HAMMER TECHNOLOGY HOLDINGS CORP. 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA July 31, 2022 and 2021 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 13 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Hammer Fiber Optics Holdings Corp. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Hammer Fiber Optics Holdings Corp. ("the Company") as of July 31, 2022, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of July 31, 2022 , and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States 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 these matters are 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. F-1 Accounting for Business Combination and Valuation of Intangible Assets - Refer to Note 6 to the financial statements Critical Audit Matter Description The Company transacted in a share exchange agreement with Telecom Financial Services Limited during the year which qualified as a significant, unusual transaction. How the Critical Audit Matter Was Addressed in the Audit Our principal audit procedures to evaluate management's accounting for the business combination and resulting asset value consisted of the following, among others: Evaluation of management's methodology for accounting for the business combination. Evaluation of information available to management in determining the value of the asset. Accounting for Revenue - Refer to Note 3 to the financial statements Critical Audit Matter Description The Company records revenue as services are provided and timing of services can impact revenue and contract liabilities balances. How the Critical Audit Matter Was Addressed in the Audit Our principal audit procedures to evaluate management's accounting for revenue consisted of the following, among others: Evaluation and testing of revenue to determine appropriate cutoff. Evaluation of management's revenue recognition policies in accordance with ASC 606 Revenue from Contracts with Customers . Fruci and Associates II, PLLC We have served as the Company's auditor since 2022. Spokane, Washington February 8, 2023 5525 F-2 Hammer Fiber Optics Holdings Corp. Consolidated Balance Sheets July 31, 2022 2021 ASSETS Current Assets Cash and cash equivalents $ 482,910 $ 77,606 Accounts receivable 216,834 285,006 Security Deposits 11,082 11,082 Prepaid expenses 14,746 14,808 Total current assets 725,572 388,502 Property and equipment, net 278,345 155,939 Intangible and other assets 7,323,702 3,113,508 Assets from Discontinued Operations 1,243,960 1,243,960 Total assets $ 9,571,579 $ 4,901,909 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities Accounts payable and accrued expenses $ 1,130,465 $ 908,136 Loans payable 1,544,935 580,597 Deferred Revenue 321,074 299,200 Total current liabilities 2,996,474 1,787,933 Liabilities from Discontinued Operations 546,304 632,385 Total Liabilities 3,542,778 2,420,318 Stockholders' Equity (Deficit) Common stock, $ 0.001 par value, 250,000,000 shares authorized 61,565,851 shares issued; 61,565,841 and 60,853,341 shares outstanding at July 31, 2022 and 2021, respectively $ 61,566 $ 60,853 Additional paid-in capital 27,564,129 22,859,434 Accumulated deficit ( 21,596,894 ) ( 20,438,696 ) Total Stockholder's Equity (Deficit) 6,028,801 2,481,591 Total Liabilities and Stockholders' Equity (Deficit) $ 9,571,579 $ 4,901,909 See accompanying notes to consolidated financial statements. F-3 Hammer Fiber Optics Holdings Corp Consolidated Statements of Operations For the Year Ended July 31, 2022 2021 Revenues $ 2,602,115 $ 2,199,127 Costs and expenses: Cost of sales 2,022,190 1,568,357 Selling, general and administrative expenses 1,062,163 694,389 Depreciation expense 65,487 55,398 Total operating expenses 3,149,840 2,318,144 Operating loss ( 547,725 ) ( 119,017 ) Other income (expense) Other Income - 213,026 Interest expense ( 11,587 ) ( 30,797 ) Financing expenses ( 586,133 ) - Other expenses ( 12,040 ) ( 2,475 ) Total other expenses ( 609,760 ) 179,754 Income (loss) Before Discontinued Operations ( 1,157,485 ) 60,737 Income (loss) From Discontinued Operations - 2,412,877 Net income (loss) $ ( 1,157,485 ) $ 2,473,614 Weighted average number of common shares outstanding - basic and diluted 61,382,496 60,853,341 Loss per share- basic and diluted Continuing operations $ ( 0.02 ) $ - Discontinued operations - 0.04 Total $ ( 0.02 ) $ 0.04 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, 2019 60,853,341 60,853 10,914,783 - $ 17,201,434 $ ( 21,987,959 ) $ ( 4,725,672 ) Treasury shares issued for acquisition - - ( 500,000 ) - 230,000 - 230,000 Commitment shares issued in registration statement - - ( 350,000 ) - 80,500 - 80,500 Net loss - - - - - ( 924,351 ) ( 924,351 ) Balance, July 31, 2020 60,853,341 60,853 10,064,783 - 17,511,934 ( 22,912,310 ) ( 5,339,523 ) Treasury shares issued for cash - - ( 307,377 ) - 75,000 - 75,000 Treasury shares issued for prior acquisition - - ( 2,067,071 ) - - - - Treasury shares issued for debt settlement - - ( 1,757,500 ) - 5,272,500 - 5,272,500 Net income - - - - - 2,473,614 2,473,614 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 - 454,195 Treasury shares issued - - ( 89,750 ) - - - - Net loss - - - - - ( 1,157,485 ) ( 1,157,485 ) Balance, July 31, 2022 61,565,841 61,566 1,753,335 - $ 27,564,129 $ ( 21,596,894 ) $ 6,028,801 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, 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ ( 1,157,485 ) $ 2,473,614 Loss from discontinued operations - ( 2,412,877 ) Adjustments to reconcile net loss to net cash provided by operating activities: Gain on loan forgiveness - ( 88,097 ) Depreciation expense 64,327 55,398 Changes in operating assets and liabilities: Accounts receivable ( 46,860 ) 146,344 Security deposits - ( 636 ) Prepaid expenses 62 33,989 Accounts payable 348,680 ( 295,910 ) Deferred revenue 21,879 9,815 Net cash provided by (used in) operating activities- continuing operations ( 769,397 ) ( 78,360 ) Net cash provided by (used in) operating activities- discontinued operations ( 50,212 ) - Net cash provided by (used in) operating activities ( 819,609 ) ( 78,360 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment ( 205,060 ) ( 75,503 ) Purchase of licenses - - Acquisition of customer contracts - - Net cash provided by (used in) investing activities- continuing operations ( 205,060 ) ( 75,503 ) Net cash provided by (used in) investing activities- discontinued operations - - Net cash provided by (used in) investing activities ( 205,060 ) ( 75,503 ) CASH FLOWS FROM FINANCING ACTIVITIES Repayment of loans ( 100,966 ) ( 103,493 ) Proceeds from loans 1,530,939 411,031 Net cash provided by (used in) financing activities- continuing operations 1,429,973 307,538 Net cash provided by (used in) financing activities- discontinued operations - ( 150,000 ) Net cash provided by (used in) financing activities 1,429,973 157,538 Net increase (decrease) in cash 405,304 3,675 Cash, beginning of period 77,606 73,931 Cash, end of period $ 482,910 $ 77,606 SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES: Cash paid for interest $ 11,587 $ 30,797 Cash paid for taxes $ 2,040 $ 2,475 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, 2022 and 2021 NOTE 1 - ORGANIZATION AND DESCRIPTION BUSINESS Hammer Fiber Optics Holdings Corp (OTCQB: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 s 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. 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. F-7 HAMMER FIBER OPTICS HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2022 and 2021 NOTE 2 -CORPORATE HISTORY AND BACKGROUND ON MERGER (CONTINUED) 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. 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. COVID-19 Pandemic Update In March 2020, the World Health Organization declared a global health pandemic related to the outbreak of a novel coronavirus. The COVID-19 pandemic adversely affected the company's financial performance in the third and fourth quarters of fiscal year 2020, mostly due to the discontinuation of the operations it its Open Data Centers, LLC operations effective April 30, 2020. In response to the COVID-19 pandemic, government health officials have recommended and mandated precautions to mitigate the spread of the virus, including shelter-in-place orders, prohibitions on public gatherings and other similar measures. As a result, the company and certain of the company's customers and suppliers temporarily closed locations beginning late in the second quarter of fiscal year 2020, continuing into the third quarter of fiscal year 2020. Partly due to the COVID-19 pandemic, the Company shut down the operations of its Open Data Centers, LLC operations effective April 30, 2020.There is uncertainty around the duration and breadth of the COVID-19 pandemic, as well as the impact it will have on the company's operations, supply chain and demand for its products. As a result, the ultimate impact on the company's business, financial condition or operating results cannot be reasonably estimated at this time. On May 5, 2020 and on February 26, 2021 the Company's 1stPoint Communications LLC subsidiary entered into two $ 88,097 notes payable to Bank of America, pursuant to the Paycheck Protection Program ("PPP Loan") under the CARES Act. 1stPoint met the requirements for Loan Forgiveness, and as of October 19, 2021, these notes have been forgiven by the Small Business Administration in accordance with rules of the CARES Act. The amounts of have been reflected as other income in the company's financial statements. 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. F-8 HAMMER FIBER OPTICS HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2022 and 2021 NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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. F-9 HAMMER FIBER OPTICS HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2022 and 2021 NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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 - inputs that are unobservable (for example cash flow modeling inputs based on assumptions). All financial assets and liabilities are approximate their fair value. Warrants are valued at Level 3. 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 have been discontinued and are reported on a summarized basis in consolidation. Open Data Centers was dissolved on December 30, 2020. The discontinued operations continue to have assets valued greater than zero because there is a commitment for equipment that has yet to be manufactured that is considered by management to be of value in future deployments either in the Company’s existing telecommunications business unit, or potentially in new deployments on the African continent in support of the HammerPay, which is part of the financial technologies business unit. 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 earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company. As of July 31, 2022 and 2021, there were no common stock equivalents outstanding. As of July 31, 2022 the Company had 300,000 shares of potentially dilutive warrants. Recent accounting pronouncements 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. At present this does not impact our financial statements, but may in the future if there is conversion of certain notes. Management will continue to evaluate if this impacts our financial statements . No other accounting pronouncements are applicable. Reclassifications Certain reclassifications have been made to the financial statements to conform to the consolidated 2021 financial statement presentation. F-10 HAMMER FIBER OPTICS HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2022 and 2021 NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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-11 HAMMER FIBER OPTICS HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2022 and 2021 NOTE 5 - DISCONTINUED OPERATIONS Hammer Fiber Optics Investment Ltd ceased operations in the Atlantic County geographical market on October 31, 2018 when Verizon Communications, LLC terminated the spectrum lease agreement. The operations of Hammer Fiber Optics Investments, Ltd were classified as a discontinued operation. Open Data Centers, LLC ceased operating in its Piscataway, NJ location in May 2020 and was classified as a discontinued operation. Reporting of the discontinued operations is in accordance with Accounting Standards Update No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The following summarizes the assets and liabilities of the discontinue operations: July 31, 2022 July 31, 2021 Assets Current Assets Cash $ - $ - Accounts receivable - - Other current assets - - Total current assets - - Other Assets Property and equipment- net 1,243,960 1,243,960 Intangible assets - - Total other assets 1,243,960 1,243,960 Total Assets $ 1,243,960 $ 1,243,960 Liabilities and Net Assets Current Liabilities Accounts payable $ 546,304 $ 632,385 Notes payable- related parties - - Current portion of long-term notes payable - related parties - - Accrued interest - - Rent Concessions - - Total current liabilities 546,304 632,385 Net assets (liabilities) $ 697,656 $ 611,575 The following summarizes the operations of the discontinued operations: July 31, 2022 July 31, 2021 Revenue $ - $ - Operating expenses Operations and maintenance - - General and administrative - - Depreciation and amortization - - Impairment expense - - Loss from operations - - Other income (expense) - 2,412,877 Interest expense - - Interest income - - Total other income (expense) - 2,412,877 Net Income $ - $ 2,412,877 F-12 HAMMER FIBER OPTICS HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2022 and 2021 NOTE 6 - ACQUISITIONS 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 in exchange for 5,000,000 shares of the Company's Common 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. One Hundred Percent (100%) of the value of the acquisition has been allocated to the value of the HammerPay Remit Platform (formerly TFS Remit) and associated customer contracts with United Bank for Africa which have been previously disclosed via 8-K. NOTE 7 - PROPERTY AND EQUIPMENT As of July 31, 2022, property and equipment from ongoing operations included: Amount Life Computer and Telecom equipment $ 1,403,381 5 years Less: Accumulated depreciation ( 1,125,036 ) Total $ 278,345 Depreciation expense was $ 65,487 and $ 55,398 for the years ended July 31, 2022 and 2021, respectively. NOTE 8 - INDEFINITE LIVED INTANGIBLE ASSETS The Company has $ 18,934 of recognized indefinite lived intangible assets, which consist of the ownership of Internet Protocol version 4 (IPv4) address blocks. The Hammer Wireless SL, Ltd. Subsidiary has been granted a nationwide telecommunications and wireless license in the country of Sierra Leone, for which it paid $ 218,584 . Hammer paid $ 42,500 to Wikibuli, Inc. in exchange for capital stock in Wikibuli, the operating company in Dominica. Hammer acquired the stock of Telecom Financial Services Limited ("TFS") for the acquisition one hundred percent ( 100 %) of its stock for 5,000,000 shares of the Company's Common Stock. This asset was valued at $ 4,250,500 . These assets are not amortized and are evaluated routinely for potential impairment. If a determination is made that the intangible asset is impaired after performing the initial qualitative assessment, the asset's fair value will be calculated and compared with the carrying value to determine whether an impairment loss should be recognized. NOTE 9 - RELATED PARTY TRANSACTIONS On October 9, 2016, the Company entered into a short-term loan agreement with a family member of a member of the Company's Board of Directors (BOD). Under the agreement, the lender advanced $ 100,000 to the Company for the purpose of providing working capital. The loan carries an annual interest rate of 3 %. On September 15, 2016, the Company received $ 210,000 from a family member of a member of the BOD, also for the purpose of working capital, and has recorded such amount as a deposit in anticipation of executing a loan agreement.The company settled this note for the full amount in stock at $ 3 /share of HMMR common stock on July 31, 2021. During the fiscal year ended July 31, 2016, the Company entered into two promissory notes with a related party for an aggregate amount of $ 2,400,000 and $ 1,000,000 , respectively. The $ 2,400,000 note matured on January 4, 2019 . The terms consist of ten principal and interest payments due quarterly in the amount of $ 300,000 for total payments of $ 3,000,000 . The Company is currently in default on this loan. To date, the Company has made payments on this note amounting to $ 725,831 . The payments were applied to interest accrued as of the time of payment as well as to principal. The principal balance was $ 2,294,067 at July 31, 2019 and 2018. The interest accrued was $ 219,434 at July 31, 2019.The $ 1,000,000 note matured on June 9, 2018 at which time the principal became due in its entirety, in addition to simple interest accrued at 3 %. In November 1, 2018, as a term of the Stock Purchase Agreements Amendment Number 1 signed as part of the acquisition of Open Data Centers, LLC, 1stPoint Communications LLC and Endstream Communications LLC, this party agreed to convert this debt at $ 3 per share of Common Stock at a time of the Company's choosing. These notes were converted to equity at $ 3 per share of common stock during the period ended July, 31, 2021 in the amount of 1,757,500 shares of Common Stock. On February 12, 2018, the Company entered into a convertible promissory note for the sum of $ 103,000 . On June 19, 2018, the note was settled in full on the company's behalf by a Director. The settlement included a prepayment penalty for a full settlement amount of $ 132,433 . The difference between the carrying value of the loan and the full settlement amount ($ 29,433 ) was recorded as interest expense. F-13 HAMMER FIBER OPTICS HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2022 and 2021 NOTE 9 - RELATED PARTY TRANSACTIONS (CONTINUED) On April, 9 2018, the Company received an additional $ 20,000 deposit from a family member of a member of the Board of Directors. The amount was intended as additional working capital. The Company anticipates execution of a loan agreement relative to this advance. This note was converted at $ 3 per share of the Company’s Common Stock during the period ended July 31, 2021 as part of the terms of the Stock Purchase Agreements Amendment Number 1 as part of the acquisition of Open Data Centers, LLC, 1stPoint Communications, LLC and Endstream Communications, LLC. During the fiscal year 2018, the Company entered into a Stock Purchase Agreement with a related party for the sum of $ 14,000 of common stock at $ 0.4629 per share on May 5, 2019, and the sum of $ 12,000 of common stock at $ 0.405 per share on May 30, 2019.During the fiscal year 2019, the Company entered into a Stock Purchase Agreement with a related party for the sum of $ 25,000 of common stock at $ 0.25 per share on March 17, 2020, the sum of $ 40,000 of common stock at $ 0.24 per share on March 24, 2020. During the current fiscal year ending on July 31, 2020, the Company entered into convertible notes with a related party on April 20 th and May 5 th 2020 in the amounts of $ 36,300 , and $ 12,000 respectively. The $ 12,000 note was paid on May 12 th , 2020. The Company entered into a convertible note with a related party on August 22, 2019 in the amount of $ 12,000 . $ 4,500 has been repaid. The Company entered into a convertible note with two related parties on August 24, 2019 in the amount of $ 12,000 and $ 6,000 respectively. Any interest may be accrued as either cash or stock at the option of the Company.During the current fiscal year ending July 31, 2020, the Company entered into Stock Purchase Agreements from a related party in the amount of $ 10,000 on August 15, 2020, $ 25,000 on March 17, 2020, and $ 40,000 on March 26, 2020. On April 6, 2020, the Company entered into a promissory note for the sum of $ 36,300 with a related party. The note bears interest at a rate of 6 %, payable quarterly .On September 1, 2020, the Company entered into a promissory note for the sum of $ 100,000 with a related party. The note bears interest at a rate of 6 %, payable quarterly . On November 23, 2020, and on January 19, 2021 the Company entered into promissory notes for the sums of $ 10,000 and $ 75,000 with a related party. These notes bear interest at a rate of 6 %, payable quarterly and may be convertible into common stock at the Company's option. On February 26, 2021, March 9, 2021 and March 15, 2021 the Company entered into promissory notes for the sums of $ 25,000 , $ 100,000 and $ 25,000 respectively, with a related party. These notes are bear interest at a rate of 6 % payable quarterly unless forgiven by the note holder and may be converted into common stock at the Company’s option. On January 15, 2022 the Company entered into a promissory note for the sum of $ 25,000 with a related party.These notes bear interest at a rate of 6 %, annually, to be expensed at the end of the note upon conversion unless forgiven by the holder, and may be convertible into common stock at the Company's option, and on December 28, 2021, January 12, 2022 and January 21, 2022 1stPoint Communications, LLC entered into three notes in the amounts of $ 10,200 , $ 7,600 and $ 4,000 with a related party under the same terms as the note on January 15, 2022. As of July 31, 2022, all of the related party payables are reported as current liabilities in the Consolidated Balance Sheet. NOTE 10 - CONVERTIBLE DEBT The company has convertible notes with related parties in the amounts of $ 24,253 , $ 161,300 , $ 12,000 , $ 6,000 , $ 7500 , $ 36,600 and $ 295,500 that convert into Common Stock at the Company's option and bear interest at a rate of 6 % annually, to be expensed at the time of conversion. On February 11, 2022, the Company entered into a Securities Purchase Agreement (the "Mast SPA") by and between the Company and Mast Hill Fund, L.P. ("Mast"). Pursuant to the terms of the Mast SPA, the Company agreed to sell to Mast and Mast agreed to purchase from the Company, a promissory note in the aggregate principal amount of $ 550,000 (the "Mast Note"), convertible into shares of the Company's common stock upon the terms and subject to the limitations and conditions set forth in the Mast Note. The Mast Note has an original issue discount of $ 55,000 , resulting in gross proceeds to the Company of $ 495,000 . Mast has piggyback registration rights pursuant to the terms of the Mast SPA. Pursuant to the terms of the Mast SPA, the Company also agreed to issue (i) a common stock purchase warrant to purchase 150,000 shares of Company common stock at an exercise price of $ 3.00 , subject to adjustment as set forth therein (the "Mast First Warrant"), (ii) a common stock purchase warrant to purchase 150,000 shares of Company common stock at an exercise price of $ 1.50 , subject to adjustment as set forth therein (the "Mast Second Warrant" and together with the Mast First Warrant, the "Mast Warrants"), and (iii) 475,000 shares of Company common stock to Mast as additional consideration for the purchase of the Mast Note. The Mast Note bears interest at a rate of 12 % per annum and matures on February 11, 2023 . Any amount of principal or interest on the Mast Note which is not paid when due will bear interest at a rate of the lesser of (i) 16 % per annum and (ii) the maximum amount permitted by law. The Mast Note may not be prepaid in whole or in part except as provided in the Mast Note by way of conversion at Mast's option. Mast has the right at any time to convert all or any part of the outstanding and unpaid principal amount and interest of the Mast Note into common stock, subject to a 4.99 % equity blocker, at a conversion price of $ 0.58 per share; provided, however, that Mast is entitled to deduct $ 1,750 from the conversion amount in each case to cover Mast's fees associated with conversion. Mast's right to exercise each of the Mast Warrants is subject to a 4.99 % equity blocker. Each of the Mast Warrants expires on the five-year anniversary of issuance. The foregoing description of the Mast SPA, the Mast Note and the Mast Warrants does not purport to be complete and is qualified in its entirety by reference to the Mast SPA, the Mast Note, the First Mast Warrant and the Second Mast Warrant, copies of which are filed as Exhibits 10.1, 10.2, 10.3 and 10.4 to Form 8-K filed on February 23, 2022. F-14 HAMMER FIBER OPTICS HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2022 and 2021 NOTE 10 - CONVERTIBLE DEBT (CONTINUED) On February 17, 2022, the Company entered into a Securities Purchase Agreement (the "Talos SPA") by and between the Company and Talos Victory Fund, LLC ("Talos"). Pursuant to the terms of the Talos SPA, the Company agreed to sell to Talos, and Talos agreed to purchase from the Company, a promissory note in the aggregate principal amount of $ 275,000 (the "Talos Note"), convertible into shares of the Company's common stock upon the terms and subject to the limitations and conditions set forth in the Talos Note. The Talos Note has an original issue discount of $ 27,500 , resulting in gross proceeds to the Company of $ 247,500 . Talos has piggyback registration rights pursuant to the terms of the Talos SPA. Pursuant to the terms of the Talos SPA, the Company also agreed to issue (i) a common stock purchase warrant to purchase 75,000 shares of Company common stock at an exercise price of $ 3.00 , subject to adjustment as set forth therein (the "Talos First Warrant"), (ii) a common stock purchase warrant to purchase 75,000 shares of Company common stock at an exercise price of $ 1.50 , subject to adjustment as set forth therein (the "Talos Second Warrant" and together with the Talos First Warrant, the "Talos Warrants"), and (iii) 237,500 shares of Company common stock to Talos as additional consideration for the purchase of the Talos Note. The Talos Note bears interest at a rate of 12 % per annum and matures on February 17, 2023 . Any amount of principal or interest on the Talos Note which is not paid when due will bear interest at a rate of the lesser of (i) 16 % per annum, and (ii) the maximum amount permitted by law. The Talos Note may not be prepaid in whole or in part except as provided in the Talos Note by way of conversion at Talos' option. NOTE 11 - INCOME TAXES The Company's income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management's best estimate of current and future taxes to be paid. The Company is subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgments and estimate are required in the determination of the consolidated income tax expense. The reconciliation of income tax benefit at the U.S. statutory rate of 21 % for the fiscal year ended July 31, 2022 and 2021, to the Company's effective tax rate is as follows: July 31, 2022 2021 Income tax benefit provision at statutory rate $ ( 187,671 ) $ 619,512 Change in valuation allowance 187,671 ( 619,512 ) $ - $ - The tax effects of temporary differences that give rise to the Company's net deferred tax assets as of July 31, 2022 and 2021 are as follows: July 31, 2022 2021 Net operating gain/loss $ ( 893,672 ) $ 2,950,060 Valuation allowance 893,672 ( 2,950,060 ) $ - $ - The Tax Cuts and Jobs Act of 2017 (the Act) reduced the statutory corporate federal income tax rate from 35 % to 21 % beginning in 2018. The blended tax rate for 2018 considered the tax laws enacted in 2017. The tax effect of temporary differences from net operating losses ("NOL") has been reduced to reflect the newly enacted rates. The Company has approximately $ 22,912,000 of NOL carried forward to offset taxable income in future years. The tax laws enacted in 2017 also changed the treatment of NOL. Prior to the change, NOL could be carried back up to two years and carried forward up to 20 years to offset taxable income. In the new tax law, the NOL that can be carried forward is limited to 80% of the taxable income, can no longer be carried back, but are allowed to be carried forward indefinitely. The new law will apply to NOL arising in tax years beginning December 31, 2017, hence, $ 3,000,000 of the NOL will be subject to the 80% limitation and will be carried forward indefinitely while $ 19,297,000 of the NOL will be carried forward for 20 years and will begin to expire in 2036. F-15 HAMMER FIBER OPTICS HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2022 and 2021 NOTE 11 - INCOME TAXES (CONTINUED) In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all of the deferred tax assets relating to NOLs for every period because it is more likely than not that all of the deferred tax asset will not be realized. As of July 31, 2021 and 2022, the Company has no unrecognized income tax benefits. The Company's policy for classifying interest and penalties associated with unrecognized income tax benefits is to include such items as a tax expense. No interest or penalties have been recorded during the years ended July 31, 2022 and 2021. As of July 31, 2022 and 2021, the Company did not have any amounts recorded pertaining to uncertain tax positions. The tax years from 2015 and forward remain open to examination by federal and state authorities due to net operating loss and credit carryforwards. The Company is currently not under examination by the Internal Revenue Service or any other taxing authorities. NOTE 12 - STOCKHOLDERS' EQUITY Treasury Stock During the year ended July 31, 2022, the Company issued 5,000,000 shares as part of 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. NOTE 13 - COMMITMENTS AND LEASES Hammer does not currently have any material long term lease obligations. NOTE 14 - FOREIGN CURRENCY We transact business in various foreign currencies including the Euro and the Leone. 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 USD 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 not material to the Company's accompanying financial statements. NOTE 15 - CLAIMS 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. $ 9209.69 Horizon Blue Cross v. Hammer Fiber Optics Inv, Ltd. $ 17,308.58 Cross River Fiber v. Hammer Fiber Optics Inv, Ltd. $ 273,220 The matter of 15 Corporate Place, LLC v. Open Data Centers, LLC settled for $ 25,000 plus acceptance of the security deposit which has already been written down in assumption of this outcome. The final settlement was less than the $ 35,000 originally offered. 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, Hammer has made a motion for Summary Judgement to dismiss the claim on the basis of the lack of evidence that any entity other than Hammer Fiber Optics Investments, Ltd. was a party to the claim. The claims in this matter are similar to those made by Zayo Group and Crown Castle Fiber, which were both settled. As a result of the expected outcome, management has made no allowance for loss in these matters. NOTE 16 - WARRANTS On February 11, 2022, the Company issued 150,000 warrants to Mast Hill Fund, L.P. in conjunction with convertible debt. The warrants are exercisable for 5 years at $ 1.50 per share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that would require a liability classification and are therefore considered equity. On February 11, 2022, the Company issued 150,000 warrants to Mast Hill Fund, L.P. in conjunction with convertible debt. The warrants are exercisable for 5 years at $ 3.00 per share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that would require a liability classification and are therefore considered equity. The Black Scholes model was used to determine the fair price of the warrants, including the use of the share price, exercise price, term, volatility ( 16 %), risk free interest rate ( 3.63 %) and the dividend rate ( 0 %). The price of the warrants was considered immaterial and because the strike price of both warrants has not been exceeded in the prior three periods it was determined by management that the price of the option should be valued at $ 0.000 /share. NOTE 17 - SUBSEQUENT EVENTS On February 17, 2022, the Company entered into a Securities Purchase Agreement (the "Talos SPA") by and between the Company and Talos Victory Fund, LLC ("Talos"). Pursuant to the terms of the Talos SPA, the Company agreed to sell to Talos, and Talos agreed to purchase from the Company, a promissory note in the aggregate principal amount of $ 275,000 (the "Talos Note"), convertible into shares of the Company's common stock upon the terms and subject to the limitations and conditions set forth in the Talos Note. The Talos Note had an original issue discount of $ 27,500 , resulting in gross proceeds to the Company of $ 247,500 . Talos reserved the right at any time to convert all or any part of the outstanding and unpaid principal amount and interest of the Talos Note into common stock, subject to a 4.99 % equity blocker, at a conversion price of $ 0.58 per share under the rights pursuant to the terms defined in their entirety by the Talos SPA filed by the Company in a Current Report on Form 8-K on February 23, 2022. On October 4, 2022 Talos informed the Company that it had elected to convert the $ 275,000 principal amount of the Note together with $ 20,613.68 interest and $ 1,750.00 in fees totaling $ 297,363.68 into 512,696 shares of Common Stock to be issued pursuant to the conversion of the Note as set forth in the Talos SPA. On October 19, 2022, the Company announced that it has entered into a non-binding letter of intent with shareholders of Mobile Finance Group Ltd trading under the brand name of Wallet Factory, a provider of digital finance services and enterprise-grade e-Wallet platforms. The LOI contemplates that the parties will enter into a definitive agreement pursuant to which HMMR will acquire a controlling interest in the outstanding common stock of Mobile Finance Group Ltd ("Wallet Factory"). Management has reviewed the subsequent events and there is no material impact on the current financial statements or the valuation of the business. F-16 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL STATEMENTS On November 14, 2022, we dismissed as our independent public accounting firm Boyle CPA (the "Dismissal"). The Dismissal is due to Boyle CPA's failure to provide any meaningful responses to our repeated communications since the September 9, 2022 Engagement Letter with Boyle CPA regarding the audit to be performed by Boyle CPA for the audit year end of July 31, 2022 (the "Audit"), leading us to the conclusion that Boyle CPA was not committed to working on the Audit. On November 14, 2022, our Board of Directors unanimously approved a resolution to dismiss Boyle CPA effective immediately as of November 14, 2022. During the years ending July 31, 2019, 2020 and 2021, respectively and the subsequent interim periods through October 31, 2022 and to present there were no (1) disagreements with Boyle CPA on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedures, or (2) reportable events under Item 301(a)(1)(v) of Regulation S-K. On November 14, 2022, , the Company unanimously passed a resolution to appoint Fruci and Associates II, PLLC as our new independent public accounting firm. ITEM 9A(T). CONTROLS AND PROCEDURES Management's Report on Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and our chief financial officer (who is acting as our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure. As of July 31, 2022, we carried out an evaluation, under the supervision of our Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The officer concluded that the disclosure controls and procedures were not effective as of the end of the period covered by this report. Management's Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control include providing management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States. Our management assessed the effectiveness of our internal control over financial reporting as of July 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework. Our management has concluded that, as of July 31, 2022, our internal control over financial reporting was not effective. This annual report does not include an attestation report of our company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit our company to provide only management's report in this annual report. Inherent limitations on effectiveness of controls Internal control over financial reporting has inherent limitations which include but is not limited to the use of independent professionals for advice and guidance, interpretation of existing and/or changing rules and principles, segregation of management duties, scale of organization, and personnel factors. Internal control over financial reporting is a process which involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a timely basis, however these inherent limitations are known features of the financial reporting process and it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Changes in Internal Control over Financial Reporting There have been no changes in our internal controls over financial reporting that occurred during the year ended July 31, 2022that have materially or are reasonably likely to materially affect, our internal controls over financial reporting. 14 ITEM 9B. OTHER INFORMATION None. 15 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Identification of Executive Officers and Directors of the Company Name and Address of Beneficial Owner Directors and Officers: Age Class Shares Held or Controlled Percentage of Class 1 Michael Cothill 2 Director 401 East 34 th Street, Suite #N27J New York, NY 10016 65 Common 4,350,000 7.1% Erik B. Levitt 3 CEO, President& Executive Director 401 East 34 th Street, Suite #N27J New York, NY 10016 48 Common 2,384,310 3.9% Michael Sevell 4 Director 401 East 34 th Street, Suite #N27J New York, NY 10016 68 Common 9,857,359 16.0% Mark Stogdill 5 Director 401 East 34 th Street, Suite #N27J New York, NY 10016 42 Common 5,000,000 8.1% Kristen Vasicek 6 Secretary & COO 401 East 34 th Street, Suite #N27J New York, NY 10016 40 Common 261,719 >1.0% All executive officers and directors as a group (5 people) Common 20,544,856 35.5 % 1. The number and percentage of shares beneficially owned is determined under rules promulgated by the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The entities or persons named in the table have sole voting and investment power with respect to all shares of common stock shown that are beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table. 2. On August 1, 2016, Michael Cothill was appointed as the Company's Treasury and Chairman of the Company's Board of Directors. The beneficial ownership of our Chairman, Michael Cothill, is held through Ambleside Trust, of which he is the Managing Member. 3. Erik Levitt's ownership is composed of 2,384,310 shares owned directly, as follows: (a) 91,800 shares issued (pursuant to an the September 11, 2018 Purchase Agreement for our purchase of Shelcomm, Inc.) ("Shelcomm"),in exchange for Erik Levitt's respective equity ownership in Shelcomm; and (b) 199,954 shares issued (pursuant to the September 12, 2018 Purchase Agreement for our purchase of Open Data Centers ("Open Data")in exchange for Erik Levitt's respective ownership of Open Data Centers, LLC.In addition, pursuant to vesting schedules, Erik Levitt will receive 1,534,325 shares through a single member LLC, Manhattan Carrier Company ("Manhattan), of which he is the sole member, as follows: (i) 665,808 shares issued to (pursuant to the September 11, 2018 Purchase Agreement providing for our 100% purchase ofEndstream Communications, LLC ("Endstream), which includedErik Levitt's respectiveownership of Endstream; (ii) 871,517 shares issued to (pursuant to the September 11, 2018 Purchase Agreement providing for our 100% purchase of lstPoint Communications, LLC) ("lstPoint"), including Erik Levitt's respective ownership of lstPoint. Amendment 2 to the Stock Purchase Agreement for Endstream and 1stPoint Communications altered the 539 Plan, and Mr. Levitt received 159,800 shares of Common Stock in exchange for Erik Levitt's respective ownership of Endstream Communications, LLC and 226,845 shares of Common Stock in exchange for Erik Levitt's respective ownership of 1stPoint Communications, LLC. In accordance with Amendment 2 of the Stock Purchase Agreements for Endstream and 1stPoint Communications altered the Plan and Mr. Levitt received an additional 141,817 shares of Stock. 4. Michael Sevell's ownership of 9,857,359shares is composed of: (a) 7,665,039 shares owned directly by Michael Sevell; and (b) 2,192,500 shares representing his indirect ownership through 2,192,500 shares owned by Forefront Investors, LLC., for which Michael Sevell has sole dispositive power. 16 5. Mark Stogdill's ownership is 5,000,000 shares represents his indirectly ownership of 5,000,000 shares owned by Arradis Enterprises, LLC, a Limited Liability Company under his control and for which he has sole dispositive power. 6 . Kristen Vasicek received 261,791 shares associated with the 2018 Purchase Agreements of Endstream Communications, LLC, and 1stPoint Communications, LLC, as amended under Amendment 2 of the Stock Purchase Agreement, which altered the 539 Vesting Plan. Term of Office Each director of the Company serves for a term of one year and until his successor is elected and qualified at the next Annual Shareholders' Meeting, or until his death, resignation or removal. Each officer of the Company serves for a term of one year and until his successor is elected and qualified at a meeting of the Board of Directors. Significant Employees Michael P. Cothill - Executive Chairman Erik B. Levitt - Principal Financial Officer, CEO - 1stPoint Communications Kristen Vasicek - Chief Operating Officer Family Relationships None. Involvement in Certain Legal Proceedings During the past ten years no director, executive officer, promoter or control person of the Company has been involved in the following: (1) A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing; (2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: (i) Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; (ii) Engaging in any type of business practice; or (iii) Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; (4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity; (5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; (6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; 17 (7) Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) Any Federal or State securities or commodities law or regulation; or (ii) Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Code of Ethics The Company has not adopted any formal Code of Ethics. Committees of the Board of Directors The Company does not presently have a separately designated standing audit committee, compensation committee, nominating committee, executive committee or any other committees of our Board of Directors. The functions of those committees are undertaken by our Board of Directors as a whole. ITEM 11. EXECUTIVE COMPENSATION The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to the named persons for services rendered in all capacities during the noted periods. No other executive officer received total annual salary and bonus compensation in excess of $100,000. SUMMARY COMPENSATION TABLE 1 Name and Principal Position Fiscal Year Salary ($) All Other Compensation ($) Total ($) Michael P. Cothill 2022 70,000 NIL 70,000 Executive Director & Executive Chairman 2021 NIL NIL NIL Erik B. Levitt 2022 NIL NIL NIL Executive Director& Principal Financial Officer, CEO - 1stPoint Communications, LLC 2021 11,000 NIL 11,000 Kristen Vasicek 6 2022 72,000 NIL 72,000 Secretary & COO 2021 72,000 NIL 72,000 1. We have omitted certain columns in the summary compensation table pursuant to Item 402(a)(5) of Regulation S-K as no compensation was awarded to, earned by, or paid to any of the executive officers or directors required to be reported in that table or column in any fiscal year covered by that table. 2. The "All Other Compensation" column is used to disclose the aggregate amount of all compensation that the company could not properly report in any other column of the Summary Compensation Table. 3 . Kristen Vasicek is employed by the company under an at-will employment agreement. 18 Option Grants We have not granted any options or stock appreciation rights to our named executive officers or directors since inception. We do not have any stock option plans. Management Agreements None. Pension, Retirement or Similar Benefit Plans There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit-sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof. Compensation Committee We do not currently have a compensation committee of the board of directors or a committee performing similar functions. The board of directors as a whole participates in the consideration of executive officer and director compensation. Indebtedness of Directors, Senior Officers, Executive Officers and Other Management None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Related Party Transactions None of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 10% of the Company's outstanding shares of its common stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past two fiscal years, or in any proposed transaction, which has materially affected or will affect the Company other than as disclosed at Note 8 to the financial statements. With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manner: Disclosing such transactions in reports where required; Disclosing in any and all filings with the SEC, where required; Obtaining disinterested directors consent; and Obtaining shareholder consent where required. Director Independence For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB on which shares of the Company's Common Stock are quoted does not have any director independence requirements. The NASDAQ definition of "Independent Director" means a person other than an Executive Officer or employee or any other individual having a relationship, which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Under the definitions outlined it is our opinion that Michael Sevell and Mark Stogdill are independent directors. Review, Approval or Ratification of Transactions with Related Persons 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. 19 ITEM 13. PRINCIPAL ACCOUNTING FEES AND SERVICES The company employs Pre-Approval Policies and Procedures Prior to engaging our accountants to perform a particular service, our board of directors obtains an estimate for the service to be performed. All of the services described above were approved by the board of directors in accordance with its procedures. Below is the aggregate amount of fees billed for professional services rendered by our principal accountants with respect to our last two fiscal years: 2022 2021 Audit fees $ 17,000 $ - Audit related fees - Tax fees - - All other fees - - Total $ 17,000 $ - All of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved by our board of directors. Maintaining Principal Accountant's Independence Our Board of Directors has considered whether the provision of the services described herein are compatible with maintaining the principal accountant's independence and believes that such services do not compromise that independence. 20 PART IV ITEM 14 - EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) Financial Statements 1. Financial statements for our company are listed in the index under Item 8 of this document 2. All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto. Exhibit Number Description of Exhibit Filing 2.2 Agreement and Plan of Merger by and between the Company and its wholly owned subsidiary Hammer Fiber Optics Holdings Corp. Filed with the SEC on June 14, 2016, as part of our Current Report on Form 8-K. 3.1a Articles of Incorporation Filed with the SEC on March 2, 2012, as part of our Registration Statement on Form S-1. 3.1b Articles of Merger Dated February 20, 2015 Intended to be Filed with the SEC on March 1, 2015, as part of our Current Report on Form 8-K. The Exhibit was not attached, accordingly the Articles of Merger was filed with the SEC on September 21, 2016, as part of our Amended Current Report on Form 8-K/A. 3.1c Articles of Merger Dated April 13, 2016 Filed with the SEC on September 21, 2016, as part of our Amended Current Report on Form 8-K/A. 3.2 Bylaws Filed with the SEC on March 2, 2012, as part of our Registration Statement on Form S-1. 31.1 Sec. 302 Certification of Principal Financial Officer Filed herewith 32.1 Sec. 906 Certification of Principal Financial Officer Filed herewith 101 INS Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document Filed herewith 101.SCH Inline XBRL Taxonomy Extension Schema Document Filed herewith 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed herewith 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed herewith 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). Filed herewith 21 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. HAMMER FIBER OPTICS HOLDINGS CORP Date: February 8, 2023 /s/ Erik B. Levitt Erik B. Levitt Principal Executive Officer Date: February 8, 2023 /s/ Erik Levitt Erik B. Levitt Principal Financial Officer 22