NOTES
TO FINANCIAL STATEMENTS
FEBRUARY
28, 2023
NOTE
1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
United
States Basketball League, Inc. (“SPEV (formerly
“USBL”)”, “the Company”) was incorporated in Delaware on May 29, 1984 as a wholly owned
subsidiary of Meisenheimer Capital, Inc. (“MCI”) for the purpose of developing and managing a professional basketball
league, the United States Basketball League (the “League”). Prior to the pending merger, SPEV has primarily engaged in
selling franchises and managing the League. From 1985 and up to the present time, SPEV has sold a total of approximately forty
active franchises (teams), a vast majority of which were terminated for non-payment of their respective franchise
obligations.
On
April 7, 2021, through a series of Stock Purchase Agreements (the “Purchase Agreements”), the majority owners of the Company,
Richard C. Meisenheimer, Daniel T. Meisenheimer, III, James Meisenheimer, Meisenheimer Capital, Inc. and Spectrum Associates, Inc. (the
“Sellers”) sold 2,704,007 common shares which it held, to a new investor group. The Sellers also sold 1,105,644 of SPEV’s
preferred stock at a per share price of $.057 per share to EROP Enterprises, LLC. As a result of the sale of common and preferred stock
by the Sellers, the Company experienced a change in control.
World
Equity Markets acted in the capacity of a broker/dealer for the Purchase Agreements and was issued 125,000 shares of common stock for
its services, and Verde Capital was issued 150,000 shares for Consulting Services. Effective April 7, 2021, the Board of Directors accepted
the resignation of Daniel T. Meisenheimer, III as Chairman of the Board of Directors and President of the Company. Effective April 7,
2021, Saeb Jannoun was appointed to fill the vacancy following the resignation of Daniel T. Meisenheimer, III as Chairman of the Board
of Directors and President of the Company. Mr. Michael Pruitt also joined the Board.
On
November 23, 2022, SPEV entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Shurepower, LLC d/b/a
Shorepower Technologies, Inc. (“Shorepower”) under which Shorepower will be merged with and into SPEV subject to several
closing conditions, including satisfactory completion of due diligence reviews by each party to the Merger Agreement, Shorepower
providing SPEV with the most recent two years of audited financial statements by a PCAOB auditor, SPEV authorizing a new class of
Series B preferred stock with each Series B preferred share having the voting power of 40
shares of SPEV common stock, SPEV completing a stock and warrant financing to have a minimum of $480,000
in cash at closing (the “SPEV Pre-Merger Financing”) and SPEV not having any debt or contingent liabilities of any kind
at the time of the closing.
The
closing occurred on March 22, 2023.
Shorepower
is a transportation electrification infrastructure manufacturer of Electric Vehicle Supply Equipment (EVSE), Truck Stop Electrification
(TSE) and electric standby Transport Refrigeration Unit (eTRU) stations. They have 60 operational TSE facilities with over 1,800 individual
electrified parking spaces in 31 states. Shorepower’s stations are EPA SmartWay-Verified and CARB-Verified. Shorepower is a New
York limited liability company with headquarters in Hillsboro (Portland Area), Oregon and an office in Detroit, Michigan metro area.
Shorepower is a certified minority owned business enterprise (MBE). The Shorepower management team is comprised of a group of seasoned
individuals with knowledge of technology, transportation and heavy-duty vehicles and nearly two decades working together. Combined, the
team has managed over $16 million in government contracts and grant funds to deploy transportation electrification throughout the nation.
The
Company changed its name to Shorepower Technology, Inc. effective June 20, 2023.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
Company’s financial statements 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 U.S. 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 amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The
Company’s accounting estimates include the collectability of receivables, useful lives of long-lived assets and recoverability
of those assets, impairment in fair value of goodwill.
Concentration
of Credit Risk
We
maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. We continually monitor
our banking relationships and consequently have not experienced any losses in our accounts. We believe we are not exposed to any significant
credit risk on cash.
Stock-based
Compensation
In
June 2018, the FASB issued ASU 2018-07, Compensation
– Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU
2018-07 allows companies to account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal
years beginning after December 15, 2018, and interim periods within those annual periods.
Cash
Equivalents
The
Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There
were no cash equivalents for the years ended February 28, 2023 or 2022.
Fair
Value of Financial Instruments
The
Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial
instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure
the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles
generally accepted in the United States of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency
and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives
the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable
inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1: |
Quoted market prices available in active markets
for identical assets or liabilities as of the reporting date. |
Level 2: |
Pricing inputs other than
quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
Level 3: |
Pricing inputs that are generally
unobservable inputs and not corroborated by market data. |
The
carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate
their fair value because of the short maturity of those instruments. The Company’s notes payable approximate the fair value of
such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial
arrangements on February 28, 2023 and 2022.
Net
Income (Loss) Per Common Share
Net
income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income
(loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding
during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number
of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common
shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period
presented.
Income
Taxes
Income
taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to tax net operating loss carryforwards. The deferred tax assets and liabilities represent the future
tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or
settled, as well as operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation
allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred
tax assets will not become available. Because the judgment about the level of future taxable income is dependent to a great extent on
matters that may, at least in part, be beyond the Company’s control, it is at least reasonably possible that management’s
judgment about the need for a valuation allowance for deferred taxes could change in the near term.
Tax
benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The
amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement.
A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in the Company’s tax returns that
do not meet these recognition and measurement standards. As of February 28, 2023, and 2022, no liability for unrecognized tax benefits
was required to be reported.
Revenue
Recognition
In
2014, the FASB issued guidance on revenue recognition (“ASC 606”), with final amendments issued in 2016. The underlying principle
of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC
606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1)
identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3)
determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing
revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that
the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has
concluded that the new guidance did not require any significant change to its revenue recognition processes.
Recently
Issued Accounting Pronouncements
The
Company has implemented all new applicable accounting pronouncements that are in effect. These pronouncements did not have any material
impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting
pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE
3 – GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity
of operations, realization of assets, and liquidation of liabilities in the normal course of business. As shown in the accompanying financial
statements, the Company has an accumulated deficit of $7,790,519, with minimal revenue generated. Due to these conditions, it raises substantial
doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating
to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result should
the Company be unable to continue as a going concern.
NOTE
4 – RELATED PARTY TRANSACTIONS
During
the year ended February 28, 2022, Saeb Jannoun, CEO, advanced the Company $3,000 for general operating expenses. The advance was non-interest
bearing and due on demand. On July 26, 2021, Mr. Jannoun converted the $3,000 into 30,000 shares of common stock. The shares were valued
at $0.50, the closing stock price on the date of conversion, for a loss on conversion of debt of $12,000.
During
the year ended February 28, 2022, EROP Enterprises LLC (“EROP”), a significant shareholder, advanced the Company $28,870
for general operating expenses. The advance was non-interest bearing and due on demand. On July 26, 2021, EROP converted $28,870 into
288,700 shares of common stock. The shares were valued at $0.50, the closing stock price on the date of conversion, for a loss on conversion
of debt of $115,480.
On
April 7, 2021, the Company issued 200,000 restricted shares of common stock each to two of its directors for services. The shares were
valued at $0.12, the closing stock price on the date of grant, for total non-cash expense of $48,000.
During
the year ended February 28, 2022, EROP purchased 1,475,000 shares of common stock for $147,500. In addition, the Company granted 200,000
shares of common stock to EROP for services per the terms of a consulting agreement. The shares were valued at $0.52, the closing stock
price on the date of grant, for total non-cash expense of $104,000. The expense was being amortized over the one-year term of the service
agreement with EROP. As of February 28, 2022, the Company recognized $73,667 of the expense.
From February 1, 2022 through February 28, 2022, EROP
provided consulting services for total cash compensation of $7,000.
During
the year ended February 28, 2022, the Company was engaged by a relative of a shareholder to provide consulting services. As of February
28, 2022, the Company has recorded $5,000 of consulting revenue for services provided.
During
the year ended February 28, 2023, the Company granted 500,000 shares of common stock to EROP for services per the terms of a consulting
agreement. The shares were valued at $0.27, the closing stock price on the date of grant, for total non-cash expense of $135,000.
During
the year ended February 28, 2023, the Company granted 500,000 shares of common stock to Thirty-05, LLC, a company owned by Saeb Jannoun,
its CEO, for officer and director services. The shares were valued at $0.27, the closing stock price on the date of grant, for total
non-cash expense of $135,000.
During
the year ended February 28, 2023, the Company granted 250,000 shares of common stock to Michael Pruitt for director services. The shares
were valued at $0.27, the closing stock price on the date of grant, for total non-cash expense of $67,500.
On
February 23, 2023, pursuant to the terms of the merger with Shorepower, the Company granted 2,000,000
shares of Series B preferred stock and 26,089,758
shares of its common stock to Jeff Kim, the CEO of Shorepower.
During
Q4 2022, the Company advanced $50,000
to Shorepower for operating expenses. The advance was made as part of the merger agreement (see Note 11) and is non-interest
bearing. The advance will be eliminated upon consolidation of the financial statements of the Company and
Shorepower in the first quarter of fiscal year 2024.
NOTE
5 – DUE TO PRIOR RELATED PARTIES
On
April 7, 2021, as part of the purchase and sale agreement, the principals of MCI consisting of Daniel Meisenheimer III, Richard Meisenheimer
and their affiliated entities agreed to cancel previously issued and outstanding loans made to the Company.
Spectrum
Associates agreed to cancel indebtedness in the amount of $1,318,789 and the principals (D. Meisenheimer III and R. Meisenheimer) and
their other affiliates agreed to cancel indebtedness in the amount of $815,590.
As
a result of the debt cancellation the Company recognized a gain on the forgiveness of debt of $55,270 and credited $2,346,971 to additional
paid in capital.
NOTE
6 – COMMON STOCK
On
April 29, 2021, the Company issued 125,000 shares of common stock to World Equity Markets who acted in the capacity of a broker/dealer
for the Purchase Agreements (Note 1). The shares were valued at $0.71, the closing stock price on the date of grant, for total non-cash
expense of $88,750. The expense is being amortized over the six-month term of the service agreement with World Equity Markets. As of
February 28, 2022, the Company recognized $88,750 of the expense.
On
April 6, 2021, the Company issued 150,000 shares of common stock to Verde Capital, LLC for consulting services. The shares were valued
at $0.15, the closing stock price on the date of grant, for total non-cash expense of $22,500. The expense is being amortized over the
one-year term of the service agreement with Verde Capital, LLC. As of February 28, 2022, the Company recognized $19,688 of the expense.
During
the year ended February 28, 2022, the Company sold 2,400,000 shares of common stock for total cash proceeds of $240,000.
On
May 18, 2021, the Company increased its authorized shares of common stock to 100,000,000 shares.
During
the year ended February 28, 2023, the Company granted 250,000 shares of common stock to Millennial Investments, LLC for consulting services
per the terms of a consulting agreement. The shares were valued at $0.27, the closing stock price on the date of grant, for total non-cash
expense of $135,000.
On
February 17, 2023, the Company sold 11,000,000 shares
of common stock through the purchase of units at a price of $0.06 per
unit, each unit consisting of one share of its common stock and one warrant to purchase shares of its common stock, for total
proceeds of $660,000. Funds held at escrow after deducting legal and investor relation expenses was $553,000
as of February 28, 2023.
On March 4, 2023, 1,105,679 shares of Series
A Preferred stock were cancelled and 1,699,146 shares of common stock were issued (Note 7).
Refer
to Note 4 for shares issued to a related party.
NOTE
7 – PREFERRED STOCK
On
May 18, 2021, the Company increased its authorized shares of Preferred Stock from 2,000,000 to 10,000,000 shares.
There
are 1,105,644
shares designated as Series A preferred stock
(“Series A”). Each share of the Series A has five votes, is entitled to a 2%
cumulative annual dividend, and is convertible at any time into shares of common stock. On February 28, 2022, EROP converted its 1,105,679
shares of Series A Preferred stock into 1,699,146
shares of common stock. As a result of the conversion,
the Company recognized interest expense of $1,699,146.
The conversion was not processed by the transfer agent until March 4, 2022, therefore, although the expense has been recognized as of
February 28, 2022, the conversion was not reflected in the shares outstanding.
As of February 28, 2023, there were no
shares of Series A issued and outstanding.
As
part of the contemplated merger, the Company designated 2,000,000 of its 10,000,000 shares of authorized preferred stock as Series B
preferred. Each Series B preferred share will have voting power of 40 shares of the Company’s common stock. The Series B preferred
will have no conversion feature.
Refer
to Note 4 for shares issued to a related party.
NOTE
8 – WARRANTS
On
February 17, 2023, the Company sold 11,000,000 shares of common stock through the purchase of units at a price of $0.06 per unit, each
unit consisting of one share of common stock and one warrant to purchase common stock, for total proceeds of $660,000. The Warrants are
exercisable for shares of the Company’s common stock at a price of $0.25 per share and expire two years from the date of issuance.
The warrants are callable by the Company if its common stock trades at $0.75 for at least 20 trading days and at a volume of not less
than 30,000 shares per day. Using the fair value calculation, the relative fair value for the warrants was calculated to determine the
warrants recorded equity amount of $524,737, which has been accounted for in additional paid in capital.
In
accordance to ASC 815-40, an equity-linked financial instrument can be classified in equity only if it (1) is indexed to the reporting
entity’s own stock and (2) meets all other conditions for equity classification. The warrants are classified as equity instruments
because a fixed amount of cash is exchanged for a fixed amount of equity.
The
fair value of the warrants was determined using the Black-Scholes option pricing model which requires the input of subjective assumptions,
the expected life of the warrants, and the expected stock price volatility. The assumptions used in calculating the fair value of stock-based
awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.
As a result, if factors change and management uses different assumptions, stock-based compensation expense could be materially different
for future awards.
The
assumptions used to determine the fair value of the Warrants as follows:
SCHEDULE
OFWARRANT OF FAIR VALUE ASSUMPTIONS
| |
| | | |
| | |
| |
Years Ended February 28, | |
| |
2023 | | |
2022 | |
Expected life (years) | |
| 2 | | |
| N/A | |
Risk-free interest rate | |
| 4.78 | % | |
| N/A | |
Expected volatility | |
| 224.92 | % | |
| N/A | |
Dividend yield | |
| 0 | % | |
| N/A | |
The
expected life of the warrants was estimated using the “simplified method,” as the Company has no historical information to
develop reasonable expectations about future exercise patterns for its warrant grants. The simplified method is based on the average
of the vesting tranches and the contractual life of each grant. The expected life of awards that vest immediately use the contractual
maturity since they are vested when issued.
For
stock price volatility, the Company calculated its expected volatility based on the historical closing price of its common stock, par
value $0.01 per share. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the
warrant at the grant-date.
SCHEDULE
OF WARRANT ACTIVITY
| |
Number
of Warrants | | |
Weighted Average Exercise Price | | |
Weighted
Average Remaining
Contract Term | | |
Intrinsic Value | |
Outstanding, February 28, 2022 | |
| — | | |
| — | | |
| — | | |
| - | |
Issued | |
| 11,000,000 | | |
$ | 0.25 | | |
| 2 | | |
| - | |
Cancelled | |
| — | | |
$ | — | | |
| — | | |
| - | |
Exercised | |
| — | | |
$ | — | | |
| — | | |
| - | |
Outstanding, February 28, 2023 | |
| 11,000,000 | | |
$ | 0.25 | | |
| 1.97 | | |
$ | 2,519,000 | |
NOTE
9 – INCOME TAXES
Deferred
taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating
loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences
are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The Company has evaluated Staff Accounting Bulletin No. 118 regarding the impact of the decreased tax rates of
the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment. The U.S. federal income tax rate of 21% is being used.
Net
deferred tax assets consist of the following components as of February:
SCHEDULE
OF DEFERRED TAX ASSETS AND LIABILITIES
| |
2023 | | |
2022 | |
Deferred tax assets: | |
| | | |
| | |
NOL Carryover | |
$ | (345,100 | ) | |
$ | (295,000 | ) |
Related Party Accruals | |
| – | | |
| – | |
Less: valuation allowance | |
| 345,100 | | |
| 295,000 | |
Net deferred tax
asset | |
$ | – | | |
$ | – | |
The
income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from
continuing operations for the period ended February 28, due to the following:
SCHEDULE
OF INCOME TAX PROVISION
| |
2023 | | |
2022 | |
Deferred Tax Assets: | |
| | | |
| | |
Book Loss | |
$ | (125,400 | ) | |
$ | (435,400 | ) |
Related Party Accruals | |
| – | | |
| (453,500 | ) |
Other nondeductible expenses | |
| 85,100 | | |
| 341,700 | |
Less valuation allowance | |
| 40,300 | | |
| 547,200 | |
Net deferred tax provision | |
$ | – | | |
$ | – | |
At
February 28, 2023, the Company had net operating loss carry forwards of approximately $1,327,000 that may be offset against future taxable
income. NOLs from tax years up to 2017 can be carried forward twenty years. Under the CARES Act,
the Company carry forward NOLs indefinitely for NOLs generated in a tax year beginning after 2017, that remain after they are carried
back to tax years in the five-year carryback period. No tax benefit has been reported in the February 28, 2023, financial statements
since the potential tax benefit is offset by a valuation allowance of the same amount.
Due
to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting
purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to
use in future years. With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by
tax authorities for years before 2016.
NOTE
10 – RESTATEMENT
The balance sheet as of February 28, 2022, was being restated to correctly present 1,105,679 shares of Series A preferred stock that were
converted into 1,699,146 shares of common stock. The conversion, although effective on February 28, 2022, the common shares were not processed
and issued by the transfer agent until March 4, 2022. The restatement had no impact on the statement of operations and the statement of
cash flows for the year ended February 28,2022.
SCHEDULE
OF RESTATED BALANCE SHEET
| |
| | | |
| | | |
| | |
As of February 28, 2022 |
| |
As Reported | | |
Adjusted | | |
As Restated | |
| |
| | |
| | |
| |
Current Assets: | |
| | | |
| | | |
| | |
Cash | |
$ | 180,756 | | |
$ | — | | |
$ | 180,756 | |
Prepaid stock for services | |
| 32,208 | | |
| — | | |
| 32,208 | |
Total Assets | |
$ | 212,964 | | |
$ | — | | |
$ | 212,964 | |
| |
| | | |
| | | |
| | |
Current Liabilities: | |
| | | |
| | | |
| | |
Accounts payable | |
$ | 13,478 | | |
$ | — | | |
$ | 13,478 | |
Total Current Liabilities | |
| 13,478 | | |
| — | | |
| 13,478 | |
| |
| | | |
| | | |
| | |
Stockholders’ Equity (Deficit): | |
| | | |
| | | |
| | |
Series A preferred stock, $0.01 par value, 1,105,644 shares issued and outstanding | |
| — | | |
| 11,057 | | |
| 11,057 | |
Common stock, $0.01 par value, 100,000,000 shares authorized; 7,146,202 | |
| 88,453 | | |
| (16,991 | ) | |
| 71,462 | |
Additional paid-in capital | |
| 7,346,701 | | |
| (1,693,212 | ) | |
| 5,653,489 | |
Common shares to be issued | |
| — | | |
| 1,699,146 | | |
| 1,699,146 | |
Accumulated deficit | |
| (7,193,214 | ) | |
| — | | |
| (7,193,214 | ) |
Treasury stock, at cost; 39,975 shares of common stock | |
| (42,454 | ) | |
| — | | |
| (42,454 | ) |
Total Stockholders’ Equity | |
| 199,486 | | |
| — | | |
| 199,486 | |
Total Liabilities and Stockholders’ Deficit | |
$ | 212,964 | | |
$ | — | | |
$ | 212,964 | |
In
addition, a disclosure was added to Note 4, for $7,000 consulting services paid to EROP, a related party of the Company, for the year
ended February 28, 2022.
NOTE
11 – SUBSEQUENT EVENTS
The
Company’s Agreement and Plan of Merger (the “Merger Agreement”) with Shurepower, LLC d/b/a Shorepower Technologies
(“Shorepower”) under which Shorepower was merged with and into SPEV (the “Merger”) was closed on March 22,
2023.
Under
the terms of the Merger Agreement, Shorepower now owns 55%
of the issued and outstanding shares of SPEV common stock that includes the sale of 11,000,000 shares
of SPEV common stock sold under the SPEV Pre-Merger Financing that raised $660,000 (Note
5). Shorepower has received 2,000,000 shares
of a Series B Preferred stock (Note 5) and the right to receive the following additional shares of SPEV common stock upon achieving
the following milestones: (i)
an additional 2.5% of the issued and outstanding SPEV Common Stock upon the completion of either (a) the conversion of 75 existing
connection points to Level 2 or greater or the (b) installation of 75 new connection points to revenue producing stations in the
first 12 months or some combination of the two yielding 75 units, (ii) an additional 2.5% of the of the issued and outstanding SPEV
Common Stock upon (a) the application for $10M in grants and/or the (b) the award of $1.0 million in grants in the first 18 months;
(iii) an additional 2.5% of the issued and outstanding SPEV common stock outstanding upon the completion of acquisitions in the
first 24 months generating no less than $3.0 million in gross revenues and (iv) an additional 500,000 shares of SPEV common stock
upon acquiring or hiring the following key personnel in the first six months after the effective date of the merger: (a) three or
more qualified Board members and (b) at least three of the following four individuals having the following qualifications: one
sales/marketing person, one grant writer/Government relations person, one technician/maintenance person and one software
programmer/engineer.
Following
the closing of the merger between SPEV and Shorepower, Shorepower has transferred its current debt obligations of $1,400,000
to SPEV. Shorepower agreed that in assuming its management of SPEV that it shall not pay more than $2,000
per month from the proceeds of the SPEV Pre-Merger Financing towards reduction of such debt obligations for the first 12 months and
that the compensation of SPEV’s new CEO will not exceed $10,000
per month for the first nine months after the merger is effective. The Company has agreed to repay $10,000 a month towards the loans due to the CEO.
Effective
on the date of closing the merger, Saeb Jannoun and Michael D. Pruitt resigned as directors of the Company, and Mr. Jannoun resigned
as the CEO. Jeff Kim was appointed as the sole officer and director.
Effective June 20, 2023, the Company’s name was changed to Shorepower Technologies Inc and its ticker symbol
to SPEV.