10-K 1 form10k.htm FORM 10-K Hammer Technology Holdings: Form 10-K - Filed by newsfilecorp.com
NV http://fasb.org/us-gaap/2023#StraightLineDepreciationMethodMember P10Y 0001539680 FY false false false 0001539680 2022-08-01 2023-07-31 0001539680 hmmr:TalosVictoryFundLlcMember hmmr:FirstWarrantMember 2022-02-17 0001539680 hmmr:TalosVictoryFundLlcMember hmmr:SecondWarrantMember 2022-02-17 0001539680 hmmr:MastHillFundLPMember hmmr:FirstWarrantMember 2022-02-11 0001539680 hmmr:MastHillFundLPMember hmmr:SecondWarrantMember 2022-02-11 0001539680 hmmr:CalviElectricVHammerFiberOpticsInvLtdMember 2021-08-01 2022-07-31 0001539680 hmmr:CrossRiverFiberVHammerFiberOpticsInvLtdMember 2021-08-01 2022-07-31 0001539680 hmmr:CrossRiverFiberMember 2022-08-01 2023-07-31 0001539680 hmmr:HorizonBlueCrossVHammerFiberOpticsInvLtdMember 2021-08-01 2022-07-31 0001539680 hmmr:MastHillFundLPMember hmmr:SecuritiesPurchaseAgreementMember 2022-02-11 0001539680 hmmr:MastHillFundLPMember hmmr:SecuritiesPurchaseAgreementMember 2022-02-01 2022-02-11 0001539680 hmmr:MastHillFundLPMember hmmr:FirstWarrantMember hmmr:SecuritiesPurchaseAgreementMember 2022-02-11 0001539680 hmmr:MastHillFundLPMember hmmr:SecondWarrantMember hmmr:SecuritiesPurchaseAgreementMember 2022-02-11 0001539680 hmmr:MastHillFundLPMember 2022-02-01 2022-02-11 0001539680 hmmr:MastHillFundLPMember 2022-02-11 0001539680 hmmr:TalosVictoryFundLlcMember hmmr:SecuritiesPurchaseAgreementMember 2022-02-17 0001539680 hmmr:TalosVictoryFundLlcMember hmmr:SecuritiesPurchaseAgreementMember 2022-02-01 2022-02-17 0001539680 hmmr:TalosVictoryFundLlcMember hmmr:FirstWarrantMember hmmr:SecuritiesPurchaseAgreementMember 2022-02-17 0001539680 hmmr:TalosVictoryFundLlcMember hmmr:SecondWarrantMember hmmr:SecuritiesPurchaseAgreementMember 2022-02-17 0001539680 hmmr:TalosVictoryFundLlcMember hmmr:SecuritiesPurchaseAgreementMember 2022-09-25 2022-10-04 0001539680 hmmr:RelatedPartyOneMember 2023-07-31 0001539680 hmmr:RelatedPartyTwoMember 2023-07-31 0001539680 hmmr:RelatedPartyThreeMember 2023-07-31 0001539680 hmmr:RelatedPartyFourMember 2023-07-31 0001539680 hmmr:RelatedPartyFiveMember 2023-07-31 0001539680 hmmr:RelatedPartySixMember 2023-07-31 0001539680 hmmr:RelatedPartySevenMember 2023-07-31 0001539680 2023-07-31 0001539680 hmmr:PromissoryNoteIssuedElevenMember us-gaap:SubsequentEventMember 2023-11-06 0001539680 hmmr:PromissoryNoteIssuedEightMember us-gaap:SubsequentEventMember 2023-12-04 0001539680 hmmr:PromissoryNoteIssuedNineMember us-gaap:SubsequentEventMember 2023-12-13 0001539680 hmmr:PromissoryNoteIssuedMember us-gaap:SubsequentEventMember 2023-08-08 0001539680 hmmr:PromissoryNoteIssuedOneMember us-gaap:SubsequentEventMember 2023-08-31 0001539680 hmmr:PromissoryNoteIssuedTwoMember us-gaap:SubsequentEventMember 2023-09-22 0001539680 hmmr:PromissoryNoteIssuedThreeMember us-gaap:SubsequentEventMember 2023-10-17 0001539680 hmmr:PromissoryNoteIssuedFourMember us-gaap:SubsequentEventMember 2023-10-24 0001539680 hmmr:PromissoryNoteIssuedFiveMember us-gaap:SubsequentEventMember 2023-11-03 0001539680 hmmr:PromissoryNoteIssuedSixMember us-gaap:SubsequentEventMember 2023-11-06 0001539680 hmmr:PromissoryNoteIssuedSevenMember us-gaap:SubsequentEventMember 2023-12-01 0001539680 hmmr:PromissoryNoteIssuedTenMember us-gaap:SubsequentEventMember 2023-12-28 0001539680 us-gaap:SubsequentEventMember 2023-08-01 0001539680 hmmr:PromissoryNoteIssuedEightMember us-gaap:SubsequentEventMember 2024-01-29 0001539680 hmmr:MastHillFundLPMember us-gaap:SubsequentEventMember 2023-08-01 2023-08-23 0001539680 hmmr:MastHillFundLPMember 2023-03-01 2023-03-06 0001539680 hmmr:MastHillFundLPMember 2023-07-31 0001539680 us-gaap:ComputerEquipmentMember 2023-07-31 0001539680 2021-08-01 2022-07-31 0001539680 2023-01-31 0001539680 2024-02-14 0001539680 us-gaap:FurnitureAndFixturesMember 2023-07-31 0001539680 us-gaap:OtherMachineryAndEquipmentMember 2023-07-31 0001539680 us-gaap:LeaseholdsAndLeaseholdImprovementsMember 2023-07-31 0001539680 us-gaap:FairValueMeasurementsRecurringMember 2023-07-31 0001539680 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2023-07-31 0001539680 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2023-07-31 0001539680 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2023-07-31 0001539680 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2022-07-31 0001539680 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2022-07-31 0001539680 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2022-07-31 0001539680 us-gaap:FairValueMeasurementsRecurringMember 2022-07-31 0001539680 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2022-08-01 2023-07-31 0001539680 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-08-01 2022-07-31 0001539680 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-07-31 0001539680 2022-07-31 0001539680 hmmr:GreenboxCapitalMember hmmr:FinancingAgreementMember 2023-03-20 0001539680 hmmr:GreenboxCapitalMember hmmr:FinancingAgreementMember 2023-07-31 0001539680 hmmr:GreenboxCapitalMember hmmr:FinancingAgreementMember 2023-03-01 2023-03-20 0001539680 hmmr:ForwardFinancingMember hmmr:FinancingAgreementMember 2021-02-26 0001539680 hmmr:ForwardFinancingMember hmmr:FinancingAgreementMember 2022-11-16 0001539680 hmmr:ForwardFinancingMember hmmr:FinancingAgreementMember 2023-07-31 0001539680 us-gaap:RetainedEarningsMember 2021-08-01 2022-07-31 0001539680 us-gaap:TreasuryStockCommonMember 2021-08-01 2022-07-31 0001539680 us-gaap:AdditionalPaidInCapitalMember 2021-08-01 2022-07-31 0001539680 us-gaap:RetainedEarningsMember 2022-08-01 2023-07-31 0001539680 us-gaap:RetainedEarningsMember 2022-07-31 0001539680 us-gaap:AdditionalPaidInCapitalMember 2022-07-31 0001539680 us-gaap:TreasuryStockCommonMember 2022-07-31 0001539680 us-gaap:CommonStockMember 2022-07-31 0001539680 us-gaap:CommonStockMember 2023-07-31 0001539680 us-gaap:TreasuryStockCommonMember 2023-07-31 0001539680 us-gaap:AdditionalPaidInCapitalMember 2023-07-31 0001539680 us-gaap:RetainedEarningsMember 2023-07-31 0001539680 us-gaap:CommonStockMember 2021-07-31 0001539680 us-gaap:TreasuryStockCommonMember 2021-07-31 0001539680 us-gaap:AdditionalPaidInCapitalMember 2021-07-31 0001539680 us-gaap:RetainedEarningsMember 2021-07-31 0001539680 2021-07-31 0001539680 us-gaap:CommonStockMember 2021-08-01 2022-07-31 0001539680 us-gaap:AdditionalPaidInCapitalMember 2022-08-01 2023-07-31 0001539680 us-gaap:TreasuryStockCommonMember 2022-08-01 2023-07-31 0001539680 us-gaap:CommonStockMember 2022-08-01 2023-07-31 0001539680 2016-08-01 2017-07-31 0001539680 hmmr:HammerFiberOpticsInvestmentsLtdMember 2022-08-01 2023-07-31 0001539680 hmmr:HammerWirelessSlLtdMember 2022-08-01 2023-07-31 0001539680 hmmr:FirstPointCommunicationsLlcMember 2022-08-01 2023-07-31 0001539680 hmmr:TalosVictoryFundLlcMember 2022-10-01 2022-10-04 0001539680 hmmr:TalosVictoryFundLlcMember 2022-10-04 0001539680 hmmr:MastHillFundLPMember 2023-03-01 2023-03-23 0001539680 hmmr:SynergyFinanceMember 2022-08-01 2023-07-31 0001539680 hmmr:ForwardFinancingMember 2022-08-01 2023-07-31 0001539680 hmmr:MastHillFundLPMember 2022-08-01 2023-07-31 0001539680 hmmr:EndstreamCommunicationsLlcMember 2022-08-01 2023-07-31 0001539680 srt:ScenarioPreviouslyReportedMember 2022-07-31 0001539680 srt:RestatementAdjustmentMember 2022-07-31 0001539680 srt:ScenarioPreviouslyReportedMember 2021-08-01 2022-07-31 0001539680 srt:RestatementAdjustmentMember 2021-08-01 2022-07-31 0001539680 srt:ScenarioPreviouslyReportedMember 2021-07-31 0001539680 srt:MaximumMember us-gaap:NoteWarrantMember 2022-07-31 0001539680 us-gaap:NoteWarrantMember 2021-08-01 2022-07-31 0001539680 us-gaap:NoteWarrantMember 2022-02-01 2022-02-28 0001539680 srt:MinimumMember us-gaap:NoteWarrantMember 2022-02-28 0001539680 srt:MaximumMember us-gaap:NoteWarrantMember 2022-02-28 0001539680 srt:MinimumMember us-gaap:NoteWarrantMember 2022-07-31 0001539680 us-gaap:NoteWarrantMember 2022-02-28 0001539680 hmmr:TanarisPowerHoldingsIncMember hmmr:ShareExchangeAgreementMember 2015-02-02 0001539680 hmmr:TanarisPowerHoldingsIncMember hmmr:ShareExchangeAgreementMember 2015-01-26 2015-02-02 0001539680 hmmr:HammerFiberOpticsInvestmentsLtdMember hmmr:TanarisPowerHoldingsIncMember hmmr:ShareExchangeAgreementMember 2016-04-01 2016-04-25 0001539680 hmmr:HammerFiberOpticsInvestmentsLtdMember hmmr:TanarisPowerHoldingsIncMember hmmr:ShareExchangeAgreementMember 2016-04-01 2016-04-13 0001539680 hmmr:TelecomFinancialServicesLimitedMember hmmr:ShareExchangeAgreementMember 2021-10-25 0001539680 hmmr:PromissoryNoteMember 2021-02-26 0001539680 hmmr:PromissoryNoteMember 2021-03-09 0001539680 hmmr:PromissoryNoteMember 2021-03-15 0001539680 hmmr:PromissoryNoteMember 2021-02-01 2021-02-26 0001539680 us-gaap:ConvertibleNotesPayableMember srt:ChiefExecutiveOfficerMember 2020-04-20 0001539680 us-gaap:ConvertibleNotesPayableMember srt:ChiefExecutiveOfficerMember 2020-05-05 0001539680 us-gaap:ConvertibleNotesPayableMember srt:ChiefExecutiveOfficerMember 2020-05-01 2020-05-12 0001539680 us-gaap:ConvertibleNotesPayableMember hmmr:SpouseOfChiefExecutiveOfficerMember 2018-02-12 0001539680 us-gaap:ConvertibleNotesPayableMember hmmr:SpouseOfChiefExecutiveOfficerMember 2019-08-01 2020-07-31 0001539680 hmmr:PromissoryNoteMember hmmr:RelatedPartyOneMember 2019-08-24 0001539680 hmmr:PromissoryNoteMember hmmr:RelatedPartyTwoMember 2019-08-24 0001539680 hmmr:StockPurchaseAgreementMember 2020-08-01 2020-08-15 0001539680 hmmr:StockPurchaseAgreementMember 2020-03-01 2020-03-17 0001539680 hmmr:StockPurchaseAgreementMember 2020-03-01 2020-03-26 0001539680 hmmr:PromissoryNoteMember 2020-09-01 0001539680 hmmr:PromissoryNoteMember 2020-08-31 2020-09-01 0001539680 hmmr:PromissoryNoteMember 2020-11-23 0001539680 hmmr:PromissoryNoteMember 2021-01-19 0001539680 hmmr:PromissoryNoteMember 2020-11-01 2020-11-23 0001539680 hmmr:PromissoryNoteMember 2021-01-01 2021-01-19 0001539680 hmmr:PromissoryNoteMember 2022-01-15 0001539680 hmmr:PromissoryNoteMember 2021-12-28 0001539680 hmmr:PromissoryNoteMember 2022-01-12 0001539680 hmmr:PromissoryNoteMember 2022-01-21 0001539680 hmmr:PromissoryNoteMember 2022-03-07 0001539680 hmmr:PromissoryNoteMember 2022-02-28 0001539680 hmmr:PromissoryNoteMember 2022-07-28 0001539680 hmmr:PromissoryNoteMember 2022-06-22 0001539680 hmmr:PromissoryNoteMember 2022-11-14 0001539680 hmmr:PromissoryNoteMember 2023-03-29 0001539680 hmmr:PromissoryNoteMember 2023-05-05 0001539680 hmmr:PromissoryNoteMember 2023-05-23 0001539680 hmmr:PromissoryNoteMember 2023-06-07 0001539680 hmmr:PromissoryNoteMember 2023-06-13 0001539680 hmmr:PromissoryNoteMember 2023-07-06 xbrli:pure xbrli:shares iso4217:USD iso4217:USD xbrli:shares

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended July 31, 2023

Commission file number 000-1539680

HAMMER FIBER OPTICS HOLDINGS CORP

(Exact name of registrant as specified in its charter)

NEVADA 98-1032170
(State of Other Jurisdiction (I.R.S. Employer Identification No.)
Of Incorporation of Organization)  

6151 Lake Osprey Drive

Sarasota, FL 34240

941-306-3019

(Address, including zip code, and telephone number, including area code,

of registrant's principal executive offices)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [  ] No [X]

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 [X] 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 [X] No [  ]

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


Large Accelerated Filer [  ] Accelerated Filer [  ]    
           
Non-Accelerated Filer [X] Smaller Reporting Company [X] Emerging Growth Company [ ]

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  [ ]

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

The aggregate market value of the voting common stock held by non-affiliates of the registrant as of January 31, 2023, was approximately $24,831,415 (based upon the $0.40 closing price for shares of the registrant's common stock as reported by the OTCQB on January 31, 2023, the last trading day of the registrant's most recently completed fourth fiscal quarter). The registrant does not have non-voting common stock outstanding. As of February 14, 2024, there were 62,680,947 shares outstanding.

1


EXPLANTORY NOTE

This Form 10K for our year ended July 31, 2023 and 2022 is audited as recommended under AS 4105 as approved by the US Securities and Exchange Commission. The changes to the July 31, 2022 report are as follows:

1. Financing expense associated with the two convertible notes have been accrued and amortized instead of expensed in accordance with ASC 470.

2. Warrants issued in conjunction with two convertible notes have been valued in accordance with ASC 820-10 as clarified by ASU 2022-03.

3. The Statement of Operations, Balance Sheet and Statement of Cash Flows has been adjusted to reflect the change in warrant financing expenses and expenses associated with the convertible notes. Adjustments to the fair value of the warrants has been reflected as other income.

4. Item 2: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been modified to reflect the change in warrant financing expenses and expenses associated with the convertible notes.

5. Certain intellectual property (platform software) for the HammerPay subsidiary has been reclassified as an intangible asset.


Table of Contents

to Annual Report on Form 10-K

For the Fiscal Year Ended July 31, 2023

PART I    
Item 1. Business 3
Item 1A. Risk Factors 5
Item 1B. Unresolved Staff Comments 11
Item 2. Properties 11
Item 3. Legal Proceedings 11
Item 4. RESERVED 11
     
PART II    
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 12
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 13
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 16
Item 8. Financial Statements and Supplementary Data 16
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 17
Item 9A(T). Controls and Procedures 17
Item 9B. Other Information 18
     
PART III    
Item 10. Directors, Executive Officers, and Corporate Governance 19
Item 11. Executive Compensation 22
Item 12. Certain Relationships and Related Transactions, and Director Independence 23
Item 13. Principal Accounting Fees and Services 24
     
PART IV    
Item 14. Exhibits and Financial Statement Schedules 25
     
SIGNATURES   26
 

2


PART I

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "believe," "expect," "anticipate," "intend," "estimate," "may," "should," "could," "will," "plan," "future," "continue, "and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by any forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things:

 risk that general economic and business conditions, both nationally and in our markets, may change substantially, or sufficiently to change or impact our business,

 risk that our expectations and estimates concerning future financial performance, financing plans and the impact of competition,

 risk in our ability to implement our growth strategy,

 risk anticipated trends in our business,

 risk that we will not be able to remediate identified material weaknesses in our internal control over financial reporting and disclosure controls and procedures,

 risk that we fail to meet the requirements of the agreements under which we acquired our business interests, including any cash payments to the business operations, which could result in the loss of our right to continue to operate or develop the specific businesses described in the agreements,

 risk that we cannot attract, retain and motivate qualified personnel, particularly employees, consultants and contractors for our operations

 risks related to tax assessments

 advances in technologies, and

 other risk factors set forth herein.

In addition, in this report, we use words such as "anticipates," "believes," "plans," "expects," "future," "intends," and similar expressions to identify forward-looking statements. As used in this current report, the terms "we", "us", "our" and the "company" refer to Hammer Fiber Optics Holdings Corp.

We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this Annual Report on Form 10K. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

3


ITEM 1. BUSINESS

Our Corporate History and Background

The Company was incorporated in the State of Nevada on September 23, 2010, under the name Recursos Montana S.A. The Company's principal activity was as a pre-exploration stage company engaged in the acquisition and exploration of mineral properties then owned by the Company. During this time, the Company was deemed a "shell company" in the pre-exploration stage and was ultimately unable to commence exploration activities.

On February 2, 2015, the Company entered into a Share Exchange Agreement with Tanaris Power Holdings, Inc., whereby the Company acquired 100% of Tanaris Power Holdings, Inc. issued and outstanding common stock in exchange for shares of the Company's common stock equal 51% of the issued and outstanding common stock and cash consideration to Tanaris in the aggregate amount of $350,000. Tanaris Power Holdings, Inc. was the owner of certain rights in connection with the marketing and sale of smart lithium-ion batteries and battery technologies for various industrial vehicles markets and related applications. On March 6, 2015, the Company amended its Articles of Incorporation to change its name to Tanaris Power Holdings, Inc.

On April 25, 2016, Tanaris Power Holdings, Inc., a Nevada corporation entered into a Share Exchange Agreement (the "Share Exchange Agreement") with Hammer Fiber Optics Investments, Ltd., a Delaware corporation ("HFOI"), and the controlling stockholders of HFOI (the "HFOI Shareholders"). Pursuant to the Share Exchange Agreement, the Company acquired 20,000,000 shares of common stock of HFOI from the HFOI shareholders (the "HFOI Shares") and in exchange the Company issued to the HFOI Shareholders 50,000,000 (post-Merger) restricted shares of its common stock (the "HMMR Shares"). As a result of the Share Exchange Agreement, HFOI became a wholly owned subsidiary of the Company. Hammer Fiber Optics Investments, Ltd. was formed in the State of Delaware on June 13, 2014.

On April 13, 2016, our board of directors approved a Plan of Merger (the "Plan of Merger") under Nevada Revised Statutes (NRS) Section 92A.180 to merge (the "Merger") with our wholly-owned subsidiary Hammer Fiber Optics Holdings Corp., a Nevada corporation, to effect a name change from Tanaris Power Holdings, Inc. to Hammer Fiber Optics Holdings Corp. The transaction was accounted for as a reverse merger. The Plan of Merger also provided for a 1 for 1,000 exchange ratio for shareholders of both the Company and Hammer Fiber Optics Holdings Corp., which had the effect of a 1 for 1,000 reverse split of our common stock. Articles of Merger were filed with the Secretary of State of Nevada on April 13, 2016 and, on April 14, 2016, this corporate action was submitted to FINRA for its review and approval.

On May 3, 2016, the Financial Industry Regulatory Authority ("FINRA") approved the merger with our wholly-owned subsidiary, Hammer Fiber Optics Holdings Corp. Accordingly, thereafter the Company's name was changed and our shares of common stock began trading on the Over the Counter Bulletin Board (OTCBB) under our new ticker symbol "HMMR" as of May 27, 2016.

On September 11, 2018, our board of directors approved stock purchase agreements with 1stPoint Communications LLC and its subsidiaries, Endstream Communications LLC, Open Data Centers LLC and Shelcomm Inc. for the acquisition of all of the equity of the entities. 1stPoint and its subsidiaries possess CLEC licenses in Florida, New York State, and a nationwide CMRS (Commercial Mobile Radio Services) license. The companies operate a data center facility in Piscataway, New Jersey. The acquisition of 1stPoint Communications, LLC, Open Data Centers, LLC and Shelcomm, Inc. closed on November 1, 2018. The acquisition of Endstream Communications, LLC closed on December 17, 2018. On January 29, 2019 our board of directors approved a stock purchase agreement with American Network, Inc to acquire all of its equity. The acquisition of American Network, Inc closed on September 1, 2019.

4


As of April 30, 2020 our board of directors approved the discontinuation of the operations of Open Data Centers LLC. The operations of Open Data Centers, LLC were discontinued effective April 30, 2020 and the Company shut down its operations in its Piscataway, NJ data center.

On October 19, 2021 our board of directors approved a name change from Hammer Fiber Optics Holdings Corp to Hammer Technology Holdings Corp.

On October 25, 2021 our board of directors approved a share exchange agreement with Telecom Financial Services Limited ("TFS") for the acquisition one hundred percent (100%) of its stock. TFS owns the intellectual property critical to the operations of the company's financial technology business unit as well as certain key supplier, marketing and operating agreements. The acquisition of TFS closed on January 3, 2022. TFS has been renamed HammerPay [USA] Ltd.

On July 31, 2023 our board of directors approved the discontinuation of the operations of Hammer Wireless (SL) Limited, the company's data communications service in Sierra Leone. The operations were discontinued in March 2020 and all assets have been written down.

Current Operations

Hammer Fiber Optics Holdings Corp (OTCPK:HMMR) is a company focused on sustainable shareholder value investing in both financial services technology and wireless telecommunications infrastructure.

Hammer's financial technologies business is focused on providing digital stored value technology via its HammerPay mobile payments platform to enable digital commerce between consumers and branded merchants across the developing world, ensuring Swift, Safe and Secure encrypted remittances and banking transactions.

Hammer's "Everything Wireless" go to market strategy for its telecommunications business includes the development of high speed fixed wireless service for residential, small business and enterprise clients using its wireless fiber platform, Hammer Wireless AIR®, mobility networks including 4G5G//LTE, Over-the-Top services such as voice, SMS and collaboration services and hosting services.

Employees

We currently have eighteen employees, fifteen of which are full time employees and three are part time.

ITEM 1A. RISK FACTORS

You should carefully consider each of the risks and uncertainties described below and elsewhere in this Annual Report on Form 10-K, as well as any amendments or updates reflected in subsequent filings with the SEC. We believe these risks and uncertainties, individually or in the aggregate, could cause our actual results to differ materially from expected and historical results and could materially and adversely affect our business operations, results of operations, financial condition and liquidity. Further, additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our results and business operations.

5


Risks Associated with Our Business

Our operations and financial performance could be negatively impacted, if the markets for our products do not develop and expand as we anticipate.

The markets for our products and services are characterized by rapidly changing technologies, evolving industry or regulatory standards and new product introductions. Our success is dependent on the successful introduction of new products and services, or upgrades of current products and services, and our ability to compete with new technologies. The following factors related to our products, services and markets, if they do not continue as in the recent past, could have an adverse impact on our operations:

 our ability to source critical materials such as optical fiber and cable and hardware and equipment, at competitive prices;

 our ability to develop new products in response to government regulations and laws;

 our ability to secure and retain adequate spectrum to facilitate ongoing operations and deployment of our services beyond our present geographic footprint.

We rely on contract manufacturing of our products. Our inability to secure production sources meeting our quality, cost, working conditions and other requirements, or failures by our contractors to perform, could harm our sales and reputation.

We source many of our materials from international manufacturers. As a result, we must locate and secure production that meets our demands. We depend on our manufacturers to maintain adequate financial resources and maintain sufficient development and manufacturing capacity. We do not have material long-term contracts with any of our manufacturers, and these manufacturers generally may unilaterally terminate their relationship with us at any time. Our dependence on contract manufacturers could subject us to a number of risks if these manufacturers do not meet our quality, cost, working conditions and other requirements or if they fail to materially perform, any of which could seriously harm our sales and reputation. Further, if we need to place greater demands on our current manufacturers due to increased customer demands, or seek additional or replacement manufacturers, we may be unable to do so on terms that are acceptable to us, if at all.

Violation of labor laws and practices by our manufacturers and suppliers could harm our business.

We require our manufacturers and suppliers to operate in compliance with applicable laws and regulations. While the Company promotes ethical business practices, we do not control our manufacturers or suppliers or their labor practices. The violation of labor or other laws by any of our manufacturers or suppliers, or divergence of their labor practices from those generally accepted as ethical in the local markets, could interrupt or otherwise disrupt the shipment of our products, harm the value of our trademarks, damage our reputation or expose us to potential liability for their wrongdoings.

A privacy breach could damage our reputation and our relationship with our customers, expose the Company to litigation risk and adversely affect our business.

As part of our normal course of business, we collect, process and retain sensitive and confidential customer information. Despite security measures we have in place, our facilities and systems may be vulnerable to security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors, or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential information could severely damage our reputation and our relationships with our customers, expose the Company to risks of litigation and liability and adversely affect our business.

6


Our Articles of Incorporation exculpates our officers and directors from certain liability to our Company or our stockholders.

Our Articles of Incorporation contain a provision limiting the liability of our officers and directors for their acts or failures to act, except for acts involving intentional misconduct, fraud or a knowing violation of law. This limitation on liability may reduce the likelihood of derivative litigation against our officers and directors and may discourage or deter our stockholders from suing our officers and directors based upon breaches of their duties to our Company.

Our directors and named executive officers are also our principal stockholders, as such they will be able to exert significant influence over matters submitted to stockholders for approval, which could delay or prevent a change in corporate control or result in the entrenchment of management or the Board of Directors, possibly conflicting with the interests of other stockholders.

Our directors and named executive officers are also our principal stockholders and as such they exert significant influence in determining the outcome of corporate actions requiring stockholder approval and otherwise control of our business. This control could have the effect of delaying or preventing a change in control or entrenching management or the Board of Directors, which could conflict with the interests of our other stockholders and, consequently, could adversely affect the market price of our common stock.

The Company's independent auditors have issued a going concern opinion.

The Company's ability to remain a going concern is highly dependent on its ability to raise sufficient debt and/or equity capital, among other things. No assurance can be given that the company will be successful in these efforts.

Information technology dependency and security vulnerabilities could lead to reduced revenue, liability claims, or competitive harm.

The Company is increasingly dependent on sophisticated information technology and infrastructure. Any significant breakdown, intrusion, interruption or corruption of these systems or data breaches could have a material adverse effect on our business.

We use electronic information technology (IT) in our manufacturing processes and operations and other aspects of our business. Despite our implementation of security measures, our IT systems are vulnerable to disruptions from computer viruses, natural disasters, unauthorized access, cyber-attack and other similar disruptions. A material breach in the security of our IT systems could include the theft of our intellectual property or trade secrets. Such disruptions or security breaches could result in the theft, unauthorized use or publication of our intellectual property and/or confidential business information, harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives, or otherwise adversely affect our business. We have, from time to time, experienced incidents related to our IT systems, and expect that such incidents will continue, including malware and computer virus attacks, unauthorized access, systems failures and disruptions. We have measures and defenses in place against unauthorized access, but we may not be able to prevent, immediately detect, or remediate such events.

Business disruptions could affect our operating results

A significant portion of our development activities and certain other critical business operations are concentrated in a few geographic areas. A major earthquake, fire or other catastrophic event that results in the destruction or disruption of any of our critical facilities could severely affect our ability to conduct normal business operations and, as a result, our future financial results could be materially and adversely affected.

7


If we cannot attract more customers to purchase our products, we may not be able to increase or sustain our revenues.

Our future success will depend on our ability to attract additional customers. The growth of our customer base could be adversely affected by:

 customer unwillingness to implement our products and services;

 any delays or difficulties that we may incur in completing the development and introduction of our products or product enhancements or service enhancements;

 the overall satisfaction of our customers;

 new product and service introductions by our competitors;

 any failure of our products to perform as expected; or

 any difficulty we may incur in meeting customers' expectations.

Fluctuations in the economy affect the telecommunications industry, including broadband and Internet, and may decrease demand for various products and services. Such a decrease may have an adverse effect on the demand in the fiber optic sector and negatively impact the growth of our customer base.

Foreign Currency

We transact business in various foreign currencies including the Euro. In general, the functional currency of a foreign operation is the local country's currency. Consequently, revenues and expenses of operations outside the United States are translated into US Dollars using the weighted-average exchange rates on the period end date and assets and liabilities of operations outside the United States are translated into US Dollars using the change rate on the balance sheet dates. The effects of foreign currency translation adjustments are included in the stockholders' equity as a component of the AOCL in the accompanying financial statements.

Internal Controls

We have determined that our internal controls are ineffective due to the small staff of the company. Although we have implemented internal systems and controls to minimize the potential for risk and business loss, a breakdown of internal controls could affect our ability to conduct normal business operations and, as a result, our future financial results could be materially and adversely affected.

Risks Relating to Ownership of 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 OTCPK quotation system in which shares of our common stock are listed, 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:

8


 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.

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. The trading price of our common shares has historically been sporadically or "thinly-traded" meaning that the number of persons interested in purchasing our common shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of 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 such time as we become more seasoned and viable. As a consequence, 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 provide 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 can be negatively affected 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 in a position 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.

9


We do not anticipate paying any cash dividends to our common shareholders.

We presently do not anticipate that we will pay dividends on any of our common stock in the foreseeable future. If payment of dividends does occur at some point in the future, it would be contingent upon our revenues and earnings, if any, capital requirements, and general financial condition. The payment of any common stock dividends will be within the discretion of our Board of Directors. We presently intend to retain any earnings after paying the interest for the preferred stock, if any, to implement our business plan; accordingly, we do not anticipate the declaration of any dividends for common stock in the foreseeable future.

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.

The elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights of our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.

Our Articles of Incorporation contain a specific provision that eliminates the liability of our directors and officers for monetary damages to our company and shareholders. Further, we are prepared to give such indemnification to our directors and officers to the extent provided for by Nevada law. We may also have contractual indemnification obligations under our employment agreements with our officers. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.

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 United States Security & Exchange Commission (SEC) and the Financial Industry Regulatory Authority (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.

10


ITEM 1B. UNRESOLVED STAFF COMMENTS

None

ITEM 2. PROPERTIES

The Company does not own any real property, nor have any long term lease obligations.

ITEM 3. LEGAL PROCEEDINGS

From time to time, the Company may become subject to various legal proceedings that are incidental to the ordinary conduct of its business. Although the Company cannot accurately predict the amount of any liability that may ultimately arise with respect to any of these matters, it makes provision for potential liabilities when it deems them probable and reasonably estimable. These provisions are based on current information and legal advice and may be adjusted from time to time according to developments.

The following parties have filed claims against Hammer Fiber Optics Investments Ltd and are not secured:

Calvi Electric v. Hammer Fiber Optics Inv, Ltd. $ 9,210  
Horizon Blue Cross v. Hammer Fiber Optics Inv, Ltd. $ 17,309  
Cross River Fiber v. Hammer Fiber Optics Inv, Ltd. $ 273,220  

Cross River Fiber has advanced its claim against Hammer Fiber Optics Investments, Ltd. Cross River Fiber has expanded its claim to include Hammer Fiber Optics Holdings Corp, 1stPoint Communications, LLC, Endstream Communications, LLC, Open Data Centers, LLC, Manhattan Carrier Company, LLC, Erik Levitt personally, Local Telecommunications Services – FL, LLC, Local Telecommunications Services – NY, LLC, American Network Inc and Hammer Wireless Corporation. There never was, nor has there ever been, a contract between any of these entities or Mr. Levitt personally and Cross River Fiber, nor is there any security under the agreement between Cross River Fiber and Hammer Fiber Optics Investments, Ltd. After discovery in the claim against Hammer Fiber Optics Holdings Corp and its subsidiaries, A trial occurred on February 5th and 6th of 2024 and a ruling was issued at the end of the trial in favor of Hammer Fiber Optics Holdings Corp and its subsidiaries. An award was given to Cross River against one of the related parties to the claim of $25,000. The judgement has not yet been entered.

ITEM 4. [RESERVED]

11


PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET FOR COMMON EQUITY

Market Price and Dividends

Our common stock is currently quoted on the OTCPK, under the symbol "HMMR." Our common stock has been quoted on the OTC Bulletin Board since approximately August 30, 2016. Prior to that, our shares of common stock were quoted on the OTC Bulletin Board under the symbol "TPHX". Because we are quoted on the OTCPK, our securities may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if they were listed on a national securities exchange. The following table sets forth the high and low bid quotations for our common stock as reported on the OTCPK for the periods indicated.

    High     Low  
Fiscal Year 2022            
July 31, 2023   0.51     0.35  
April 30, 2023   0.51     0.22  
January 31, 2023   0.56     0.26  
October 31, 2022   0.50     0.16  
             
Fiscal Year 2021            
July 31, 2022   0.70     0.43  
April 30, 2022   0.69     0.39  
January 31, 2022   1.40     0.41  
October 31, 2021   1.41     0.43  

Information for the periods referenced above has been furnished by the OTCPK. The quotations furnished by the OTCPK reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not reflect actual transactions. As of July 31, 2023, there were 62,205,947 shares of the registrant's $.001 par value common stock issued and 60,452,612 outstanding. We have never declared or paid any cash dividends on our common stock nor do we intend to do so in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board of directors and will depend upon our financial condition, operating results, capital requirements, any applicable contractual restrictions and such other factors as our board of directors deems relevant.

Re-Purchase of Equity Securities

None.

Securities Authorized for Issuance under Equity Compensation Plan

None.

12


ITEM 6. SELECTED FINANCIAL DATA

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

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as "anticipate," "expect," "intend," "plan," "believe," "foresee," "estimate" and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. You should read this Report completely and with the understanding that actual future results may be materially different from what we expect. The forward looking statements included in this Report are made as of the date of this Report and should be evaluated with consideration of any changes occurring after the date of this Report. We will not update forward-looking statements even though our situation may change in the future and we assume no obligation to update any forward- looking statements, whether as a result of new information, future events or otherwise.

The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Overview

The company was incorporated on September 23, 2010 pursuant to the laws of the State of Nevada under the name of Recursos Montana S.A. On March 6, 2015 the Company amended its Articles of Incorporation to change its name to "Tanaris Power Holding, Inc." On April 25, 2016, Tanaris Power Holdings, Inc., a Nevada corporation (the "Company" or "TPHX") entered into a Share Exchange Agreement (the "Share Exchange Agreement") with Hammer Fiber Optics Investments, Ltd., a Delaware corporation ("HFOI"), and the controlling stockholders of HFOI (the "HFOI Shareholders"). Pursuant to the Share Exchange Agreement, closed on July 19, 2016, the Company acquired 20,000,000 shares of common stock of HFOI from the HFOI shareholders and in exchange the Company issued to the HFOI Shareholders 50,000,000 (post-Merger) restricted shares of its common stock. As a result of the Share Exchange Agreement, HFOI became a wholly owned subsidiary of the Company.

The Company was originally organized for the purpose of acquiring and developing mineral properties. The Company had not established the existence of a commercially viable minable ore deposit and therefore did not reach the exploration stage. As such, the company negotiated to dispose of the business of investing in minerals in favor of developing new business opportunities in the technology sector. The company Hammer Fiber Optics Holdings Corp. is now an alternative telecommunications carrier that is poised to position itself as a premier provider of diversified dark fiber networking solutions as well as high capacity broadband wireless access networks in the United States and abroad.

13


On September 11, 2018, Mark Stogdill, President and Chief Executive Officer and Executive Director of the Board of Directors of the Company resigned from his position as President and Chief Executive Officer of the Company. Mr. Stogdill retains his position as a Director of the Board of Directors. In combination with this change, Erik B. Levitt was appointed the interim President and Chief Executive Officer, effective immediately, and later appointed the President and Chief Executive Officer on November 1, 2018.

On October 10, 2018 the Company announced the closure of the Atlantic City, NJ wireless broadband network as a result of the termination of the Master Spectrum Lease Agreement held by the Company subsidiary Hammer Fiber Optic Investments Ltd. d/b/a Hammer Communications by Verizon Communications. Verizon Communications had informed the Company of their intention to honor the terms of the lease agreement, then subsequently issued a notification to the Company that the spectrum lease for the 28 GHz spectrum will be prematurely terminated as of October 31, 2018. The Company negotiated with Verizon to find a path forward and was offered a less desirable spectrum leasing arrangement. After extensive engineering discussions it was determined that it was not feasible to pursue the alternative agreement proposed by Verizon. As a result, the Company discontinued operations as of October 31, 2018.

On September 11, 2018, our board of directors approved stock purchase agreements with 1stPoint Communications LLC and its subsidiaries, Endstream Communications LLC, Open Data Centers LLC and Shelcomm Inc. for the acquisition of all of the equity of the entities. 1stPoint and its subsidiaries possess CLEC licenses in Florida, New York State, and a nationwide CMRS (Commercial Mobile Radio Services) license. The companies operate a data center facility in Piscataway, New Jersey. The acquisition of 1stPoint Communications, LLC, Open Data Centers, LLC and Shelcomm, Inc. closed on November 1, 2018. Mr. Levitt was also elected as a member of the Board of Directors, effective immediately. The acquisition of Endstream Communications, LLC closed on December 17, 2018.

On January 29, 2019 our board of directors approved a stock purchase agreement with American Network, Inc to acquire all of its equity. The acquisition of American Network, Inc closed on September 1, 2019.

As of April 30, 2020 our board of directors approved the discontinuation of the operations of Open Data Centers LLC. The operations of Open Data Centers, LLC were discontinued effective April 30, 2020 and the Company shut down its operations in its Piscataway, NJ data center.

On September 14, 2021, Erik B. Levitt, President and Chief Executive Officer and Executive Director of the Board of Directors of the Company resigned from his position as Chief Executive Officer of the Company. Mr. Levitt retains his position as an Executive Director of the Board of Directors and Principal Financial Officer as well as the Managing Member and Chief Executive Officer of 1stPoint Communications, LLC and Endstream Communications, LLC. In combination with this change, Michael C. Cothill was appointed the Executive Chairman, effective immediately.

On October 19, 2021 our board of directors approved a name change from Hammer Fiber Optics Holdings Corp to Hammer Technology Holdings. The name change has not yet been made effective.

On October 25, 2021 our board of directors approved a share exchange agreement with Telecom Financial Services Limited ("TFS") for the acquisition one hundred percent (100%) of its stock. TFS owns the intellectual property critical to the operations of the company's financial technology business unit as well as certain key supplier, marketing and operating agreements. TFS has been renamed HammerPay [USA] Ltd.

On July 31, 2023 our board of directors approved the discontinuation of the operations of Hammer Wireless (SL) Limited, the company's data communications service in Sierra Leone. The operations were discontinued in March 2020 and all assets have been written down.

14


Results of Operations

The Year Ended July 31, 2023 Compared to the Year Ended July 31, 2022

Net revenues from continuing operations for the year ended July 31, 2023 and 2022 were $3,256,611 and $2,602,115, respectively. The increase in gross revenues were primarily due to growth in the messaging revenue from the Company's Over-the-Top ("OTT") business practice.

During the year ended July 31, 2023, the Company incurred total operating expenses from continuing operations of $3,846,078 compared with $3,149,840 for the comparable period ended in 2022. The increase in operating costs was primarily due to expenses related to its increased revenues in its OTT business as well as expenses associated with new product development in the financial services segment on the HammerPay platform.

The Company recorded depreciation expense of $60,283 during the year ended July 31, 2023 compared to $65,487 in the comparable period in 2022, primarily due to efficiencies in the Company's telecommunications business unit.

During the year ended July 31, 2023, interest financing expense and expenses associated with warrants was $457,398 compared to $805,803 in the comparable period in 2022. The increase was due primarily to the interest and financing expense associated with the notes payable used to fund the development and growth of the HammerPay application and the financial technology business unit.

Liquidity and Capital Resources

We have financed our operations since inception primarily through notes payable from related parties, which have been disclosed herein under Related Party Transactions. As of July 31, 2023, the Company had cash and cash equivalents of $66,688.

Net cash from operating activities was $-636,706 and $-451,955 for the year ended July 31, 2023 and July 31, 2022, respectively. The increase was primarily due to the development activities related to the HammerPay application.

Net cash used in investing activities was $12,650 and $46,893 for the year ended July 31, 2023 and July 31, 2022, respectively. The decrease was primarily due efficiencies in the Company's telecommunications business unit.

Net cash provided by financing activities was $233,134 and $904,152 for the year ended July 31, 2023 and July 31, 2022, respectively. The decrease in cash provided by financing activities for the period ended July 31, 2023 when compared to the same period in 2022 was primarily due to reduced cash needs in the development of the HammerPay application.

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors have included in their report on our audited financial statements for the fiscal years ended July 31, 2023 and 2022 an explanatory paragraph regarding factors that raise substantial doubt that we will be able to continue as a going concern.

Going Concern

As at July 31, 2023, substantial doubt existed as to the Company's ability to continue as a going concern as the Company has earned only minimal revenue, has no certainty of earning additional revenues in the future, has a working capital deficit and an overall accumulated deficit since inception. The Company will require additional financing to continue operations either from management, existing shareholders, or new shareholders through equity financing and/or sources of debt financing. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

15


Contractual Obligations

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

Selected Financial Data

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

July 31, 2023 and 2022

Reports of Independent Registered Public Accounting Firms .F-1
Consolidated Balance Sheets F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Changes in Stockholders' Equity F-5
Consolidated Statements of Cash Flows F-6
Notes to Consolidated Financial Statements F-7
 

16


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Hammer Fiber Optics Holding Corp

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Hammer Fiber Optics Holding Corp (“the Company”) as of July 31, 2023 and 2022, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended July 31, 2023, 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 July 31, 2023 and 2022 and the results of its operations and its cash flows for each of the years in the two-year period ended July 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 4 to the financial statements, the Company has consistently sustained losses since inception. This factor, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to this matter is also described in Note 4. 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 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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Accounting for Convertible Notes Payable and Related Transactions — Refer to Notes 10, 12, and 16 to the financial statements.

F-1


Critical Audit Matter Description

The company has issued convertible notes during 2023 and 2022 with related incentives consisting of warrants and common stock. These financing transactions required auditor judgement regarding the appropriateness of the accounting and subjectivity in relation to valuation these financing transactions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to evaluating the Company’s accounting for the notes payable, including management’s judgements and inputs related to the fair value of the incentives, included the following, among others:

  • Substantive detail testing to evaluate the accuracy and completeness of the recorded convertible notes.
     
  • Development of an independent fair value assessment and compared our estimates to management’s estimates.
     
  • Evaluated management’s conclusions regarding the accounting treatment applied to the convertible notes and related transactions.

form10kxu002.jpg

Fruci & Associates II, PLLC – PCAOB ID #05525
We have served as the Company’s auditor since 2022.

Spokane, Washington
February 14, 2024

5525

 

F-2


Hammer Fiber Optics Holdings Corp.

Consolidated Balance Sheets

    July 31,  
    2023     2022  
ASSETS        

(as restated)

 
Current Assets            
Cash and cash equivalents $ 66,688   $ 482,910  
Accounts receivable   238,820     216,834  
Security Deposits   7,316     11,082  
Prepaid expenses   18,675     14,746  
Total current assets   331,499     725,572  
Property and equipment, net   89,712     137,345  
Intangible and other assets   7,406,827     7,464,702  
Assets from Discontinued Operations   -     1,243,960  
             
Total Assets $ 7,828,038   $ 9,571,579  
             
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)            
Current Liabilities            
Accounts payable and accrued expenses $ 1,205,995   $ 1,342,287  
Loans payable   1,443,294     1,314,693  
Warrant Liabilities   195,750     213,750  
Unissued Stock   105,925     -  
Deferred Revenue   172,900     321,074  
Current Liabilities from Discontinued Operations   545,994     546,304  
             
Total Liabilities   3,669,858     3,738,108  
             
Stockholders' Equity (Deficit)            
Common stock, $0.001 par value, 250,000,000 shares authorized
62,205,947 and 61,565,851 shares issued; 60,452,612 and 59,812,506  shares

outstanding at July 31, 2023 and 2022, respectively
$ 62,206   $ 61,566  
Additional paid-in capital   27,808,440     27,564,129  
Accumulated deficit   (23,712,466 )   (21,792,224 )
Total Stockholder's Equity (Deficit)   4,158,180     5,833,471  
             
Total Liabilities and Stockholders' Equity (Deficit) $ 7,828,038   $ 9,571,579  

See accompanying notes to consolidated financial statements.

F-3


Hammer Fiber Optics Holdings Corp

Consolidated Statements of Operations

    For the Year Ended  
    July 31,  
    2023     2022  
          (as restated)  
Revenues $ 3,256,611   $ 2,602,115  
             
Costs and expenses:            
Cost of sales   2,426,456     2,022,190  
Selling, general and administrative expenses   1,359,339     1,062,163  
Depreciation expense   60,283     65,487  
Total operating expenses   3,846,078     3,149,840  
             
Operating loss   (589,467 )   (547,725 )
             
Other income (expense)            
Other Income   262,259     -  
Interest expense   (20,618 )   (89,926 )
Warrant financing expense   (145,725 )   (125,025 )
Financing expenses   (255,532 )   (635,812 )
Warrant adjustment to Fair Value   18,000     57,000  
Other expenses   (175,559 )   (12,040 )
Total other expenses   (317,175 )   (805,803 )
             
Income (loss) Before Discontinued Operations   (906,642 )   (1,353,528 )
             
Income (loss) From Discontinued Operations   (1,013,600 )   -  
             
Net income (loss) $ (1,920,242 ) $ (1,353,528 )
             
Weighted average number of common shares outstanding - basic and diluted   62,205,947     61,565,841  
             
Loss per share- basic and diluted            
Continuing operations $ (0.01 ) $ (0.02 )
Discontinued operations   (0.02 )   -  
Total $ (0.03 ) $ (0.02 )

See accompanying notes to consolidated statements.

F-4


Hammer Fiber Optics Holdings Corp.

Consolidated Statement of Stockholders' Equity (Deficit)

                            Additional           Total  
    Common Stock     Treasury Stock     Paid-in     Accumulated     Stockholders'  
    Shares     Amount     Shares     Amount     Capital     Deficit     Equity (Deficit)  
                                           
Balance, July 31, 2021   60,853,341     60,853     5,932,835     -     22,859,434     (20,438,696 )   2,481,591  
                                           
Shares issued from prior acquisition   -     -     (2,089,750 )   -     -     -        
Shares returned to treasury   -     -     3,000,000     -     -     -     -  
Treasury shares issued for acquisition   -     -     (5,000,000 )   -     4,250,500     -     4,250,500  
Commitment shares issued for debt   712,500     713     -     -     454,195     -     454,908  
Treasury shares issued   -     -     (89,750 )   -     -     -     -  
Net loss (as restated)   -     -     -     -     -     (1,353,528 )   (1,353,528 )
                                           
Balance, July 31, 2022 (as restated)   61,565,841     61,566     1,753,335     -   $ 27,564,129   $ (21,792,224 ) $ 5,833,471  
                                           
Debt conversion shares issued   640,106     640     -     -     244,311     -     244,951  
Net loss   -     -     -     -     -     (1,920,242 )   (1,920,242 )
Balance, July 31, 2023   62,205,947     62,206     1,753,335     -   $ 27,808,440   $ (23,712,466 ) $ 4,158,180  

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

F-5


Hammer Fiber Optics Holdings Corp

Consolidated Statements of Cash Flows

    For the Years Ended  
    July 31,  
    2023     2022  
          (as restated)  
CASH FLOWS FROM OPERATING ACTIVITIES            
Net income (loss) $ (1,920,242 ) $ (1,353,528 )
Loss from discontinued operations   1,013,600     -  
Adjustments to reconcile net loss to net cash provided by operating activities:            
Depreciation expense   60,283     65,487  
Warrant adjustment to Fair Value   (18,000 )   (57,000 )
Non-cash interest expense   227,872     454,908  
Writedown of intangible assets   57,875     -  
Changes in operating assets and liabilities:            
Accounts receivable   (21,986 )   68,172  
Security deposits   3,766     -  
Prepaid expenses   (3,929 )   62  
Accounts payable   (117,821 )   434,151  
Deferred revenue   (148,174 )   21,874  
Net cash provided by (used in) operating activities- continuing operations   (866,756 )   (365,874 )
Net cash provided by (used in) operating activities- discontinued operations   230,050     (86,081 )
Net cash provided by (used in) operating activities   (636,706 )   (451,955 )
             
CASH FLOWS FROM INVESTING ACTIVITIES            
Purchase of property and equipment   (12,650 )   (46,893 )
Net cash provided by (used in) investing activities- continuing operations   (12,650 )   (46,893 )
Net cash provided by (used in) investing activities- discontinued operations   -     -  
Net cash provided by (used in) investing activities   (12,650 )   (46,893 )
             
CASH FLOWS FROM FINANCING ACTIVITIES            
Repayment of loans   (168,284 )   (61,300 )
Proceeds from loans   401,418     965,452  
Net cash provided by (used in) financing activities- continuing operations   233,134     904,152  
Net cash provided by (used in) financing activities- discontinued operations   -     -  
Net cash provided by (used in) financing activities   233,134     904,152  
Net increase (decrease) in cash   (416,222 )   405,304  
Cash, beginning of period   482,910     77,606  
Cash, end of period $ 66,688   $ 482,910  
             
SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES:            
Cash paid for interest $ 20,618   $ 11,587  
Cash paid for taxes $ 1,415   $ 2,040  
SUPPLEMENTAL SCHEDULES OF NONCASH FINANCING ACTIVITIES            
Common stock shares issued upon conversion of debt $ 244,311   $ -  

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

F-6


HAMMER FIBER OPTICS HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023 and 2022

NOTE 1 - ORGANIZATION AND DESCRIPTION BUSINESS

Hammer Fiber Optics Holdings Corp (OTCPK:HMMR) is a company focused on sustainable shareholder value investing in both financial services technology and wireless telecommunications infrastructure.

Hammer's financial technologies business is focused on providing digital stored value technology via its HammerPay mobile payments platform to enable digital commerce between consumers and branded merchants across the developing world, ensuring Swift, Safe and Secure encrypted remittances and banking transactions.

Hammer's "Everything Wireless" go to market strategy for its telecommunications business includes the development of high speed fixed wireless service for residential, small business and enterprise clients using its wireless fiber platform, Hammer Wireless AIR®, mobility networks including 4G/LTE, Over-the-Top services such as voice, SMS and collaboration services and hosting services.

 

NOTE 2 - CORPORATE HISTORY AND BACKGROUND ON MERGER

The Company was originally incorporated in the State of Nevada on September 23, 2010, under the name Recursos Montana S.A. The Company's principal activity was an exploration stage company engaged in the acquisition of mineral properties then owned by the Company.

On February 2, 2015, the Company entered into a Share Exchange Agreement with Tanaris Power Holdings, Inc., whereby the Company acquired 100% of Tanaris Power Holdings, Inc. issued and outstanding common stock in exchange for shares of the Company's common stock equal to 51% of the issued and outstanding common stock of the Company. Tanaris Power Holdings, Inc. was the owner of certain rights in connection with the marketing and sale of smart lithium-ion batteries and battery technologies for various industrial vehicles markets and related applications. On March 6, 2015, the Company amended its Articles of Incorporation to change its name to Tanaris Power Holdings, Inc.

On April 25, 2016, Tanaris Power Holdings, Inc., a Nevada corporation entered into a Share Exchange Agreement (the "Share Exchange Agreement") with Hammer Fiber Optics Investments, Ltd., a Delaware corporation ("HFOI"), and the controlling stockholders of HFOI (the "HFOI Shareholders").Pursuant to the Share Exchange Agreement, the Company acquired 20,000,000 shares of common stock of HFOI from the HFOI shareholders (the "HFOI Shares") and in exchange, the Company issued to the HFOI Shareholders 50,000,000 (post-Merger) restricted shares of its common stock (the "HMMR Shares").As a result of the Share Exchange Agreement, HFOI became a wholly owned subsidiary of the Company.

On April 13, 2016, the Board of Directors (BOD) approved a Plan of Merger (the "Plan of Merger") under Nevada Revised Statuses (NRS) Section 92A.180 to merge (the "Merger") with our wholly-owned subsidiary HFO Holdings, a Nevada corporation, to effect a name change from Tanaris Power Holdings Inc. to Hammer Fiber Optics Holdings Corp. The Plan of Merger also provided for a 1 for 1,000 exchange ratio for shareholders of both the Company and the HRO Holdings, which had the effect of a 1 for 1,000 reverse split of the common stock. Articles of Merger were filed with the Secretary of State of Nevada on April 13, 2016 and, on April 14, 2016, this corporate action was submitted to Financial Industry Regulatory Authority (the "FINRA") for its review and approval.

On May 3, 2016, the FINRA approved the merger with the wholly-owned subsidiary, HMMR Fiber Optics Holdings Corp. (“HFO Holdings”). Accordingly, thereafter, the Company’s name was changed and the shares of common stock began trading under new ticker symbol “HMMR” as of May 27, 2016. The merger was effected on July 19, 2016.

F-7


HAMMER FIBER OPTICS HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023 and 2022

NOTE 2 - CORPORATE HISTORY AND BACKGROUND ON MERGER (CONTINUED)

On September 11, 2018, our board of directors approved stock purchase agreements with 1stPoint Communications LLC and its subsidiaries, Endstream Communications LLC, Open Data Centers LLC and Shelcomm Inc. for the acquisition of all of the equity of the entities. 1stPoint and its subsidiaries possess CLEC licenses in Florida, New York State, and a nationwide CMRS (Commercial Mobile Radio Services) license. The companies operate a data center facility in Piscataway, New Jersey. The acquisition of 1stPoint Communications, LLC, Open Data Centers, LLC and Shelcomm, Inc. closed on November 1, 2018. The acquisition of Endstream Communications, LLC closed on December 17, 2018.

On January 29, 2019 our board of directors approved a stock purchase agreement with American Network, Inc to acquire all of its equity. The acquisition of American Network, Inc closed on September 1, 2019.

As of April 30, 2020 our board of directors approved the discontinuation of the operations of Open Data Centers LLC. The operations of Open Data Centers, LLC were discontinued effective April 30, 2020 and the Company shut down its operations in its Piscataway, NJ data center.

On October 19, 2021 our board of directors approved a name change from Hammer Fiber Optics Holdings Corp to Hammer Technology Holdings Corp.

On October 25, 2021 our board of directors approved a share exchange agreement with Telecom Financial Services Limited ("TFS") for the acquisition one hundred percent (100%) of its stock. TFS owns the intellectual property critical to the operations of the company's financial technology business unit as well as certain key supplier, marketing and operating agreements. The acquisition of TFS closed on January 3, 2022. TFS has been renamed HammerPay [USA] Ltd.

On July 31, 2023 our board of directors approved the discontinuation of the operations of Hammer Wireless (SL) Limited, the company's data communications service in Sierra Leone. The operations were discontinued in March 2020 and all assets have been written down.

 

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

F-8


HAMMER FIBER OPTICS HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023 and 2022

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Cash and cash equivalents

Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.

Property and equipment

Property and equipment is stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. For network service equipment, and furniture and fixtures, the useful life is ten and five years, respectively. Leasehold Improvements are depreciated over six years. Expenditures for additions and improvements are capitalized; repairs and maintenance are expensed as incurred.

Impairment of long-lived assets

The Company evaluates long-lived assets 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 the assets to future undiscounted cash flows to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company has not recognized impairment losses for any long-lived assets.

Notes Receivable

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Subsequent to initial recognition, they are recorded at amortized cost less any provision for impairment. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty is more likely than not to default.

Indefinite lived intangible assets

The Company reviews property, plant and equipment, inventory component prepayments and certain identifiable intangibles, excluding goodwill, for impairment. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amounts to future undiscounted cash flows the assets are expected to generate. If property, plant and equipment, inventory component prepayments and certain identifiable intangibles are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the assets exceeds its fair value. The Company has not recorded any related impairment losses. The Company does not amortize goodwill and intangible assets with indefinite useful lives, rather such assets are required to be tested for impairment at least annually or sooner whenever events or changes in circumstances indicate that the assets may be impaired. The Company has not recorded any related impairment losses.

F-9


HAMMER FIBER OPTICS HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023 and 2022

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue recognition

The Company accounts for revenues under Accounting Standards Update (ASU) 2014-09, "Revenue from Contracts with Customers" (Topic 606), which we adopted on August 1, 2018, using the modified retrospective approach. This standard update, along with related subsequently issued updates, clarifies the principles for recognizing revenue and develops a common revenue standard for GAAP. The Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model to arrangements that meet the definition of a contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer.

At contract inception, once the contract is determined to be within the scope of Topic 606, the Company evaluates the goods or services promised within each contract related performance obligation and assesses whether each promised good or service is distinct. The Company recognizes as revenue, the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Amounts invoiced or collected in advance of product delivery or providing services are recorded as unearned revenue or customer deposits. The company accrues for sales returns, bad debts, and other allowances based on its historical experience. The Company’s revenues are derived from its subsidiaries, 1stPoint Communications, LLC, Endstream Communications, LLC and Shelcomm, Inc. 1stPoint’s and Shelcomm’s revenues are derived from retail web and voice hosting services as well as carrier hosting services. These are contracted agreements which are billed monthly, and revenues are recognized in the period in which the services are rendered. In some cases customers sign longer term agreements (up to two years) and prepay for those services. Revenues are recognized in the period the services are delivered. Endstream’s revenue is derived from post-paid and pre-paid wholesale voice services and billed on a usage basis. Revenues are recognized in the period in which the services are delivered.

Income taxes

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, "Accounting for Income Taxes". The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Fair value measurements

The Company adopted the provisions of ASC Topic 820, "Fair Value Measurements and Disclosures", which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.

F-10


HAMMER FIBER OPTICS HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023 and 2022

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

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

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

Level 3 - unobservable inputs reflecting management's assumptions about the inputs used in pricing the asset or liability. Financial assets and liabilities (including warrants) approximate fair value.

All financial assets and liabilities are approximate their fair value. Warrants are valued at Level 3.

Fair Value Measurements 

      Fair Value Measurements at July 31, 2023
using:
 
  July 31,
2023
    Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
    Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
 
                     
Liabilities $              
Warrant Liabilities $ 195,750             195,750  
 
          Fair Value Measurements at July 31, 2022
using:
 
    July 31,
2022
    Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
    Significant
Other
Observable
Inputs
(Level 2)
    Significant
Unobservable
Inputs
(Level 3)
 
                         
Liabilities $              
Warrant Liabilities $ 213,750             213,750  

The warrant liabilities are measured at fair value using quoted market prices and estimated volatility factors based on historical prices for the Company’s common stock and are classified within Level 3 of the valuation hierarchy. 

The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities as of July 31, 2023, and 2023:

  July 31, 2023   July 31, 2022  
Balance, January 1 $ 213,750   $  
Additions       270,750  
Change in fair value of derivative liabilities   (35,862 )   (57,000 )
Balance, December 31 $ 195,750   $ 213,750  

Consolidation of financial statements

Hammer Fiber Optics Holdings Corp. is the parent company and sole shareholder of Hammer Wireless Corporation, Hammer Fiber Optic Investments Ltd, 1stPoint Communications, LLC, Endstream Communications, LLC, Shelcomm, Inc., American Network, Inc. and HammerPay [USA], Inc. The company is also the beneficial owner of Hammer Wireless SL. The financial statements for Hammer Fiber Optics Holdings Corp. and its subsidiaries are reported on a consolidated basis. All significant intercompany accounts and transactions have been eliminated. Hammer Fiber Optics Investments, Ltd and Open Data Centers, LLC and Hammer Wireless (SL) Ltd have been discontinued and are reported on a summarized basis in consolidation. Open Data Centers was dissolved on December 30, 2020.

Segment Information

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker (“CODM”), or decision-making group, in making decisions on how to allocate resources and assess performance. The Company has one operating segment.

Basic and Diluted Earnings (Loss) per Common Share

The basic earnings (loss) per share are calculated by dividing the Company's net income available to common shareholders by the weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Diluted EPS considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company and the fact that the Company has a net loss for the periods presented. As of July 31, 2023 and 2022, there were no common stock equivalents outstanding.

As of July 31, 2023 the Company had 600,000 shares of potentially dilutive warrants.

F-11


HAMMER FIBER OPTICS HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023 and 2022

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent accounting pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses. This ASU added a new impairment model (known as the current expected credit loss (“CECL”) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. The CECL model applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. The Company adopted this ASU on a prospective basis as of August 1, 2022, and the adoption of this guidance had no material impact on the consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock, as well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. The Company adopted this ASU on a prospective basis as of August 1, 2023.  The Company is currently evaluating any impact the adoption of this ASU might have on its consolidated financial statements.

Reclassifications

Certain reclassifications have been made to the financial statements to conform to the consolidated 2023 financial statement presentation.

Accounts Receivable

Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management's judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company's portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of the Company's customers. The allowance for doubtful accounts was approximately $11,000 and $0 as of July 31, 2023 and 2022.

 

NOTE 4 - GOING CONCERN

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has consistently sustained losses since its inception. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year from the issuance of these financial statements. The Company's continuation as a going concern is dependent upon, among other things, its ability to increase revenues, adequately control operating expenses and receive debt and/or equity capital from third parties. No assurance can be given that the Company will be successful in these efforts.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company intends to continue to address this condition by seeking to raise additional capital through the issuance of debt and/or the sale of equity until such time that ongoing revenues can sustain the business, at which time capitalization may be considered through other means.

F-12


HAMMER FIBER OPTICS HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023 and 2022

NOTE 5 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS

Subsequent to the Company's filing of its Annual Report on Form 10-K for the year ended July 31, 2022, with the Securities and Exchange Commission on February 8, 2023, the Company performed an evaluation of its accounting in connection with warrants issued in conjunction with the February 11, 2022 Mast Hill Fund, L.P. and February 17, 2022 Talos Victory Fund, L.P. convertible notes. Management determined that the Original Form 10-K does not give effect to $196,043 in expense and the issuance of warrant (the "Warrants") to purchase shares at a price between $1.50 and $3.00 per share of the common stock outstanding. Accordingly, the Company restates its consolidated financial statements in this Form 10-K as outlined further below. Upon review of the Company's previously filed 10-K, the following errors were discovered and recorded:

1. Certain intellectual property (platform software) for the HammerPay subsidiary has been reclassified as an intangible asset.

2. Financing expense associated with the two convertible notes have been accrued and amortized instead of expensed in accordance with ASC 470-20-25.

3. Warrants issued in conjunction with two convertible notes have been valued in accordance with ASC 820-10 as clarified by ASU 2022-03.

4. The Balance Sheet, Statement of Operations and Statement of Cash Flows has been adjusted to reflect the change in warrant financing expenses and expenses associated with the convertible notes. Adjustments to the fair value of the warrants has been reflected as other income.

5. Item 2: "Management's Discussion and Analysis of Financial Condition and Results of Operations" has been modified to reflect the change in warrant financing expenses and expenses associated with the convertible notes.

F-13


HAMMER FIBER OPTICS HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023 and 2022

NOTE 5 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (CONTINUED)

The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated balance sheets for the year ended July 31, 2022:

    July 31,                 July 31,  
    2022     Adjustments     2022  
    (As Filed)                 (As Restated)  
ASSETS                        
Current Assets                        
Cash and cash equivalents $ 482,910     -         $ 482,910  
Accounts receivable   216,834     -           216,834  
Security Deposits   11,082     -           11,082  
Prepaid expenses   14,746     -           14,746  
Total current assets   725,572                 725,572  
Property and equipment, net   278,345     141,000     (1)     137,345  
                         
Intangible and other assets   7,323,702     (141,000 )   (1)     7,464,702  
Assets from Discontinued Operations   1,243,960     -           1,243,960  
Total assets $ 9,571,579               $ 9,571,579  
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                    
Current Liabilities                        
Accounts payable and accrued expenses $ 1,130,465     211,822     (2)   $ 1,342,287  
Loans payable   1,544,935     (230,242 )   (2)     1,314,693  
Warrant Liabilities   -     213,750     (2)     213,750  
Deferred Revenue   321,074     -           321,074  
Liabilities from Discontinued Operations   546,304     -           546,304  
Total Liabilities   3,542,778                 3,738,108  
Stockholders' Equity (Deficit)                        
Common stock, $0.001 par value, 250,000,000 shares authorized 62,205,947 and 61,565,851 shares issued; 60,452,612 and 59,812,506 shares outstanding at July 31, 2023 and 2022, respectively $ 61,566     -         $ 61,566  
Additional paid-in capital   27,564,129     -           27,564,129  
Accumulated deficit   (21,596,894 )   (195,330 )   (2)     (21,792,224 )
Total Stockholder's Equity (Deficit)   6,028,801                 5,833,471  
Total Liabilities and Stockholders' Equity (Deficit) $ 9,571,579               $ 9,571,579  

 

F-14


HAMMER FIBER OPTICS HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023 and 2022

NOTE 5 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (CONTINUED)

The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated statements of operations for the year ended July 31, 2022:

    July 31,                   July 31,  
    2022     Adjustments     2022  
    (As Filed)                   (As Restated)  
Revenues $ 2,602,115     $ -         $ 2,602,115  
Costs and expenses:                          
Cost of sales   2,022,190       -           2,022,190  
Selling, general and administrative expenses   1,062,163       -           1,062,163  
Depreciation expense   65,487       -           65,487  
Total operating expenses   3,149,840       -           3,149,840  
Operating loss   (547,725 )     -           (547,725 )
Other income (expense)                          
Other Income   -       -           -  
Interest expense   (11,587 )     (78,339 )   (2)     (89,926 )
Warrant financing expense   -       (125,025 )   (2)     (125,025 )
Financing expenses   (586,133 )     (49,679 )   (2)     (635,812 )
Warrant adjustment to fair value   -       57,000     (2)     57,000  
Other expenses   (12,040 )     -           (12,040 )
Total other expenses   (609,760 )                 (805,803 )
Income (loss) Before Discontinued Operations   (1,157,485 )                 (1,353,528 )
Income (loss) From Discontinued Operations   -       -           -  
Net income (loss) $ (1,157,485 )               $ (1,353,528 )
Weighted average number of common shares outstanding - basic and diluted 61,382,496                   61,565,841  
Loss per share- basic and diluted                          
Continuing operations $ (0.02 )               $ (0.02 )
Discontinued operations   -                   -  
Total $ (0.02 )               $ (0.02 )

 

F-15


HAMMER FIBER OPTICS HOLDINGS CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JULY 31, 2023 and 2022

NOTE 5 - RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS (CONTINUED)

The following table sets forth the effects of the adjustments on affected items within the Company's previously reported consolidated statements of cash flows for the year ended July 31, 2022:

    July 31,                   July 31,  
    2022     Adjustments     2022  
    (As Filed)                   (As Restated)  
CASH FLOWS FROM OPERATING ACTIVITIES                          
Net Loss $ (1,157,485 )   $ (196,043 )       $ (1,353,528 )
Loss from discontinued operations   -       -           -  
Adjustments to reconcile net loss to net cash provided by operating activities:                          
Gain on loan forgiveness   -       -           -  
Depreciation expense   64,327       1,160     (1)     65,487  
Warrant adjustment to Fair Value   -       (57,000 )   (2)     (57,000 )
Non-cash expense   -       454,908     (2)     454,908  
Changes in operating assets and liabilities:                          
Accounts receivable   (46,860 )     115,032     (2)     68,172  
Security deposits   -       -           -  
Prepaid expenses   62       -           62  
Accounts payable   348,680       85,471     (2)     434,151  
Deferred revenue   21,879       (5 )   (2)     21,874  
Net cash provided by (used in) operating activities- continuing operations   (769,397 )                 (365,874 )
Net cash provided by (used in) operating activities- discontinued operations   (50,212 )                 (86,081 )
Net cash provided by (used in) operating activities   (819,609 )                 (451,955 )
CASH FLOWS FROM INVESTING ACTIVITIES                          
Purchase of property and equipment   (205,060 )     158,167     (2)     (46,893 )