support Services, LLC, the Selling Shareholder, is the holder of a $45,000 principal amount convertible note issued pursuant to a legal services agreement between the Company and this firm.
Sincerely, | |
/s/ Newlan Law Firm, PLLC | |
NEWLAN LAW FIRM, PLLC |