Company Quick10K Filing
Quick10K
Altitude International
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
8-K 2019-01-25 Enter Agreement, Sale of Shares, Accountant, Control, Officers, Exhibits
8-K 2019-01-25 Enter Agreement, Sale of Shares, Accountant, Control, Officers, Exhibits
8-K 2018-08-08 Enter Agreement, Exhibits
8-K 2018-08-07 Other Events, Exhibits
8-K 2018-06-04 Amend Bylaw
8-K 2018-02-13 Officers, Amend Bylaw, Other Events
8-K 2018-01-08 Officers
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ALTD 2018-12-31
Part I
Item 1. Business
Item 1A. Risk Factors
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosure
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 8. Financial Statements
Note 1 - Nature of Operations
Note 2 - Summary of Significant Accounting Policies
Note 3 - Fixed Assets
Note 4 - Intangible Assets - Trademark
Note 5 - Notes Payable
Note 6 - Commitments and Contingencies
Note 7 - Related Party Transactions
Note 8 - Stockholders' Equity
Note 9 - Income Taxes
Note 10 - Deferred Revenue
Note 11 - Subsequent Events
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Part IV
Item 15. Exhibits, Financial Statement Schedules.
EX-31.1 ex_139126.htm
EX-31.2 ex_139127.htm
EX-32.1 ex_139128.htm
EX-32.2 ex_139129.htm

Altitude International Earnings 2018-12-31

ALTD 10K Annual Report

Balance SheetIncome StatementCash Flow

10-K 1 altitude20181231_10k.htm FORM 10-K altitude20181231_10k.htm

 



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 10-K

 


 

Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended

December 31, 2018

 

OR

 

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

COMMISSION FILE NUMBER:  000-55639

 

ALTITUDE INTERNATIONAL, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

New York

13-3778988

(State or Other Jurisdiction of Incorporation or Organization)

(I.R.S. Employer Identification No.)

 

515 E. Las Olas Boulevard, Suite 120

Fort Lauderdale, FL 33301

(Address of Principal Executive Offices)

 

(954) 256-5120

(Registrant’s telephone number, including area code)

 

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NONE

 

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

COMMON STOCK, $0.001 PAR VALUE PER SHARE

(Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes ☐     No ☒

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.   ☐    

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒     No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒     No ☐

 

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

 

Large accelerated filer  ☐

 

Accelerated filer  ☐

Non-accelerated filer     ☐

(Do not check if a smaller reporting company)

 

Smaller reporting company ☒

Emerging growth company  

 

 

 

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

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐     No ☒

 

The aggregate market value of the voting and non-voting stock held by non-affiliates was approximately $1,228,000 as of June 30, 2018, based upon a bid price of $0.08 per share for the registrant’s common stock on such date.

 

On March 19, 2019, a total of 28,758,517 shares of our common stock were outstanding.

 

 

 

 

ALTITUDE INTERNATIONAL, INC.

 

INDEX TO ANNUAL REPORT ON FORM 10-K

 

 

PART I

PAGE

 

 

 

Item 1.

Business

3

Item 1A.

Risk Factors

8

Item 1B.

Unresolved Staff Comments

N/A

Item 2.

Properties

12

Item 3.

Legal Proceedings

13

Item 4.

Mine Safety Disclosures

13

 

 

 

 

PART II

 

 

 

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

14

Item 6.

Selected Financial Data

15

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

N/A

Item 8.

Financial Statements

21

Item 9.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

22

Item 9A.

Controls and Procedures

22

Item 9B.

Other Information

23

 

 

 

 

PART III

 

 

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

24

Item 11.

Executive Compensation

26

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

27

Item 13.

Certain Relationships and Related Transactions, and Director Independence

28

Item 14.

Principal Accountant Fees and Services

28

 

 

 

 

PART IV

 

 

 

 

Item 15.

Exhibits

29

 

 

 

 

Signatures

30

 

 

 

 

FORWARD LOOKING INFORMATION

MAY PROVE INACCURATE

 

THIS ANNUAL REPORT ON FORM 10-K CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS AND INFORMATION RELATING TO US THAT ARE BASED ON THE BELIEFS OF MANAGEMENT, AS WELL AS ASSUMPTIONS MADE BY AND INFORMATION CURRENTLY AVAILABLE TO US. WHEN USED IN THIS DOCUMENT, THE WORDS “ANTICIPATE,” “BELIEVE,” “ESTIMATE,” “SHOULD,” “PLAN,” AND “EXPECT” AND SIMILAR EXPRESSIONS, AS THEY RELATE TO US, ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS REFLECT OUR CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS, INCLUDING THOSE DESCRIBED IN THIS ANNUAL REPORT ON FORM 10-K. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED HEREIN AS ANTICIPATED, BELIEVED, ESTIMATED, PLANNED OR EXPECTED. WE DO NOT INTEND TO UPDATE THESE FORWARD-LOOKING STATEMENTS.

 

PART I

 

ITEM 1. Business

 

Description of Business

 

Altitude International, Inc. (the “Company”) (formerly known as Titan Computer Services, Inc.) was incorporated on July 13, 1994 in the State of New York.

 

On June 27, 2017, the Company entered into a Share Exchange Agreement (“Share Exchange”) with Altitude International, Inc, a Wisconsin corporation (“Altitude”). Altitude was incorporated on May 18, 2017, under the laws of the state of Wisconsin. Altitude specializes in creating properly engineered, membrane-based designs for simulated altitude training equipment. The product line ranges from personal at home use machines to fully integrated environmental rooms and chambers. The Company changed its name on June 4, 2018 to “Altitude International, Inc.” to reflect its current operations.

 

The Exchange

 

Pursuant to the terms of the Share Exchange, the Company agreed to issue 6,102,000 shares of its common stock to the individual shareholders of Altitude on a pro rata basis in exchange for receive 100% of the shares of Altitude. Following the Share Exchange, Altitude is a wholly-owned subsidiary of the Company.

 

Corporate History

 

Following the Exchange, the Company, through its operating subsidiary Altitude, specializes in creating uniquely-engineered, membrane-based designs for simulated altitude training environments. The product line ranges from personal at home use machines to fully integrated environmental rooms and chambers. Through a license agreement with Sporting Edge UK, a brand well-established in the United Kingdom, the Company intends to expand its technology into the American marketplace, where the appetite for increasing performance in elite athletes, professional sports, equine sports, and universities and colleges is immense.

 

Competition

 

Currently, the membrane-based technology is not being well used in the United States. In North America, there exists some companies that provide altitude training masks, but the equipment is on a much smaller scale intended for personal use. This type of equipment employs PSA technology, which has reliability issues and a restricted altitude capacity.

 

Marketing and Customers

 

Altitude has focused its efforts on building a customer base with elite athletes, professional sports teams, universities, and health and fitness chains.

 

3

 

It is essential that potential customers can be accessed easily and quickly, but this is often difficult.  Getting access to an organization can be difficult and getting to the right person even more so.  Altitude has two strategies to achieve this:

 

A strategic partnership with Woodway, who will be the distributor of Altitude products in all of North, Central and South America in all markets save Equestrian and Health & Fitness clubs.  This gives immediate access, at the right level, to every university, college, hospital and professional sports team in the USA and many more in other parts of the territory.  The traditional delays and costs associated with assembling a large and trained sales team are avoided as are the expenses associated with running such a large team.  Altitude is pleased to be working with Woodway, a world leader in treadmill sales and a company that even has a special treadmill installed in the International Space Station.

 

A small network of ambassadors are associated with the Company, including:

 

Robert Kanuth

Businessman and ex-Harvard basketball star

Landon Adler

Ex-professional basketball player

Jonathan Goldfarb

Ex world top-50 tennis player

Ron Turner

Football coach from a famous coaching family

Lesley Visser

Outstanding sportscaster and media icon

Professor Greg Whyte

Internationally renowned Sports Physiologist

 

We hope that our ambassadors will help us access decision makers at the highest level who are pre-disposed to listen to our message.  We hope their work, alongside the marketing being undertaken by Woodway and our licensed Altitude technology and training protocols will help grow the business.

 

A demonstration facility is already installed in Wisconsin and a second such facility is planned for Florida, so that customers can experience the environment first hand.

 

Principal Agreements Affecting Our Ordinary Business

 

Altitude has several agreements in place related to its business operations.

 

Revised Sporting Edge UK Licensing Agreement

 

Altitude has a Revised Licensing Agreement with Sporting Edge UK that grants a license to Altitude to use Sporting Edge UK’s proprietary technology related to properly engineered, membrane-based designs for simulated altitude training equipment. The annual license fee under the revised agreement is $1.00 per year. The product line ranges from personal at home use machines to fully integrated environmental rooms and chambers. Altitude has the licensing rights to use all technology to manufacture the products and to sell them (directly or through distributors) in the following territories:

 

The Continent of North America, Central America, The Continent of South America.

 

Other territories as may be agreed from time to time, on a temporary or permanent basis.

 

Woodway Agreement

 

Altitude and Woodway USA Inc. entered into an Amended and Restated Sole Distribution Agreement in June 2017. Pursuant to the terms of that Agreement, Woodway will be the sole Distributor of Altitude products in all of North, Central and South America in all markets save Equestrian and Health & Fitness clubs.  As part of the Sole Distribution Agreement, Woodway will raise awareness and understanding of the Products in the Territory by way of seminars, briefings, demonstrations, presentations, advertising and other sales activities.

 

Business Strategy

 

The Company seeks to set itself apart from other altitude training technology by introducing to elite athletes, health and fitness clubs, and profession sports teams novel training techniques proven to increase performance. The Company has developed technology and training protocols that make possible large improvements in fitness and performance in normal room environments. The well-financed sports market of North America offers the Company opportunities to manufacture and distribute its products to a welcoming customer base.

 

4

 

The 2019 Business Plan is centered on several concurrent activities. These activities include, but are not limited to: sales support material development, market technology education and select market penetration. While these elements are considered concurrent, the order listed depicts a priority of operation for the plan.

 

In general, the US market lags behind Europe with respect to utilizing simulated altitude as a training and recovery technology. As Altitude intends to bring the US into the main stream of performance altitude training, certain information and awareness thresholds must be crossed. Specifically, collateral material must be created that reflects US centric market trends and that depict the current knowledge base for the technology.

 

Targeted groups of credible and trend setting end-users must be identified and exposed to the state-of-the-science as it relates to the training and recovery attributes of hypoxic induced physiological adaptation. Initially these groups will consist of elite athletes and professionals, advanced collegiate programs and therapeutic medical professionals.

 

The educational process will be carefully aligned with a focused sales program. The intent of the sales program will be to advance the technology by sales of Altitude systems to high visibility and influential organizations. These organizations and their market positions will serve as the launching platform for Altitude in the US.

 

As noted above, while these actions are somewhat concurrent, the focus of the Company will be on developing the US message and collateral marketing material. Starting quarter two the focus will move towards education and sales. While the education process must technically occur in advance of sales, it is anticipated that the lag time between the two steps will be short. This being said, it should be noted that the process of education, sales and delivery/commissioning is expected to be 3 to 9 months on any given system.

 

Industry Operating Environment

 

Whether at the Olympic level or in professional and college teams, top level sports require individuals to perform at their maximum potential.  Margins between success and failure are small--the difference between first and last in the Tour de France is three percent--and athletes constantly seek to close the gap between success and failure.

 

Many American athletes currently engage in altitude training by travelling to elevations of about 6,000ft to train in air with decreased oxygen levels. Though this type of training has its benefits, it does not come without costs.  Traveling creates a disruption to an athlete’s normal training schedule as well as considerable economic costs to travel and train in those locations.  Altitude WI’s licensed technology allows for all the benefits of altitude training without the disruptions of travel.

 

U.S. suppliers of altitude training equipment exist but they use an entirely different technology that almost entirely focuses on a mask-based approach.   This cumbersome approach is not favored by the athletes and impedes normal breathing patterns.  Altitude’s approach is to create room environments that are not only precisely controllable for simulated altitude level, but also for temperature and humidity – allowing the climate of almost any location on the planet to be replicated.  This allows many combinations of altitude, heat and humidity stresses to be created and also provides for pre-acclimatization of players about to compete outside their normal climate zone.  These additional stresses deliver increased benefits compared to altitude training alone.

 

Development

 

The product designs licensed from Sporting Edge UK are proven and cover a wide range of room sizes.  The only requirement is to change from metric to imperial sizes where necessary.

 

There are three unique elements to the Altitude proposition:

 

Sophisticated Touch Screen control systems capable of integrating the control of simulated altitude, temperature and humidity.

 

A unique design of Air Separation Unit with only a single active part that provides for ultra-reliable operation and a design life of greater than fifteen years.

 

Proven training protocols that allow the desired training benefits to be achieved.

 

 

5

 

We have included some photos of what our systems look like:

 

 

 

 

6

 

 

 

Altitude has leased space in the Woodway facility in Waukesha, Wisconsin to undertake the manufacture of systems.  The work will primarily consist of the assembly of components into the unique licensed designs.  Initial recruitment of technically-capable persons will be necessary, followed by short training blocks to pass on the required skills.  At least one person is likely to visit the UK to see systems in operation and obtain hands-on experience of the manufacturing requirement.  Woodway is an engineering-based company and provides the perfect environment to establish an operation which is in many ways similar to their own.  In addition, many aspects of infrastructure – goods handling, welfare facilities, etc. – can be accessed immediately without expense to Altitude.

 

Competition

 

Currently, the membrane-based technology is not being well used in the United States. In North America, there exists some companies that provide altitude training masks, but the equipment is on a much smaller scale intended for personal use. This type of equipment employs PSA technology, which has reliability issues and a restricted altitude capacity.

 

Intellectual Property

 

The Company does not own any patents directly but has access to the Sporting Edge UK intellectual property through the License Agreement.

 

Government Regulation

 

We are subject to local and international laws and regulations that relate directly or indirectly to our operations. We are also subject to common business and tax rules and regulations pertaining to the operation of our business. However, to our knowledge, there are no laws or regulations specifically directed to our industry and proposed business activities.  While general laws about privacy are applicable, we only incorporate publicly available data in our databases.

 

Employees

 

We currently have two full-time employees, our Chief Executive Officer and Chief Operations Officer, and one part time employee, our Chief Technology Officer. 

 

7

 

ITEM 1A. Risk Factors

 

As we are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information under this item; however, we believe this information may be of value to our shareholders for this filing. We reserve the right not to provide risk factors in our future filings. Our primary risk factors and other considerations include:

 

Risks Related to the Company

 

The Company operates in an environment that involves many risks and uncertainties. The risks and uncertainties described in this section are not the only risks and uncertainties that we face. Additional risks and uncertainties that presently are not considered material or are not known to us, and therefore are not mentioned herein, may impair our business operations. If any of the risks described actually occur, our business, operating results and financial position could be adversely affected.

 

Our revenues and profitability can fluctuate from period to period and are often difficult to predict due to factors beyond our control.

 

Our results of operations in any particular period may not be indicative of results to be expected in future periods, and have historically been, and are expected to continue to be, subject to periodic fluctuations arising from a number of factors, including:

 

Introduction and market acceptance of new products and sales trends affecting specific existing products;

Variations in product selling prices and costs and the mix of products sold;

Size and timing of Retail customer orders, which, in turn, often depend upon the success of our customers’ businesses or specific products;

Changes in the market conditions for consumer fitness equipment;

Changes in macroeconomic factors;

Availability of consumer credit;

Timing and availability of products coming from our offshore contract manufacturing suppliers;

Seasonality of markets, which vary from quarter-to-quarter and are influenced by outside factors such as overall consumer confidence and the availability and cost of television advertising time;

Effectiveness of our media and advertising programs;

Customer consolidation in our Retail segment, or the bankruptcy of any of our larger Retail customers;

Restructuring charges;

Goodwill and other intangible asset impairment charges; and

Legal and contract settlement charges.

 

These trends and factors could adversely affect our business, operating results, financial position and cash flows in any particular period. 

 

Portions of our operating expenses and costs of goods sold are relatively fixed, and we may have limited ability to reduce expenses sufficiently in response to any revenue shortfalls.

 

Many of our operating expenses are relatively fixed. We may not be able to adjust our operating expenses or other costs sufficiently to adequately respond to any revenue shortfalls. If we are unable to reduce operating expenses or other costs quickly in response to any declines in revenue, it would negatively impact our operating results, financial condition and cash flows.

 

If we are unable to anticipate consumer preferences or to effectively develop, market and sell future products, our future revenues and operating results could be adversely affected.

 

Our future success depends on our ability to effectively develop, market and sell new products that respond to new and evolving consumer preferences. Accordingly, our revenues and operating results may be adversely affected if we are unable to develop or acquire rights to new products that satisfy consumer preferences. In addition, any new products that we market may not generate sufficient revenues to recoup their acquisition, development, production, marketing, selling and other costs.

 

8

 

Decline in consumer spending would likely negatively affect our product revenues and earnings.

 

Success of each of our products depends substantially on the amount of discretionary funds available to our customers, including universities, sports teams and gym owners. Global credit and financial markets have experienced extreme disruptions in the recent past, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that similar disruptions will not occur in the future. Deterioration in general economic conditions may depress consumer spending, especially spending for high-end athletic products such as ours. Poor economic conditions could in turn lead to substantial decreases in our net sales or have a material adverse effect on our operating results, financial position and cash flows.

 

Government regulatory actions could disrupt our marketing efforts and product sales.

 

Various international and U.S. federal, state and local governmental authorities, including the Federal Trade Commission, the Consumer Product Safety Commission and the Securities and Exchange Commission, regulate our product and marketing efforts. Our revenue and profitability could be significantly harmed if any of these authorities commence a regulatory enforcement action that interrupts our marketing efforts, results in a product recall or negative publicity, or requires changes in product design or marketing materials.

 

Currency exchange rate fluctuations could result in higher costs, reduced margins or decreased international sales.

 

Some key components may be manufactured outside of the U.S. and, therefore, currency exchange rate fluctuations could result in higher costs for our products or could disrupt the business of independent manufacturers that produce our products, by making their purchases of raw materials more expensive and more difficult to finance. Our future financial results could be significantly affected by the value of the U.S. dollar in relation to the foreign currencies in which we, our customers or our suppliers conduct business. Past fluctuations in currency exchange rates versus the U.S. dollar have caused our costs for certain products to increase, reducing our margins and cash flows. Similar fluctuations and cost increases may occur in the future. If we are unable to increase our selling prices to offset such cost increases, or if such increases have a negative impact on sales of our products, our revenues and margins would be reduced, and our operating results and cash flows would be negatively impacted. In addition, a portion of our revenue may be derived from sales outside the U.S. in our territory including Canada, Central and South America. Currency rate fluctuations could make our products more expensive for foreign consumers and reduce our revenue, which would negatively affect our operating results and cash flows.

 

We may face competition from providers of comparable products in categories where our patent protection is limited or reduced due to patent expiration. Increased competition in those product categories could negatively affect our future revenues and operating results.

 

The patents that cover the production of hypoxic environments in room situations have all expired and so no general patent protection is available.  However, under the terms of the license with SEUK, the Company will benefit from patents that have been filed that relate to improving membrane performance and improving the uniformity of climate in environmental chambers.  These patents are pending in the UK.

 

We are subject to periodic litigation, product liability risk and other regulatory proceedings, which could result in unexpected expense of time and resources.

 

From time to time, we may be a defendant in lawsuits and regulatory actions relating to our business or the former operations of our discontinued Commercial business segment. Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such proceedings. An unfavorable outcome could have a material adverse impact on our business, financial condition and results of operations. In addition, any significant litigation in the future, regardless of its merits, could divert management’s attention from our operations and may result in substantial legal costs.

 

We are subject to warranty claims for our products, which could result in unexpected expense.

 

Many of our products carry warranties for defects in quality and workmanship. We may experience significant expense as the result of product quality issues, product recalls or product liability claims which may have a material adverse effect on our business.

  

9

 

Disruption to our information and communication systems could result in interruptions to our business and potential implementation of new systems for critical business functions may heighten the risk of disruption.

 

Our business is reliant on information and communication technology, and a substantial portion of our revenues are generated with the support of information and communication systems. T We also rely on information systems in all stages of our product cycle, from design to distribution, and we use such systems as a method of communication between employees, suppliers and customers. In addition, we use information systems to maintain our accounting records, assist in trade receivables collection and customer service efforts, and forecast operating results and cash flows.

 

System failures or service interruptions may occur as the result of many factors, including: computer viruses; hacking or other unlawful activities by third parties; disasters; equipment, hardware or software failures; ineffective design or implementation of new systems or systems upgrades; cable outages, extended power failures, or our inability or failure to properly protect, repair or maintain our communication and information systems. If we do not consider the potential impact of critical decisions related to systems or process design and implementation, this could lead to operational challenges and increased costs. Any of the factors could have a material adverse effect on our operating results, financial position and cash flows.

 

System security risks, data protection breaches and cyber-attacks could disrupt our operations.

 

We manage and store various proprietary information and sensitive or confidential data relating to our business, including sensitive and personally identifiable information. Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of proprietary information or sensitive or confidential data about us, or our customers, including the potential loss or disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us, our customers or the individuals affected to a risk of loss or misuse of this information, result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business. In addition, the cost and operational consequences of implementing further data protection measures could be significant.

 

Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms and other malicious software programs that attack or otherwise exploit any security vulnerabilities of our systems. In addition, sophisticated hardware and operating system software and applications that we procure from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of the system. The costs to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede our revenue, manufacturing, distribution or other critical functions.

 

Risks Related to our Securities

 

Our Stock Price May be Volatile, which May Result in Losses to Our Shareholders.

 

The stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies listed on the OTCQB Market on which shares of our common stock are quoted, have been volatile in the past and have experienced sharp share price and trading volume changes. The trading price of our common stock is likely to be volatile and could fluctuate widely in response to many factors, including the following, some of which are beyond our control:

 

variations in our operating results;

changes in expectations of our future financial performance, including financial estimates by securities analysts and investors;

changes in operating and stock price performance of other companies in our industry;

additions or departures of key personnel; and

future sales of our common stock.

 

Domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock.    

 

10

 

Our Common Shares May Become Thinly Traded and You May be Unable to Sell at or Near Ask Prices, or at All.

 

We cannot predict the extent to which an active public market for trading our common stock will be sustained.

 

This situation is attributable to many factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community who generate or influence sales volume.  Even if we came to the attention of such persons, those persons tend to be risk-averse and may be reluctant to follow, purchase, or recommend the purchase of shares of an unproven company such as ours until we become more seasoned and viable. Consequently, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.

 

The market price for our common stock is particularly volatile given our status as a relatively small company, which could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.

 

Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be able to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.

 

Because the SEC Imposes Additional Sales Practice Requirements on Brokers Who Deal in Shares of Penny Stocks, Some Brokers May be Unwilling to Trade Our Securities. This Means that You May have Difficulty Reselling Your Shares, which May Cause the Value of Your Investment to Decline.  

 

Our shares are classified as penny stocks and are covered by Section 15(g) of the Exchange Act which imposes additional sales practice requirements on brokers-dealers who sell our securities. For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement prior from you to making a sale on your behalf. Because of the imposition of the foregoing additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock. This could prevent you from reselling your shares and may cause the value of your investment to decline.

 

Financial Industry Regulatory Authority (FINRA) Sales Practice Requirements May Limit Your Ability to Buy and Sell Our Common Stock, which Could Depress the Price of Our Shares.   

 

FINRA rules require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.

 

Volatility in Our Common Share Price May Subject Us to Securities Litigation.

 

The market for our common stock is characterized by significant price volatility as compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources.

 

11

 

Our Business is Subject to Changing Regulations Related to Corporate Governance and Public Disclosure that have Increased Both Our Costs and the Risk of Noncompliance.

 

Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the SEC and FINRA, have issued requirements and regulations and continue to develop additional regulations and requirements in response to corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our efforts to comply with these regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue-generating activities to compliance activities. Because new and modified laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.

 

We Will Incur Increased Costs and Compliance Risks as a Result of Becoming a Public Company.

 

We will incur costs associated with our public company reporting requirements. We also anticipate that we will incur costs associated with recently adopted corporate governance requirements, including certain requirements under the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the SEC and FINRA.  We expect these rules and regulations, in particular Section 404 of the Sarbanes-Oxley Act of 2002, to significantly increase our legal and financial compliance costs and to make some activities more time-consuming and costly. Like many smaller public companies, we face a significant impact from required compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires management of public companies to evaluate the effectiveness of internal control over financial reporting and the independent auditors to attest to the effectiveness of such internal controls and the evaluation performed by management. The SEC has adopted rules implementing Section 404 for public companies as well as disclosure requirements. The Public Company Accounting Oversight Board, or PCAOB, has adopted documentation and attestation standards that the independent auditors must follow in conducting its attestation under Section 404. We are currently preparing for compliance with Section 404; however, there can be no assurance that we will be able to effectively meet all of the requirements of Section 404 as currently known to us in the currently mandated timeframe. Any failure to implement effectively new or improved internal controls, or to resolve difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet reporting obligations or result in management being required to give a qualified assessment of our internal controls over financial reporting or our independent auditors providing an adverse opinion regarding management’s assessment. Any such result could cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price.

 

We also expect these new rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

 

Sales of Our Currently Issued and Outstanding Stock May Become Freely Tradable Pursuant to Rule 144 and May Dilute the Market for Your Shares and have a Depressive Effect on the Price of the Shares of Our Common Stock.

 

A majority of the outstanding shares of our common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”) (“Rule 144”). As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws. A sale under Rule 144 or under any other exemption from the Securities Act, if available, or pursuant to subsequent registrations of our shares of common stock, may have a depressive effect upon the price of our shares of common stock in any active market that may develop.

 

ITEM 2. Properties

 

We do not own any property, nor do we have any contracts or options to acquire any property in the future. Presently, we are operating out of a virtual office.  This space is adequate for our present and our planned future operations. We currently pay $99 per month for use of this space.  We have no current plans to occupy other or additional office space.

  

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ITEM 3. Legal Proceedings

 

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We know of no existing or pending legal proceedings against us, nor are we involved as a plaintiff in any proceeding or pending litigation. There are no proceedings in which any of our directors, officers or any of their respective affiliates, or any beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

 

ITEM 4. Mine Safety Disclosure

 

Not Applicable.

 

 

 

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PART II

 

ITEM 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Market Information

 

Prices for our common stock are quoted on OTC Markets under the symbol “ALTD.” There are 28,758,517 shares of our common stock were outstanding as of March 19, 2019.  

 

Security Holders

 

On March 19, 2019, there were approximately 90 record holders of our common stock. 

 

Dividends

 

We have not paid dividends during the three most recently completed fiscal years and have no current plans to pay dividends on our common stock. We currently intend to retain all earnings, if any, for use in our business.

 

Recent Sales and Other Issuances of Our Equity Securities

 

On December 31, 2018, the Company issued shares of common stock to its directors, officer, and certain consultants for their service to the Company. Kanuth was issued 1,000,000 restricted shares of common stock, Lesley Visser was issued 250,000 restricted shares of common stock, Greg Whyte was issued 40,000 restricted shares of common stock, Harvey Galvin was issued 15,000 restricted shares of common stock, Mike Horvath was issued 25,000 restricted shares of common stock, Chris Visser was issued 25,000 restricted shares of common stock and its legal counsel was issued 125,000 restricted shares of common stock, which 87,500 were previously recorded as issuable. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.

 

On January 1, 2019, the Company issued 12,500 shares of common stock to its legal counsel. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.

 

On January 25, 2019, the Company issued 2,241,686 restricted shares of common stock to Dave Vincent (“Vincent”) upon the conversion of $156,918 in existing debt owed to Vincent that has been accrued by the Company. The issuance was made in reliance on the exemption from registration provided by Sections 3(a)(9) and 4(a)(2) of the Securities Act as the common stock was issued in exchange for debt securities of the Company held by Vincent, there was no additional consideration for the exchange, there was no remuneration for the solicitation of the exchange, there was no general solicitation, and the transaction did not involve a public offering.

 

On January 25, 2019, the Company issued 2,245,672 restricted shares of common stock to Robert Kanuth (“Kanuth”) upon the conversion of $157,197 in existing debt owed to Kanuth that has been accrued by the Company. The issuance was made in reliance on the exemption from registration provided by Sections 3(a)(9) and 4(a)(2) of the Securities Act as the common stock was issued in exchange for debt securities of the Company held by each shareholder, there was no additional consideration for the exchange, there was no remuneration for the solicitation of the exchange, there was no general solicitation, and the transactions did not involve a public offering. The holders provided legal opinions pursuant to Rule 144 promulgated under Section 4(a)(1) of the Securities Act.

 

On February 1, 2019, the Company authorized the issuance of 12,500 shares of common stock to its legal counsel. These shares were issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended pursuant to Section 4(a)(2) of the Act and/or Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering.

 

14

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

As of December 31, 2018, we did not have any shares issuable pursuant to outstanding stock options, warrants or and rights. On February 13, 2018, the Company’s shareholders and Board of Directors approved the 2017 Incentive Stock Plan (the “Plan”). The Plan provides for the grant of two types of options: (1) Incentive Stock Options, which are options that meet the requirements of Section 422 of the Code, and (2) Non-statutory Options. Shareholder approval will make available a total of 3,000,000 shares of the Company’s authorized but unissued Common Stock for purchase upon exercise of options granted under the 2017 Incentive Stock Plan. The term of the 2017 Incentive Stock Plan is ten years, subject to earlier termination by the Board.

 

Incentive Stock Options may be granted to employees of the Company or a related corporation. Non-Qualified Stock Options may be granted to employees of the Company, a related corporation, or affiliated companies. In any fiscal year, no employee may receive options to purchase more than $100,000 worth of shares of Common Stock and no option may be granted with an exercise price less than the fair market value measured on the date of the grant.

 

The 2017 Incentive Stock Plan will be administered by Board of Directors. The Board will have authority to construe, amend or terminate the 2017 Incentive Stock Plan. A written agreement will evidence each option and determine whether the option is an Incentive Stock Option or Non-Qualified Stock Option.

 

Options will expire no longer than 10 years from the date of grant; provided that no Incentive Stock Option granted to a greater-than-10% shareholder will expire later than 5 years from the date of grant. Vested options generally will terminate upon the first to occur of: (1) expiration of the option; (2) three months following the optionee’s termination of employment, other than as a result of death or disability; or (3) six months following the optionee’s death or cessation of employment by reason of disability.

 

Options granted under the 2017 Incentive Stock Plan will be no less than twenty percent (20%) of the shares covered thereby shall become exercisable annually unless the Board determines otherwise. The Committee may accelerate vesting. Upon a change in control, all options outstanding at the date thereof will become fully vested and exercisable. The purchase price of option shares must be paid by wire transfer, except to the extent another method is permitted by the Board.

 

There are currently 500,000 stock options that have been issued under the 2017 Plan.

 

ITEM 6. Selected Financial Data

 

Not Applicable. 

 

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion should be read in conjunction with the consolidated financial statements and the related notes thereto, as well as all other related notes, and financial and operational references, appearing elsewhere in this document. 

 

Certain information contained in this discussion and elsewhere in this report may include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and is subject to the safe harbor created by that act. The safe harbor created by the Private Securities Litigation Reform Act will not apply to certain  “forward looking statements” because we issued “penny stock” (as defined in Section 3(a)(51) of the Securities Exchange Act of 1934 and Rule 3(a)(51-1) under the Exchange Act) during the three year period preceding the date(s) on which those forward looking statements were first made, except to the extent otherwise specifically provided by rule, regulation or order of the Securities and Exchange Commission. We caution readers that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statements which may be deemed to have been made in this Report or which are otherwise made by or on our behalf.  For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “explore,” “consider,” “anticipate,” “intend,” “could,” “estimate,” “plan,” or “propose” or the negative variations of those words or comparable terminology are intended to identify forward-looking statements. Factors that may affect our results include, but are not limited to, the risks and uncertainties associated with:

 

 Our ability to raise capital necessary to sustain our anticipated operations and implement our business plan,

 

 

 Our ability to implement our business plan,

 

15

 

 Our ability to generate sufficient cash to survive,

 

 The degree and nature of our competition,

 

 The lack of diversification of our business plan,

 

 The general volatility of the capital markets and the establishment of a market for our shares, and

 

 Disruption in the economic and financial conditions primarily from the impact of past terrorist attacks in the United States, threats of future attacks, police and military activities overseas and other disruptive worldwide political and economic events and environmental weather conditions.

 

We are also subject to other risks detailed from time to time in our other filings with Securities and Exchange Commission and elsewhere in this report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate.  Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements.  We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.

 

We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

 

have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

 

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

 

submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and

 

disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation.

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

Plan of Operation

 

The Company produces systems under license from Sporting Edge UK.  These systems include the control of simulated altitude as a minimum and often the simultaneous control of temperature and humidity, providing a full environmental capability.  Also included in the license are the Training Protocols that Sporting Edge UK has established to ensure that the optimum results are achieved by athletes using the altitude facilities.

 

16

 

The Company has space in the Woodway facility in Waukesha to undertake the manufacture of systems.  This will consist primarily of manufacturing space, but with a small office content.  The work will primarily consist of the assembly of components into the unique licensed designs.  Initial recruitment of technically capable persons will be necessary, followed by short training blocks to pass on the required skills.  At least one person is likely to visit the UK to see systems in operation and obtain hands-on experience of the manufacturing requirement.  Woodway is an engineering-based company and so is a perfect environment in which to establish an operation which is in many ways similar to their own.  In addition, many aspects of infrastructure – goods handling, welfare facilities, etc. – can be accessed immediately without expense to Altitude. 

 

The Company has two approaches to penetrating the market.  

 

The Company has appointed Woodway as the sole Distributor for North, South and Central America.  This provides access to every professional Sports Club, College and University as well as many Hospitals and Military facilities.  As a result, the time and cost associated with establishing and operating a sales force is avoided.

 

The Company also has Board members and Company Ambassadors who are able to access key, top level decision makers via their personal contact networks.

 

A demonstration Altitude Room has been installed at the Woodway facility in Waukesha to allow effective demonstration of the physiological changes brought about be reduced oxygen air. 

 

Customer support and installation activities will be carried out in association with the existing network of Woodway Service Centers.  Once again, the cost and time of establishing such a network is avoided whilst ensuring that the vital support element is in place.

 

The Company has installed a chamber at Tulane University.

 

Commercial operations will center in Florida.

 

Off-balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Results of Operations

 

For the year ended December 31, 2018 compared to the period ended December 31, 2017

 

Revenues

 

We had $78,902 and $0 of revenue for the period ended December 31, 2018 and 2017, respectively. The Company began its revenue stream in the third quarter of 2018.

 

Direct Costs of Revenue

 

Direct costs of revenue for the period ended December 31, 2018 and 2017 were $46,858 and $0, respectively.

 

Operating Expenses

 

Operating expenses for the period ended December 31, 2018 and 2017 were $1,833,532 and $290,405, respectively. The expenses for 2018 were comprised primarily of stock-based compensation ($1,508,100). The expenses for 2017 were comprised primarily of professional fees of $60,789 and travel expenses of $187,432. 

 

Other Income (Expenses)

 

Other expenses for the period ended December 31, 2018 and 2017 were $49,731 and $0, respectively.

 

17

 

Net Loss

 

Net loss for the period ended December 31, 2018 and 2017 was $1,851,219 and $290,405, respectively.

 

 Liquidity and Capital Resources

 

We had a cash balance of $2,434 and negative working capital of $522,618 at December 31, 2018.

 

During 2017 we raised a total of $153,500 primarily through director loans and advances. In January 2019, we raised $100,000 through the sale of shares of our common stock. We believe that current cash on hand will be sufficient to fund all of the Company’s requirements for the next four months.

 

The Company’s anticipated capital requirements for the next 12 months will consist of expenses of being a public company and general and administrative expenses all of which we currently estimate will cost $325,000, excluding revenue related expenses and salaries.  In the event there are unanticipated expenses and we need additional funds, we may seek to raise additional funding that we require in the form of equity financing from the sale of our common stock.  However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund such additional expenses.  We currently do not have any agreements, arrangements or understandings with any person or entity to obtain funds through bank loans, lines of credit or any other sources.

 

Sources and Uses of Cash

 

Operating activities during the period ended December 31, 2018 used $185,380 of net cash.  Net cash used in investing activities was $0 for the period ended December 31, 2018.  Net cash provided by financing activities of $162,947 was received from the issuance of common stock and shareholder advances during the period ended December 31, 2018.

 

Off Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies

 

Use of Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompanying financial statements include the amortization period for intangible assets, valuation and impairment valuation of intangible assets, depreciable lives of the web site and property and equipment, valuation of warrant and beneficial conversion feature debt discounts, valuation of share-based payments and the valuation allowance on deferred tax assets.

 

Changes in Accounting Principles. No significant changes in accounting principles were adopted during fiscal 2018 and 2017.

 

Impairment of Long-Lived Assets. The Company accounts for long-lived assets in accordance with the provisions of Statement of Financial Accounting Standards ASC 360-10, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

 

Fair Value of Financial Instruments and Fair Value Measurements. The Company measures their financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash, accounts payable, accrued expenses escrow liability and short-term loans the carrying amounts approximate fair value due to their short maturities.

 

18

 

We have adopted accounting guidance for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

 

Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

 

Revenue Recognition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2019, and early adoption is permitted. 

 

Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (“ASU 2016-08”); ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”); and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). The Company must adopt ASU 2016-08, ASU 2016-10 and ASU 2016-12 with ASU 2014-09 (collectively, the “new revenue standards”). 

 

The new revenue standards may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company adopted the new revenue standards in its first quarter of 2018 utilizing the full retrospective transition method.

 

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 Company accounts for non-employee share-based awards in accordance with ASC Topic 505-50. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model.

 

2019 Plans

 

The 2019 Business Plan is centered on several concurrent activities. These activities include, but are not limited to: sales support material development, market technology education and select market penetration. While these elements are considered concurrent, the order listed depicts a priority of operation for the plan.

 

In general, the US market lags behind Europe with respect to utilizing simulated altitude as a training and recovery technology. As Altitude intends to bring the US into the main stream of performance altitude training, certain information and awareness thresholds must be crossed. Specifically, collateral material must be created that reflects US centric market trends and that depict the current knowledge base for the technology.

 

Targeted groups of credible and trend setting end-users must be identified and exposed to the state-of-the-science as it relates to the training and recovery attributes of hypoxic induced physiological adaptation. Initially these groups will consist of elite athletes and professionals, advanced collegiate programs and therapeutic medical professionals.

 

19

 

The educational process will be carefully aligned with a focused sales program. The intent of the sales program will be to advance the technology by sales of Altitude systems to high visibility and influential organizations. These organizations and their market positions will serve as the launching platform for Altitude in the US.

 

As noted above, while these actions are somewhat concurrent, the initial focus of the first and second quarters will be on developing the US message and collateral marketing material. Starting quarter two the focus will move towards education and sales. While the education process must technically occur in advance of sales, it is anticipated that the lag time between the two steps will be short. This being said, it should be noted that the process of education, sales and delivery/commissioning is expected to be 3 to 9 months on any given system.

 

No assurances can be given that any of these plans will come to fruition or that if implemented that they will necessarily yield positive results.

 

Inflation

 

In the opinion of management, inflation has not had a material effect on the Company’s financial condition or results of its operations.

 

 

 

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ITEM 8. Financial Statements

 

 

ALTITUDE INTERNATIONAL, INC.

Contents

 

 

Page

 

 

Financial Statements

 

 

 

Report of Independent Registered Public Accounting Firm

F-1

 

 

Balance Sheets as of December 31, 2018 and 2017

F-3

 

 

Statements of Operations for the year ended December 31, 2018 and the period from May 18, 2017 (date of inception) through December 31, 2017

F-4

 

 

Statements of Changes in Stockholders’ Deficiency for the year ended December 31, 2018 and the period from May 18, 2017 (date of inception) through December 31, 2017

F-5

 

 

Statements of Cash Flows for the year ended December 31, 2018 and the period from May 18, 2017 (date of inception) through December 31, 2017

F-6

 

 

Notes to Financial Statements

F-7

 

 

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Report of Independent Registered Public Accounting Firm

 

To the shareholders and the board of directors of Altitude International, Inc.

 

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Altitude International, Inc. (the "Company") as of December 31, 2018, the related statements of operations, stockholders' equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

 

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engage to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

 

/s/ BF Borgers CPA PC

 

We have served as the Company's auditor since 2019.

Lakewood, CO

March 29, 2019

 

F-1

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and

Stockholders of Titan Computer Services Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheet of Titan Computer Services Inc. (the “Company”) as of December 31, 2017 and the related consolidated statement of operations, stockholders’ deficit, and cash flows for the period May 18, 2017 (date of inception) through December 31, 2017 and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for the period May 18,2017(date of inception) through December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company is an early stage Company with limited operations and resources, has recurring losses since inception and negative cash flows from operations, which together raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ ZBS Group LLP

 

Plainview, NY

April 12, 2018

 

 

F-2

 

ALTITUDE INTERNATIONAL, INC.

(f/k/a Titan Computer Services, Inc.)

and Subsidiary

Consolidated Balance Sheets

December 31,

 

   

2018

   

2017

 

ASSETS

               

Current assets

               

Cash

  $ 2,434     $ 24,867  

Prepaid expense

    5,553       4,167  

Total current assets

    7,987       29,034  
                 

Fixed assets, net

    5,229       8,713  

Intangible assets, net

    11,365       11,977  

Total assets

  $ 24,581     $ 49,724  
                 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

               

Current liabilities

               

Notes payable - related party

  $ 143,500     $ -  

Accrued expenses

    7,000       -  

Accounts payable - related party

    10,000       4,167  

Accrued expenses - related party

    215,265       189,198  

Accrued interest - related party

    49,731       -  

Stockholders' advance

    36,211       26,764  

Deferred revenue

    68,898       -  

Total current liabilities

    530,605       220,129  

Total liabilities

    530,605       220,129  
                 

Commitments and contingencies - Note 6

               
                 

Stockholders' deficit

               

Preferred stock - no par value, 5,000,000 shares authorized, no shares issued and outstanding at December 31, 2018 and 2017, respectively

    -       -  

Common stock - no par value, 70,000,000 shares authorized, 24,271,159 and 21,728,659 shares issued, issuable, and outstanding at December 31, 2018 and 2017, respectively

    1,785,369       269,769  

Additional paid in capital

    (149,769 )     (149,769 )

Accumulated deficit

    (2,141,625 )     (290,405 )

Total stockholders' deficit

    (506,025 )     (170,405 )

Total liabilities and stockholders' deficit

  $ 24,580     $ 49,724  

 

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

 

F-3

 

ALTITUDE INTERNATIONAL, INC.

(f/k/a Titan Computer Services, Inc.)

and Subsidiary

Consolidated Statement of Operations

 

   

For the year ended

December 31, 2018

   

For the period from May 18, 2017 (Date of Inception) to

December 31, 2017

 
                 

Revenue

  $ 78,902     $ -  
                 

Operating expenses

               

Direct costs of revenue

    46,858       -  

Professional fees

    70,305       85,040  

Corporate expenses

    13,779       -  

Salary expenses

    121,600       -  

Stock-based compensation

    1,508,100       -  

Other general and administrative expenses

    119,749       205,365  

Total operating expenses

    1,880,391       290,405  
                 

Loss from operations

    (1,801,489 )     (290,405 )
                 

Other income (expenses)

               

Interest expense

    (49,731 )     -  

Total other income (expenses)

    (49,731 )     -  
                 

Net loss

  $ (1,851,220 )   $ (290,405 )
                 

Earnings per share - basic and fully diluted

  $ (0.08 )   $ (0.01 )
                 

Weighted average number of shares of common stock - basic and fully diluted

    22,841,741       25,677,821  

 

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

 

F-4

 

ALTITUDE INTERNATIONAL, INC.

(f/k/a Titan Computer Services, Inc.)

and Subsidiary

Consolidated Statement of Changes in Stockholders' Equity

For the Period from May 18, 2017 (Date of Inception) to December 31, 2018

 

   

Common Stock

   

Additional

                 
           

No

   

Paid in

   

Accumulated

         
   

Shares

   

Par Value

   

Capital

   

Deficit

   

Total

 
                                         

Issuance of shares on incorporation

    6,102,000     $ 6,102     $ (6,102 )   $ -     $ -  

Reorganization for reverse merger

    15,026,659       143,667       (143,667 )     -       -  

Proceeds from sale of common stock

    500,000       100,000       -       -       100,000  

Issuance of common stock for services

    100,000       20,000       -       -       20,000  

Net loss for the period ended December 31, 2017

    -       -       -       (290,405 )     (290,405 )
                                         

Balance, December 31, 2017

    21,728,659     $ 269,769     $ (149,769 )   $ (290,405 )   $ (170,405 )

Issuance of common stock for services

    2,542,500       1,515,600       -               1,515,600  

Net loss for the period ended December 31, 2018

    -       -       -       (1,851,220 )     (1,851,219 )
                                         

Balance, December 31, 2018

    24,271,159     $ 1,785,369     $ (149,769 )   $ (2,141,625 )   $ (506,025 )

 

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

 

F-5

 

ALTITUDE INTERNATIONAL, INC.

(f/k/a Titan Computer Services, Inc.)

and Subsidiary

Consolidated Statement of Cash Flows

 

   

For the year ended

December 31, 2018

   

For the period from May 18, 2017 (Date of Inception) to

December 31, 2017

 
                 

Cash flows from operating activities:

               

Net loss

  $ (1,851,220 )   $ (290,405 )

Adjustments to reconcile net loss to net cash used in operations:

               

Depreciation expense

    3,484       1,742  

Amortization expense

    612       307  

Stock-based compensation

    1,508,100       20,000  

Change in assets and liabilities:

               

Prepaid expense

    (5,553 )     (4,167 )

Accounts payable and accrued expenses

    7,000       189,198  

Accounts payable - related party

    -       4,167  

Accrued expenses - related party

    33,568       -  

Accrued interest - related party

    49,731       -  

Deferred revenue

    68,898       -  

Net cash used in operating activities

    (185,380 )     (79,158 )
                 

Cash flows used in investing activities:

               

Purchase of plant and equipment

    -       (10,455 )

Purchase of trademark

    -       (12,284 )

Net cash used in investing activities

    -       (22,739 )
                 

Cash flows from financing activities:

               

Issuance of common stock, net of transaction cost $12,500

    -       100,000  

Proceeds from related party loans and advances

    153,500       -  

Shareholder's Advance

    9,447       26,764  

Net cash provided by financing activities

    162,947       126,764  
                 

Net increase(decrease) in cash

    (22,433 )     24,867  
                 

Cash at beginning of period

    24,867       -  
                 

Cash at end of period

  $ 2,434     $ 24,867  
                 

Cash paid for interest

  $ -     $ -  

Cash paid for taxes

  $ -     $ -  
                 

Non-cash investing and financing activities:

               

Acquisition of office equipment by a shareholder

  $ -     $ 10,455  

Acquisition of trademark by a shareholder

  $ -     $ 12,284  

 

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

 

F-6

 

ALTITUDE INTERNATIONAL, INC.

(f/k/a Titan Computer Services, Inc.)

And Subsidiary

Notes to the Consolidated Financial Statements

December 31, 2018

 

NOTE 1 – NATURE OF OPERATIONS

 

Company Background

 

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.” The Company changed its name on June 4, 2018 to “Altitude International, Inc.” to reflect its current operations.

 

On June 27, 2017, the Company successfully closed a Share Exchange transaction (“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 by way of its sole distribution agreement with Woodway Inc. 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.

 

Amend the Bylaws to Permit a Simple Majority Vote and Allow for the Appointment of up to Seven

 

Article II Section 10 of the Company’s Bylaws stated, “Any action required or permitted to be taken by the Shareholders thereof may be taken without a meeting if all Shareholders entitled to vote thereon consent in writing to the adoption of a resolution authorizing the action except as otherwise permitted by the Certificate of Incorporation.”

 

The Bylaws were amended to allow for a simple majority vote as permitted by §615 of the New York Business Corporation Law. The amended section shall read, “Any action required or permitted to be taken by the Shareholders thereof may be taken without a meeting if a majority of the Shareholders entitled to vote thereon consent in writing to the adoption of a resolution authorizing the action. ”

 

Article III Section 2 of the Company’s Bylaws provided that the number of Directors constituting the entire Board “shall not be less than one nor more than three, as may be fixed by resolution of the Board of Director.” The Bylaws were amended to allow for additional directors as proposed herein (up to four) and to allow for additional directors as the Company grows (up to seven). The amended section shall include the number “seven” instead of “three” as the maximum number of directors.

 

Name Change from “Titan Computer Services, Inc.” to “Altitude International, Inc.”

 

On February 13, 2018, the majority of the shareholders of the Company approved the amendment to the Articles of Incorporation to change the Company’s name from “Titan Computer Services, Inc.” to “Altitude International, Inc.” The purpose of the name change will help further our brand identity and will reflect the major focus of our business operations, the manufacturing and distribution of products in the athletic training industry, specifically altitude training.  The filing of the name change with the state of New York has not been completed as of the date of this report. Once processed by New York, the Company will apply for a name and symbol change with FINRA.

 

Nature of Operations

 

The product designs to be licensed from Sporting Edge UK, Ltd (“Sporting Edge UK”) are proven and cover a wide range of room sizes.  The only requirement is to change from metric to imperial sizes where necessary.

  

There are three unique elements to the Altitude product:

 

Sophisticated Touch Screen control systems capable of integrating the control of simulated altitude, temperature and humidity.

 

A unique design of Air Separation Unit with only a single active part that provides for ultra-reliable operation and a design life of greater than fifteen years.

 

Proven training protocols that allow the desired training benefits to be achieved.

 

F-7

 

Altitude has leased space in the Woodway facility in Waukesha, Wisconsin to undertake the manufacture of systems.  The work will primarily consist of the assembly of components into the unique licensed designs.  Initial recruitment of technically-capable persons will be necessary, followed by short training blocks to pass on the required skills.  At least one person is likely to visit the UK to see systems in operation and obtain hands-on experience of the manufacturing requirement.  Woodway is an engineering-based company and provides the perfect environment to establish an operation which is in many ways similar to their own.  In addition, many aspects of infrastructure – goods handling, welfare facilities, etc. – can be accessed immediately without expense to Altitude.

 

Recapitalization of Altitude

 

On June 27, 2017, the Company entered into a share exchange transaction with Altitude which resulted in a change of control of the Company. Pursuant to the terms of the Share Exchange, the Company agreed to issue 6,102,000 shares of its common stock to all the individual shareholders of Altitude on a pro rata basis (one to one share exchange). In exchange for this stock issuance, the Company received 100% of the outstanding shares of Altitude. Following this Share Exchange, Altitude became a wholly-owned subsidiary of Titan. There was a cancellation of 14,700,000 shares of common stock of the Company that was held by the Company’s former majority stockholder as part of the share exchange agreement, which all had a net effect of a decrease of 8,598,000 shares in the Company’s outstanding shares. The business, assets and liabilities of the Company changed as a result of this reverse acquisition to Altitude’s business plan.

 

This share exchange transaction resulted in those shareholders obtaining a majority voting interest in –the Company and control of the Board of Directors of the Company. Generally accepted accounting principles require that the Company whose shareholders retain the majority interest and control in a combined business be treated as the acquirer for accounting purposes, resulting in a reverse acquisition with Altitude as the accounting acquirer and the Company as the acquired party. Accordingly, the share exchange transaction has been accounted for as a recapitalization of Altitude, whereby is deemed to be the continuing, surviving entity for accounting purposes but through reorganization, has deemed to have adopted the capital structure of Altitude - NY. The equity section of the accompanying condensed consolidated financial statements has been restated to reflect the recapitalization of the Company due to the reverse acquisition.

 

Accordingly, all references to common shares of Altitude’s common stock have been restated to reflect the equivalent number of the Company’s common shares. In other words, the 6,102,000 Altitude shares outstanding at the time of the share exchange are restated to 21,228,659 common shares (prior to the 500,000 common share capital raise mentioned below that was conducted after the share exchange agreement), as of June 27, 2017. Each share of Altitude is accordingly restated at a multiple of approximately 3.48 shares of the Company for the weighted average shares outstanding for the loss per share calculations in the accompanying condensed consolidated statement of operations.

 

The book value of the net assets that for accounting purposes, were deemed to have been acquired by Altitude from the Company, as of the date of acquisition (June 27, 2017) were $0, after the waiver of all debts from officers and third parties.

 

A condition to the closing of the Share Exchange Agreement was raising $100,000 in the Company. On June 27, 2017, the Company issued 500,000 shares of its common stock to an accredited investor pursuant to a Subscription Agreement for $100,000, or $0.20 per share which was kept at escrow account. During the recapitalization, the Company incurred legal fees of $12,500 which was paid through the attorney’s escrow account and recorded as transaction costs which were netted against the $100,000 proceeds.

 

Altitude International, Inc.

 

Altitude International, Inc. (“Altitude”) was incorporated on May 18, 2017 under the laws of the state of Wisconsin with 100,000,000 authorized common stock with $0.001 par value. On May 18, 2017, 6,102,000 shares of common stock at $0.001 (par) were issued as founder shares, valued at a total of $6,102 to 15 individuals, including Mr. Dave Vincent (“Vincent”) who is the majority equity interest shareholder and the director of the Company. These shares were issued for future potential services from these various individuals and as of the date of this issuance, no value was placed on these future potential services and were therefore recorded at par value as stock-based compensation to the founders.

 

On June 27, 2017, after the closing of certain Stock Purchase Agreements, in private sale transaction and the Share Exchange Agreement, a change of control of the Company occurred and the new operational focus of the Company commenced. See Notes 6 and 8.

 

F-8

 

Altitude will operate through Northern, Central, and South America sales by way of its sole distribution agreement with Woodway Inc. to execute the current business plan of athletic training industry, specifically altitude training. Our objective is to be recognized as one of the upper tier specialty altitude training equipment providers.

 

Changes in Management and the Board of Directors

 

On January 25, 2019, Robert Kanuth was appointed as the Company’s new CEO and David Vincent resigned as CEO and was appointed as the Company’s Chief Technology Officer. On October 20, 2017, Greg Whyte was appointed to fill the vacancy as a director of the Company. On January 8, 2018, Joseph Frost was appointed to serve as the Chief Operating Officer and on February 13, 2018 Lesley Visser and Frost were elected to serve on the Board of Directors.

 

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 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 assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

 

Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud.  The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.

 

Going Concern and Liquidity

 

We have incurred recurring losses since inception and expect to continue to incur losses as a result of legal and professional fees and our corporate general and administrative expenses. At December 31, 2018, we had $2,434 in cash. Our net losses incurred for the year ended December 31, 2018 were $1,851,220 and working capital deficit was $522,618 at December 31, 2018. 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.

  

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Altitude. All significant intercompany balances and transactions have been eliminated in the consolidation. The consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles (“GAAP”) and stated in United States dollars, have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents.

 

F-9

 

Property, Plant and Equipment

 

Property and equipment are stated at cost, net of accumulated depreciation. Expenditures that extend the life, increase the capacity, or improve the efficiency of property and equipment are capitalized, while expenditures for repairs and maintenance are expensed as incurred. Depreciation is recognized using the straight-line method over the following approximate useful lives:

 

Machinery and equipment  

 

3-5 Years

 

Intangible Assets

 

Costs incurred to file patent applications and acquired intangibles are capitalized when the Company believes that there is a high likelihood that the patent will be issued and there will be future economic benefit associated with the patent. These costs will be amortized on a straight-line basis over a 20 years life from the date of patent filing. All costs associated with abandoned patent applications are expensed. In addition, the Company will review the carrying value of patents for indicators of impairment on a periodic basis and if it determines that the carrying value is impaired, it values the patent at fair value. As of December 31, 2018, carrying value of patent was $11,365.

 

In accordance with the provisions of the applicable authoritative guidance, the Company’s long-lived assets and amortizable intangible assets are tested for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The Company assesses the recoverability of such assets by determining whether their carrying value can be recovered through undiscounted future operating cash flows, including its estimates of revenue driven by assumed market segment share and estimated costs. If impairment is indicated, the Company measures the amount of such impairment by comparing the fair value to the carrying value. The amortization of the trademark was not significant for the period ended December 31, 2018.

 

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, and FASB ASC Topic 205, Presentation of Financial Statements.  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. For the year ended December 31, 2018, the Company had not experienced impairment losses on its long-lived assets.

 

Revenue Recognition

 

Our sales are generated primarily from contracts with customers for the design, development, manufacture, and installation of simulated altitude athletic equipment. We provide our products under fixed-price contracts. Under fixed-price contracts, we agree to perform the specified work for a pre-determined price. To the extent our actual costs vary from the estimates upon which the price was negotiated, we will generate more or less profit or could incur a loss.

 

We account for a contract after it has been approved by all parties to the arrangement, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. 

 

We evaluate the products or services promised in each contract at inception to determine whether the contract should be accounted for as having one or more performance obligations. The products and services in our contracts are typically not distinct from one another due to their complex relationships, customization, and the significant contract management functions required to perform under the contract. Accordingly, our contracts are typically accounted for as one performance obligation.

 

We determine the transaction price for each contract based on the consideration we expect to receive for the products or services being provided under the contract.

 

F-10

 

We recognize revenue as performance obligations are satisfied and the customer obtains control of the products and services. In determining when performance obligations are satisfied, we consider factors such as contract terms, payment terms and whether there is an alternative future use of the product or service. Substantially all of our revenue is recognized over time as we perform under the contract because if our customer were to terminate the contract for reasons other than our non-performance, we would have the right to recover damages which would include, among other potential damages, the right to payment for our work performed to date plus a reasonable profit to deliver products or services that do not have an alternative use to us.

 

For performance obligations recognized over time, revenue is recognized based on the extent of progress towards completion of the performance obligation, generally using the percentage-of-completion cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer as we incur costs on our contracts. Under the percentage-of-completion cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs to complete the performance obligation.

 

Advertising Costs

 

Advertising costs are expensed as incurred. Advertising costs for the year ended December 31, 2018 was $6,000.

 

Stock-Based Compensation

 

The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition provisions ASC Topic 505-50. The Company estimates the fair value of stock options at the grant date by using the Black-Scholes option-pricing model.

 

Fair Value of Financial Instruments

 

The book values of cash, prepaid expenses, and accounts payable approximate their respective fair values due to the short-term nature of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs).

 

The hierarchy consists of three levels

 

Level one — Quoted market prices in active markets for identical assets or liabilities;

Level two — Inputs other than level one inputs that are either directly or indirectly observable; and

Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

 

Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.

 

Earnings (Loss) Per Share

 

Basic earnings (loss) per share are computed by dividing the net income by the weighted-average number of shares of common stock and common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later.

 

Income Taxes

 

The Company accounts for income taxes in accordance with FASB ASC 740, “Income Taxes.”  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and loss carry-forwards and their respective tax bases.

 

F-11

 

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 December 31, 2018. Interest and penalties in any, related to unrecognized tax benefits would be recognized as interest expense. The Company does not have any accrued interest or penalties associated with unrecognized tax benefits, nor was any significant interest expense recognized during the year ended December 31, 2018.

 

On December 22, 2017, the United States Government passed new tax legislation that, among other provisions, will lower the corporate tax rate from 35% to 21%. In addition to applying the new lower corporate tax rate in 2018 and thereafter to any taxable income we may have, the legislation affects the way we can use and carry forward net operating losses previously accumulated and results in a revaluation of deferred tax assets recorded on our balance sheet. Given that the deferred tax assets are offset by a full valuation allowance, these changes will have no net impact on the Company’s financial position and net loss. However, if and when we become profitable, we will receive a reduced benefit from such deferred tax assets. Had this legislation been effective prior to our December 31, 2018, fiscal year-end, the effect of the legislation would have been a reduction in deferred tax assets and the corresponding valuation allowance.

 

Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

 

Effect of Recent Accounting Pronouncements

 

Going Concern

 

ASU 2014-15 – “Presentation of Financial Statements—Going Concern—Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).” In August 2014, FASB issued guidance that requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The updated accounting guidance was effective for the Company on September 30, 2018. We have implemented this new accounting standard and we will update our liquidity disclosures as necessary.

 

Recent Accounting Pronouncements

 

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.

 

F-12

 

Financial Instruments

 

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 will be effective for the Company beginning in its first quarter of 2019. The Company does not believe the adoption of ASU 2016-01 will have a material impact on its consolidated financial statements.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which modifies the measurement of expected credit losses of certain financial instruments. ASU 2016-13 will be effective for the Company beginning in its first quarter of 2021 and early adoption is permitted. The Company does not believe the adoption of ASU 2016-13 will have a material impact on its consolidated financial statements.

 

Leases

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which modified lease accounting for both lessees and lessors to increase transparency and comparability by recognizing lease assets and lease liabilities by lessees for those leases classified as operating leases under previous accounting standards and disclosing key information about leasing arrangements. ASU 2016-02 will be effective for the Company beginning in its first quarter of 2020, and early adoption is permitted. The Company is currently evaluating the timing of its adoption and the impact of adopting ASU 2016-02 on its financial statements.

 

Stock Compensation

 

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which simplified certain aspects of the accounting for share-based payment transactions, including income taxes, classification of awards and classification on the statement of cash flows. ASU 2016-09 was effective for the Company beginning in its first quarter of 2018. The Company has determined that the adoption of ASU 2016-09 on its consolidated financial statements had no impact.

 

Income Taxes

 

In October 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory (“ASU 2016-16”), which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. ASU 2016-06 will be effective for the Company in its first quarter of 2019. The Company is currently evaluating the impact of adopting ASU 2016-16 on its consolidated financial statements.

 

Revenue Recognition

 

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2019, and early adoption is permitted. 

 

Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (“ASU 2016-08”); ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”); and ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”). The Company must adopt ASU 2016-08, ASU 2016-10 and ASU 2016-12 with ASU 2014-09 (collectively, the “new revenue standards”). 

 

The new revenue standards may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company adopted the new revenue standards in its first quarter of 2018 utilizing the full retrospective transition method.

 

 

F-13

 

NOTE 3 – FIXED ASSETS  

 

The Company has fixed assets related to office equipment.  The depreciation of the equipment is over a three-year period.  As of December 31, 2018, and 2017, the Company had fixed assets, net of accumulated depreciation, of $5,229 and $8,713, respectively.  The fixed assets are as follows: 

 

   

December 31,

   

December 31,

 
   

2018

   

2017

 

Office equipment

  $ 10,455     $ 10,455  

Total fixed assets

    10,455       10,455  

Less:  Accumulated depreciation

    5,226       1,742  

Fixed assets, net

  $ 5,229     $ 8,713  

 

Depreciation of the office equipment for the year ended December 31, 2018 was $3,484.

 

NOTE 4 – INTANGIBLE ASSETS - TRADEMARK

 

The Company has intangible assets related to a trademark.  The amortization of the intangible asset is over a twenty-year period.  As of December 31, 2018, and 2017, the Company had intangible assets, net of accumulated amortization, of $11,365 and $11,977, respectively.  The intangible assets are as follows:

 

   

December 31,

   

December 31,

 
   

2018

   

2017

 

Trademark

  $ 12,284     $ 12,284  

Total intangible assets

    12,284       12,284  

Less: Accumulated amortization

    919       307  

Intangible assets, net

  $ 11,365     $ 11,977  

 

Amortization expense of the trademark for the year ended December 31, 2018 was $612.

 

NOTE 5 – NOTES PAYABLE

 

Notes payable

   

December 31, 2018

   

December 31, 2017

 
           

Accrued

                   

Accrued

         
   

Principal

   

Interest

   

Total

   

Principal

   

Interest

   

Total

 

David Vincent

  $ 20,000     $ 3,595     $ 23,595     $ -     $ -     $ -  

David Vincent

    40,000       6,707       46,707       -       -       -  

Joseph B. Frost

    40,000       4,252       44,252       -       -       -  

Joseph B. Frost

    500       6       506       -       -       -  

Joseph B. Frost

    10,000       833       10,833       -       -       -  

Joseph B. Frost

    13,000       1,012       14,012       -       -       -  

David Vincent

    5,000       48       5,048       -       -       -  

David Vincent

    15,000       26       15,026       -       -       -  

Total

  $ 143,500     $ 16,479     $ 159,979     $ -     $ -     $ -  

 

On February 7, 2018, Vincent, the Company’s majority shareholder and director, loaned the Company $20,000 in the form of a promissory note. The note bears interest of 20% and has the term of one year, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $3,595, and the principal balance was $20,000.  See Note 7.

 

On March 2, 2018, Vincent, a director, loaned the Company $40,000 in the form of a promissory note. The note bears interest of 20% and has the term of one year, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $6,707, and the principal balance was $40,000.  See Note 7.

 

F-14

 

On June 21, 2018, Frost formalized various advances to the Company in the amount of $40,000 in the form of a promissory note. The note bears interest of 20% and has the term of one year, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $4,252, and the principal balance was $40,000.  Before the note was formalized, interest was also charged at the same rate. See Note 7.

 

On July 30, 2018, Frost, a director, loaned the Company $10,000 in the form of a promissory note. The note bears interest of 20% and has the term of one year, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $833, and the principal balance was $10,000.  See Note 7.

 

On August 10, 2018, Frost, a director, loaned the Company $13,000 in the form of a promissory note. The note bears interest of 20% and has the term of six months, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $1,012, and the principal balance was $13,000.  See Note 7.

 

On November 5, 2018, Frost, a director, loaned the Company $500 in the form of a promissory note. The note bears interest of 8% and has the term of six months, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $6, and the principal balance was $500.  See Note 7.

 

On November 8, 2018, Vincent, a director, loaned the Company $5,000 in the form of a promissory note. The note bears interest of 8% and has the term of six months, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $48, and the principal balance was $5,000.  See Note 7.

 

On December 24, 2018, Vincent, a director, loaned the Company $15,000 in the form of a promissory note. The note bears interest of 8% and has the term of six months, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $26, and the principal balance was $15,000.  See Note 7.

 

NOTE 6 – COMMITMENTS AND CONTINGENCIES

 

The Company is subject, from time to time, to claims by third parties under various legal disputes. The defense of such claims, or any adverse outcome relating to any such claims, could have a material adverse effect on the Company’s liquidity, financial condition and cash flows. As of March 19 7, 2019, the Company did not have any legal actions pending against it.

 

On June 27, 2017, Altitude entered a license agreement with Sporting Edge UK (see Note 1), Sporting Edge UK is the sole and exclusive owner of and has the right to license to licensee the ability to manufacture and sell rights to the full range of membrane-based systems for the production of reduced oxygen environments and associated services as well as the use of patents and trademarks held by Sporting Edge UK or Vincent.

  

On January 24, 2019, Altitude and Sporting Edge UK entered into a Revised Licensing Agreement that grants a license to Altitude to use Sporting Edge UK’s proprietary technology related to properly engineered, membrane-based designs for simulated altitude training equipment. The annual license fee under the revised agreement is $1.00 per year. The product line ranges from personal at home use machines to fully integrated environmental rooms and chambers. Altitude has the licensing rights to use all technology to manufacture the products and to sell them (directly or through distributors) in the following territories:

 

The Continent of North America, Central America, The Continent of South America.

 

Other territories as may be agreed from time to time, on a temporary or permanent basis.

 

All amounts due under the 2017 license agreement were waived, as were all royalty fees.

 

NOTE 7 – RELATED PARTY TRANSACTIONS

 

As of December 31, 2018, and 2017, the balance due to our former CEO, David Vincent, was recorded under stockholder’s advance of $36,211 and $26,764, respectively, which is a verbal agreement, non-interest bearing, unsecured and payable on demand. These advances included $10,455 of acquisition of office equipment and $12,284 of acquisition of trademark which were disclosed at supplemental disclosure of non-cash flow investing activities of the statement of cash flow.  On February 9, 2018, the Board of Directors changed the arrangement whereas the advance would begin accruing interest at the rate of 20%. The Company has accrued expenses to David Vincent, as of December 31, 2018 and 2017 of $57,948 and $57,948, respectively.

 

F-15

 

Altitude has an oral agreement with its Chairman of the Board and current CEO, Robert Kanuth, in which it will provide for reimbursement of private airline travel expenses incurred on behalf of the Company, for his use of an aircraft in which he has an interest in. These travel expenses totaled $123,750 for the period ended December 31, 2017 and is included in accrued expenses to related parties at December 31, 2018.  In January 2018, the Board of Directors issued a one-time bonus to Mr. Kanuth, in the amount of $7,525, to compensate for the significant payable and what would have been interest.  Additionally, the open balance will accrue interest at the rate of 20% per annum and, as of December 31, 2018, the accrued interest was $24,750.  The remuneration package for the Chairman is currently under negotiation as are the terms and validity of a purported agreement between the Chairman and the Company’s CEO regarding shares to be transferred from the CEO to the Chairman upon sales milestones being reached.  The Company and its subsidiaries were not parties to the purported agreement, and their property is not the subject of the purported agreement. 

 

On January 2, 2018, the Company issued 1,000,000 shares of common stock to Frost, the Company’s Chief Operating Officer, under his employment agreement.  The common stock of the Company is thinly traded and had a value of $1.35 per share, therefore the Company recorded the transaction at $1,350,000.  See Note 8.

 

On February 7, 2018, Vincent, the Company’s majority shareholder and director, loaned the Company $20,000 in the form of a promissory note. The note bears interest of 20% and has the term of one year, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $3,595, and the principal balance was $20,000.  See Note 5.

 

On March 2, 2018, Vincent, a director, loaned the Company $40,000 in the form of a promissory note. The note bears interest of 20% and has the term of one year, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $6,707, and the principal balance was $40,000.  See Note 5.

 

On June 21, 2018, Frost formalized various advances to the Company in the amount of $40,000 in the form of a promissory note. The note bears interest of 20% and has the term of one year, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $4,252, and the principal balance was $40,000.  Before the note was formalized, interest was also charged at the same rate. See Note 5.

 

On July 30, 2018, Frost, a director, loaned the Company $10,000 in the form of a promissory note. The note bears interest of 20% and has the term of one year, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $833, and the principal balance was $10,000.  See Note 5.

 

On August 10, 2018, Frost, a director, loaned the Company $13,000 in the form of a promissory note. The note bears interest of 20% and has the term of six months, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $1,012, and the principal balance was $13,000.  See Note 5.

 

On November 5, 2018, Vincent, a director, loaned the Company $500 in the form of a promissory note. The note bears interest of 8% and has the term of six months, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $6, and the principal balance was $500.  See Note 5.

 

On November 8, 2018, Vincent, a director, loaned the Company $5,000 in the form of a promissory note. The note bears interest of 8% and has the term of six months, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $48, and the principal balance was $5,000.  See Note 5.

 

On December 24, 2018, Frost, a director, loaned the Company $15,000 in the form of a promissory note. The note bears interest of 8% and has the term of six months, at which time all principal and interest will be paid in a balloon payment.  As of December 31, 2018, the accrued interest was $26, and the principal balance was $15,000.  See Note 5.

 

On December 31, 2018, the Company issued Kanuth, a Director, 1,000,000 shares of common stock for prior services rendered. The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $70,000.  See Note 7.

 

On December 31, 2018, the Company issued Greg Whyte, a Director, 40,000 shares of common stock for prior services rendered. The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $2,800.  See Note 7.

 

F-16

 

On December 31, 2018, the Company issued Lesley Visser, a Director, 250,000 shares of common stock for prior services rendered. The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $17,500.  See Note 7.

 

NOTE 8 – STOCKHOLDERS’ EQUITY

 

Preferred Stock

 

On February 5, 2015, the Board of Directors of the Company authorized 5,000,000 shares of preferred stock with no par value.  Each share of the preferred stock is entitled to one vote and is convertible into one share of common stock.

 

As of December 31, 2018, and 2017, the Company has no preferred stock issued and outstanding. 

 

Common Stock

 

Altitude was incorporated on May 18, 2017 under the laws of the state of Wisconsin with 100,000,000 authorized common stock with $0.001 par value. The shareholders have one vote per share of common stock.

 

After the closing of certain Stock Purchase Agreements, in private sale transaction and the Share Exchange Agreement, the Company’s common stock had no par value and is registered in New York.

 

On June 12, 2017, Altitude issued 6,102,000 shares of its common stock at par value of $0.001 per share as founder shares for future potential services from 15 individuals, including Vincent, who is the largest equity interest shareholder and the director of the Company, with a total recorded at par value of $6,102.

 

On June 27, 2017, the Company entered into a share exchange transaction with Altitude and the shareholders of Altitude. Pursuant to the terms of the Share Exchange, the Company agreed to issue 6,102,000 shares of its common stock to the individual shareholders of Altitude on a pro rata basis in exchange for receive 100% of the shares of Altitude.  Following the Share Exchange, Altitude became a wholly-owned subsidiary of the Company.  See Note 1.

 

Prior to the Share Exchange Agreement, there were 22,828,659 shares of common stock of the Company issued and outstanding, 14,700,000 of which were cancelled on June 27, 2017. As consideration for the Share Exchange Agreement, the shareholders of Altitude received a total of 6,102,000 restricted shares of the Company, proportionate to their shareholdings in Altitude.

 

On June 27, 2017, the date of closing of the Share Exchange Agreement, the Company issued 500,000 shares of its common stock to an accredited investor pursuant to a Subscription Agreement for $100,000, or $0.20 per share. Total proceed received was $87,500 after paying transaction costs of $12,500. Immediately following the Share Exchange agreement, there were 21,728,659 shares of common stock issued and outstanding and no shares of preferred stock outstanding.

 

On January 1, 2018, the Company was contractually obligated to issue its legal counsel 37,500 shares of common stock for legal work to date.  The common stock of the Company is thinly traded and had a value of $1.35 per share, therefore the Company recorded the transaction at $50,625.

 

On January 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for January 2018.  The common stock of the Company is thinly traded and had a value of $1.35 per share, therefore the Company recorded the transaction at $16,875.

 

On January 2, 2018, the Company issued 1,000,000 shares of common stock to Frost, the Company’s Chief Operating Officer, under his employment agreement.  The common stock of the Company is thinly traded and had a value of $1.35 per share, therefore the Company recorded the transaction at $1,350,000.  See Note 7.

 

On February 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for February 2018.  The common stock of the Company is thinly traded and had a value of $1.35 per share, therefore the Company recorded the transaction at $16,875.

 

On March 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for March 2018.  The common stock of the Company is thinly traded and had a value of $1.10 per share, therefore the Company recorded the transaction at $13,750. 

 

F-17

 

On April 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for April 2018.  The common stock of the Company is thinly traded and had a value of $0.51 per share, therefore the Company recorded the transaction at $6,375.

 

On May 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for May 2018.  The common stock of the Company is thinly traded and had a value of $0.10 per share, therefore the Company recorded the transaction at $1,250. 

 

On June 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for June 2018.  The common stock of the Company is thinly traded and had a value of $0.08 per share, therefore the Company recorded the transaction at $1,000. 

 

On July 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for July 2018.  The common stock of the Company is thinly traded and had a value of $0.08 per share, therefore the Company recorded the transaction at $1,000.

 

On August 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for August 2018.  The common stock of the Company is thinly traded and had a value of $0.08 per share, therefore the Company recorded the transaction at $1,000. 

 

On September 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for September 2018.  The common stock of the Company is thinly traded and had a value of $0.20 per share, therefore the Company recorded the transaction at $2,500. 

 

On October 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for October 2018.  The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $875. 

 

On November 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for November 2018.  The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $875. 

 

On December 1, 2018, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for December 2018.  The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $875. 

 

On December 31, 2018, the Company issued Kanuth, a Director, 1,000,000 shares of common stock for prior services rendered. The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $70,000.  See Note 7.

 

On December 31, 2018, the Company issued Lesley Visser, a Director, 250,000 shares of common stock for prior services rendered. The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $17,500.  See Note 7.

 

On December 31, 2018, the Company issued Greg Whyte, a Director, 40,000 shares of common stock for prior services rendered. The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $2,800. See Note 7.

 

On December 31, 2018, the Company issued Harvey Galvin 15,000 shares of common stock for prior services rendered. The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $1,050. 

 

On December 31, 2018, the Company issued Michael Horvath 25,000 shares of common stock for prior services rendered. The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $1,750. 

 

F-18

 

On December 31, 2018, the Company issued Chris Visser 25,000 shares of common stock for prior services rendered. The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $1,750. 

 

As of December 31, 2018, and 2017, the Company has 24,271,159 and 21,728,659 shares of no par common stock issued, issuable, and outstanding.

 

Stock Option Plan

 

On February 13, 2018, the Company’s shareholders and Board of Directors approved the 2017 Incentive Stock Plan.

 

NOTE 9 – INCOME TAXES

 

As of December 31, 2018, and 2017, the Company has net operating loss carry forwards of $633,524 and $290,405. The carry forward expires through the year 2038. 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 2018 and 2017), as follows:

 

   

December 31,

   

December 31,

 
   

2018

   

2017

 

Tax expense (benefit) at the statutory rate

  $ (72,055

)

  $ (60,985

)

State income taxes, net of federal income tax benefit

    (17,156

)

       

Change in valuation allowance

    89,211       60,985  

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 2018 and 2017 remains to examination by federal agencies and other jurisdictions in which it operates.

 

The tax effect of significant components of the Company’s deferred tax assets and liabilities at December 31, 2018 and 2017, are as follows:

 

   

December 31,

   

December 31,

 
   

2018

   

2017

 

Deferred tax assets:

               

Net operating loss carryforward

  $ 89,211     $ 60,985  

Timing differences

    -       -  

Total gross deferred tax assets

    89,211       60,985  

Less: Deferred tax asset valuation allowance

    (89,211

)

    (60,985

)

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 2018 and 2017 were fully offset by a 100% valuation allowance. The valuation allowance for the remaining net deferred tax assets was $89,211 and $60,985 as of December 31, 2018 and 2017, respectively.

 

F-19

 

On December 22, 2017, the United States Government passed new tax legislation that, among other provisions, will lower the corporate tax rate from 34% to 21%. In addition to applying the new lower corporate tax rate in 2018 and thereafter to any taxable income we may have, the legislation affects the way we can use and carry forward net operating losses previously accumulated and results in a revaluation of deferred tax assets recorded on our balance sheet. Given that the deferred tax assets are offset by a full valuation allowance, these changes will have no net impact on the Company’s financial position and net loss.

 

NOTE 10 – DEFERRED REVENUE

 

The Company received a retainer of $92,735 in August 2018 and $55,425 in regards to a contract with one party for a contracted revenue of $184,750. Management has determined that as of December 31, 2018, approximately forty-three percent (43%) of the contract had been realized therefore the Company recorded revenue of $78,902, leaving a deferred revenue of $68,898.

 

NOTE 11 – SUBSEQUENT EVENTS

 

On January 1, 2019, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for January 2019.  The common stock of the Company is thinly traded and had a value of $0.07 per share, therefore the Company recorded the transaction at $875. 

 

On January 25, 2019, the Company issued 250,000 options to Vincent. The options vest at a rate of 25% every six months after the grant date and expire upon termination of employment. The exercise price is $0.077.

 

On January 25, 2019, the Company issued 250,000 options to Frost. The options vest at a rate of 25% every six months after the grant date and expire upon termination of employment. The exercise price is $0.077.

 

On January 25, 2019, Vincent and Kanuth converted debt of $156,918 and $157,197, respectively, into 2,241,686 and 2,245,672 shares of common stock of the Company, respectively.

 

On February 1, 2019, the Company was contractually obligated to issue its legal counsel 12,500 shares of common stock for legal work for February 2019.  The common stock of the Company is thinly traded and had a value of $0.15 per share, therefore the Company recorded the transaction at $1,875. 

 

 

 

F-20

 

ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 

On January 24, 2019, the officers of the Company approved the dismissal of ZBS Group LLP (“ZBS”) as the Company’s independent registered public accounting firm, effective January 24, 2019.

 

On January 24, 2019, the Company approved the engagement of BF Borgers CPA, PC (“BF Borgers”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.

 

ITEM 9A. Controls and Procedures

 

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions as appropriate to allow timely decisions regarding required disclosure.  We concluded that our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act were not effective as of December 31, 2018 to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, and summarized and reported within the time periods specified in SEC rules and forms and our disclosure controls and procedures were also ineffective to ensure that the information required to be disclosed in reports that we file under the Exchange Act is accumulated and communicated to our principal executive and financial officers to allow timely decisions regarding required disclosures.

 

Management’s Annual Report on Internal Control over Financial Reporting

 

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in rule 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of the CEO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Internal controls over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records which in reasonable detail accurately and fairly reflect the transactions and disposition of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made in accordance with authorizations of management and directors of the issuer; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

 

In evaluating the effectiveness of the Company’s internal control over financial reporting as of June 30, 2017, management used the criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the criteria established by COSO, management (with the participation of the CEO and CFO) identified the following material weaknesses in the Company’s internal control over financial reporting as of June 30, 2017, which arose from the limited number of number of staff at the Company and the inability to achieve proper segregation of duties:

 

 

The Company lacked effective controls for ensuring the accuracy of reporting over significant account balances, including the review, approval, and documentation of related transactions and account reconciliations and other complex accounting procedures.

 

 

The Company lacked effective controls because their directors are not independent.

 

22

 

As a result of these material weaknesses, management concluded that the Company did not maintain effective internal control over financial reporting as of June 30, 2017, based on the criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

 

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Security and Exchange Commission that permit us to provide only management’s report in this Annual Report.

 

Limitations on the Effectiveness of Controls

 

The Company’s management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of the control system must reflect that there are resource constraints and that the benefits must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

 

Changes in Internal Control over Financial Reporting

 

Except as set forth above, there were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Attestation Report of the Registered Public Accounting Firm

 

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report on Form 10-K.

 

ITEM 9B. Other Information

 

None.

 

 

23

 

PART III

 

ITEM 10. Directors, Executive Officers and Corporate Governance

 

The following table sets forth the names, ages and positions of our board members and executive officers as of March 19, 2019:

 

Name

 

Age

 

Position

David Vincent

 

68

 

CTO

Robert Kanuth

 

71

 

CEO and Chairman

Joseph B. Frost

 

62

 

COO, Director

Lesley Visser

 

65

 

Director

Gregory Whyte

 

51

 

Director

 

Biographies of Directors and Officers

 

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

 

Robert Kanuth, Chairman and Chief Executive Officer

 

Robert Kanuth, a Harvard graduate, is an owner of Pelican Bay Suites, a hotel on Grand Bahama Island. Robert Cranston Kanuth, Jr., is a distinguished investment banker who founded and directed the highly successful Cranston Securities in the mid-1970’s. Based in his hometown of Columbus, Ohio, Bob added headquarters in Washington, D.C., while doing large scale transactions throughout the United States. The company was sold to insurance giant Kemper Corporation in 1987. He then founded Cranston Development, funding projects which restored and revitalized such cities as Richmond, VA., Savannah, GA., and Pittsburgh, PA.  A Harvard alumnus, Kanuth went on to serve in the Army National Guard before launching his compelling financial career. Kanuth is married to Hall of Fame Sportscaster Lesley Visser, a director of the Company.

 

David Peter Vincent, Director and Chief Technology Officer

 

David Vincent, a Chartered Engineer, is the pioneer of high-performance membrane technology for both altitude training and fire protection markets.  For the past thirteen years, David has been the Managing Director at Sporting Edge UK with previous senior management positions at In BT, Andrew Corporation, Scientific Atlanta Inc, and Amstrad plc.  He was educated to BSc level in Electrical and Electronic Engineering in Plymouth, England, and at 25 became one of the youngest Chartered Engineers in the country.  He has since served on Technical Committees at the British Standards Institute and has registered several patents that improve the performance of simulated altitude systems.

 

Joseph B. Frost, Director and Chief Operating Officer

 

Joseph Frost has extensive experience in the areas of client development and management, project development and coordination. Over the past 35 years, Mr. Frost has created and worked with teams of professionals focused on the development of tools and processes to reduce development risks for his clients by reducing technical gaps, improving communications between the owner, consultants and contractors with the ultimate goal of delivering a higher value product and better speed to market.

 

Lesley Visser, Director

 

Lesley Visser is one of the most highly acclaimed female sportscasters of all-time. Her long and prestigious trailblazing career has seen her as the first and only woman to be recognized by the Pro Football Hall of Fame as the 2006 recipient of the Pete Rozelle Radio-Television Award, which recognizes “long-time exceptional contributions to radio and television in professional football.” Visser has been honored with the Compass Award for “changing the paradigm of her business” and was one of the 100 luminaries commemorating the 75th anniversary of the CBS Television Network in 2003. She was named “WISE Woman of the Year” in 2002 and voted the “Outstanding Women’s Sportswriter in America” in 1983 and won the “Women’s Sports Foundation Award for Journalism” in 1992. In 1999 she won the first AWSM Pioneer Award. Visser earned her bachelor’s degree in English from Boston College and received an honorary doctorate of Journalism from her alma mater in May 2007. Lesley Visser is married to Robert Kanuth, a director of the Company.

 

 

24

 

Greg Whyte

 

Mr. Whyte is a well-known authority on Exercise Physiology and Sports and Exercise Performance. An internationally recognized expert in the field, Greg has extensive professional experience assessing, treating and improving the performance of patients, sporting enthusiasts and athletes. 

 

Indemnification of Directors and Officers

 

Our directors and officers are indemnified as provided by the New York Business Corporation Law (“Section 722”) and our bylaws.  We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.  In the event of a claim for indemnification against such liabilities is asserted by one of our directors, executive officers or controlling persons, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction.  We will then be governed by the court’s decision.

 

Director Compensation

 

During the period ended December 31, 2018, we had no independent directors.

 

Involvement on Certain Material Legal Proceedings During the Last Five Years

 

No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations.

 

No bankruptcy petitions have been filed by or against any business or property of any director, officer, significant employee or consultant of the Company nor has any bankruptcy petition been filed against a partnership or business association where these persons were general partners or executive officers.

 

No director, officer, significant employee or consultant has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities.

 

No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law.

 

Directors’ and Officers’ Liability Insurance

 

The Company maintains directors’ and officers’ liability insurance insuring our directors and officers against liability for acts or omissions in their capacities as directors or officers.

 

Code of Ethics

 

We intend to adopt a code of ethics that applies to our officers, directors and employees, including our principal executive officer and principal accounting officer, but have not done so to date due to our relatively small size. We intend to adopt a written code of ethics in the near future.

  

Corporate Governance & Board Independence

 

Our Board of Directors consists of three directors and has not established a Nominating or Governance Committees as standing committees. The Board does not have an executive committee or any committees performing a similar function. We are not currently listed on a national securities exchange or in an inter-dealer quotation system that has requirements that a majority of the board of directors be independent.

 

Due to our lack of operations and size, and since we are not currently listed on a national securities exchange, we are not subject to any listing requirements mandating the establishment of any particular committees; all functions of a nominating/governance committee were performed by our whole board of directors. Our board of directors intends to appoint such persons and form such committees as are required to meet the corporate governance requirements imposed by the national securities exchanges as necessary. Our board of directors does not believe that it is necessary to have such committees at the early stage of the company’s development, and our board of directors believes that the functions of such committees can be adequately performed by the members of our board of directors.

 

25

 

We believe that members of our board of directors are capable of analyzing and evaluating our consolidated financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date.

 

Board Leadership Structure

 

The Board of Directors is led by the Chairman. The Board believes its current leadership structure best serves the objectives of the Board’s oversight of management, the Board’s ability to carry out its roles and responsibilities on behalf of the Company’s shareholders, and the Company’s overall corporate governance. The Board periodically reviews the leadership structure to determine whether it continues to best serve the Company and its shareholders.

 

Audit Committee and Financial Expert; Committees

 

The Company does not have an audit committee. We are not a “listed company” under SEC rules and are therefore not required to have an audit committee comprised of independent directors.

 

The Company has no nominating or compensation committees at this time. The entire Board participates in the nomination and audit oversight processes and considers executive and director compensation. Given the size of the Company and its stage of development, the entire Board is involved in such decision-making processes. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors.

 

Family relationships

 

Other than the relationship between two of our directors, Lesley Visser and Robert Kanuth, who are married, there are no family relationships among any of our officers or directors.

 

Current Management

 

Robert Kanuth was appointed as the Chief Executive Officer of the Company on January 25, 2019. David Vincent was appointed the Chief Technology Officer on January 25, 2019. Joseph B. Frost was appointed as the Chief Operating Officer effective as of January 8, 2018. The biographies of all executives are contained herein.

 

ITEM 11. Executive Compensation

  

Summary Compensation Table

 

The table below sets forth, for our last two fiscal years, the compensation earned by our officers.

 

                                       

All

         
   

Fiscal

 

Salary

           

Stock

   

Option

   

Other

         

Name and Principal Position

 

Year

 

Paid

   

Bonus

   

Awards

   

Awards

   

Compensation

   

Total

 
        ($)     ($)     ($)     ($)     ($)     ($)  

David Vincent, CEO (a)

 

2018

    0       0       0       0       0       0  
   

2017

    0       0       0       0       0       0  
                                                     

Joseph B. Frost, COO (b)

 

2018

    125,000       0       1,350,000       0       0       1,475,000  
   

2017

    0       0       0       0       0       0  
                                                     
Robert Kanuth, CEO (c)   2018     0       0       70,000       0       0       70,000  

 

 

(a)

Appointed as CEO June 2017 and resigned January 2019. Appointed as CTO January 2019.

 

(b)

Appointed as COO January 2018.

 

(c)

Appointed as CEO January 2019.

 

26

 

We have no pension, health, annuity, bonus, insurance, profit sharing or similar benefit plans. As of March 19, 2018, we have a stock option plan.

 

Employment Agreements

 

The Company has an employment agreement with Joseph B. Frost, its Chief Operating Officer, which provides for an annual salary of $125,000 plus 1,000,000 shares of common stock. The employment contract also has customary provisions for other benefits and includes non-competition and non-solicitation clauses. The employment agreement was entered into November 8, 2017, effective January 1, 2018, and constitutes an “at will” employment arrangement, and may be terminated by either Frost or the Company upon two months written notice if without cause.

 

The Company has no other formal employment agreements.

 

Outstanding Equity Awards

 

There were no equity awards made to any named executive officer that were outstanding at December 31, 2018. 

 

Director Compensation

 

On January 25, 2019, Mr. Kanuth, Ms. Visser and Mr. Whyte received shares of common stock for their service as directors of the Company.

 

Change-in-Control Agreements

 

Following the issuance of shares as set forth in Item 5 as described herein, and after the closing of a certain Settlement Agreement and Release of Claims entered into by and between Kanuth and Vincent, and the transfer of 4,350,000 restricted shares of common stock from Vincent to Kanuth, a change of control of the Company occurred and Mr. Vincent no longer owns more than 50% of the common shares of the Company.

 

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

Security Ownership of Certain Beneficial Owners

 

The following table lists, as of March 19, 2019 the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using beneficial ownership’ concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

 

The percentages below are calculated based on 28,758,517 shares of our common stock issued and outstanding as of March 19, 2019. We do not have any outstanding options, or other securities exercisable for or convertible into shares of our common stock. Unless otherwise indicated, the address of each person listed is c/o Altitude International, Inc., 515 E. Olas Blvd., Suite 120, Fort Lauderdale, FL 33301.

 

Name and Address of Beneficial Owner

 

Title of
Class

 

Amount and Nature

of Beneficial Ownership (1)

   

Percent of
Class (2)

 

David Vincent

 

Common Stock

    9,241,686       32.135

%

Amy Freedman

 

Common Stock

    2,900,000       10.084

%

Lesley Visser (3)

 

Common Stock

    275,000       0.956

%

Joseph B. Frost

 

Common Stock

    1,000,000       3.477

%

Robert Kanuth (3)

 

Common Stock

    7,645,672       26.586

%

Greg Whyte

 

Common Stock

    65,000       0.226

%

 

 

27

 

1.

The number and percentage of shares beneficially owned is determined under the rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.

   

2.

SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days.  Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person.  Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person.  At the present time there are no outstanding options or warrants.

   

3.

Ms. Visser and Mr. Kanuth are married. Therefore, their shareholdings are aggregated and each is determined to own 7,895,672 shares of common stock in the Company, or 27.46% of the class of common stock.

 

ITEM 13. Certain Relationships and Related Transactions, and Director Independence

 

Director Independence

 

Our securities are not listed on a national securities exchange or on any inter-dealer quotation system which has a requirement that a majority of directors be independent. Our board of directors has undertaken a review of the independence of each director by the standards for director independence set forth in the NASDAQ Marketplace Rules. Under these rules, a director is not considered to be independent if he or she also is an executive officer or employee of the corporation. Our board of directors has determined that the Company does not have any independent directors.

 

ITEM 14. Principal Accountant Fees and Services

 

Audit Fees

 

The Company engaged BF Borgers CPA, PC (“BF Borgers”) as our independent registered public accounting firm on January 24, 2019. The audit fees for December 31, 2018 were approximately $15,000. The Company engaged ZBS Group LLP (“ZBS”) as our independent registered public accounting firm since December 24, 2014 through January 24, 2019.  During the period ended December 31, 2017, ZBS billed us audit fees of approximately $8,000.

 

Audit-Related Fees

 

The aggregate fees billed in each of the last two fiscal years for assurance and related services by BF Borgers and ZBS that are reasonably related to the performance of the audit or review of our consolidated financial statements including our quarterly interim reviews on Form 10-Q and are reported under Audit Fees above.

 

Tax Fees

 

BF Borgers and ZBS did not charge us any tax fees for the year ended December 31, 2018 and 2017, respectively.

 

All Other Fees

 

BF Borgers has not billed any other fees since their engagement on January 24, 2019. ZBS has not billed any other fees since their engagement on December 24, 2014 through January 24, 2019.

 

 

 

28

 

PART IV

 

ITEM 15. Exhibits, Financial Statement Schedules.

 

Exhibits

 

See the Exhibit Index following the signature page of this Registration Statement, which Exhibit Index is incorporated herein by reference.

 

Exhibit

 

 

Number

 

Description

3.1

 

Articles of Incorporation (incorporated by reference from the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 19, 2016).

3.1.1

 

Amended Articles of Incorporation (incorporated by reference from the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 19, 2016).

3.1.2

 

Articles of Incorporation of Altitude International (incorporated by reference to the form 8-K filed by the Company on July 3, 2017).

3.2

 

Amended Articles of Incorporation (incorporated by reference from the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on January 19, 2016).

10.1

 

Share Exchange Agreement (incorporated by reference from the form 8-K filed by the Company on July 3, 2017).

10.2

 

Licensing Agreement (incorporated by reference from the form 8-K filed by the Company on July 3, 2017).

10.3

 

Sole Distribution Agreement (incorporated by reference from the form 8-K filed by the Company on July 3, 2017).

31.1

 

Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

 

Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

 

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

 

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 INS

 

XBRL Instance Document

101 SCH

 

XBRL Taxonomy Extension Schema Document

101 CAL

 

XBRL Taxonomy Calculation Linkbase Document

101 DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

101 LAB

 

XBRL Taxonomy Labels Linkbase Document

101 PRE

 

XBRL Taxonomy Presentation Linkbase Document

 

 

 

 

29

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

By:  /s/ Robert Kanuth             

Robert Kanuth

Principal Executive Officer and Principal Financial and Accounting Officer

 

Dated: March 29, 2019

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

Name

 

Title

 

Date

 

 

 

 

 

/s/ Robert Kanuth

 

Chairman

 

March 29, 2019

Robert Kanuth

 

 

 

 

 

 

 

 

 

/s/ David Vincent

 

Director

 

March 29, 2019

David Vincent

 

 

 

 

 

 

 

 

 

/s/ Lesley Visser

 

Director

 

March 29, 2019

Lesley Visser

 

 

 

 

 

 

 

 

 

/s/ Joseph B. Frost

 

Director

 

March 29, 2019

Joseph B. Frost

 

 

 

 

         

/s/ Greg Whyte

 

Director

 

March 29, 2019

Greg Whyte

 

 

 

 

 

 

 

 

 

 

 

30