NOTE
A – SUMMARY OF ACCOUNTING POLICIES
A
summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.
Business
Sparta Commercial Services, Inc. (“Sparta,”
“we,” “us,” or the “Company”) is a Nevada corporation serving three markets. Sparta is a technology
company that develops, markets and manages business websites and mobile applications (mobile apps) for smartphones
and tablets. The Company also owns and manages websites which sell on-demand motorcycle, recreational vehicle, and truck title
history reports for consumers, retail dealers, auction houses, insurance companies and banks/finance companies. Notwithstanding
our discontinuance of consumer financing, we continue to offer, on a pass through basis, an equipment-leasing product for local
and state agencies throughout the country seeking an alternative and economical way to finance their essential equipment
needs, including police motorcycles and cruisers, buses, fire trucks, and EMS equipment.
Our
roots are in the Powersports industry and our original focus was providing consumer and municipal financing to the powersports,
recreational vehicle, and automobile industries (see Discontinued Operations). Presently, through our subsidiary, iMobile Solutions,
Inc. (“iMS”), we offer mobile application development, sales, marketing and support, and Vehicle Title History
Reports.
Our mobile application (mobile app) offerings
have broadened our base beyond vehicle dealers to a wide range of businesses including, but not limited to, agriculture dealerships,
racetracks, private clubs, country clubs, restaurants and grocery stores. We also offer a private label version of our mobile
app framework to enable other businesses to offer custom apps to their customers.
The Company also designs, launches, maintains,
and hosts websites for businesses. We provide specific, tailored action plans for our clients’ websites that include services
such as eCommerce, CRM (Customer Relationship Management) development and integration, ordering system creation and integration,
SEO (search engine optimization), social media marketing, and online reviews to improve their presence online. In addition, we
offer text messaging services which are vital for businesses’ marketing, retention and loyalty strategies. Our text messaging
platform allows our clients to easily manage, schedule, and analyze text message performance.
Our
vehicle history reports include Cyclechex (Motorcycle History Reports at www.cyclechex.com); RVchecks (Recreational Vehicle
History Reports at www.rvchecks.com); CarVINreport (Automobile at www.carvinreport.com) and Truckchex (Heavy Duty
Truck History Reports at www.truckchex.com). Our Vehicle History Reports are designed for consumers, retail dealers, auction
houses, insurance companies and banks/finance companies.
Principles
of Consolidation
The
consolidated financial statements include the accounts of the Company and its majority owned subsidiary. All material intercompany
transactions and balances have been eliminated in consolidation. The third party ownership of the Company’s subsidiary is
accounted for as noncontrolling interest in the consolidated financial statements. Changes in the noncontrolling interest are
reported in the statement of stockholders’ deficit.
Estimates
The
preparation of the financial statements in conformity with generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from
those estimates.
Discontinued
Operations
As
discussed in Note C, in the second quarter of fiscal 2013, the Company’s Board of Directors approved management’s
recommendation to discontinue the Company’s consumer lease and loan lines of business and the sale of the Company’s
entire portfolio of performing RISCs, and a portion of its portfolio of leases. The sale was consummated in that quarter. The
assets and liabilities have been accounted for as discontinued operations in the Company’s consolidated balance sheets for
all periods presented. The operating results related to these lines of business have been included in discontinued operations
in the Company’s consolidated statements of operations for all periods presented.
Revenue
Recognition
The
Company recognizes revenue when the following criteria have been met: persuasive evidence of an arrangement exists, no significant
Company obligations remain, collection of the related receivable is reasonably assured, and the fees are fixed or determinable.
The
Company acts as a principal in its revenue transactions as the Company is the primary obligor in the transactions.
Revenues
from mobile app products are generally recognized upon delivery. Revenues from History Reports are generally recognized upon delivery
/ download. Prepayments received from customers before delivery (if any) are recognized as deferred revenue and recognized upon
delivery.
Cash
Equivalents
For
the purpose of the accompanying financial statements, all highly liquid investments with a maturity of three months or less are
considered to be cash equivalents.
Website
Development Costs
The
Company recognizes website development costs in accordance with ASC 350-50, “Accounting for Website Development Costs.”
As such, the Company expenses all costs incurred that relate to the planning and post implementation phases of development
of its website. Direct costs incurred in the development phase are capitalized and recognized over the estimated useful life.
Costs associated with repair or maintenance for the website are included in cost of net revenues in the current period expenses.
Fair
Value Measurements
The
Company adopted ASC 820, “Fair Value Measurements (“ASC 820”).” ASC 820 establishes a three-level
fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets the lowest priority to unobservable inputs to fair value measurements of
certain assets and Liabilities. The three levels of the fair value hierarchy under ASC 820 are described below:
●
|
Level
1 — Quoted prices for identical instruments in active markets. Level 1 assets
and liabilities include debt and equity securities and derivative contracts that are
traded in an active exchange market, as well as certain securities that are highly liquid
and are actively traded in over-the-counter markets.
|
|
|
●
|
Level
2 — Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and model derived
valuations in which all significant inputs and significant value drivers are observable
in active markets.
|
|
|
●
|
Level
3 — Unobservable inputs that are supported by little or no market activity
and that are significant to the fair value measurements. Level 3 assets and liabilities
include financial instruments whose value is determined using pricing models, discounted
cash flow methodologies, or similar techniques based on significant unobservable inputs,
as well as management judgments or estimates that are significant to valuation.
|
This
hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when
determining fair value. For some products or in certain market conditions, observable inputs may not always be available.
Income
Taxes
We
utilize ASC 740 “Income Taxes” which requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this
method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of
assets and liabilities and their financial reporting amounts at year-end based on enacted laws and statutory tax rates applicable
to the periods in which the differences are expected to affect taxable income.
The
Company recognizes the impact of a tax position in the financial statements only if that position is more likely than not of being
sustained upon examination by taxing authorities, based on the technical merits of the position. Our practice is to recognize
interest and/or penalties related to income tax matters in income tax expense.
Stock
Based Compensation
We
account for our stock based compensation under ASC 718 “Compensation – Stock Compensation” using
the fair value based method.
Under
this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which
an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities
in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled
by the issuance of those equity instruments.
We
use the fair value method for equity instruments granted to non-employees and use the Black-Scholes model for measuring the fair
value of options. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance
of the services is completed (measurement date) and is recognized over the vesting periods.
Property
and Equipment
Property
and equipment are recorded at cost. Minor additions and renewals are expensed in the year incurred. Major additions and renewals
are capitalized and depreciated over their estimated useful lives. Depreciation is calculated using the straight-line method over
the estimated useful lives. Estimated useful lives of major depreciable assets are as follows:
Leasehold
improvements
|
3
years
|
Furniture
and fixtures
|
7
years
|
Website
costs
|
3
years
|
Computer
Equipment
|
5
years
|
Concentrations
of Credit Risk
Financial
instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash,
cash equivalents and receivables. The Company places its cash and temporary cash investments with high credit quality institutions.
At times, such investments may be in excess of the FDIC insurance limit.
Net
Loss Per Share
The
Company uses ASC 260-10, “Earnings Per Share,” for calculating the basic and diluted loss per share. The Company
computes basic loss per share by dividing net loss and net loss attributable to common shareholders by the weighted average number
of common shares outstanding. Common equivalent shares are excluded from the computation of net loss per share if their effect
is anti-dilutive.
At
April 30, 2017 and 2016, 1,446,243,940 potential shares (including 23,273,656 shares to be issued included on the balance sheet)
and 1,534,522,006 potential shares (including 9,605,000 shares to be issued included on the balance sheet), respectively, were
excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share.
Derivative
Liabilities
The
Company assessed the classification of its derivative financial instruments as of April 30, 2017 and 2016, which consist of convertible
instruments and rights to shares of the Company’s common stock, and determined that such derivatives meet the criteria for
liability classification under ASC 815.
ASC
815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments
and account for them as freestanding derivative financial instruments. These three criteria include circumstances in which (a)
the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic
characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument
and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with
changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative
instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception
to this rule when the host instrument is deemed to be conventional, as described.
Convertible
Instruments
The
Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional
standards for “Accounting for Derivative Instruments and Hedging Activities”.
The
Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated
from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with
Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.”
Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options
embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment
date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements
are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary
deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between
the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price
embedded in the note. ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control
could or require net cash settlement, then the contract shall be classified as an asset or a liability.
Reclassifications
Certain
reclassifications have been made to conform to prior periods’ data to the current presentation. These reclassifications
had no effect on reported losses.
Recent
Accounting Pronouncements
In
April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt
issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This update is effective
for interim and annual reporting periods beginning after December 15, 2015 and requires retrospective application for all periods
presented. Early adoption is permitted. The Company will adopt this standard in the interim period beginning on May 1, 2018. Adoption
of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
In
March 2018, the FASB issued ASU 2018-09, “Compensation - Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting” (ASU 2018-09). This ASU makes several modifications to Topic 718 related to the
accounting for forfeitures, employer tax withholding on share-based compensation, and the financial statement presentation of
excess tax benefits or deficiencies. ASU 2018-09 also clarifies the statement of cash flows presentation for certain components
of share-based awards. The standard is effective for interim and annual reporting periods beginning after December 15, 2018, with
early adoption permitted. The Company expects to adopt this guidance when effective and is currently evaluating the effect that
the updated standard will have on its consolidated financial statements and related disclosures.
In
August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements - Going Concern (Topic 205-40): Disclosure
of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). This amendment
prescribes that an entity should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial
doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements
are issued. The amendments will become effective for the Company’s annual and interim reporting periods beginning May 1,
2019. The Company will begin evaluating going concern disclosures based on this guidance upon adoption.
The
FASB issued the following accounting standard updates related to Topic 606, Revenue Contracts with Customers:
●
|
ASU
No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) in May 2014. ASU
2014-09 requires entities to recognize revenue through the application of a five-step model, which includes identification
of the contract, identification of the performance obligations, determination of the transaction price, allocation of the
transaction price to the performance obligations and recognition of revenue as the entity satisfies the performance obligations.
|
●
|
ASU
No. 2018-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations
(Reporting Revenue Gross versus Net) (“ASU 2018-08”) in March 2018. ASU 2018-08 does not change the core principle
of revenue recognition in Topic 606 but clarifies the implementation guidance on principal versus agent considerations.
|
●
|
ASU
No. 2018-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing
(“ASU 2018-10”) in April 2018. ASU 2018-10 does not change the core principle of revenue recognition in Topic
606 but clarifies the implementation guidance on identifying performance obligations and the licensing implementation guidance,
while retaining the related principles for those areas.
|
●
|
ASU
No. 2018-11, Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because
of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2018 EITF Meeting
(SEC Update) (“ASU 2018-11”) in May 2018. ASU 2018-11 rescinds SEC paragraphs pursuant to two SEC Staff Announcements
at the March 3, 2018 EITF meeting. The SEC Staff is rescinding SEC Staff Observer comments that are codified in Topic 605
and Topic 932, effective upon adoption of Topic 606.
|
●
|
ASU
No. 2018-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients
in May 2018. ASU 2018-12 does not change the core principle of revenue recognition in Topic 606 but clarifies the implementation
guidance on a few narrow areas and adds some practical expedients to the guidance.
|
These
ASUs will become effective for the Company beginning interim period beginning May 1, 2018.
Adoption
of this standard is not expected to have a material impact on the Company’s consolidated financial statements.
In
February 2016, the FASB issued Accounting Standards Update No. 2016-02 (Topic 842) “Leases.” Topic 842
supersedes the lease requirements in Accounting Standards Codification (ASC) Topic 840, “Leases.” Under
Topic 842, lessees are required to recognize assets and liabilities on the balance sheet for most leases and provide enhanced
disclosures. Leases will continue to be classified as either finance or operating. The Company will adopt Topic 842 effective
May 1, 2019 using a modified retrospective method and will not restate comparative periods. The Company is assessing the impact
of this ASU on its’ consolidated financial statements
NOTE
B – GOING CONCERN MATTERS
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. As shown in the accompanying consolidated financial
statements, the Company has incurred recurring losses and generated negative cash flows from operating activities since inception.
As of April 30, 2017, the Company had an accumulated deficit of $57,386,338 and a working capital deficit (total current liabilities
exceeded total current assets) of $9,778,298. The Company’s cash balance and revenues generated are not currently sufficient
and cannot be projected to cover its operating expenses for the next twelve months from the filing date of this report. These
factors among others raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable
period of time.
The
Company’s existence is dependent upon management’s ability to develop profitable operations. Management is devoting
substantially all of its efforts to developing its business and raising capital and there can be no assurance that the Company’s
efforts will be successful. No assurance can be given that management’s actions will result in profitable operations or
the resolution of its liquidity problems. The accompanying consolidated financial statements do not include any adjustments that
might result should the Company be unable to continue as a going concern.
In
order to improve the Company’s liquidity, the Company’s management is actively pursuing additional equity financing
through discussions with investment bankers and private investors. There can be no assurance that the Company will be successful
in its effort to secure additional equity financing.
NOTE
C – DISCONTINUED OPERATIONS
In
the second quarter of fiscal 2013, the Company’s Board of Directors approved management’s recommendation to discontinue
the Company’s consumer lease and loan lines of business and the sale of all of the Company’s portfolio of performing
RISCs and a portion of its portfolio of leases. The sale was consummated in that quarter. The assets and liabilities have been
accounted for as discontinued operations in the Company’s consolidated balance sheets for all periods presented.
The
operating results related to these lines of business have been included in discontinued operations in the Company’s consolidated
statements of operations for all periods presented. The following table presents summarized operating results for the discontinued
operations.
|
|
Years
Ended
|
|
|
|
April
30, 2017
|
|
|
April
30, 2016
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
14,492
|
|
|
$
|
39,295
|
|
Net
loss
|
|
$
|
(33,188
|
)
|
|
$
|
(29,024
|
)
|
As
the Company sold its entire portfolio of performing RISCs, and a portion of its portfolio of leases with the remaining leases
in final run-off mode, therefore no portfolio performance measures were calculated for the years ended April 30, 2017 and 2016.
ASSETS
INCLUDED IN DISCONTINUED OPERATIONS
MOTORCYCLES
AND OTHER VEHICLES UNDER OPERATING LEASES
Motorcycles
and other vehicles under operating leases at April 30, 2017 and 2016:
|
|
April
30, 2017
|
|
|
April
30, 2016
|
|
Motorcycles
and other vehicles
|
|
$
|
11,040
|
|
|
$
|
11,040
|
|
Less:
accumulated depreciation
|
|
|
(11,040
|
)
|
|
|
(11,040
|
)
|
Motorcycles
and other vehicles, net of accumulated depreciation
|
|
|
-
|
|
|
|
-
|
|
Less:
estimated reserve for residual values
|
|
|
-
|
|
|
|
-
|
|
Motorcycles
and other vehicles under operating leases, net
|
|
$
|
-
|
|
|
$
|
-
|
|
At
April 30, 2017, motorcycles and other vehicles have been fully depreciated. Depreciation expense for vehicles for the years ended
April 30, 2017 and 2016 was zero and $5,207, respectively. All of the assets are pledged as collateral for outstanding notes payable.
RETAIL
(RISC) LOAN RECEIVABLES
All
of the Company’s RISC performing loan receivables were sold in August 2013. As of April 30, 2017 and 2016 the Company had
RISC loans net of reserves of $0 and $0, respectively.
As
the Company sold all of its portfolio of RISCs, and a portion of its portfolio of leases with the remaining leases in final run-off
mode, therefore no portfolio performance measures were calculated for the years ending April 30, 2017 and 2016.
LIABILITIES
INCLUDED IN DISCONTINUED OPERATIONS
Included
in liabilities from discontinued operations are the following:
SECURED
NOTES PAYABLE
|
|
April
30, 2017
|
|
|
April
30, 2016
|
|
|
|
|
|
|
|
|
Secured,
subordinated individual lender
|
|
$
|
|
|
|
$
|
2,590
|
|
Secured,
subordinated individual lender
|
|
|
12,080
|
|
|
|
12,080
|
|
Total
|
|
$
|
12,080
|
|
|
$
|
14,670
|
|
At
April 30, 2017, the notes have maturities due within one year. We make payments on the notes as we collect on the underlying leases
and loans.
NOTE
D – NOTES PAYABLE AND DERIVATIVES
The
Company has outstanding numerous notes payable to various parties. The notes bear interest at rates of 5% - 20% per year and are
summarized as follows:
Notes
Payable
|
|
April
30, 2017
|
|
|
April
30, 2016
|
|
Notes
convertible at holder’s option
|
|
$
|
2,464,216
|
|
|
$
|
2,625,105
|
|
Notes
convertible at Company’s option
|
|
|
76,000
|
|
|
|
225,000
|
|
Non-convertible
notes payable
|
|
|
2,014,826
|
|
|
|
1,197,500
|
|
Subtotal
|
|
|
4,555,042
|
|
|
|
4,047,605
|
|
Less
debt discount
|
|
|
(292,633
|
)
|
|
|
(556,885
|
)
|
Total
|
|
$
|
4,262,409
|
|
|
$
|
3,490,720
|
|
Certain
of the notes payable contain variable conversion rates and the conversion features are classified as derivative liabilities. The
conversion prices are based on the market price of the Company’s common stock, at discounts of 30% - 48% to market value.
At April 30, 2017 the Company has reserved 1,466,243,940 shares, to the extent such shares become available, of its common
stock for issuance upon the conversion of debentures.
Amortization
of debt discount for the years ended April 30, 2017 and 2016 was $540,227 and $1,606,491, respectively.
The
Company’s derivative financial instruments consist of embedded derivatives related to the outstanding short term Convertible
Notes Payable. These embedded derivatives include certain conversion features indexed to the Company’s common stock. The
accounting treatment of derivative financial instruments requires that the Company record the derivatives and related items at
their fair values as of the inception date of the Convertible Notes Payable and at fair value as of each subsequent balance sheet
date. In addition, under the provisions of Accounting Standards Codification subtopic 815-40, Derivatives and Hedging; Contracts
in Entity’s Own Equity (“ASC 815-40”), as a result of entering into the Convertible Notes Payable, the
Company is required to classify all other non-employee stock options and warrants as derivative liabilities and mark them to market
at each reporting date. Any change in fair value inclusive of modifications of terms will be recorded as non-operating, non-cash
income or expense at each reporting date. If the fair value of the derivatives is higher at the subsequent balance sheet date,
the Company will record a non-operating, non-cash charge. If the fair value of the derivatives is lower at the subsequent balance
sheet date, the Company will record non-operating, non-cash income.
The
change in fair value of the derivative liabilities of convertible notes outstanding at April 30, 2017 was calculated with the
following average assumptions, using a Black-Scholes option-pricing model are as follows:
Significant
Assumptions:
|
|
|
|
|
|
Risk free
interest rate
|
|
Ranging from
|
|
0.52%
to 1.28
|
%
|
Expected
stock price volatility
|
|
|
|
|
273
|
%
|
Expected
dividend payout
|
|
|
|
|
0
|
|
Expected
options life in years
|
|
Ranging
from
|
|
|
0.25
years to 1.83 years
|
|
During
the years ended April 30, 2017 and 2016, the Company recorded a gain of $180,534 and an expense of $85,684, respectively, related
to the change in value of the derivative liabilities.
The
change in fair value of the derivative liabilities at April 30, 2016 was calculated with the following average assumptions, using
a Black-Scholes option pricing model are as follows:
Significant
Assumptions:
|
|
|
|
|
|
Risk
free interest rate
|
|
Ranging
from
|
|
|
0.25
% to 0.75
|
%
|
Expected
stock price volatility
|
|
|
|
|
281%
to 434
|
%
|
Expected
dividend payout
|
|
|
|
|
0
|
%
|
Expected
options life in years
|
|
Ranging
from
|
|
|
0.25
year to 1.83 years
|
|
Changes
in derivative liability during the years ended April 30, 2017and 2016 were:
|
|
April
30,
|
|
|
|
2017
|
|
|
2016
|
|
Balance,
beginning of year
|
|
$
|
2,170,976
|
|
|
$
|
1,605,535
|
|
Derivative
liability reclassified to additional paid in capital
|
|
|
(503,220
|
)
|
|
|
(1,383,617
|
)
|
Derivative
financial liability arising on the issue of convertible notes
|
|
|
1,046,712
|
|
|
|
1,863,374
|
|
Fair
value adjustments
|
|
|
(180,534
|
)
|
|
|
85,684
|
|
Balance,
end of year
|
|
$
|
2,533,934
|
|
|
$
|
2,170,976
|
|
NOTE
E – LOANS PAYABLE TO RELATED PARTIES
As
of April 30, 2017 and 2016, aggregated loans payable, without demand and with no interest, to officers and directors were $418,853
and $395,853, respectively.
NOTE
F – EQUITY TRANSACTIONS
The
Company is authorized to issue 10,000,000 shares of preferred stock with $0.001 par value per share, of which 35,850 shares have
been designated as Series A convertible preferred stock with a $100 stated value per share, 1,000 shares have been designated
as Series B Preferred Stock with a $10,000 per share liquidation value, and 200,000 shares have been designated as Series C Preferred
Stock with a $10 per share liquidation value, and 750,000,000 shares of common stock with $0.001 par value per share. The Company
had 125 shares of Series A preferred stock issued and outstanding as of April 30, 2017 and 2016. The Company had no shares of
Series B preferred stock issued and outstanding as of April 30, 2017 and 2016. The Company had no shares of Series C preferred
stock issued and outstanding as of April 30, 2017 and 2016. The Company had 583,273,965 and 419,912,451 shares of common stock
issued and outstanding as of April 30, 2017 and 2016, respectively. The Company had 23,273,656 and 9,605,000 shares of common
classified as to be issued at April 30, 2017 and April 30, 2016, respectively.
Preferred
Stock Series A.
The
Series A preferred stock has a stated value of $100 per share, carries a 6% annual cumulative dividend, payable semi-annually
in arrears, and is convertible into shares of common stock at the rate of one preferred share into 8.55 shares of common stock.
There were no transactions of the Series A Preferred Stock during the years ended April 30, 2017 and 2016.
Accrued
dividends payable on the Series A Preferred were $9,091 and $8,326 at April 30, 2017 and 2016, respectively. At the Company’s
option, these dividends may be paid in shares of the Company’s Common Stock.
Preferred
Stock Series B
On
July 24, 2009, the Company designated 1,000 shares as Series B Preferred Stock. The Series B Preferred Stock, with respect to
dividend rights and rights upon liquidation, winding-up or dissolution, rank senior to the Company’s common stock and any
other class or series of preferred stock, and junior to all of the Company’s existing and future indebtedness. The Series
B Preferred Stock accrues dividends at an annual rate of 10%. Accrued dividends are payable upon redemption of the Series B Preferred
Stock. The Company’s common stock may not be redeemed while shares of Series B Preferred Stock are outstanding. The Series
B Preferred Stock certificate of designations provides that, without the approval of a majority of the shares of Series B Preferred
Stock, the Company cannot authorize or create any class of stock ranking as to distribution of assets upon a liquidation senior
to or otherwise pari passu with the Series B Preferred Stock, liquidate, dissolve or wind-up the Company’s business and
affairs, or effect certain fundamental corporate transactions, or otherwise alter or change adversely the powers, preferences
or rights given to the Series B Preferred Stock. The Series B Preferred Stock have a liquidation preference per share equal to
the original price per share thereof plus all accrued dividends thereon upon liquidation, including upon consummation of certain
fundamental corporate transactions, dissolution, or winding up of the Company’s business. The shares of Series B Preferred
Stock are redeemable at the Company’s option on or after the fifth anniversary of the date of its issuance. During the year
ended April 30, 2015, pursuant to the terms of the Series B Preferred Stock, the Company redeemed and returned to treasury all
shares of Series B Preferred Stock and all shares of to be issued Series B Preferred Stock by exchanging the shares for $2,118,309
of note subscription receivables and $193,011 of interest receivable thereon. Subsequent to this redemption, there were no shares
of Series B Preferred Stock outstanding and there were no shares of Series B Preferred Stock payable. There were no transactions
of the Series B Preferred Stock during the years ended April 30, 2017 and April 30, 2016.
Preferred
Stock Series C
In
November 2009, the Company authorized a new series of 200,000 shares of preferred stock designated as Series C Convertible
Preferred Stock, each share having a par value of $0.001 per share. The Series C Preferred Stock shall, upon liquidation,
winding-up or dissolution, rank: (a) senior to the Company’s common stock and any other class or series of preferred
stock of the Company which by their terms are junior to the Series C Preferred Stock (collectively, together with any
warrants, rights, calls or options exercisable for or convertible into such Preferred Stock, the “Junior
Shares”); (b) junior to all existing and future indebtedness of the Company; and (c) junior to the Company’s
Series A and Series B Preferred Stock. The Series C Preferred Stock is not entitled to receive any dividends, has a
liquidation value of $10.00 per share, redeemable at the Company’s option at $10.00 per share, and is convertible at
the option of the holder into shares of common stock as follows: the number of such shares of common stock to be received for
each share of Series C Preferred Stock so converted shall be determined by (A) dividing the number of shares of Series C
Preferred Stock to be converted by the weighted average closing price per share of the Company’s common stock for the
ten (10) trading days immediately preceding the date on which the Company agrees to issue shares of Series C Preferred Stock
to such holder multiplied by (B) the Series C liquidation value. There were no transactions of the Series C Preferred Stock
during the years ended April 30, 2017 and 2016 and no shares issued and outstanding at April 30, 2017 and 2016.
Subsidiary’s
Convertible Preferred Stock Series C
The
subsidiary has 110 shares of Series C Convertible Preferred, $1.00 par value, authorized and as of April 30, 2017 had 59 shares
outstanding. The shares are convertible at the holder’s option into either 2,222 shares of the subsidiary’s common
stock or 2,000 shares of the Company’s common stock. During the year ended April 30, 2017 the subsidiary sold 10 shares
of Series C stock to six accredited investors for a total of $50,000. No shares were sold during the fiscal year ended April 30,
2016.
Common
Stock
During
the year ended April 30, 2017, the Company:
●
|
sold
13,010,160 shares of restricted common stock to an accredited investor for $20,000, these shares are classified as to be issued
as of April 30, 2017,
|
●
|
issued
162,361,514 shares of restricted common stock for conversion of notes payable and accrued interest thereon totaling $414,334,
|
●
|
issued
1,000,000 shares of restricted common stock for services valued at $1,800,
|
●
|
issued
2,501,000 shares of restricted common stock, valued at $4,753, pursuant to the terms of various notes, these shares are classified
as to be issued as of April 30, 2017,
|
●
|
issued
1,842,504 shares of restricted common stock which had been classified as to be issued at April 30, 2016.
|
The
Company’s subsidiary issued 2,891,500 shares of its restricted common stock, valued at $8,674,504, to the Company to repay
the Company’s advances. This transaction has been eliminated to Additional-paid-in-Capital upon consolidation of financial
statements. And, the Company’s subsidiary issued 29,320 shares of its restricted common stock upon conversion of notes and
interest payable of $88,096.
During
the year ended April 30, 2016, the Company expensed $227,159 for non-cash charges related to stock and option compensation expense.
During
the year ended April 30, 2016, the Company:
●
issued 2,356,598 shares of common stock which had been classified as to be issued at April 30, 2015,
●
sold 760,456 shares of restricted common stock to an accredited investor for $20,000,
●
issued 321,955,811 shares of common stock and accrued 1,842,500 shares of common stock for the conversion of $1,557,057 of note
principal and accrued interest and accounts payable,
●
issued 13,346,868 shares of common stock and accrued 7,762,500 shares of common stock valued at $139,877 pursuant to terms of
various notes,
●
issued 40,576,000 shares of common stock valued at $227,095 pursuant to consulting agreements as stock-based compensation for
the consulting services,
●
issued 35,056 shares of common stock to three employees pursuant to vesting provisions of prior stock awards valued at $64.
NOTE
G – FAIR VALUE MEASUREMENTS
The
Company follows the guidance established pursuant to ASC 820 which established a framework for measuring fair value and expands
disclosure about fair value measurements. ASC 820 defines fair value as the amount that would be received for an asset or paid
to transfer a liability (i.e., 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 that requires
an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC
820 describes the following three levels of inputs that may be used:
Level
1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities.
The fair value hierarchy gives the highest priority to Level 1 inputs.
Level
2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.
Level
3: Unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions.
The fair value hierarchy gives the lowest priority to Level 3 inputs.
The
table below summarizes the fair values of financial liabilities as of April 30, 2017:
|
|
Fair
Value at
|
|
|
Fair
Value Measurement Using
|
|
|
|
April
30, 2017
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
Derivative
liabilities
|
|
$
|
2,533,934
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2,533,934
|
|
Fair
values of financial liabilities as of April 30, 2016 are as follows:
|
|
Fair
Value at
|
|
|
Fair
Value Measurement Using
|
|
|
|
April
30, 2016
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
Derivative
liabilities
|
|
$
|
2,170,976
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
2,170,976
|
|
The
following is a description of the valuation methodologies used for these items:
Derivative
liabilities — these instruments consist of certain variable conversion features related to notes payable obligations
and certain outstanding warrants. These instruments were valued using pricing models which incorporate the Company’s stock
price, volatility, U.S. risk free rate, dividend rate and estimated life.
The
Company did not identify any other non-recurring assets and liabilities that are required to be presented in the balance sheets
at fair value in accordance with ASC Topic 825 “The Fair Value Option for Financial Issuances”.
NOTE
H – NON-CASH FINANCIAL INFORMATION
During
the year ended April 30, 2017, the Company:
●
|
issued
162,361,514 shares of restricted common stock for conversion of notes payable and accrued
interest thereon totaling $414,334,
|
|
●
|
issued
1,000,000 shares of restricted common stock for services valued at $1,800,
|
|
●
|
issued
2,501,000 shares of restricted common stock, valued at $4,753, pursuant to the terms
of various notes, these shares are classified as to be issued as of April 30, 2017,
|
|
●
|
issued
1,842,504 shares of restricted common stock which had been classified as to be issued
at April 30, 2016.
|
The
Company’s subsidiary issued 2,891,500 shares of its restricted common stock, valued at $8,674,504, to the Company to repay
the Company’s advances. This transaction has been eliminated to Additional-paid-in-Capital upon consolidation of financial
statements. And, the Company’s subsidiary issued 29,320 shares of its restricted common stock upon conversion of notes and
interest payable of $88,096.
During
the year ended April 30, 2016, the Company:
●
|
Issued
13,346,868 shares of common stock and accrued 7,762,500 shares of common stock valued at $139,877 pursuant to the terms of
various notes,
|
●
|
Issued
321,955,811 shares of common stock and accrued 1,842,500 shares of common stock for the conversion of $1,557,057 of note principal
and accrued interest,
|
●
|
Issued
35,056 shares of common stock to three employees pursuant to vesting schedules of prior stock awards,
|
●
|
Issued
2,356,598 shares of common stock which had been recorded as to be issued at April 30, 2015.
|
NOTE
I - PROPERTY AND EQUIPMENT
Major
classes of property and equipment at April 30, 2016 and 2015 consist of the followings:
|
|
2017
|
|
|
2016
|
|
Computer
equipment, software and furniture
|
|
$
|
213,262
|
|
|
$
|
213,262
|
|
Less:
accumulated depreciation
|
|
|
(208,837
|
)
|
|
|
(206,362
|
)
|
Net
property and equipment
|
|
$
|
4,425
|
|
|
$
|
6,900
|
|
Depreciation
expense related to property and equipment was $2,475 and $3,147for the years ended April 30, 2017 and 2016, respectively.
NOTE
J - STOCK OPTIONS AND WARRANTS
Options:
Incentive
Compensation Plan.
Pursuant
to resolutions of the Company’s Board of Directors in August 2014, the exercise price on the 327,335 options held by the
Company’ s officers and directors was reduced to $0.50 per share from exercise prices ranging from $0.60 to $14.355, and
the expiration dates were extended by two years. The $63,149 valuation of this action was fully expensed during the year.
No
options were granted during the fiscal years ended April 30, 2017 and 2016.
The
following table summarizes common stock options issued to officers, directors and employees outstanding and the related exercise
price.
Options
Outstanding
|
|
|
|
|
Options
Exercisable
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contractual Life (Years)
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
Price
|
|
310,000
|
|
|
0.16
|
|
|
$
|
0.50
|
|
|
310,000
|
|
$
|
0.50
|
|
Transactions
involving stock options issued to officers, directors and employees are summarized as follows:
|
|
Number
of
Shares
|
|
|
Weighted
Average
Price
Per
Share
|
|
Outstanding
at April 30, 2015
|
|
|
327,335
|
|
|
$
|
0.50
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Canceled
or expired
|
|
|
-
|
|
|
|
-
|
|
Outstanding
at April 30, 2016
|
|
|
327,335
|
|
|
$
|
0.50
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Canceled
or expired
|
|
|
(17,335
|
)
|
|
|
0.50
|
|
Outstanding
at April 30, 2017
|
|
|
310,000
|
|
|
$
|
0.50
|
|
Warrants:
The
following table summarizes the changes in warrants outstanding and the related prices for the shares of the Company’s common
stock issued to non-employees of the Company.
No
warrants were granted during the fiscal years ended April 30, 2017 and 2016.
|
|
|
Warrants
Outstanding
|
|
|
|
|
|
Warrants
Exercisable
|
|
Exercise
Prices
|
|
|
Number
Outstanding
|
|
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Number
Exercisable
|
|
|
Weighted
Average
Exercise
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.80
|
|
|
|
20,000
|
|
|
|
0.67
|
|
|
$
|
0.80
|
|
|
|
20,000
|
|
|
$
|
0.80
|
|
$
|
0.65
|
|
|
|
40,000
|
|
|
|
2.51
|
|
|
$
|
0.65
|
|
|
|
40,000
|
|
|
$
|
0.65
|
|
$
|
0.60
|
|
|
|
20,000
|
|
|
|
0.39
|
|
|
$
|
0.60
|
|
|
|
20,000
|
|
|
$
|
0.60
|
|
$
|
0.40
|
|
|
|
150,000
|
|
|
|
0.49
|
|
|
$
|
0.40
|
|
|
|
150,000
|
|
|
$
|
0.40
|
|
|
|
|
|
|
230,000
|
|
|
|
1.01
|
|
|
$
|
0.59
|
|
|
|
150,000
|
|
|
$
|
0.59
|
|
Transactions
involving stock warrants issued to non-employees are summarized as follows:
|
|
Number
of
Shares
|
|
|
Weighted
Average
Exercise
Price Per Share
|
|
Outstanding
at April 30, 2015
|
|
|
420,763
|
|
|
$
|
0.66
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Canceled
or expired
|
|
|
(77,923
|
)
|
|
|
0.98
|
|
Outstanding
at April 30, 2016
|
|
|
342,840
|
|
|
|
0.59
|
|
Granted
|
|
|
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Canceled
or expired
|
|
|
(112,840
|
)
|
|
|
0.27
|
|
Outstanding
at April 30, 2017
|
|
|
230,000
|
|
|
$
|
0.50
|
|
NOTE
K - INCOME TAXES
At
April 30, 2017 and 2016, the Company has available for federal income tax purposes a net operating loss carry forward of approximately
$43,915,516 and $43,739,529, respectively, that may be used to offset future taxable income and expiring through the tax year
2036, subject to certain limitation pursuant to Internal Revenue Code Section 382. The Company has provided a valuation reserve
against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history
of the Company; it is more likely than not that, the benefits will not be realized.
A
reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows:
|
|
Years
Ended April 30,
|
|
|
|
2017
|
|
|
2016
|
|
Federal
statutory income tax rate
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
State
income taxes, net of federal benefit
|
|
|
(11.0
|
)
|
|
|
(11.0
|
)
|
Permanent
differences
|
|
|
23.6
|
|
|
|
23.6
|
|
Change
in valuation allowance
|
|
|
21.4
|
|
|
|
21.4
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
0.0
|
%
|
|
|
0.0
|
%
|
Components
of deferred tax assets as of April 30, 2017 and 2016 are as follows:
|
|
April
30,
|
|
|
|
2017
|
|
|
2016
|
|
Noncurrent:
|
|
|
|
|
|
|
|
|
Net
operating loss carry forward
|
|
$
|
19,245,393
|
|
|
$
|
19,682,788
|
|
Valuation
allowance
|
|
|
(19,245,293
|
)
|
|
|
(19,682,788
|
)
|
Net
deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The
valuation allowance increased by $437,395 and $1,187,880 during the years ended April 30, 2017 and 2016, respectively.
NOTE
L - COMMITMENTS AND CONTINGENCIES
Operating
Lease Commitments
Our
executive offices are located in New York, NY. We have an agreement for use of office space at this location under a lease expiring
on July 30, 2017. The monthly base rent is $8,750.
Rent
expense was $244,298 and $185,213 for the years ended April 30, 2016 and 2015, respectively.
Employment
and Consulting Agreements
The
Company does not have employment agreements with any of its non-executive employees.
The
Company has consulting agreements with outside contractors to provide marketing and financial advisory services. The agreements
are generally for a term of 12 months from inception and renewable automatically from year to year unless either the Company or
consultant terminates such engagement by written notice.
The
Company entered into an employment agreement, dated as of July 12, 2004, with Anthony L. Havens, our Chief Executive Officer.
The employment is for a term of five years. The employment term is to be automatically extended for one five-year period, and
additional one-year periods, unless written notice is given three months prior to the expiration of any such term that the term
will not be extended. The agreement was automatically extended for one year on July 12, 2017. He is entitled to six weeks of paid
vacation per year, and health insurance, short-term and long-term disability insurance, retirement benefits, fringe benefits,
and other employee benefits on the same basis as is generally made available to other senior executives. He did not receive any
equity compensation as part of this agreement.
Litigation
The
Company is subject to legal proceedings and claims which arise in the ordinary course of its business. Sparta can make no representations
about the potential outcome of such proceedings.
As
of April 30, 2016, we were not a party to any material pending legal proceeding except as stated below. From time to time, we
may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.
On
December 18, 2012, the Company filed suit in the United States District Court for the Southern District Court of New York
against a former credit provider. The suit sought damages arising out of the credit provider’s termination of the
Company’s credit line in 2009. The defendant counterclaimed for recovery of legal fees of $2 million under an
indemnification clause contained in one of the loan documents. The matter proceeded to trial in May 2015, and the Court
thereafter issued decisions dismissing the Company’s claims and the defendant’s counterclaim. On January 15, 2016
the complaint, the amended complaint and the defendant’s counterclaim were dismissed. On February 12, 2016, the Company
filed a Notice of Appeal to the United States Court of Appeals for the Second Circuit from the judgment dismissing the
complaint and amended complaint. On February 18, 2016 the defendant filed a Notice of Cross-Appeal of the dismissal of its
counterclaim. Sparta can make no representations about the potential outcome of the appeal or cross-appeal, but believes
that the decision of the lower court dismissing the defendant’s counterclaim was properly decided in holding that the
indemnification clause did not apply to defendant’s claim. On February 22, 2017, the United States Court of Appeals for
the Second Circuit affirmed the decision of the lower court, the United States District Court, Southern District of New York,
in the action entitled Sparta Commercial Services Inc. v. DZ Bank AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main,
New York. The lower court decision had resulted in an order dismissing the claims of both parties. The Cross-Appeal filed by
DZ Bank seeking attorney’s fees from Sparta in excess of $2 million was also denied in its entirety. Sparta is
reviewing its options regarding further proceedings. There can be no assurance that the Court of Appeals’ decision is a
final adjudication of all claims, or that there will be no further determinations of liability sought by either party in this
matter.
The
Company has received notices dated April 1, 2016, May 13, 2016 and July 22, 2016 from two lenders claiming defaults relating
to conversion requests of $8,365 principal and $643 interest and $5,000 principal, with regard to notes in the total amounts of
$55,125 and $27,500, respectively, which the company has refused to process and believes it has defenses in that regard. The Company
believes the claim is contingent, unliquidated and disputed. There can be no assurance that the Company would prevail should
litigation with regard to any of these requests occur. These liabilities have been recorded in the consolidated financial statements.
On September 22, 2016, a motion
for summary judgment in lieu of complaint was filed in the Supreme Court of The State of New York County of Kings, against the
Company by a lender for the amount of $102,170.82 in principal and interest; accrued and unpaid interest thereupon in the
amount from the date of filing to entry of judgment herein; lender’s reasonable attorney’s fees, costs, and
expenses; and any such other relief as the Court deems just and proper. The Company believes the claim is contingent, unliquidated
and disputed.
NOTE
M – SUBSEQUENT EVENTS
Subsequent
to April 30, 2017 the Company:
Pursuant
to terms of agreements, accrued as to be issued 4,476,700 shares of restricted common stock, valued at $17,113.
Accrued
as to be issued, 31,296,960 shares of restricted common stock which had been sold for $80,000.
Subsequent
to July 31, 2017 the Company:
Issued 61 shares of Series C
Convertible Preferred stock upon the conversion of $30,000. Each Unit consists of 1 share of Series C Preferred stock
convertible at any time into 300 shares of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share
of the Company’s common stock at $0.005 per share.
Sold
330 Units of Series C Convertible Preferred stock for $165,000. Each Unit consists of 1 share of Series C Preferred stock convertible
at any time into 300 shares of the Company’s common stock (subject to certain percentage ownership provisions) and
150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share.
Pursuant
to terms of agreements, accrued as to be issued 700,000 shares of restricted common stock, valued at $3,881.
Accrued
as to be issued, 9,715,720 shares of restricted common stock as a result of conversion of $30,000 of notes payable and accrued
interest thereon.
Issued
7,194,222 shares of restricted common stock which had been classified as to be issued in prior periods.
Pursuant
to terms of agreements, issued 9,417,434 shares of restricted common stock, valued at $45,000.
Subsequent
to October 31, 2017 the Company:
Sold 370 Units of Series C Convertible Preferred
stock for $185,000. Each Unit consists of 1 share of Series C Preferred stock convertible at any time into 300 shares of the Company’s
common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the
Company’s common stock at $0.005 per share.
Issued
20 shares of Series C Convertible Preferred stock upon conversion of $40,000 of notes payable and accrued interest thereon.
Accrued
as to be issued, 13,579,320 shares of common stock upon the conversion of $27,000 of notes payable and accrued interest thereon.
Pursuant
to terms of agreements, issued 11,085,565 shares of restricted common stock, valued at $44,398.
Subsequent
to January 31, 2018 the Company:
Sold 115 Units of Series C Convertible Preferred
stock for $115,000. Each Unit consists of 1 share of Series C Preferred stock convertible at any time into 300 shares of the Company’s
common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the
Company’s common stock at $0.005 per share.
Issued
219.95 Units of Series C Convertible Preferred stock upon the conversion of $74,282 notes payable and accrued interest thereon.
Pursuant
to terms of agreements, issued 9,891,503 shares of restricted common stock, valued at $45,000.
Subsequent
to April 30, 2018 the Company:
Sold
429 Units C Convertible Preferred stock for $212,500. Each Unit consists of 1 share of Series C Preferred stock convertible at
any time into 300 shares of the Company’s common stock (subject to certain percentage ownership provisions) and 150
two year Warrants to purchase one share of the Company’s common stock at $0.005 per share.
Pursuant
to terms of agreements, issued 6,230,217 shares of restricted common stock, valued at $27,628.
Subsequent
to July 31, 2018 the Company:
Sold
327 Units of Series C Convertible Preferred stock for $163,173. Each Unit consists of 1 share of Series C Preferred stock convertible
at any time into 300 shares of the Company’s common stock (subject to certain percentage ownership provisions) and
150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share.
Issued
220 Units of the Company’s Series C Convertible Preferred stock upon conversion of $143,144 of notes payable and
accrued interest thereon. Each Unit consists of 1 share of Series C Preferred stock convertible at any time into 400 shares of
the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one
share of the Company’s common stock at $0.005 per share.
Pursuant
to terms of agreements, accrued as to be issued 3,000,000 shares of restricted common stock, valued at $13,303.
Issued
40 Units of the Company’s Series D Convertible Preferred stock upon conversion of $40, 000 of accounts payable. Each
Unit consists of 1 share of Series D Preferred stock convertible at any time into 400 shares of the Company’s common stock
(subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s common
stock at $0.01 per share.
Issued 30 Units of the Company’s
Series D Convertible Preferred stock in exchange for of $30,000 of the Company’s subsidiary’s Convertible
preferred stock. Each Unit consists of 1 share of Series D Preferred stock convertible at any time into 400 shares of the Company’s
common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s
common stock at $0.01 per share.
Issued 142.83 Units of the Company’s
Series D Convertible Preferred stock upon conversion of $142,825 of notes payable and accrued interest thereon. Each Unit consists
of 1 share of Series D Preferred stock convertible at any time into 400 shares of the Company’s common stock (subject to
certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s common stock at
$0.01 per share.
Subsequent
to October 31, 2018 the Company:
Sold
444.1 Units of Series C Convertible Preferred stock for $223,050. Each Unit consists of 1 share of Series C Preferred stock convertible
at any time into 300 shares of the Company’s common stock (subject to certain percentage ownership provisions) and
150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share.
Issued
117.51 Units of the Company’s Series D Convertible Preferred upon conversion of $117,510 of notes payable and accrued
interest thereon. Each Unit consists of 1 share of Series D Preferred stock convertible at any time into 400 shares of the Company’s
common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s
common stock at $0.01 per share.
Issued
83.75 Units of the Company’s Series D Convertible Preferred stock
upon conversion of $83,750 of accounts payable. Each Unit consists of 1 share of Series
D Preferred stock convertible at any time into 400 shares of the Company’s common
stock (subject to certain percentage ownership provisions) and 150 two year Warrants
to purchase one share of the Company’s common stock at $0.01 per share.
Subsequent
to January 31, 2019 the Company:
Sold 194 Units of Series C Convertible
Preferred stock for $97,000. Each Unit consists of 1 share of Series C Preferred stock convertible at any time into 300
shares of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year Warrants
to purchase one share of the Company’s common stock at $0.005 per share.
Issued 20 Units of the Company’s
Series C Convertible Preferred stock in exchange for $10,000 of the Company’s subsidiary’s Series C Convertible Preferred
stock. Each Unit consists of 1 share of Series C Preferred stock convertible at any time into 300 shares of the Company’s
common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s
common stock at $0.005 per share.
Issued 165.12 Units of the Company’s
Series C Convertible Preferred stock upon conversion of $111,130 of notes payable and accrued interest thereon. Each Unit consists
of 1 share of Series C Preferred stock convertible at any time into 300 shares of the Company’s common stock (subject to
certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s common stock at
$0.005 per share.
Issued
145.79 Units of the Company’s Series D Convertible Preferred stock upon conversion of $146,040 of notes payable and
accrued interest thereon. Each Unit consists of 1 share of Series D Preferred stock convertible at any time into 400 shares of
the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one
share of the Company’s common stock at $0.01 per share.
Issued
20 Units of the Company’s Series D Convertible Preferred stock in exchange
for $20,000 of the Company’s subsidiary’s Convertible Preferred stock.
Each Unit consists of 1 share of Series D Preferred stock convertible at any time into
400 shares of the Company’s common stock (subject to certain percentage ownership
provisions) and 150 two year Warrants to purchase one share of the Company’s common
stock at $0.01 per share.
Pursuant
to terms of agreements, accrued as to be issued 2,000,000 shares of restricted common stock, valued at $8,869.
Subsequent
to April 30, 2019 the Company:
Accrued
1,000,000 shares of restricted common stock to be issued in cancellation of $311,127 in accounts payable.
Sold
298 Units of Series C Convertible Preferred stock for $103,000 in cash and conversion of $45,829 of notes payable and accrued
interest thereon. Each Unit consists of 1 share of Series C Preferred stock convertible at any time into 300 shares of the Company’s
common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the
Company’s common stock at $0.005 per share.
Issued
125 Units of the Company’s Series D Convertible Preferred stock in exchange for $125,000 of the Company’s
subsidiary’s Convertible Preferred stock. Each Unit consists of 1 share of Series D Preferred stock convertible at any
time into 400 shares of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two
year Warrants to purchase one share of the Company’s common stock at $0.01 per share.
Subsequent
to July 31, 2019 the Company:
Sold
392 Units of Series C Convertible Preferred stock for $196,000. Each Unit consists of 1 share of Series C Preferred stock convertible
at any time into 300 shares of the Company’s common stock (subject to certain percentage ownership provisions) and
150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share.
Issued
15 Units of the Company’s Series D Convertible Preferred stock in exchange for $15,000 of the Company’s subsidiary’s
Convertible Preferred stock. Each Unit consists of 1 share of Series D Preferred stock convertible at any time into 400 shares
of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase
one share of the Company’s common stock at $0.01 per share.
Subsequent
to October 31, 2019 the Company:
Sold
250 Units of Series C Convertible Preferred stock for $125,000. Each Unit consists of 1 share of Series C Preferred stock convertible
at any time into 300 shares of the Company’s common stock (subject to certain percentage ownership provisions) and
150 two year Warrants to purchase one share of the Company’s common stock at $0.005 per share.
Issued
50 Units of the Company’s Series D Convertible Preferred stock in exchange for $50,000 of the Company’s
subsidiary’s Convertible Preferred stock. Each Unit consists of 1 share of Series D Preferred stock (convertible at any
time into 400 shares of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year
Warrants to purchase one share of the Company’s common stock at $0.01 per share.
Subsequent
to January 31, 2020 the Company:
Sold
105 Units of Series C Convertible Preferred stock for $52,500. Each Unit consists of 1 share of Series C Preferred stock convertible
at any time into 300 shares of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two
year Warrants to purchase one share of the Company’s common stock at $0.005 per share.
Issued
145 Units of the Company’s Series D Convertible Preferred stock in exchange for $145,000 of the Company’s subsidiary’s
Convertible Preferred stock. Each Unit consists of 1 share of Series D Preferred stock convertible at any time into 400 shares
of the Company’s common stock (subject to certain percentage ownership provisions) and 150 two year Warrants to purchase
one share of the Company’s common stock at $0.01 per share.
Issued
222.22 Units of the Company’s Series D Convertible Preferred stock upon conversion of $222,250 of accounts payable. Each
Unit consists of 1 share of Series D Preferred stock convertible at any time into 400 shares of the Company’s common stock
(subject to certain percentage ownership provisions) and 150 two year Warrants to purchase one share of the Company’s common
stock at $0.01 per share.