NOTE
1 – NATURE OF OPERATIONS
Company
Background
Altitude
International Holdings, Inc. (f/k/a Altitude International, Inc., the “Company,” “we,” “us,” “our,”
or “Altitude-NY”), was incorporated in the State of New York on July 13, 1994 as “Titan Computer Services, Inc.”
On August 21, 2020, the Company filed with the State of New York to change its name from Altitude International, Inc. to Altitude International
Holdings, Inc.
On
June 27, 2017, the Company successfully closed a Share Exchange transaction (the “Share Exchange”) with the shareholders
of Altitude International, Inc. (“Altitude”), a Wisconsin corporation. Altitude was incorporated on May 18, 2017, under the
laws of the state of Wisconsin and has been operating as a wholly owned subsidiary of Altitude-NY since the Share Exchange. Altitude
operates through Northern, Central, and South America sales to execute the current business plan of athletic training industry, specifically
altitude training. Our objective is to be recognized as one of the upper tier specialty altitude training equipment providers in the
Americas.
On
April 24, 2020, the Company formed a wholly owned subsidiary in Wisconsin called “Altitude Sports Management Corp.,” which
has no activity to date.
On
July 6, 2021, Altitude International Holdings, Inc. (“Altitude” or the “Company”) entered into a Share Exchange
Agreement (the “Agreement”) with Breunich Holdings, Inc., a Delaware entity (“BHI”). For financial reporting
purposes, the acquisition of BHI and the change of control in connection with the acquisition represented a “reverse merger”
and BHI is deemed to be the accounting acquirer in the transaction. BHI is the acquirer for financial reporting purposes, and the Company
(Altitude International Holdings, Inc.) is the acquired company. Consequently, the assets and liabilities and the operations that are
reflected in the historical financial statements prior to the acquisition are those of BHI. See Note 3.
Pursuant
to the terms of the Agreement, the Company agreed to issue 295,986,724 shares of its common stock to the shareholders of BHI in exchange
for 100% ownership of BHI. The Company also agreed to issue 51 shares of its Series A preferred stock to Gregory Breunich as part of
the agreement.
Following
the closing of the Agreement, BHI is a wholly owned subsidiary of the Company, with each of its subsidiaries operating as wholly
owned subsidiaries. The Company is a holding company comprised of multiple scalable related revenue streams that together
create a vertically integrated high-performance sports, education, and technology group. Our mission is to redefine and
revolutionize athletic preparation and training, while providing relief, opportunity, and wellness to those that need it the
most.
We operate through the following
11 wholly-owned subsidiaries: Breunich Holding, Inc., a Delaware corporation (“BHI”), Altitude International, Inc., a Wisconsin
corporation (“Altitude Chambers”), Altitude Sports Management Corp., a Wisconsin corporation (“Altitude Sports Management
Corp.”), ITA-USA Enterprise, LLC, a Florida limited liability company (“Altitude Academies” or “Club Med Academies”),
CMA Soccer, LLC, a Florida limited liability company (“CMAS”), Trident Water, LLC, a Florida limited liability company (“Altitude
Water”), Altitude Wellness, LLC, a Florida limited liability company (“Altitude Wellness”), NVL Academy, LLC, a Florida
limited liability company (“Altitude Volleyball”), North Miami Beach Academy LLC, a Florida limited liability company (“NMBA”),
Six Log Cleaning & Sanitizing LLC, a Florida limited liability company (“SLCS”), and Altitude Online, LLC, a Florida limited
liability company (“Altitude Online”).
Nature
of Operations
Altitude
International Holdings, Inc. is a holding company focused on a people-first, global wellness group through its operating subsidiaries
which are comprised of multiple scalable related revenue streams that together create a vertically integrated high-performance sports,
education, and technology group. Our mission is to redefine and revolutionize athletic preparation and training while providing relief,
opportunity, and wellness to those that need it the most.
Our
sports and education properties comprise what is currently known as Altitude Academies. Our wholly owned subsidiary, Altitude International,
Inc. manufactures a variety of world-class hypoxic training chambers, which enables competitive athletes of all kinds to train in a simulated
high-altitude environment. This controlled oxygen-deficient environment coupled with specific training protocols achieves numerous scientifically
proven benefits in athletic development. Altitude recently has launched its high-performance wellness center, Altitude Wellness, LLC,
to serve as the reoccurring revenue model for Altitude’s chamber technology. Altitude Water manufactures several types of Atmospheric
Water Generators (“AWG”) ranging from small residential and light commercial to heavy-duty military-grade machines designed
for larger-scale uses. Altitude Water’s next-generation air-to-water machines and our proprietary “EnviroGuard™”
purification system controlled by our proprietary software produce some of the purest and finest drinking water in the world. Altitude
Water’s drinking water is highly oxygenated, ideally suited for athlete hydration amid competitive performance.
Altitude’s
growth initiatives include scaling the existing tuition categories, adding new ones in sports, arts, and sciences in the coming years,
pursuing a consolidation strategy within the soccer club system in the United States, and exponentially growing our accredited academic
model. Strategic to our continued growth, the establishment of Altitude’s headquarters in Port Saint Lucie, Florida marked our
international destination footprint by adding to our asset base and securing control of the hospitality side of our business. The management
team of Altitude is well versed in developing an ecosystem where the business sectors drive network and growth impact between one another,
providing increased earnings and value to the Altitude properties.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
Company follows the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America
and has a year-end of December 31.
The
unaudited condensed consolidated financial statements of the Company for the six month periods ended June 30, 2022, and 2021 have been
prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information
and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. Accordingly, they do not include all the information
and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.
However, such information reflects all adjustments (consisting solely of normal recurring adjustments unless otherwise indicated), which
are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations. Results
shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information
as of December 31, 2021, was derived from the audited financial statements included in the Company’s financial statements as of
and for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange
Commission (the “SEC”) on March 15, 2022. These financial statements should be read in conjunction with that report.
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Altitude. All significant intercompany
balances and transactions have been eliminated in the consolidation. The consolidated financial statements included herein, presented
in accordance with United States generally accepted accounting principles (“GAAP”) and stated in United States dollars, have
been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission.
ITA-USA
Enterprise LLC, doing business as Club Med Academies and as Altitude Academies, specializes in training and education of young aspiring
student-athletes from around the world, providing a pathway from middle school to college to the professional ranks. The Company has
no direct relationship with Club Med. ITA’s proprietary educational model currently focuses on sports and academics. The business
model is scalable to other disciplines, i.e., the arts and science sectors. It is a tuition-based business hosting boarding and non-boarding
students.
CMA
Soccer LLC, doing business as Altitude Soccer, the soccer division of Club Med Academies, hosts student-athletes from multiple nations
worldwide like all other Club Med Academy sports. CMAS utilizes highly specialized training methodologies blending all of the critical
elements required to build an elite-level player. Those who attend participate in a 10 hour per day regimen of soccer and academics.
CMAS is a college and professional bound program placing its graduates in colleges throughout the United States and even some in the
professional ranks throughout Europe, South America, and the USA. Rush Soccer is a nationally competitive youth soccer club network that
administers boys’ and girls’ teams internationally with proprietary training methodology, documentation, and materials, proprietary
technologies and platforms, and a database of individuals.
NVL
Academy LLC, doing business as Altitude Volleyball, is the beach volleyball and indoor volleyball tuition-based operation. Most of
the athletes, except for a few individuals, come from the USA. For the most part, Volleyball in the United States is a women’s
sport. NVL operates and functions like all other academy sports.
Trident
Water LLC manufactures Atmospheric Water Generators (“AWG’s”). They range from smaller residential, light commercial,
and heavy-duty military-grade machines. The machines supply 12, 100, to 200 gallons per day. Trident’s patented purification process
produces what management believes is the purest of water that is then put through filters replenishing the calcium and magnesium minerals
to make the finest drinking water on the market today.
North
Miami Beach Academy LLC, a local park operation with the City of North Miami Beach, provides junior, adult, and family programming
for the city residents. In addition to the local park deliverables, NMBA operates a non-boarding tennis and academic academy.
Six
Log Cleaning & Sanitizing, LLC provides a wide variety of services to its corporate customers, including but not limited to:
general office cleaning, carpet cleaning, window cleaning, and other janitorial protocols. Fogging to prevent and protect against exposure
to various bacteria, fungi, and viruses is another Six Log offering.
Altitude
International, Inc. manufactures air separation systems and chambers to regulate oxygen, carbon dioxide, humidity and temperature
levels in Altitude’s hypoxic chamber training environments. Altitude’s chambers simulate altitudes from 0-39,000 feet, ideal
for athletic training. Altitude’s chambers are currently utilized by the National Football League (“NFL,” the Miami
Dolphins) and one university (Tulane University) sports teams to train and develop their athletes. An Altitude chamber will be installed
for a National Basketball Association (“NBA,” Orlando Magic) shortly.
Altitude
Wellness LLC focuses on helping our members reach their individual health goals by offering various experiences that enhance the
way you look and feel. Multiple modalities ranging from altitude chambers, cryo chambers, ozone chambers, red light therapy, IV therapy,
infrared sauna, and neurofeedback are just a few of the treatments that will be available. The Altitude Wellness Experience will be a
combination of a hundred little things that make each member feel special. From warm and chilled eucalyptus towels when you arrive to
fresh juices and healthy snacks, all are vital to the experience. The highly trained staff will include nurses, dietitians, trainers,
therapists, and health specialists. Each will know the patient by name and be familiar with their profile, which will be completed on
the app and available to the Experience Specialists upon each check-in. As of June 30, 2022, Altitude Wellness is not operating.
Altitude
Online Learning LLC was recently established in 2021 to support and address the global demand for distance learning. This is a natural
extension of our existing brick-and-mortar academic operations. Through our corporation system status, Altitude Online Learning is fully
accredited. The economics of an online distance school presents a significant potential opportunity. Now students from around the world
will have the opportunity to earn an American diploma in their home countries while attending Altitude Online Learning.
Altitude
Sports Management Corp. has not been defined for its use as of June 30, 2022.
All
intercompany accounts and transactions are eliminated in consolidation.
Going
Concern and Liquidity
We
have incurred recurring losses since inception and expect to continue to incur losses as a result of legal and professional fees and
our corporate general and administrative expenses. On June 30, 2022, we had $1,699,450 in cash. Our net losses incurred for the six months
ended June 30, 2022 were $1,216,089 and the working capital deficit was $1,546,302 on June 30, 2022. As a result, there is substantial
doubt about our ability to continue as a going concern. In the event that we are unable to generate sufficient cash from our operating
activities or raise additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our
on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition and long-term
prospects. The Company expects to seek to obtain additional funding through increased revenues and future financings. There can be no
assurance as to the availability or terms upon which such financing and capital might be available. The accompany financial statements
have been prepared assuming that the Company will continues as a going concern.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent
liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash
and Cash Equivalents
Cash
is comprised of cash balances. Cash is held at major financial institutions and is subject to credit risk to the extent that those balances
exceed applicable Federal Deposit Insurance Corporation (“FDIC”) of $250,000. The Company had material balances in excess
of the insured limits as of June 30, 2022, and December 31, 2021, of approximately $1,449,450 and $173,000, respectively.
Accounts
Receivable
As
of June 30, 2022, and December 31, 2021, the net accounts receivable balances were $830,393 and $91,520, net of allowances. There were
allowances for doubtful accounts of $248,990 and $205,455 on June 30, 2022 and December 31, 2021, respectively. The credit terms provided
are as follows:
|
1. |
Altitude
Academies – The tuition is paid typically in two installments but, on a case-by-case basis, modifications do occur. |
|
|
|
|
2. |
Rush
Soccer – Rebates for soccer kits purchased by club members and membership rebates. |
|
|
|
|
3. |
Altitude
Water – The normal credit terms are 50% down with final payment upon delivery. |
|
|
|
|
4. |
Altitude
Chambers – The normal credit terms are 50% down with progress payments until final payment upon delivery. |
Bad
debt expense is determined based on the aging of accounts receivable and subsequent collections. Typically, receivables aged 60 days,
or more are reviewed for determination. Receivables over 90 days, unless payment terms with some payments made to date, are reserved
as additional allowance for doubtful accounts.
Prepaid
Acquisition Costs
The
Company has made two $500,000 payments as a deposit for the acquisition of the Sandpiper resort property (see Note 3). These deposits
are nonrefundable.
Deferred
Costs
Deferred
costs for offering costs as of June 30, 2022 is $187,500. These costs relate to the Company’s capital raise and Form S-1 as filed
and are for legal and professional fee expenses.
Deferred
costs for the acquisition of the Sandpiper resort property (see Note 3) are for legal and professional fee expenses.
Fixed
Assets
Fixed
assets are stated at cost, net of accumulated depreciation. Expenditures that extend the life, increase the capacity, or improve the
efficiency of property and equipment are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation
is recognized using the straight-line method over the following approximate useful lives:
SCHEDULE
OF ESTIMATED USEFUL LIVES
Computers,
software, and office equipment |
|
1
– 6 years |
Machinery
and equipment |
|
3
– 5 years |
Leasehold
improvements |
|
Lesser
of lease term or estimated useful life |
Operating
/ shop equipment |
|
4
– 7 years |
Transportation
equipment |
|
5
– 6 years |
Inventory
and Direct Costs of Revenue
The
inventory is comprised of Atmospheric Water Generators (“AWG’s”) at Trident and chamber related parts at Altitude International
and is valued at the lower of cost or market. As of June 30, 2022, and December 31, 2021, the inventory was valued at $256,450 and $161,235,
respectively.
Inventory
is comprised of:
SCHEDULE OF INVENTORY
| |
| | |
Finished Goods | |
$ | 32,000 | |
Parts | |
| 224,450 | |
Total | |
$ | 256,450 | |
Impairment
of Long-Lived Assets
The
Company’s long-lived assets and other assets (consisting of property and equipment) are reviewed for impairment in accordance with
the guidance of the FASB ASC Topic 360-10, Property, Plant, and Equipment. Long lived assets are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated
by that asset. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized
by the amount by which the carrying amount of the asset exceeds the fair value of the asset.
Revenue
Recognition
Our
sales are generated from six revenue streams: 1) contracts with customers for the design, development, manufacture, and installation
of simulated altitude athletic equipment, 2) sports training and academic tuition, and 3) hosting events, 4) membership fees, 5) uniform
sales, and 6) sale of atmospheric water generators. For the simulated athletic equipment and the water filtration systems, we provide
our products under fixed-price contracts. Under fixed-price contracts, we agree to perform the specified work for a pre-determined price.
To the extent our actual costs vary from the estimates upon which the price was negotiated, we will generate more or less profit or could
incur a loss.
We
account for a contract after it has been approved by all parties to the arrangement, the rights of the parties are identified, payment
terms are identified, the contract has commercial substance and collectability of consideration is probable.
We
evaluate the products or services promised in each contract at inception to determine whether the contract should be accounted for as
having one or more performance obligations. The products and services in our contracts are typically not distinct from one another due
to their complex relationships, customization, and the significant contract management functions required to perform under the contract.
Accordingly, our contracts are typically accounted for as one performance obligation, except for the simulated altitude athletic equipment
whereas there is a service obligation over a period of time.
We
determine the transaction price for each contract based on the consideration we expect to receive for the products or services being
provided under the contract.
In
regard to the simulated altitude athletic equipment and the atmospheric water generators (“AWG”), we recognize revenue as
performance obligations are satisfied and the customer obtains control of the products and services. In determining when performance
obligations are satisfied, we consider factors such as contract terms, payment terms and whether there is an alternative future use of
the product or service. Substantially all of our revenue is recognized over time as we perform under the contract because if our customer
were to terminate the contract for reasons other than our non-performance, we would have the right to recover damages which would include,
among other potential damages, the right to payment for our work performed to date plus a reasonable profit to deliver products or services
that do not have an alternative use to us.
In
regard to the sports training and academics tuition revenue recognition policy, the tuition is recognized over the course of the training
period which is typically a semester. In determining when performance obligations are satisfied, we consider factors as to actual attendance
at the academy.
In
regard to the revenue associated with Rush Soccer, the revenue related to events is recognized at the time of the event. The revenue
associated with uniforms is recognized at the time of delivery. Membership fees are recognized at the beginning of the membership period.
In
regard to the simulated athletic equipment and the atmospheric water generators, the revenue is recognized upon delivery and/or installation,
specific to the customer.
Deferred
Revenue
Our
payment terms generally require a substantial initial deposit to confirm a reservation and tuition for the school year or training period.
Historically, our deferred revenue balances are comprised solely of customer deposit balances and changes from period to period due to
the seasonal nature of billings and cash collections, the number of students in each program and the recognition of revenue. A deposit
made to the Company for tuition is contractually non-refundable. As of June 30, 2022, and December 31, 2021, deferred revenue amounted
to $1,819,373 and $1,388,126, respectively.
Stock-Based
Compensation
The
Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to
recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees.
The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods
using the straight-line attribution method.
Fair
Value of Financial Instruments
The
book values of cash, accounts receivable, and accounts payable approximate their respective fair values due to the short-term nature
of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs)
and an entity’s own assumptions (unobservable inputs).
The
hierarchy consists of three levels
|
● |
Level
one — Quoted market prices in active markets for identical assets or liabilities; |
|
● |
Level
two — Inputs other than level one inputs that are either directly or indirectly observable; and |
|
● |
Level
three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect
those assumptions that a market participant would use. |
Determining
which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures
each quarter.
Net
Loss Per Share
Net
loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined
by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”)
calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year.
Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares
and dilutive common share equivalents outstanding. The Company does not have any dilutive shares of common stock as of June 30, 2022,
or December 31, 2021.
Income
Taxes
The
Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of
existing assets and liabilities and loss carryforwards and their respective tax bases.
Deferred
tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income (loss) in the years in which those
temporary differences are expected to be recovered or settled.
The
effect of a change in tax rules on deferred tax assets and liabilities is recognized in operations in the year of change. A valuation
allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
Tax
benefits of uncertain tax positions are recognized only if it is more likely than not that the Company will be able to sustain a position
taken on an income tax return. The Company has no liability for uncertain tax positions as of June 30, 2022. Interest and penalties in
any, related to unrecognized tax benefits would be recognized as interest expense. The Company does not have any accrued interest or
penalties associated with unrecognized tax benefits, nor was any significant interest expense recognized during the six months ended
June 30, 2022.
Goodwill
and Intangible Assets
The
Company accounts for intangible assets in accordance with the authoritative guidance issued by the FASB. Intangibles are valued at their
fair value and are amortized taking into account the character of the acquired intangible asset and the expected period of benefit. The
Company evaluates intangible assets for impairment, at a minimum, on an annual basis and whenever events or changes in circumstances
indicate that the carrying value may not be recoverable from its estimated undiscounted future cash flows. Recoverability of intangible
assets is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering
a number of factors, including past operating results, budgets, economic projections, market trends, and product development cycles.
If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is
performed to measure the amount of impairment loss. The Company tests its goodwill using a market-based approach to determine the estimated
fair value of the reporting unit as to which the goodwill has been allocated. As of June 30, 2022, based on the assessment of Management,
the Company determined that goodwill associated with the share exchange in which the Company acquired BHI amounted to $29,493,398. The
Company will evaluate goodwill annually for any impairment. The Company also determined that the acquisition of Soccer Partners (see
Note 4) had provisional goodwill of $166,834. The Company will have an independent valuation of the acquisition to determine any change
in the estimated amount recorded.
Recent
Accounting Pronouncements
In
August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options, which simplifies accounting for convertible
instruments. The new guidance eliminates two of the three models in ASC 470-20 that require separating embedded conversion features from
convertible instruments. The guidance also addresses how convertible instruments are accounted for in the diluted earnings per share
calculation. The guidance is effective for fiscal years beginning after December 15, 2021. The Company is currently evaluating the impact
of ASU 2020-06 on its consolidated financial statements.
Recently
Issued Accounting Standards: Management does not believe that any recently issued, but not yet effective, accounting standards if currently
adopted would have a material effect on the accompanying financial statements.
NOTE
3 – ACQUISITION
Soccer
Partners America
On
March 7, 2022, Altitude International Holdings, Inc. and CMA Soccer LLC entered into a Consulting, Management and License Agreement with
Soccer Partners America (“Soccer Partners”), a Colorado not for profit corporation. Soccer Partners, under the brand name
of Rush Soccer, has developed the largest known network of affiliated independent youth soccer clubs and with CMA Soccer, will establish
a Rush residential academy program and a men’s professional soccer team. As part of the agreement, certain members of the management
of Soccer Partners were granted a combined total of 10,000,000 shares of common stock of the Company and employment agreements for five
individuals. The Company’s common stock is not historically traded at a significant volume which has caused significant fluctuations
in the price per share. For the initial valuation, the stock was valued at $0.056 per share per the closing price on March 4, 2022, or
$556,000. The Company also pays consideration of $20,000 per year for a period of 20 years, or $400,000, to Soccer Partners. Management
has recorded a provisional goodwill, as of June 30, 2022, of $166,834, and may be adjusted based on management’s final determination
of the fair value of the assets and liabilities acquired.
The
following table summarizes the consideration given for Altitude and the fair values of the assets and liabilities assumed at the acquisition
date.
SCHEDULE
OF BUSINESS COMBINATIONS AT FAIR VALUE
| |
| | |
Consideration given: | |
| | |
| |
| | |
Common stock shares given | |
$ | 556,000 | |
Future consideration | |
| 400,000 | |
Total consideration given | |
$ | 956,000 | |
| |
| | |
Fair value of identifiable assets acquired, and liabilities assumed: | |
| | |
Cash | |
$ | 1,216,126 | |
Accounts receivable | |
| 447,941 | |
Prepaid expenses | |
| 118,150 | |
Other current assets | |
| 800 | |
Fixed assets, net | |
| 4,065 | |
Loan payable | |
| (501,724 | ) |
Accounts payable and accrued expenses | |
| (176,275 | ) |
Deferred revenue | |
| (219,917 | ) |
Note payable | |
| (100,000 | ) |
Total identifiable net asset | |
| 789,166 | |
Goodwill | |
| 166,834 | |
Total consideration | |
$ | 956,000 | |
Pro-Forma
Financial Information
The
following unaudited pro-forma data summarizes the result of operations for the six months ended June 30, 2021, and 2020, as if the acquisition
Rush Soccer had been completed on January 1, 2021. The pro-forma financial information is presented for informational purposes only and
is not indicative of the results of operations that would have been achieved if the acquisition had taken place on January 1, 2021.
SCHEDULE
OF PRO-FORMA FINANCIAL INFORMATION
| |
| | | |
| | | |
| | | |
| | |
| |
For the Six Months Ended June 30, 2022 | |
| |
| | |
Rush | | |
Pro-forma | | |
| |
| |
ALTD | | |
Soccer | | |
Adjustments | | |
Total | |
Revenue and income, net | |
$ | 3,770,318 | | |
$ | 1,444,875 | | |
$ | - | | |
$ | 5,215,193 | |
Operating expenses | |
| 5,320,287 | | |
| 1,785,438 | | |
| - | | |
| 7,105,725 | |
Loss from operations | |
| (1,549,970 | ) | |
| (340,563 | ) | |
| - | | |
| (1,890,533 | ) |
Other income (expense) | |
| (191,658 | ) | |
| 140,800 | | |
| - | | |
| (50,858 | ) |
Net loss | |
$ | (1,741,627 | ) | |
$ | (199,763 | ) | |
$ | - | | |
$ | (1,941,390 | ) |
Net loss per common share - basic and fully diluted | |
$ | (0.00 | ) | |
| | | |
| | | |
$ | (0.01 | ) |
Weighted average number of common shares outstanding during the period - basic and fully diluted | |
| 370,937,178 | | |
| | | |
| | | |
| 370,995,488 | |
| |
| | | |
| | | |
| | | |
| | |
| |
For the Six Months Ended June 30, 2021 | |
| |
| | |
Rush | | |
Pro-forma | | |
| |
| |
ALTD | | |
Soccer | | |
Adjustments | | |
Total | |
Revenue and income, net | |
$ | 3,575,979 | | |
$ | 985,229 | | |
$ | - | | |
$ | 4,561,208 | |
Operating expenses | |
| 3,664,026 | | |
| 1,099,105 | | |
| - | | |
| 4,763,131 | |
Income (loss) from operations | |
| (88,047 | ) | |
| (113,876 | ) | |
| - | | |
| (201,923 | ) |
Other income (expense) | |
| (17,865 | ) | |
| - | | |
| - | | |
| (17,865 | ) |
Net income (loss) | |
$ | (105,912 | ) | |
$ | (113,876 | ) | |
$ | - | | |
$ | (219,788 | ) |
Net income (loss) per common share - basic and fully diluted | |
$ | (0.00 | ) | |
| | | |
| | | |
$ | (0.00 | ) |
Weighted average number of common shares outstanding during the period - basic and fully diluted | |
| 56,940,822 | | |
| | | |
| | | |
| 65,241,426 | |
Sandpiper
Resort Property Acquisition
On
April 27, 2022, the Company executed a Purchase and Sale Agreement (the “Agreement”) with Sandpiper Resort Properties, Inc.
and Holiday Village of Sandpiper, Inc., for the sale of its property in Port Saint Lucie, Florida (the “Property”). The Property
being sold in the Agreement is the Property on which the Company’s facilities are currently located and where the Company currently
operates.
The
purchase price for the Property is $55,000,000, with an initial refundable deposit of $500,000 due within five business days of the execution
of the Agreement. This deposit was delivered by the Company on May 2, 2022. An additional non-refundable deposit of $500,000 was paid
on June 6, 2022. With this payment, the first deposit became non-refundable. See Note 2.
The
Closing Date of the purchase of the Property shall occur no later than August 31, 2022, or at such time as the parties agree. The Company
may assign the Agreement to an affiliate of the Company no later than five days prior to the Closing Date, as long as the Company is
not released of its obligations under the Agreement and the Company is responsible for any associated costs. See Note 12.
NOTE
4 – FIXED ASSETS
The
Company has fixed assets related to computer and equipment, furniture and fixtures, leasehold improvements, operating / shop equipment
and transportation equipment. The depreciation of the equipment is over a three-year period. As of June 30, 2022, and December 31, 2021,
the Company had fixed assets, net of accumulated depreciation, of $74,154 and $71,036, respectively. The fixed assets are as follows:
SCHEDULE
OF FIXED ASSETS
| |
June 30, | | |
December 31, | |
| |
2022 | | |
2021 | |
Computer and equipment | |
$ | 157,686 | | |
$ | 148,893 | |
Furniture and fixtures | |
| 17,331 | | |
| 17,331 | |
Leasehold improvements | |
| 162,840 | | |
| 234,835 | |
Operating / shop equipment | |
| 264,242 | | |
| 185,128 | |
Transportation equipment | |
| 36,991 | | |
| 36,991 | |
Total fixed assets | |
| 639,090 | | |
| 623,178 | |
Less: Accumulated depreciation | |
| 564,936 | | |
| 552,142 | |
Total fixed assets, net | |
$ | 74,154 | | |
$ | 71,036 | |
Depreciation
for the six months ended June 30, 2022, and 2021 was $12,794 and $13,146, respectively.
NOTE
5 – GOODWILL AND INTANGIBLE ASSETS
The
Company has goodwill related to the acquisition of Altitude International Holdings, Inc. As of June 30, 2022, and December 31, 2021,
the Company had goodwill of $29,659,798 and $29,493,398, respectively.
The
Company has intangible assets related to the license agreement between Altitude International, Inc. and Sporting Edge. The Company is
amortizing this intangible asset over a period of ten years. As of June 30, 2022, and December 31, 2021, the intangible assets were $272,500
and $287,500, respectively. For the six months ended June 30, 2022, and 2021, the Company recorded amortization expense for intangible
assets of $15,000 and $0, respectively.
The
future amortization of the license agreement is as follows:
SCHEDULE OF INTANGIBLE ASSETS, FUTURE AMORTIZATION EXPENSE
| |
| | |
2022 | |
$ | 15,000 | |
2023 | |
| 30,000 | |
2024 | |
| 30,000 | |
2025 | |
| 30,000 | |
2026 | |
| 30,000 | |
Thereafter | |
| 137,500 | |
Total | |
$ | 272,500 | |
NOTE
6 – NOTES PAYABLE
SCHEDULE
OF NOTES PAYABLE
| |
June 30, 2022 | | |
December 31, 2021 | |
| |
| | |
Accrued | | |
| | |
| | |
Accrued | | |
| |
| |
Principal | | |
Interest | | |
Total | | |
Principal | | |
Interest | | |
Total | |
SBA EIDL | |
$ | 149,169 | | |
$ | - | | |
$ | 149,169 | | |
$ | 149,169 | | |
$ | - | | |
$ | 149,169 | |
FVPO Funds | |
| - | | |
| - | | |
| - | | |
| 91,758 | | |
| 20,574 | | |
| 112,332 | |
Grand Slam | |
| 419,560 | | |
| - | | |
| 419,560 | | |
| 434,560 | | |
| - | | |
| 434,560 | |
FVPO Funds (a) | |
| 3,250,000 | | |
| - | | |
| 3,250,000 | | |
| 500,000 | | |
| - | | |
| 500,000 | |
SBA EIDL | |
| 113,400 | | |
| - | | |
| 113,400 | | |
| 113,400 | | |
| - | | |
| 113,400 | |
SBA | |
| 100,000 | | |
| - | | |
| 100,000 | | |
| - | | |
| - | | |
| - | |
Subtotal | |
| 4,032,129 | | |
| - | | |
| 4,032,129 | | |
| 1,288,887 | | |
| 20,574 | | |
| 1,309,461 | |
Debt Discounts (a) | |
| (580,922 | ) | |
| - | | |
| (580,922 | ) | |
| - | | |
| - | | |
| - | |
Total | |
$ | 3,451,207 | | |
$ | - | | |
$ | 3,451,207 | | |
$ | 1,288,887 | | |
$ | 20,574 | | |
$ | 1,309,461 | |
On
May 5, 2020, the Company received $20,800 in the form of a loan through the CARES Act Paycheck Protection Program. The balance on June
30, 2022 and December 31, 2021 was $20,800 and $20,800, respectively.
On
January 11, 2019, ITA entered into a Term Loan Commitment (the “Loan Note”) with Feenix, which provides for a loan of $300,000.
The loan note has a three-year term and bears interest at a rate of 8.5% per annum. The loan note may be prepaid at any time prior to
maturity with no prepayment penalties. As of December 31, 2021, the balance of the loan note payable was $91,758. This note was paid
in full on January 3, 2022. The Loan Note had certain covenants regarding financial reporting and new loans which Feenix has provided
waivers in regard to those requirements.
On
October 31, 2011, ITA entered into a Promissory Loan (the “Loan Note”) with Grand Slam Partners (“Grand Slam”),
which provides for a loan of $735,714. Beginning on December 31, 2012, and on or before December 31st thereafter until the
loan note is paid in full, ITA shall pay an annual lump sum payment at the conclusion of each calendar year equal to the greater of 25%
of net profits of the corresponding calendar year or $30,000 (“Scheduled Annual Payment”). The Loan Note may be prepaid at
any time prior to maturity with no prepayment penalties. As of June 30, 2022 and December 30, 2021, the balances of the loan note payable
were $419,560 and $434,560, respectively.
On
May 27, 2020, and August 25, 2020, ITA and NVL received unsecured loans from the Small Business Administration (“SBA”) of
$149,900 and $113,400, respectively. These 2020 SBA loans bear interest at 3.75% per annum and are payable over 30 years with all payments
of principal and interest deferred for the first twelve months. Substantially all of the assets of the Company are pledged as security
for this loan. The balances on June 30, 2022, and December 31, 2021, was $149,169 and $113,400, respectively, for both periods. These
notes are secured by substantially all assets of ITA and NVL.
On
December 20, 2021, Trident Water and Altitude International Holdings, Inc. entered into an unsecured Loan Agreement with FVP Servicing,
LLC for $500,000. The loan matures on December 20, 2023, and bears interest of 12%. The balance as of December 31, 2021, was $500,000.
The loan is secured by the assets of Trident Water and Altitude International Holdings, Inc. and guaranteed by all entities of the Company.
On February 8, 2022, the Company entered into a First Amendment to Loan Agreement for an additional incremental advance of $100,000.
On April 29, 2022, the Company executed a Second Amendment to Loan Agreement with Feenix. This amendment relates to the Feenix loan dated
December 20, 2021. The amendment provided the Company $2,650,000. As of June 30, 2022, and December 31, 2021, the balances were $3,250,000
and $500,000, respectively. See Note 9.
In
the acquisition of Soccer America (see Note 3), the Company assumed the SBA loan dated June 15, 2020, with a balance of $100,000. The
promissory note requires monthly payments of $641. The promissory note matures on June 15, 2050, and bears interest of 2.75%. The promissory
note is secured by the assets of Soccer America. As of June 30, 2022, the balance was $100,000.
NOTE
7 – COMMITMENTS AND CONTINGENCIES
The
Company is subject, from time to time, to claims by third parties under various legal disputes. The defense of such claims, or any adverse
outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash
flows.
Certain
conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only
be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent
liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings
that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates
the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or
expected to be sought therein.
If
the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates
that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then
the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be
disclosed.
Loss
contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee
would be disclosed.
On
June 27, 2017, Altitude entered a license agreement with Sporting Edge UK. Sporting Edge UK is the sole and exclusive owner of and has
the right to license to the licensee the ability to manufacture and sell rights to the full range of membrane-based systems for the production
of reduced oxygen environments and associated services as well as the use of patents and trademarks held by Sporting Edge UK or Vincent.
On
January 24, 2019, Altitude and Sporting Edge UK entered into a Revised Licensing Agreement that grants a license to Altitude to use Sporting
Edge UK’s proprietary technology related to properly engineered, membrane-based designs for simulated altitude training equipment.
The annual license fee under the revised agreement is $1.00 per year. The product line ranges from personal at home use machines to fully
integrated environmental rooms and chambers. Altitude has the licensing rights to use all technology to manufacture the products and
to sell them (directly or through distributors) in the following territories:
● |
The
Continent of North America, Central America and South America. |
|
|
● |
Other
territories as may be agreed upon from time to time, on a temporary or permanent basis. |
All
royalty amounts due under the 2017 license agreement were waived. The Company will continue to pay for equipment per the agreement.
On
October 31, 2021, Altitude Wellness LLC and 16929 Wellness Consultants Inc. (“16929 Wellness”) entered into a Management
Agreement. As part of the agreement, the Company pays the management of 16929 Wellness a monthly payment of $20,000 until the earlier
of six months following the date of the agreement or the day that the monthly management fee from selling franchises is greater than
$20,000 per month. 16929 Wellness granted a waiver on the $20,000 payment for November 2021. The Company will pay 16929 Wellness a monthly
fee of $1,250 for each franchise that uses Dr. Kenneth JH Lee as a medical director and 20% of all initial franchisee franchise fees
(estimated to be $8,000 per franchise purchased. As part of the agreement, 3,000,000 shares of common stock of the Company were issued
to 16929 Wellness.
NOTE
8 – RELATED PARTY TRANSACTIONS
For
the six months ended June 30, 2022, the Company compensated Gregory Breunich and Gabriel Jaramillo collectively $180,000, which was paid
to their company, Trans World Performance LLC.
For
the six months ended June 30, 2022, the Company compensated Gregory Breunich $20,000 in addition to the above compensation.
The
above balances were paid during the period ended June 30, 2022. The payments are reflected in professional fees on the statement of operations
for the six months ended June 30, 2022.
NOTE
9 – STOCKHOLDERS’ EQUITY
Preferred
Stock
On
February 5, 2015, the Board of Directors of the Company authorized 5,000,000 shares of preferred stock with no par value. Each share
of the preferred stock is entitled to one vote and is convertible into one share of common stock.
On
July 21, 2021, the Company filed a Certificate of Designation for Series A Preferred Stock. The Series A Preferred Stock shares vote
together with the common stock and have voting rights equal to 0.019607 multiplied by the total issued and outstanding shares of common
stock eligible (the “Numerator”) to vote at the time of the respective vote divided by 0.49 minus the Numerator. As of December
31, 2021, with 358,070,905 shares of common stock outstanding, the 51 shares of Series A Preferred Stock would have 369,547,734 votes
per share of Series A Preferred Stock.
On
July 23, 2021, the Company issued 51 shares of preferred stock to Gregory Breunich as part of the July 23, 2021 agreement between the
Company and BHI.
As
of June 30, 2022, and December 31, 2021, the Company had 51 shares of preferred stock and 51 shares of preferred stock issued and outstanding,
respectively.
Common
Stock
Altitude
was incorporated on May 18, 2017, under the laws of the state of Wisconsin with 100,000,000 authorized common stock with $0.001 par value.
The shareholders have one vote per share of common stock.
After
the closing of certain Stock Purchase Agreements, in private sale transaction and the Share Exchange Agreement, the Company’s common
stock had no par value and is registered in New York.
On
February 10, 2021, the Company filed amended Articles of Incorporation with the State of New York to amend its authorized shares of common
stock by an additional 530,000,000 whereas the total authorized is a total of 605,000,000 shares of capital stock consisting of (i) 600,000,000
shares of common stock, no par value, and (ii) 5,000,000 shares of preferred stock, no par value.
On
January 1, 2022, the Company issued its legal counsel 12,500 shares of common stock for legal work for January 2022. The common stock
of the Company is thinly traded and had a value of $0.119 per share, therefore the Company recorded the transaction at $1,488.
On
February 1, 2022, the Company issued its legal counsel 12,500 shares of common stock for legal work for February 2022. The common stock
of the Company is thinly traded and had a value of $0.069 per share, therefore the Company recorded the transaction at $862.
On
February 22, 2022, the Company issued 1,000,000 shares of common stock of the Company to Hospitality Funding Inc. in exchange for services
related to consulting. The common stock of the Company is thinly traded and had a value of $0.055 per share, therefore the Company recorded
the transaction at $55,000.
On
March 1, 2022, the Company issued its legal counsel 12,500 shares of common stock for legal work for March 2022. The common stock of
the Company is thinly traded and had a value of $0.06 per share, therefore the Company recorded the transaction at $750.
On
March 17, 2022, the Company issued a consultant 500,000 shares of common stock for services. The common stock is thinly traded and had
a value of $0.0556 per share, therefore the Company recorded the transaction at $27,800.
On
March 7, 2022, Altitude International Holdings, Inc. and CMA Soccer LLC entered into a Consulting, Management and License Agreement with
Soccer Partners America (“Soccer Partners”), a Colorado not for profit corporation. Soccer Partners, under the brand name
of Rush Soccer, has developed the largest known network of affiliated independent youth soccer clubs and with CMA Soccer, will establish
a Rush residential academy program and a men’s professional soccer team. As part of the agreement, certain members of the management
of Soccer Partners were granted a combined total of 10,000,000 shares of common stock of the Company and employment agreements for five
individuals. The common stock of the Company is thinly traded and had a value of $0.0556 per share, therefore the Company recorded the
transaction at $556,000. See Note 3.
On
April 1, 2022, the Company issued its legal counsel 12,500 shares of common stock for legal work for April 2022. The common stock of
the Company is thinly traded and had a value of $0.0327 per share, therefore the Company recorded the transaction at $409.
On
April 29, 2022, as part of the financing with Feenix (see Note 6), the Company issued Feenix 16,363,636 shares of common stock as a loan
discount.
Stock
Option Plan
On
February 13, 2018, the Company’s shareholders and Board of Directors approved the 2017 Incentive Stock Plan.
There
are currently no stock options currently issued and outstanding under the 2017 Plan, as all 250,000 remaining stock options issued and
outstanding were exercised on February 8, 2021.
NOTE
10 – INCOME TAXES
As
of June 30, 2022, the Company has net operating loss carry forwards of $504,804 that $254,336 may be available to reduce future years’
taxable income through 2041. In 2020, there were no tax impacts as Breunich Holdings, Inc. was taxed as a limited liability company.
The Company’s net operating loss carry forwards may be subject to annual limitations, which could reduce or defer the utilization
of the losses as a result of an ownership change as defined in Section 382 of the Internal Revenue Code.
The
Company’s tax expense differs from the “expected” tax expense for Federal income tax purposes (computed by applying
the United States Federal tax rate of 21% to loss before taxes for fiscal year 2021 and 2020), as follows:
SCHEDULE
OF INCOME TAX EXPENSE (BENEFIT)
| |
June 30, | | |
December 31, | |
| |
2022 | | |
2021 | |
Tax expense (benefit) at the statutory rate | |
$ | (202,301 | ) | |
$ | (205,425 | ) |
State income taxes, net of federal income tax benefit | |
| (48,167 | ) | |
| (48,911 | ) |
Change in valuation allowance | |
| 250,468 | | |
| 254,336 | |
Total | |
$ | - | | |
$ | - | |
The
tax effects of the temporary differences between reportable financial statement income and taxable income are recognized as deferred
tax assets and liabilities.
The
tax years 2021 and 2020 remains for examination by federal agencies and other jurisdictions in which it operates.
The
tax effect of significant components of the Company’s deferred tax assets and liabilities at June 30, 2022, and December 31, 2021,
are as follows:
SCHEDULE
OF DEFERRED TAX ASSETS AND LIABILITIES
| |
June 30, | | |
December 31, | |
| |
2022 | | |
2021 | |
Deferred tax assets: | |
| | | |
| | |
Net operating loss carryforward | |
$ | 504,804 | | |
$ | 254,336 | |
Timing differences | |
| - | | |
| - | |
Total gross deferred tax assets | |
| 504,804 | | |
| 254,336 | |
Less: Deferred tax asset valuation allowance | |
| (504,804 | ) | |
| (254,336 | ) |
Total net deferred taxes | |
$ | - | | |
$ | - | |
In
assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all
of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal
of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
Because
of the historical earnings history of the Company, the net deferred tax assets for 2022 and 2021 were fully offset by a 100% valuation
allowance. The valuation allowance for the remaining net deferred tax assets was $504,804 and $254,336 as of June 30, 2022, and December
31, 2021, respectively. Due to the transaction between the Company and BHI, which resulted in a change of control, net operating loss
carryforwards prior to the transaction may not be usable for the future.
NOTE
11 – REVENUE CLASSES
The
Company has six distinct revenue streams: altitude chambers, tuition-based sports academies, hosting events, membership fees, uniform
sales and atmospheric water generators. Selected financial information for the Company’s operating revenue classes are as follows:
SCHEDULE
OF OPERATING REVENUE CLASSES
| |
For the Six | | |
For the Six | |
| |
Months ended | | |
Months ended | |
| |
June 30, 2022 | | |
June 30, 2021 | |
Revenues: | |
| | | |
| | |
Altitude chambers | |
$ | 420,913 | | |
$ | - | |
Tuition-based sports academies | |
| 3,250,660 | | |
| 3,277,555 | |
Hosting events | |
| 737,393 | | |
| - | |
Uniform sales | |
| 71,730 | | |
| - | |
Membership fees | |
| 202,497 | | |
| - | |
Atmospheric water generators | |
| 98,745 | | |
| 298,424 | |
Total | |
$ | 4,781,938 | | |
$ | 3,575,979 | |
NOTE
12 – SUBSEQUENT EVENTS
On July 27, 2022, the Company executed a Third
Addendum to Purchase and Sale Agreement (the “Addendum”) with Sandpiper Resort Properties, Inc. and Holiday Village of Sandpiper,
Inc. (collectively, “Sandpiper”), modifying that certain Purchase and Sale Agreement effective as of April 25, 2022 (the
“Agreement”) for the purchase by the Company of property in Port Saint Lucie, Florida (the “Property”). See Note
3. The Property being sold is the Property on which the Company’s facilities are currently located and where the Company currently
operates and includes approximately 216 acres and approximately 3,000 feet of waterfront property.
Under the terms of the Addendum, the Agreement
is modified such that the Company shall pay a Third Deposit of $250,000 to Sandpiper by July 29, 2022. The Company’s total deposit
shall then be $1,250,000. Additionally, the parties have agreed that the Closing Date shall be August 31, 2022.
Further, section 12.12.2 and 12.12.3 of the Agreement,
discussing Material Loss and Nonmaterial Loss respectively, are amended by the Addendum. Section 12.12.2 is changed such that if the
Casualty Renovation Cost exceeds $250,000 and either party elects not to pay the excess then either party may terminate the Agreement
by Notice delivered to the other party, in which case the deposit shall be returned to the Company. Pursuant to the amended 12.12.3
section, if the Casualty Renovation Cost is less than or equal to $250,000, neither party shall have any right to terminate the Agreement.