# EDGAR Filing Document

**Accession Number:** 0001970090
**File Stem:** 0001665160-23-000509
**Filing Date:** 2023-3
**Character Count:** 54584
**Document Hash:** ad4422eb61b885a550bedd3498f423cf
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001665160-23-000509.hdr.sgml**: 20230330

**ACCESSION NUMBER**: 0001665160-23-000509

**CONFORMED SUBMISSION TYPE**: C

**PUBLIC DOCUMENT COUNT**: 2

**FILED AS OF DATE**: 20230330

**DATE AS OF CHANGE**: 20230330

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Pashion Footwear Inc.
- **CENTRAL INDEX KEY:** 0001970090
- **IRS NUMBER:** 822695723
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** C
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 020-32084
- **FILM NUMBER:** 23777865

**BUSINESS ADDRESS:**
- **STREET 1:** 2950 BROAD STREET
- **STREET 2:** #1030
- **CITY:** SAN LUIS OBISPO
- **STATE:** CA
- **ZIP:** 93401
- **BUSINESS PHONE:** (805) 235-9446

**MAIL ADDRESS:**
- **STREET 1:** 2950 BROAD STREET
- **STREET 2:** #1030
- **CITY:** SAN LUIS OBISPO
- **STATE:** CA
- **ZIP:** 93401

### Attached PDF Documents

**Attachment 1:** `offeringmemoformc.pdf`

## Offering Memorandum: Part II of Offering Document (Exhibit A to Form C)

Pashion Footwear Inc.
2950 Broad Street #1030
San Luis Obispo, CA 93401
http://pashionfootwear.com

Up to $1,235,000.00 Convertible Promissory Note.

Minimum Target Amount: $15,000.00

A crowdfunding investment involves risk. You should not invest any funds in this offering unless you can afford to lose your entire investment.

In making an investment decision, investors must rely on their own examination of the issuer and the terms of the offering, including the merits and risks involved. These securities have not been recommended or approved by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not passed upon the accuracy or adequacy of this document.

The U.S. Securities and Exchange Commission does not pass upon the merits of any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering document or literature.

These securities are offered under an exemption from registration; however, the U.S. Securities and Exchange Commission has not made an independent determination that these securities are exempt from registration.

# Company:

Company: Pashion Footwear Inc.

Address: 2950 Broad Street #1030, San Luis Obispo, CA 93401

State of Incorporation: DE

Date Incorporated: August 30, 2017

# Terms:

Convertible Promissory Notes

Offering Minimum: $10,000.00 of Convertible Promissory Note.

Offering Maximum: $1,235,000.00 of Convertible Promissory Note.

Type of Security Offered: Convertible Promissory Note.

Note converts to Preferred Stock when the company raises $1,250,000.00 in a qualified equity financing.

Maturity Date: June 30, 2025

Valuation Cap: $20,000,000.00

Discount Rate: 20.0%

Annual Interest Rate: 1.0%

Minimum Investment Amount (per investor): $200.00

# Terms of the underlying Security

Underlying Security Name: Preferred Stock

Voting Rights:

1 vote(s) per Security

Other Material Rights:

The Convertible Promissory Note Series 2023-CF converts into a currently undesignated class of preferred stock on par with the currently outstanding Series Seed Preferred Stock.

Please refer to Exhibit F of the Offering Memorandum for the complete list of rights of the Company's Series Seed Preferred Stock laid out in the Amended & Restated Certificate of Incorporation, and subsequent amendment.

*Annual Interest Rate subject to adjustment of bonuses, including the 10% bonus for OWNer's Bonus eligible investors. See Bonus info below.

# Investment Incentives & Bonuses*

Time-Based

Friends and Family Early Birds

Invest in the first 24 hours and receive 10% bonus interest.

## Amount-Based

### **\$500+ | Tier 1: Shop with 30% Off**

Sitewide One-Time 30% off code.

### **\$1,000+ | Tier 2: Shop with 30% Off Sitewide For a YEAR**

30% off every Pashion Purchase in the next 12 months.

### **\$2,500+ | Tier 3: 30% Off Sitewide...FOREVER.**

30% off every Pashion Purchase...for life.

### **\$5,000+ | Tier 4: Join the Pashion Design Collective**

Tier 3 + Exclusive community. Weigh in on our shoe design process - styles, colors, & materials for future seasons. Members may also be chosen as “fit testers” - receiving exclusive early access to new styles to help us perfect the design.

### **\$10,000+ | Tier 5: Limited Edition Heel Kit**

Tiers 3 and 4 + Receive a never-before-seen (& never again made) Luxe Heel Kit - special ordered for backers of this tier.

### **\$25,000+ | Tier 6: Limited Edition Shoe Style**

Tier 3 and 4 + Receive a never-before seen (& never again made) Luxe Shoe - special ordered for backers of this tier.

### **\$50,000+ | Tier 7: EXPERIENCE: Be a Heel Kit Designer**

Tiers 3 and 4+ 3 sessions with CEO & Design Director to create your own Heel Kit (design, renders, & sample review). *Must use pre-existing mold, but can choose colors, materials, & embellishments* Will receive 3 samples of final design.

### **\$75,000+ | Tier 8: Name a Shoe After You**

Tier 3 and 4 + Select a new shoe silhouette from our upcoming 2023 lines to name. **Selected name may not include any profanity or violate any trademarks. Must resemble an actual name or appropriate adjective**

### **\$100,000+ | Tier 9: EXPERIENCE: Design Your Own Shoe**

Tier 3 and 4 + 3 design sessions with CEO & Design Director to create your own Shoe (design, renders & sample review). *Must use existing mold. Can choose colors, materials, & embellishments* Will receive 3 samples of your final design.

### **\$250,000+ | Tier 10: EXPERIENCE: Launch Your Own Shoe**

Tiers 3 and 4 + 4 design sessions with CEO & Design Director to create a Shoe. *Must

use existing mold. Choose color, material, & embellishments* Receive 10 samples of final design, name the design, & it will release on the Pashion site.

*In order to receive perks from an investment, one must submit a single investment in the same offering that meets the minimum perk requirement. Bonus interest from perks will not be granted if an investor submits multiple investments that, when combined, meet the perk requirement. All perks occur when the offering is completed.*

## The 10% StartEngine Owners' Bonus

Pashion Footwear Inc. ('Pashion Footwear' or the 'Company') will offer 10% additional bonus interest for all investments that are committed by investors that are eligible for the StartEngine Crowdfunding Inc. OWNer's bonus.

Eligible StartEngine shareholders will receive a 10% increase in the annual interest rate on Convertible Promissory Notes in this Offering. This means your annual interest rate will be 1.1% instead of 1%.

This 10% Bonus is only valid during the investors eligibility period. Investors eligible for this bonus will also have priority if they are on a waitlist to invest and the company surpasses its maximum funding goal. They will have the first opportunity to invest should room in the offering become available if prior investments are canceled or fail.

Investors will receive the highest single bonus they are eligible for among the bonuses based on the amount invested and time of offering elapsed (if any). Eligible investors will also receive the Owner's Bonus in addition to the aforementioned bonus.

## The Company and its Business

### Company Overview

#### Company Overview

Pashion Footwear Inc. ('Pashion Footwear' or the 'Company') is a C-Corporation organized under the laws of the state of Delaware on August 30, 2017.

At Pashion Footwear, we believe women deserve to look good AND feel good without compromise. We are solving the biggest love/hate relationship in a woman's closet - her heels. Pashion Footwear is an empowering footwear brand utilizing innovative technical design & athletic materials to pioneer the future of women's shoes - blending comfort, customization, and style through our patented convertible footwear (that's right, high heels that turn to flats - AND let you mix heel types, heights, and designs). We have issued utility patents in the US, China & the EU - allowing us to pioneer this new category in the market. Based on internal analysis, our customer satisfaction metrics are industry-leading, as is our unique margin profile. This combination of wins has enabled us to post our first profitable months, all while providing a uniquely versatile experience to consumers around the globe.

Currently, Pashion sells our shoe bundles & upsell accessories exclusively through our

own D2C website.

With this Reg. CF fundraising, we plan to launch a novel bridal affiliate program as our second sales channel. Shortly after, we have plans to launch into traditional wholesale channels with the right big box partner.

*In exchange for altering payback terms to Settle, a lender in the Company's businesses, providing the Company with a 6-month revolving capital line to fund inventory purchases, Settle filed a lien on the Company's inventory. Settle has no intention of exercising the lien and Settle has made it clear that they are willing to negotiate, as their main priority is for the Company to stay in business, fundraise, and move forward with the Company as a partner.*

## IP

The Company was granted U.S Patents to Pashion Footwear Inc. filed with the USPTO on July 16th, 2018.

### *Competitors and Industry*

#### Competitors

At Pashion Footwear, we are pioneering two entirely new categories in the women's footwear market protected by our issued utility IP - convertible footwear & their accessories. While there have been other attempts at convertible footwear in the past, we have found none that have ever utilized a removable sole support system - ie, the Pashion SteloTM (a component we got to name, as it did not exist previously in footwear manufacturing). This innovative concept is essential to allowing a high heel to transform to a comfortable flat, without sacrificing stability or comfort. This makes our technology superior to other attempts that have failed previously in the market.

While our technology remains unmatched by any other player in the space, that is not to say we are without competition. Our main competitive challenge is the traditional, big-name footwear brands that our consumers have loyally bought from for their entire lives. We have to convince the consumer to not only try a new brand, but an entirely new technology and concept. Once they have given us a try - they are hooked, but we must compete against the big names for brand awareness as we continue to build out this new category.

#### Industry/Market

One of the most competitive things about our technical design is that it is not limited stylistically, since it only exists on the underside of a shoe. We are able to become a full shoe-shelf replacement for our consumers - creating convertible sandals, pumps, ankle boots, knee-high boots, slides, mules, etc. We can also create an infinite number of upsell accessories - from various shapes and heights of heels to interchangeable ankle straps, clips, and varying accessory categories.

We see a world where our consumer only has two brands on her shoe shelf - Pashions,

and her athletic brand of choice.

We believe the post-pandemic climate is an extremely advantageous time for our concept in the market. According to studies done by the Business of Fashion & McKinsey, women are more eager than ever to dress up again as their social calendars begin to fill with backlogged events - however, they are hesitant to forgo the comfort they've grown accustomed to after two years in slippers. They are actively seeking footwear that blends comfort and style, without sacrifice.

In 2022, high heels increased 151% in sell-out rate across mass retailers in the US and UK. We believe NOW is our time to shine.

We plan to become a full-shoe-shelf replacement solution for the core silhouettes in a woman's closet - encompassing everything from sandals to boots (both heeled, and flat). The women's footwear market is $179B globally - and growing - expected to reach $219B by 2027 (Statista). We are starting with our sights set on the US market, but our international patents give us a clear path to global expansion when the time is right.

The convertible heel market is entirely new, with our Company as one of the exclusive pioneers, so we look to stick with the trends in the broader footwear market. As reported by the Business of Fashion and McKinsey - dressing up & the corresponding occasionwear required is on the rise following the dry social calendars caused by COVID-19. However, women are hesitant to give up the comfort they grew accustomed to during the pandemic - actively seeking out products that blend style, comfort, versatility, and the ability to wear an item to a variety of occasions.

In addition to high heel sell-out rates increasing 151% across mass retailers in the US and UK in 2022, 37% of fashion executives expect occasion wear to be a top-three category for year-on-year sales growth. This trend has been building - with online searches for women's heels jumping up more than 200% year over year in 2021, with a particular focus on 'practical' and comfort-driven heel shapes such as thick or block heels.

### *Current Stage and Roadmap*

#### **Current Stage**

We are launched in market with exceptional customer satisfaction metrics - most notably (1) 18% Return & Exchange rate, well below industry standard for ECommerce Footwear of 30% (2) 25%+ of our monthly sales are from happy returning customers. We've fueled rapid growth - 450% net sales growth year over year in 2021 - due to the product's uniquely visual nature, lending itself to organic virality both in-person and online (ex: 45M organic TikTok views in 2022). Our disruptive economic profile with our upsell accessory business allowed us to post first profits in July & November of 2022 at 26%-30% EBITDA, well above the industry average of ~10%.

#### **Future Roadmap**

The women's footwear market has not seen technical innovation in over 200 years - forcing consumers to constantly pick between looking good and feeling good from a polarized, inefficient selection. However - coming out of the pandemic, women are more eager than ever to dress up again - but no longer willing to sacrifice the comfort they grew accustomed to after two years in slippers. The days of the archaic 'beauty is pain' mindset are coming to a rapid end - leaving a massive opportunity in the market to create footwear that exists at the intersection of style x comfort, without sacrifice. Versatile footwear that actually works for the modern woman's busy lifestyle. This is what Pashion has created - all backed by issued & defensible utility IP, giving the brand the unique ability to pioneer a new category.

In the coming years, Pashion has three main priorities:

1.  **Building Brand/Category Awareness & Credibility.** Pashion's largest challenge since launch has been one simple fact: convertible heels are such a new concept, that very few know to look for it. And, once they find it - it seems too good to be true. Pashion is tasked with not only establishing the brand, but consumer trust in this novel new design. We plan to do so through a comprehensive, organic-first marketing campaign to bring awareness to consumers and educate them on the future of footwear (after all, no one is used to shoes coming with instructions!). Our marketing activities will include the production of content campaigns, PR, brand partnerships, affiliate, & CRM/referral strategies.

2.  **Diversifying Sales Channels.** One of the best ways to educate consumers on our technology is to provide an in-person experience to try out the shoes firsthand (ahyem, foot). We have already proven that we can scale a novel retail experience through our first retail test in 2022 - during which we outsold goal by 300%. In 2023, we plan to pursue two new sales channels - (1) traditional wholesale with a big-box retail partner, utilizing an experiential & demonstrative POS experience (2) a never-before-seen bridal affiliate program, turning brides (our fastest growing demographic) into saleswomen.

3.  **Becoming a Complete Shoe Shelf Replacement Solution.** Our customers become complete convertible converts - and that makes them hungry for more. Once a consumer has adapted to the behavior of removing her heels whenever they hurt, she desires that same value from every shoe in her closet. We plan to meet her where she is - developing a comprehensive line of core & seasonal sandals, pumps, boots etc - ensuring she can always turn her heels to flats, no matter the occasion or dress code.

## The Team

### Officers and Directors

**Name:** Haley Pavone

Haley Pavone's current primary role is with the Issuer.

Positions and offices currently held with the issuer:

- **Position:** CEO/Founder/President/Board Member
**Dates of Service:** October, 2016 - Present
**Responsibilities:** I am the founder & CEO at Pashion, and the inventory of our utility IP. $100,000 annual salary; 4,158,823 fully-diluted shares.

**Name:** Forrest Lee Fleming

Forrest Lee Fleming 's current primary role is with the Issuer.

Positions and offices currently held with the issuer:

- **Position:** Board Member
**Dates of Service:** March, 2019 - Present
**Responsibilities:** I suggested the idea of Crowdfunding to Haley Pavone CEO. Initially, we tried to raise capital with traditional VC with limited success. No salary; 1,847,978 fully diluted shares.

Other business experience in the past three years:

- **Employer:** BioProtonics
**Title:** CEO
**Dates of Service:** November, 2022 - Present
**Responsibilities:** For the first time, MRH provides meaningful diagnostic imaging resolution on tissue at the micro-level (sub 1mm). Also, very important for broad commercialization, MRH adds less than 1 minute to current MRI scan time and corrects for patient movement during scans. MRH potentially will lead to a safer, less invasive, less costly alternative for many biopsies routinely performed today of which the majority are negative. This advancement will allow for earlier detection of many diseases and cancers and enable more accurate therapies sooner in the disease cycle to improve patient outcomes and lower medical costs. Eventually MRH could be part of every MRI scan

**Name:** Gabriella Liotta

Gabriella Liotta's current primary role is with the Issuer.

Positions and offices currently held with the issuer:

- **Position:** Board Member
**Dates of Service:** April, 2022 - Present
**Responsibilities:** Board Member and Advisor. No salary; 48,504 options.

Other business experience in the past three years:

- **Employer:** Major League Soccer

**Title:** Vice President

**Dates of Service:** June, 2022 - Present

**Responsibilities:** As Vice President of Licensing, Consumer Products, I lead the business development and product portfolio for On-Field with adidas and Off-Field soft goods and hard goods fan wear.

Other business experience in the past three years:

- **Employer:** Authentic Brands Group

**Title:** Senior Vice President

**Dates of Service:** March, 2017 - April, 2020

**Responsibilities:** At ABG i was the Business Unit Manager, SVP leading Brand Management, Marketing, and Business Development Teams in Action Sports driving global expansion, expanding categories and channel of distribution.

**Name:** Jessica Lynne Norman

Jessica Lynne Norman's current primary role is with the Issuer.

Positions and offices currently held with the issuer:

- **Position:** COO and Principal Accounting Officer

**Dates of Service:** January, 2019 - Present

**Responsibilities:** I lead all operational activities and oversee the Company's finances. $63,000 annual salary; 344,390 fully-diluted share count.

## Risk Factors

The SEC requires the company to identify risks that are specific to its business and its financial condition. The company is still subject to all the same risks that all companies in its business, and all companies in the economy, are exposed to. These include risks relating to economic downturns, political and economic events and technological developments (such as hacking and the ability to prevent hacking). Additionally, early-stage companies are inherently more risky than more developed companies. You should consider general risks as well as specific risks when deciding whether to invest.

These are the risks that relate to the Company:

### *Uncertain Risk*

An investment in the Company (also referred to as 'we', 'us', 'our', or 'Company') involves a high degree of risk and should only be considered by those who can afford the loss of their entire investment. Furthermore, the purchase of any of the Convertible Promissory Note Series 2023-CF should only be undertaken by persons whose financial resources are sufficient to enable them to indefinitely retain an

illiquid investment. Each investor in the Company should consider all of the information provided to such potential investor regarding the Company as well as the following risk factors, in addition to the other information listed in the Company’s Form C. The following risk factors are not intended, and shall not be deemed to be, a complete description of the commercial and other risks inherent in the investment in the Company.

#### ***Our business projections are only projections***

There can be no assurance that the Company will meet our projections. There can be no assurance that the Company will be able to find sufficient demand for our product, that people think it’s a better option than a competing product, or that we will be able to provide the service at a level that allows the Company to make a profit and still attract business.

#### ***Any valuation at this stage is difficult to assess***

The valuation for the offering was established by the Company. Unlike listed companies that are valued publicly through market-driven stock prices, the valuation of private companies, especially startups, is difficult to assess and you may risk overpaying for your investment.

#### ***The transferability of the Securities you are buying is limited***

Any Convertible Promissory Note Series 2023-CF purchased through this crowdfunding campaign is subject to SEC limitations of transfer. This means that the stock/note that you purchase cannot be resold for a period of one year. The exception to this rule is if you are transferring the stock back to the Company, to an “accredited investor,” as part of an offering registered with the Commission, to a member of your family, trust created for the benefit of your family, or in connection with your death or divorce.

#### ***Your investment could be illiquid for a long time***

You should be prepared to hold this investment for several years or longer. For the 12 months following your investment, there will be restrictions on how you can resell the securities you receive. More importantly, there is no established market for these securities and there may never be one. As a result, if you decide to sell these securities in the future, you may not be able to find a buyer. The Company may be acquired by an existing player in the educational software development industry. However, that may never happen or it may happen at a price that results in you losing money on this investment.

#### ***If the Company cannot raise sufficient funds it will not succeed***

The Company, is offering a Convertible Promissory Note Series 2023-CF in the amount of up to $1.235M in this offering, and may close on any investments that are made. Even if the maximum amount is raised, the Company is likely to need additional funds in the future in order to grow, and if it cannot raise those funds for whatever reason, including reasons relating to the Company itself or the broader economy, it may not survive. If the Company manages to raise only the minimum amount of funds, sought, it will have to find other sources of funding for some of the plans outlined in “Use of

# **PASHION FOOTWEAR INC.**  
 **STATEMENTS OF CASH FLOWS**  
 **(UNAUDITED)**

| For Fiscal Year Ended December 31, | 2022 | 2021 |
| --- | --- | --- |
| (USD $ in Dollars) |  |  |
| CASH FLOW FROM OPERATING ACTIVITIES |  |  |
| Net income/(loss) | $(995,974) | ###### |
| Adjustments to reconcile net income to net cash provided/(used) by operating activities: |  |  |
| Depreciation of Property | 38,313 | 28,784 |
| Amortization of Intangibles | 23,881 | 15,805 |
| Warranty | 115,712 |  |
| Share-based Compensation | 10,425 | 6,925 |
| Changes in operating assets and liabilities: |  |  |
| Accounts receivable, net | (59,074) | 146 |
| Inventory | (433,808) | (821,859) |
| Prepaids and Other Current Assets | 4,299 | (11,021) |
| Accounts Payable | 785,475 | 170,106 |
| Credit Cards | 10,976 | 62,475 |
| Other Current Liabilities | 91,651 | 27,934 |
| Security Deposit | 2,711 | (3,011) |
| Net cash provided/(used) by operating activities | (405,413) | (3,069,675) |
| CASH FLOW FROM INVESTING ACTIVITIES |  |  |
| Purchases of Property and Equipment | (19,056) | (145,578) |
| Purchases of Intangible Assets | (44,374) | (59,220) |
| Net cash provided/(used) in investing activities | (63,430) | (204,798) |
| CASH FLOW FROM FINANCING ACTIVITIES |  |  |
| Capital Contribution | 1,447 | 728,368 |
| Forward Financing | (230,040) | 393,271 |
| Borrowing on Promissory Notes and Loans | 38,157 | 1,713,202 |
| Borrowing on Convertible Notes | 665,000 | - |
| Net cash provided/(used) by financing activities | 474,565 | 2,834,841 |
| Change in Cash | 5,722 | (439,632) |
| Cash-beginning of year | 42,194 | 481,826 |
| Cash-end of year | $47,916 | $42,194 |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |  |  |
| Cash paid during the year for interest | $71,115 | $153,156 |
| Cash paid during the year for income taxes | $ - | $ - |
| OTHER NONCASH INVESTING AND FINANCING ACTIVITIES AND SUPPLEMENTAL DISCLOSURES |  |  |
| Purchase of property and equipment not yet paid for | $ - | $ - |
| Issuance of equity in return for note | - |  |
| Issuance of equity in return for accrued payroll and other liabilities |  |  |

*See accompanying notes to financial statements.*

7

# ---**PASHION FOOTWEAR INC.**

# **NOTES TO FINANCIAL STATEMENTS**

# **FOR YEAR ENDED TO DECEMBER 31, 2022 AND DECEMBER 31, 2021**---

## 1. NATURE OF OPERATIONS

Pashion Footwear Inc. was incorporated on August 30, 2017, in the state of Delaware. The financial statements of Pashion Footwear Inc. (which may be referred to as the 'Company', 'we', 'us', or 'our') are prepared in accordance with accounting principles generally accepted in the United States of America ('U.S. GAAP'). The Company's headquarters are located in San Luis Obispo, California.

Pashion is an empowering footwear brand utilizing innovative technical design to pioneer the future of women's shoes - blending comfort, customization and style without sacrifice. Our utility-patented tech allows a high heel to transform into a flat within seconds, solving the biggest love/hate relationship in a woman's closet and bringing unmatched versatility to their daily lives. Pashion sells convertible high heel shoe bundles & the corresponding accessory products (heel kits, stelos, flat caps) direct to consumer via our own e-commerce site - www.pashionfootwear.com. We also have executed limited wholesale business with retailers, and plan to expand that sales channel in 2023.

## 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

### Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America ('US GAAP'). The Company has adopted the calendar year as its basis of reporting.

### Use of Estimates

The preparation of financial statements in conformity with United States GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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.

### Cash and Cash Equivalents

Cash and cash equivalents include all cash in banks. The Company's cash is deposited in demand accounts at financial institutions that management believes are creditworthy. The Company's cash and cash equivalents in bank deposit accounts, at times, may exceed federally insured limits. As of December 31, 2022, and December 31, 2021, the Company's cash and cash equivalents did not exceed FDIC insured limits.

### Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at net realizable value or the amount that the Company expects to collect on gross customer trade receivables. We estimate losses on receivables based on known troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written-off when it is probable that all contractual payments due will not be collected in accordance with the terms of the agreement. As of December 31, 2021, and 2020, the Company determined that no reserve was necessary.

---

8

# ---**PASHION FOOTWEAR INC.**

# **NOTES TO FINANCIAL STATEMENTS**

# **FOR YEAR ENDED TO DECEMBER 31, 2022 AND DECEMBER 31, 2021**---

# **Inventory**

Inventory are valued at the lower of cost and net realizable value. Costs related to finished goods which are determined using a FIFO (first-in-first-out) method.

# **Property and Equipment**

Property and equipment are stated at cost. Normal repairs and maintenance costs are charged to earnings as incurred and additions and major improvements are capitalized. The cost of assets retired or otherwise disposed of and the related depreciation are eliminated from the accounts in the period of disposal and the resulting gain or loss is credited or charged to earnings.

Depreciation is computed over the estimated useful lives of the related asset type or term of the operating lease using the straight-line method for financial statement purposes. The estimated service lives for property and equipment is as follows:

| Category | Useful Life |
| --- | --- |
| Molds | 10 years |

# **Impairment of Long-lived Assets**

Long-lived assets, such as property and equipment and identifiable intangibles with finite useful lives, are periodically evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We look for indicators of a trigger event for asset impairment and pay special attention to any adverse change in the extent or manner in which the asset is being used or in its physical condition. Assets are grouped and evaluated for impairment at the lowest level of which there are identifiable cash flows, which is generally at a location level. Assets are reviewed using factors including, but not limited to, our future operating plans and projected cash flows. The determination of whether impairment has occurred is based on an estimate of undiscounted future cash flows directly related to the assets, compared to the carrying value of the assets. If the sum of the undiscounted future cash flows of the assets does not exceed the carrying value of the assets, full or partial impairment may exist. If the asset carrying amount exceeds its fair value, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset. Fair value is determined using an income approach, which requires discounting the estimated future cash flows associated with the asset.

# **Intangible Assets**

The Company capitalizes its patent and filing fees and legal patent and prosecution fees in connection with internally developed pending patents. When pending patents are issued, patents will be amortized over the expected period to be benefitted, not to exceed the patent lives, which may be as long as ten years.

Other intangibles include website and software development costs, which will be amortized over the expected period to be benefitted, which may be as long as ten years.

# **Income Taxes**---

9

# ---**PASHION FOOTWEAR INC.**

# **NOTES TO FINANCIAL STATEMENTS**

# **FOR YEAR ENDED TO DECEMBER 31, 2022 AND DECEMBER 31, 2021**---

Fashion Footwear Inc. is a C corporation for income tax purposes. The Company accounts for income taxes under the liability method, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying values of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided on deferred tax assets if it is determined that it is more likely than not that the deferred tax asset will not be realized. The Company records interest, net of any applicable related income tax benefit, on potential income tax contingencies as a component of income tax expense. The Company records tax positions taken or expected to be taken in a tax return based upon the amount that is more likely than not to be realized or paid, including in connection with the resolution of any related appeals or other legal processes. Accordingly, the Company recognizes liabilities for certain unrecognized tax benefits based on the amounts that are more likely than not to be settled with the relevant taxing authority. The Company recognizes interest and/or penalties related to unrecognized tax benefits as a component of income tax expense.

# *Concentration of Credit Risk*

The Company maintains its cash with a major financial institution located in the United States of America which it believes to be creditworthy. Balances are insured by the Federal Deposit Insurance Corporation up to $250,000. At times, the Company may maintain balances in excess of the federally insured limits.

# **Revenue Recognition**

The Company recognizes revenues in accordance with FASB ASC 606, Revenue from Contracts with Customers, when delivery of goods is the sole performance obligation in its contracts with customers. The Company typically collects payment upon sale and recognizes the revenue when the item has shipped and has fulfilled its sole performance obligation.

Revenue recognition, according to Topic 606, is determined using the following steps:

1) Identification of the contract, or contracts, with the customer: the Company determines the existence of a contract with a customer when the contract is mutually approved; the rights of each party in relation to the services to be transferred can be identified, the payment terms for the services can be identified, the customer has the capacity and intention to pay and the contract has commercial substance.

2) Identification of performance obligations in the contract: performance obligations consist of a promised in a contract (written or oral) with a customer to transfer to the customer either a good or service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer.

3) Recognition of revenue when, or how, a performance obligation is met: revenues are recognized when or as control of the promised goods or services is transferred to customers.

The Company earns revenues from the sale of convertible high heel shoe bundles & the corresponding accessory products.

# **Cost of sales**

Costs of goods sold include the product cost, merchant fees, shipping, and others.

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10

# ---**PASHION FOOTWEAR INC.**

# **NOTES TO FINANCIAL STATEMENTS**

# **FOR YEAR ENDED TO DECEMBER 31, 2022 AND DECEMBER 31, 2021**---

# **Advertising and Promotion**

Advertising and promotional costs are expensed as incurred. Advertising and promotional expenses for the years ended December 31, 2022, and December 31, 2021, amounted to $794,978 and $1,668,368, which is included in sales and marketing expenses.

# **Research and Development Costs**

Costs incurred in the research and development of the Company's products are expensed as incurred.

# **Stock-Based Compensation**

The Company accounts for stock-based compensation to both employee and non-employees in accordance with ASC 718, Compensation - Stock Compensation. Under the fair value recognition provisions of ASC 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense ratably over the requisite service period, which is generally the option vesting period. The Company uses the Black-Scholes option pricing model to determine the fair value of stock options.

# **Fair Value of Financial Instruments**

The carrying value of the Company's financial instruments included in current assets and current liabilities (such as cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value due to the short-term nature of such instruments).

The inputs used to measure fair value are based on a hierarchy that prioritizes observable and unobservable inputs used in valuation techniques. These levels, in order of highest to lowest priority, are described below:

*Level 1*-Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

*Level 2*-Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

*Level 3*-Unobservable inputs reflecting the Company's assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

# **COVID-19**

In March 2020, the outbreak and spread of the COVID-19 virus was classified as a global pandemic by the World Health Organization. This widespread disease impacted the Company's business operations, including its employees, customers, vendors, and communities. The COVID-19 pandemic may continue to impact the Company's business operations and financial operating results, and there is substantial uncertainty in the nature and degree of its continued effects over time.

The extent to which the pandemic impacts the business going forward will depend on numerous evolving factors management cannot reliably predict, including the duration and scope of the pandemic; governmental, business, and individuals' actions in response to the pandemic; and the impact on economic activity including the possibility of recession or financial market instability. These factors may adversely impact consumer and business spending on products as well as customers' ability to pay for products and services on an ongoing basis. This uncertainty also

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11

# ---**PASHION FOOTWEAR INC.**

# **NOTES TO FINANCIAL STATEMENTS**

# **FOR YEAR ENDED TO DECEMBER 31, 2022 AND DECEMBER 31, 2021**---

affects management's accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions, including investments, receivables, and forward-looking guidance.

# **Subsequent Events**

The Company considers events or transactions that occur after the balance sheet date, but prior to the issuance of the financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through February 15, 2023, which is the date the financial statements were issued.

# **Recently Issued and Adopted Accounting Pronouncements**

FASB issued ASU No. 2019-02, leases, that requires organizations that lease assets, referred to as 'lessees', to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with lease terms of more than twelve months. ASU 2019-02 will also require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases and will include qualitative and quantitative requirements. The new standard for nonpublic entities will be effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, and early application is permitted. We are currently evaluating the effect that the updated standard will have on the financial statements and related disclosures.

The FASB issues ASUs to amend the authoritative literature in ASC. There have been a number of ASUs to date, including those above, that amend the original text of ASC. Management believes that those issued to date either (i) provide supplemental guidance, (ii) are technical corrections, (iii) are not applicable to us or (iv) are not expected to have a significant impact on our financial statements.

# **3. INVENTORY**

Inventory consists of the following items:

| As of Year Ended December 31, | 2022 | 2021 |
| --- | --- | --- |
| Finished goods | 1,525,942 | 1,092,134 |
| Total Inventory | $1,525,942 | $1,092,134 |

# **4. DETAILS OF CERTAIN ASSETS AND LIABILITIES**

Account receivables consist primarily of trade receivables and accounts payable consist primarily of trade payables. Prepaid and other current assets consist of the following items:

| As of Year Ended December 31, | 2022 | 2021 |
| --- | --- | --- |
| Prepaid Expenses | 12,726 | 17,025 |
| Total Prepaids and Other Current Assets | $12,726 | $17,025 |

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12

# ---**PASHION FOOTWEAR INC.**

# **NOTES TO FINANCIAL STATEMENTS**

# **FOR YEAR ENDED TO DECEMBER 31, 2022 AND DECEMBER 31, 2021**---

Other current liabilities consist of the following items:

| As of Year Ended December 31, | 2022 | 2021 |
| --- | --- | --- |
| Accrued Expenses | 91,358 | - |
| Accrued Interest | 945 | 945 |
| Sales Taxes Payable | 12,741 | 16,991 |
| Gift Cards | 38,030 | 36,150 |
| Route Package Protection Payable | 14,059 | 4,098 |
| Customer Deposits | 60 | - |
| Unearned Revenues | 16,856 | 24,214 |
| Total Other Current Liabilities | $174,049 | $82,398 |

# **5. PROPERTY AND EQUIPMENT**

As of December 31, 2022, and December 31, 2021, property and equipment consists of:

| As of Year Ended December 31, | 2022 | 2021 |
| --- | --- | --- |
| Molds | $386,306 | $367,250 |
| Property and Equipment, at Cost | 386,306 | 367,250 |
| Accumulated depreciation | (95,799) | (57,486) |
| Property and Equipment, Net | $290,507 | $309,764 |

Depreciation expenses for property and equipment for the fiscal year ended December 31, 2022, and 2021 were in the amount of $38,313 and $28,784, respectively.

# **6. INTANGIBLE ASSETS**

As of December 31, 2022, and December 31, 2021, intangible asset consist of:

| As of Year Ended December 31, | 2022 | 2021 |
| --- | --- | --- |
| Website | $15,106 | $15,106 |
| Patent | 209,273 | 164,899 |
| Software | 12,981 | 12,981 |
| Intangible assets, at cost | 237,360 | 192,986 |
| Accumulated amortization | (44,721) | (20,840) |
| Intangible assets, Net | $192,639 | $172,146 |

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13

# ---**PASHION FOOTWEAR INC.**

# **NOTES TO FINANCIAL STATEMENTS**

# **FOR YEAR ENDED TO DECEMBER 31, 2022 AND DECEMBER 31, 2021**---

Entire intangible assets have been amortized. Amortization expense for trademarks and patents for the fiscal year ended December 31, 2022, and 2021 was in the amount of $23,881 and $15,805, respectively.

The following table summarizes the estimated amortization expense relating to the Company's intangible assets as of December 31, 2022:

| Period | Amortization Expense |
| --- | --- |
| 2023 | $(23,881) |
| 2024 | (23,881) |
| 2025 | (23,881) |
| 2026 | (23,881) |
| Thereafter | (97,116) |
| Total | $(192,639) |

# **7. CAPITALIZATION AND EQUITY TRANSACTIONS**

# **Common Stock**

The Company is authorized to issue 15,000,000 shares of Common Stock with a par value of $0.0001. As of December 31, 2022, and December 31, 2021, 5,068,836 shares and 5,039,881 shares have been issued and are outstanding, respectively.

# **Series Seed-1 Preferred Stock**

The Company is authorized to issue 1,250,000 shares of Series Seed-1 Preferred Shares with a $0.0001 par value. As of December 31, 2022, and December 31, 2021, 1,015,462 shares have been issued and are outstanding.

# **Series Seed-2 Preferred Stock**

The Company is authorized to issue 528,415 shares of Series Seed-2 Preferred Shares with a $0.0001 par value. As of December 31, 2022, and December 31, 2021, 528,415 shares have been issued and are outstanding.

# **Series Seed-3 Preferred Stock**

The Company is authorized to issue 1,445,800 shares of Series Seed-3 Preferred Shares with a $0.0001 par value. As of December 31, 2022, and December 31, 2021, 1,445,800 shares have been issued and are outstanding.

# **Series Seed-4 Preferred Stock**

The Company is authorized to issue 1,044,217 shares of Series Seed-4 Preferred Shares with a $0.0001 par value. As of December 31, 2022, and December 31, 2021, 1,043,217 shares have been issued and are outstanding.

# **Series Seed-5 Preferred Stock**

The Company is authorized to issue 15,866 shares of Series Seed-4 Preferred Shares with a $0.0001 par value. As of December 31, 2022, and December 31, 2021, 15,866 shares have been issued and are outstanding.

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14

---

**PASHION FOOTWEAR INC.**

**NOTES TO FINANCIAL STATEMENTS**

**FOR YEAR ENDED TO DECEMBER 31, 2022 AND DECEMBER 31, 2021**---

## 8. SHAREBASED COMPENSATION

During 2017, the Company authorized the Stock Option Plan (which may be referred to as the “Plan”). The Company reserved 1,560,000 shares of its Common Stock pursuant to the Plan, which provides for the grant of shares of stock options, stock appreciation rights, and stock awards (performance shares) to employees, non-employee directors, and non-employee consultants. The option exercise price generally may not be less than the underlying stock’s fair market value at the date of the grant and generally have a term of four years. The amounts granted each calendar year to an employee or nonemployee is limited depending on the type of award.

### *Stock Options*

The Company granted stock options. The stock options were valued using the Black-Scholes pricing model with a range of inputs indicated below:

| As of Year Ended December 31, | 2022 |
| --- | --- |
| Expected life (years) | 10.00 |
| Risk-free interest rate | 2.50% |
| Expected volatility | 75% |
| Annual dividend yield | 0% |

The risk-free interest rate assumption for options granted is based upon observed interest rates on the United States government securities appropriate for the expected term of the Company’s employee stock options.

The expected term of employee stock options is calculated using the simplified method which takes into consideration the contractual life and vesting terms of the options.

The Company determined the expected volatility assumption for options granted using the historical volatility of comparable public company’s Common Stock. The Company will continue to monitor peer companies and other relevant factors used to measure expected volatility for future stock option grants, until such time that the Company’s common stock has enough market history to use historical volatility.

The dividend yield assumption for options granted is based on the Company’s history and expectation of dividend payouts. The Company has never declared or paid any cash dividends on its common stock, and the Company does not anticipate paying any cash dividends in the foreseeable future.

Management estimated the fair value of common stock based on recent sales to third parties. Forfeitures are recognized as incurred.

A summary of the Company’s stock options activity and related information is as follows:

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15

# **PASHION FOOTWEAR INC.**

# **NOTES TO FINANCIAL STATEMENTS**

# **FOR YEAR ENDED TO DECEMBER 31, 2022 AND DECEMBER 31, 2021**

|  | Number of Awards | Weighted Average Exercise | Weighted Average Contract Term |
| --- | --- | --- | --- |
| Outstanding at December 31, 2020 | 115,819 | $0.06 | - |
| Granted | 516,043 |  |  |
| Exercised | - |  |  |
| Expired/Cancelled | - |  | - |
| Outstanding at December 31, 2021 | 631,862 | $0.06 | 9.24 |
| Exercisable Options at December 31, 2021 | 213,868 | $0.06 | 9.24 |
| Granted | - | $ - |  |
| Exercised | (28,955) | $ - |  |
| Expired/Cancelled | (39,968) | $ - |  |
| Outstanding at December 31, 2022 | 562,939 | $0.06 | 8.24 |
| Exercisable Options at December 31, 2022 | 369,324 | $0.06 | 8.24 |

Stock option expenses for the years ended December 31, 2022, and December 31, 2021 were $10,425 and $6,925, respectively.

# **9. DEBT**

# **Promissory Notes & Loans**

During the years presented, the Company entered into promissory notes & loans agreements. The details of the Company's loans, notes, and the terms are as follows:

| Debt Instrument Name | Principal Amount | Interest Rate | Borrowing Period | Maturity Date | For the Year Ended December 2022 |  |  |  |  | For the Year Ended December 2021 |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  | Interest Expense | Accrued Interest | Current Portion | Non-Current Portion | Total Indebtedness | Interest Expense | Accrued Interest | Current Portion | Non-Current Portion | Total Indebtedness |
| Investment and Security Agreement (S&P) Inc. | $1,988,680 | 12.29% | 5/16/2022 | 7/31/2023 | $146,720 | 146,720 | $1,880,690 | $ - | $2,016,410 | $214,065 | 2,124,065 | $ - | $1,833,147 | $2,047,231 |
| S&P 500, Loan | $64,500 | 3.75% | 5/16/2020 | 5/30/2022 | $3,410 | 3,410 | $3,780 | $60,720 | $66,810 | $ - | $ - | $ - | $64,500 | $64,500 |
| Machinery Bank | $27,148 | 6.75% | 1/20/2021 | 1/20/2024 | $1,832 | 1,832,49 | $2,224 | $8,893 | $11,128 | $1,832 | $1,732 | $1,520 | $17,981 | $19,504 |
| Total |  |  |  |  | $150,971 | $150,971 | $1,875,694 | $69,013 | $2,094,446 | $155,097 | $1,925,797 | $1,520 | $1,905,628 | $2,131,231 |

The summary of the future maturities is as follows:

# **As of Year Ended December 31, 2022**

| 2023 | $1,875,694 |
| --- | --- |
| 2024 | 12,673 |
| 2025 | 12,673 |
| 2026 | 12,673 |
| 2027 | 12,673 |
| Thereafter | 18,920 |
| Total | $1,945,308 |

# **Forward Financing**

During fiscal year 2022, the Company entered into a Shopify Capital Agreement in the amount of $165,000. It bears a remittance rate of 15%. The lender provides the Company with the advance amount in exchange for sale of receivables to the lender. As of December 31, 2022, and December 31, 2021, the outstanding balance of this kind of financing is in the amount of $163,231 and $277,703, respectively and the entire amount is classified as the current portion.

During fiscal year 2021, the Company entered into a Clearco Capital Agreement in the amount of $250,000. As of December 31, 2022, and December 31, 2021, the outstanding balance of this kind of financing is in the amount of $0 and $115,569, respectively and the entire amount is classified as the current portion.

16

### UNITED STATES SECURITIES AND EXCHANGE COMMISSION
**Washington, D.C. 20549**

## FORM C

### UNDER THE SECURITIES ACT OF 1933

### Issuer Information

**Name of Issuer:** Pashion Footwear Inc.

**Legal Status:** Corporation

**Jurisdiction of Incorporation/Organization:** DE

**Date of Organization:** 08-30-2017

**Physical Address:** 2950 Broad Street #1030, San Luis Obispo, CA, 93401

**Issuer Website:** http://pashionfootwear.com

**Is there a Co-Issuer?:** No

**Intermediary Name:** StartEngine Capital, LLC

**Intermediary CIK:** 0001665160

**Intermediary File Number:** 007-00007

### Offering Information

**Compensation to Intermediary:** Up to 9% percent

**Financial Interest in Issuer:** Three percent (3%) of securities of the total amount of investments raised in the offering, along the same terms as investors.

**Type of Security Offered:** Other

**Other Description of Security:** Convertible Note

**Number of Securities Offered:** 15000

**Method for Determining Price:** N/A

**Target Offering Amount:** $15,000.00

**Oversubscription Accepted:** Yes

**Oversubscription Allocation Type:** Other

**Description of Oversubscription:** At issuer's discretion, with priority given to StartEngine Owners

**Maximum Offering Amount:** $1,235,000.00

**Deadline to Reach Target Amount:** 06-28-2023

### Annual Report Disclosure Requirements

**Current Number of Employees:** 7

**Total Assets (Most Recent Fiscal Year):** $1,645,657.90

**Total Assets (Prior Fiscal Year):** $1,151,264.31

**Cash & Cash Equivalents (Most Recent Fiscal Year):** $47,824.43

**Cash & Cash Equivalents (Prior Fiscal Year):** $42,194.26

**Accounts Receivable (Most Recent Fiscal Year):** $59,073.70

**Accounts Receivable (Prior Fiscal Year):** $0.00

**Short-Term Debt (Most Recent Fiscal Year):** $1,985,112.32

**Short-Term Debt (Prior Fiscal Year):** $2,043,161.99

**Long-Term Debt (Most Recent Fiscal Year):** $738,393.45

**Long-Term Debt (Prior Fiscal Year):** $82,481.29

**Revenues/Sales (Most Recent Fiscal Year):** $2,703,257.00

**Revenues/Sales (Prior Fiscal Year):** $2,834,297.00

**Cost of Goods Sold (Most Recent Fiscal Year):** $1,568,943.00

**Cost of Goods Sold (Prior Fiscal Year):** $2,179,507.00

**Taxes Paid (Most Recent Fiscal Year):** $0.00

**Taxes Paid (Prior Fiscal Year):** $0.00

**Net Income (Most Recent Fiscal Year):** $-856,804.00

**Net Income (Prior Fiscal Year):** $-2,536,915.00

**Jurisdictions Offered:**

ALABAMA, ALASKA, ARIZONA, ARKANSAS, CALIFORNIA, COLORADO, CONNECTICUT, DISTRICT OF COLUMBIA, DELAWARE, FLORIDA, GEORGIA, HAWAII, IDAHO, ILLINOIS, INDIANA, IOWA, KANSAS, KENTUCKY, LOUISIANA, MAINE, MARYLAND, MASSACHUSETTS, MICHIGAN, MINNESOTA, MISSISSIPPI, MISSOURI, MONTANA, NEBRASKA, NEVADA, NEW HAMPSHIRE, NEW JERSEY, NEW MEXICO, NEW YORK, NORTH CAROLINA, NORTH DAKOTA, OHIO, OKLAHOMA, OREGON, PENNSYLVANIA, PR, RHODE ISLAND, SOUTH CAROLINA, SOUTH DAKOTA, TENNESSEE, TEXAS, UTAH, VERMONT, VIRGINIA, WASHINGTON, WEST VIRGINIA, WISCONSIN, WYOMING

### Signatures

**Issuer:** Pashion Footwear Inc.

**Signature:** Haley Pavone

**Title:** CEO, President Director

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**Signature:** Haley Pavone

**Title:** CEO, President Director

**Date:** 03-29-2023

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**Signature:** Jessica Norman

**Title:** COO, Principal Accounting Officer

**Date:** 03-29-2023