NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited interim consolidated
financial statements of Digerati Technologies, Inc. (“we;” “us,” “our,” or the “Company”) have
been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the United
States Securities and Exchange Commission. In the opinion of management, these interim financial statements contain all adjustments, consisting
of normal recurring adjustments necessary for a fair presentation of financial position and the results of operations for the interim
periods presented. The results of operations for interim periods are not necessarily indicative of the results to be expected for the
full year. Notes to the consolidated financial statements, which would substantially duplicate the disclosure contained in the audited
consolidated financial statements for the year ended July 31, 2020 contained in the Company’s Form 10-K filed on October 29, 2020
have been omitted.
Treasury Shares
As a result of entering into various convertible
debt instruments which contained a variable conversion feature with no floor, warrants with fixed exercise price, and convertible notes
with fixed conversion price or with a conversion price floor, we reserved 25,000,000 treasury shares for consideration for future conversions
and exercise of warrants, for convertible notes with fixed conversion price, notes with variable conversion feature with a floor and warrants
with a conversion price floor. The Company will evaluate the reserved treasury shares on a quarterly basis, and if necessary, reserve
additional treasury shares. As of April 30, 2021, we believe that the treasury share reserved are sufficient for any future conversions
of these instruments. As a result, these debt instruments and warrants are excluded from derivative consideration.
Customers and Suppliers
We rely on various suppliers
to provide services in connection with our VOIP and UCaaS offerings. Our customers include businesses in various industries including
Healthcare, Banking, Financial Services, Legal, Real Estate, and Construction. We are not dependent upon any single supplier or customer.
During the nine months ended
April 30, 2021, and 2020, the Company did not derive a significant amount of revenue from one single customer.
As of the nine months ended
April 30, 2021, and 2020, the Company did not derive a significant number of accounts receivable from one single customer.
Sources of revenue:
Cloud Software and Service
Revenue. The Company recognizes cloud software and service revenue, mainly from subscription services for its cloud telephony applications
that includes hosted IP/PBX services, SIP trunking, call center applications, auto attendant, voice and web conferencing, call recording,
messaging, voicemail to email conversion, integrated mobility applications that are device and location agnostic, and other customized
applications. Other services include enterprise-class data and connectivity solutions through multiple broadband technologies including
cloud WAN or SD-WAN (Software-defined Wide Area Network), fiber, and Ethernet over copper. We also offer remote network monitoring, data
backup and disaster recovery services. The Company applies a five-step approach in determining the amount and timing of revenue to be
recognized: (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining
the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue
when the performance obligation is satisfied. Substantially all of the Company’s revenue is recognized at the time control of the
products transfers to the customer.
Service Revenue
Service
revenue from subscriptions to the Company’s cloud-based technology platform is recognized over time on a ratable basis over the contractual
subscription term beginning on the date that the platform is made available to the customer. Payments received in advance of subscription
services being rendered are recorded as a deferred revenue. Usage fees, either bundled or not bundled, are recognized when the Company
has a right to invoice. Professional services for configuration, system integration, optimization, customer training and/or education
are primarily billed on a fixed-fee basis and are performed by the Company directly. Alternatively, customers may choose to perform these
services themselves or engage their own third-party service providers. Professional services revenue is recognized over time, generally
as services are activated for the customer.
Product
Revenue
The
Company recognizes product revenue for telephony equipment at a point in time, when transfer of control has occurred, which is generally
upon delivery. Sales returns are recorded as a reduction to revenue estimated based on historical experience.
Disaggregation of Cloud software
and service revenue
Summary of disaggregated revenue is as follows (in thousands):
|
|
Three months ended April 30,
|
|
|
Nine months ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
Cloud software and service revenue
|
|
$
|
3,666
|
|
|
$
|
1,556
|
|
|
$
|
8,440
|
|
|
$
|
4,653
|
|
Product revenue
|
|
|
85
|
|
|
|
10
|
|
|
|
189
|
|
|
|
59
|
|
Total operating revenues
|
|
$
|
3,751
|
|
|
$
|
1,566
|
|
|
$
|
8,629
|
|
|
$
|
4,712
|
|
Contract Assets
Contract assets
are recorded for those parts of the contract consideration not yet invoiced but for which the performance obligations are completed.
The revenue is recognized when the customer receives services or equipment for a reduced consideration at the onset of an arrangement;
for example, when the initial month’s services or equipment are discounted. Contract assets are included in prepaid and other current
assets in the consolidated balance sheets, depending on if their reduction is recognized during the succeeding 12-month period or beyond.
Contract assets as of April 30, 2021, and July 31, 2020, were $13,260 and $5,980, respectively.
Deferred Income
Deferred income represents billings or payment received in advance of revenue recognition and is recognized upon transfer of control.
Balances consist primarily of annual plan subscription services, for services not yet provided as of the balance sheet date. Deferred
revenues that will be recognized during the succeeding 12-month period are recorded as current deferred revenues in the consolidated
balance sheets, with the remainder recorded as other noncurrent liabilities in the consolidated balance sheets. Deferred income as of
April 30, 2021, and July 31, 2020, were $43,000 and $148,000, respectively.
Customer deposits
The Company in some instances
requires customers to make deposits for equipment, installation charges and training. As equipment is installed and training takes places
the deposits are then applied to revenue. As of April 30, 2021, and July 31, 2020, Digerati’s customer deposits balance was $131,000
and $131,000, respectively.
Costs to Obtain a Customer Contract
Sales
commissions are paid upon collections of related revenue and are expensed during the same period. Sales commissions for the nine months
ended April 30, 2021, and April 30, 2020, were $576,476 and $51,953, respectively.
Direct Costs - Cloud software and service
We incur bandwidth and colocation
charges in connection with our UCaaS or cloud communication services. The bandwidth charges are incurred as part of the connectivity between
our customers to allow them access to our various services. We also incur costs from underlying providers for fiber, Internet broadband,
and telecommunication circuits in connection with our data and connectivity solutions.
Noncontrolling interest. The Company
follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation, which
governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries
and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs be treated as a separate
component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact
be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated
subsidiary be allocated to the NCI even when such allocation might result in a deficit balance.
The net income (loss)
attributed to the NCI is separately designated in the accompanying consolidated statements of operations and other comprehensive income
(loss). For the nine months ended April 30, 2021, and 2020, the Company recognized a net loss attributable to the noncontrolling interest
of $223,000 and $58,000, respectively.
Recently issued accounting pronouncements.
Recent accounting pronouncements, other than below, issued by the Financial Accounting Standards Board (“FASB”) (including
its Emerging Issues Task Force), the AICPA and the SEC did not, or are not, believed by management to have a material effect on the Company’s
present or future financial statements.
In August 2020, the FASB issued “ASU 2020-06,
Debt with Conversion and Other Options (Subtopic 47020) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40)” which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate
the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition
or a fully retrospective method of transition is permissible for the adoption of this standard. Update No. 2020-06 is effective for fiscal
years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted no earlier than
the fiscal year beginning after December 15, 2020. The Company is currently evaluating the potential on its financial statements.
NOTE 2 – GOING CONCERN
Financial Condition
The Company’s consolidated financial statements
for the nine months ending April 30, 2021, have been prepared on a going concern basis, which contemplates the realization of assets and
the settlement of liabilities in the normal course of business. Since the Company’s inception in 1993, the Company has incurred net losses
and accumulated a deficit of approximately $104,166,000, a working capital deficit of approximately $22,924,000 and total liabilities
of $32,430,000, which includes $17,340,000 in derivative liabilities, which raises substantial doubt about Digerati’s ability to
continue as a going concern.
Management Plans to Continue as a Going
Concern
Management believes that available
resources as of April 30, 2021, will not be sufficient to fund the Company’s operations and corporate expenses over the next 12
months. The Company’s ability to continue to meet its obligations and to achieve its business objectives is dependent upon, and
other things, raising additional capital, issuing stock-based compensation to certain members of the executive management team in lieu
of cash, or generating sufficient revenue in excess of costs. At such time as the Company requires additional funding, the Company will
seek to secure such best-efforts funding from various possible sources, including equity or debt financing, sales of assets, or collaborative
arrangements. If the Company raises additional capital through the issuance of equity securities or securities convertible into equity,
stockholders will experience dilution, and such securities may have rights, preferences, or privileges senior to those of the holders
of common stock or convertible senior notes. If the Company raises additional funds by issuing debt, the Company may be subject to limitations
on its operations, through debt covenants or other restrictions. If the Company obtains additional funds through arrangements with collaborators
or strategic partners, the Company may be required to relinquish its rights to certain technologies. There can be no assurance that the
Company will be able to raise additional funds or raise them on acceptable terms. If the Company is unable to obtain financing on acceptable
terms, it may be unable to execute its business plan, the Company could be required to curtail its operations, and the Company may not
be able to pay off its obligations, if and when they come due.
We are currently taking initiatives
to reduce our overall cash deficiencies on a monthly basis. During fiscal 2021 certain members of our management team have taken a significant
portion of their compensation in common stock to reduce the depletion of our available cash. To strengthen our business, we intend to
adopt best practices from our recent acquisitions and invest in a marketing and sales strategy to grow our monthly recurring revenue;
we anticipate utilizing our value-added resellers and channel partners to tap into new sources of revenue streams, we have also secured
numerous agent agreements through our recent acquisitions that we anticipate will accelerate revenue growth. In addition, we will continue
to focus on selling a greater number of comprehensive services to our existing customer base. Further, in an effort to increase our revenues,
we will continue to evaluate the acquisition of various assets with emphasis in VoIP Services and Cloud Communication Services. As a result,
during the due diligence process we anticipate incurring significant legal and professional fees.
We have been successful in
raising debt and equity capital in the past and as described in Notes 6, 7, and 8. We have financing efforts in place to continue to raise
cash through debt and equity offerings. Although we have successfully completed financings and reduced expenses in the past, we cannot
assure you that our plans to address these matters in the future will be successful.
The Company’s consolidated
financial statements as of April 30, 2021, do not include any adjustments that might result from the inability to implement or execute
the Company’s plans to improve our ability to continue as a going concern.
On November 17, 2020, the
Company and T3 Communications, Inc (“T3 Nevada”), a majority owned subsidiary entered into a credit agreement (the “Credit
Agreement”) with Post Road Administrative LLC and its affiliate Post Road Special Opportunity Fund II LLP (collectively, “Post
Road”). Pursuant to the Credit Agreement, Post Road provided T3 Nevada with a secured loan of up to $20,000,000, with initial loans
of $10,500,000 pursuant to the issuance of a Term Loan A Note and $3,500,000 pursuant to the issuance of a Term Loan B Note, each funded
on November 17, 2020.
The Company used $14,000,000
of the credit facility for the payment of approximately $9.452 million for the purchase price for the merger of Nexogy, $1.190 million
for the purchase price and transaction fees of certain assets of ActiveServe, Inc., $1.487 million for the payment in full of outstanding
debts owed and accrued interest to three creditors, including the secured creditor Thermo Communication, Inc., the payment of approximately
$464,000 paid to Post Road, and recognized as deferred financing cost, and will be amortized over the terms of the notes. In addition,
the Company expensed $430,000 in legal fees associated to the acquisitions and financing.
The Company can draw additional
loans in increments of $1,000,000, before the 18 month anniversary of the initial funding date. The current Credit Agreement will allow
the Company to continue acquiring UCaaS service providers that meet the Company’s acquisition criteria. Management anticipates that
future acquisitions will provide additional operating revenues to the Company as it continues to execute on its consolidation strategy.
There can be no guarantee that the planned acquisitions will close or that they will produce the anticipated revenues on the schedule
anticipated by management.
NOTE 3 – INTANGIBLE ASSETS
Below are summarized changes in intangible assets
at April 30, 2021, and July 31, 2020:
Total amortization expense for the nine months
ended April 30, 2021, and 2020 was $962,429 and $284,571, respectively.
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
April 30, 2021
|
|
Value
|
|
|
Amortization
|
|
|
Amount
|
|
NetSapiens - license, 10 years
|
|
$
|
150,000
|
|
|
$
|
(150,000
|
)
|
|
$
|
-
|
|
Customer relationships, 5 years
|
|
|
40,000
|
|
|
|
(26,672
|
)
|
|
|
13,328
|
|
Customer relationships, 7 years
|
|
|
1,480,000
|
|
|
|
(646,077
|
)
|
|
|
833,923
|
|
Customer relationships 7 years
|
|
|
5,710,000
|
|
|
|
(407,857
|
)
|
|
|
5,302,143
|
|
Trademarks, 7 years
|
|
|
2,870,000
|
|
|
|
(205,000
|
)
|
|
|
2,665,000
|
|
Non-compete, 2 & 3 years
|
|
|
290,000
|
|
|
|
(65,000
|
)
|
|
|
225,000
|
|
Marketing & Non-compete, 5 years
|
|
|
800,000
|
|
|
|
(480,000
|
)
|
|
|
320,000
|
|
Total Define-lived Assets
|
|
|
11,340,000
|
|
|
|
(1,980,606
|
)
|
|
|
9,359,394
|
|
Goodwill, Indefinite
|
|
|
3,512,533
|
|
|
|
-
|
|
|
|
3,512,533
|
|
Balance, April 30, 2021
|
|
$
|
14,852,533
|
|
|
$
|
(1,980,606
|
)
|
|
$
|
12,871,927
|
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
July 31, 2020
|
|
Value
|
|
|
Amortization
|
|
|
Amount
|
|
NetSapiens - license, 10 years
|
|
$
|
150,000
|
|
|
$
|
(150,000
|
)
|
|
$
|
-
|
|
Customer relationships, 5 years
|
|
|
40,000
|
|
|
|
(20,672
|
)
|
|
|
19,328
|
|
Customer relationships, 7 years
|
|
|
1,480,000
|
|
|
|
(487,505
|
)
|
|
|
992,495
|
|
Marketing & Non-compete, 5 years
|
|
|
800,000
|
|
|
|
(360,000
|
)
|
|
|
440,000
|
|
Total Define-lived Assets
|
|
|
2,470,000
|
|
|
|
(1,018,177
|
)
|
|
|
1,451,823
|
|
Goodwill, Indefinite
|
|
|
810,353
|
|
|
|
-
|
|
|
|
810,353
|
|
Balance, July 31, 2020
|
|
$
|
3,280,353
|
|
|
$
|
(1,018,177
|
)
|
|
$
|
2,262,176
|
|
NOTE 4 – STOCK-BASED COMPENSATION
In November 2015, the Company adopted the Digerati
Technologies, Inc. 2015 Equity Compensation Plan (the “Plan”). The Plan authorizes the grant of up to 7.5 million stock options,
restricted common shares, non-restricted common shares and other awards to employees, directors, and certain other persons. The Plan is
intended to permit the Company to retain and attract qualified individuals who will contribute to the overall success of the Company.
The Company’s Board of Directors determines the terms of any grants under the Plan. Exercise prices of all stock options and other
awards vary based on the market price of the shares of common stock as of the date of grant. The stock options, restricted common stock,
non-restricted common stock, and other awards vest based on the terms of the individual grant.
During the nine months ended April 30, 2021, we
issued:
|
●
|
7,608,820 common shares to various employees as part of the Company’s
Non-Standardized profit-sharing plan contribution. The Company recognized stock-based compensation expense of $247,287 equivalent to the
value of the shares calculated based on the share’s closing price at the grant dates.
|
|
●
|
250,000 common shares to a former member of the
Management team for services in lieu of cash compensation. The Company recognized stock-based compensation expense of approximately $17,500
equivalent to the value of the shares calculated based on the share’s closing price at the grant dates.
|
|
●
|
500,000 options to purchase common shares to
one of our members of the Board of Directors with an exercise price of $0.1475 per share and a term of 5 years. At issuance, 166,666 of
the options vested, 333,334 of the options will vest equally over a period of two years. At the time of issuance, the options had a fair
market value of $52,531.
|
|
●
|
3,730,000 options to purchase common shares to
various employees with an exercise price of $0.04 per share and a term of 5 years. At issuance, 33,333 of the options vested, 66,667 of
the options will vest equally over a period of two years, and 3,630,000 of the options will vest equally over a period of three years.
The options have a fair market value of $214,812.
|
During the nine months ended April 30, 2020, we
issued:
|
●
|
7,313,827 common shares to the Executive Officers
for services in lieu of cash compensation. The Company recognized stock-based compensation expense of approximately $410,044 equivalent
to the value of the shares calculated based on the share’s closing price at the grant dates.
|
|
●
|
2,988,251 shares of common stock to the Executive
Officers, with a market value at time of issuance of $158,216 the stock was issued as payment for outstanding compensation.
|
|
●
|
60,000 options to purchase common shares to an
employee with an exercise price of $0.12 per share and a term of 5 years. The options vest equally over a period of three years. The options
have a fair market value of $7,158.
|
The fair market value of all options issued during the nine
months ended April 30, 2021, were determined using the Black-Scholes option pricing model which used the following assumptions:
Expected dividend yield
|
0.00%
|
Expected stock price volatility
|
197.71% - 317.52%
|
Risk-free interest rate
|
0.22% - 1.47%
|
Expected term
|
2.0 - 3.0 years.
|
The Company recognized approximately $109,685
and $315,000 in stock-based compensation expense for stock options to employees for the nine months ended April 30, 2021, and 2020, respectively.
Unamortized compensation stock option cost totaled $220,861 and $126,182 at April 30, 2021, and April 30, 2020, respectively.
A summary of the stock options as of April 30,
2021, and July 31, 2020, and the changes during the nine months ended April 30, 2021, are presented below:
|
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
|
Weighted average
|
|
|
remaining contractual
|
|
|
|
Options
|
|
|
exercise
price
|
|
|
term
(years)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at July 31, 2020
|
|
|
5,000,000
|
|
|
$
|
0.27
|
|
|
|
2.66
|
|
Granted
|
|
|
4,230,000
|
|
|
$
|
0.05
|
|
|
|
4.65
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited and cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding at April 30, 2021
|
|
|
9,230,000
|
|
|
$
|
0.17
|
|
|
|
3.18
|
|
Exercisable at April 30, 2021
|
|
|
5,666,908
|
|
|
$
|
0.24
|
|
|
|
2.28
|
|
The aggregate intrinsic value (the difference
between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number
of in-the-money options) of the 9,230,000 and 5,000,000 stock options outstanding at April 30, 2021, and July 31, 2020, was $427,340 and
$0, respectively.
The aggregate intrinsic value of 5,666,908 and
4,717,699 stock options exercisable at April 30, 2021, and July 31, 2020, was $65,173 and $0, respectively.
NOTE 5 – WARRANTS
During the nine months ended April 30, 2021, the
Company issued the following warrants:
On November 17, 2020, the Company issued 107,701,179 Warrants to Post
Road Special Opportunity Fund II LP (the “Warrant”) to purchase, initially, twenty-five percent (25%) of the Company’s
total shares (the “Warrant”), calculated on a fully-diluted basis as of the date of issuance (the “Warrant Shares”)
and subject to a reduction to fifteen percent (15%) as described below.
The number of Warrant Shares is adjustable to
allow the holder to maintain, subject to certain share issuances that are exceptions, the right to purchase twenty-five percent (25%)
of the Company’s total shares, calculated on a fully-diluted basis. The Warrant has an exercise price of $0.01 per share and the
Warrant expires on November 17, 2030. Seventy-five percent (75%) of the Warrant Shares are immediately fully vested and not subject to
forfeiture at any time for any reason. The remaining twenty-five percent (25%) of the Warrant Shares are subject to forfeiture based on
the Company achieving certain performance targets which, if achieved, would result in twenty percent (20%) warrant coverage. If the minority
shareholders of T3 Nevada convert their T3 Nevada shares into shares of the Company’s common stock, par value $0.001 per share (the
“Common Stock”), the Warrant Shares percentage shall also be lowered such that when combined with the achievement of the performance
targets, the warrant coverage could be reduced to fifteen percent (15%).
In connection with the issuance of the Warrant,
the three executives of the Company, Art Smith, Antonio Estrada, and Craig Clement entered into a Tag-Along Agreement (the “Tag-Along
Agreement”) whereby they agreed that the holder of the Warrant or Warrant Share will have the right to participate or “tag-along”
in any agreements to sell any shares of their Common Stock that such executives enter into. The Company also agreed, in connection with
the issuance of the Warrant and pursuant to a Board Observer Agreement (the “Board Observer Agreement”), to grant Post Road
the right to appoint a representative to each of the boards of directors of the Company and each of its subsidiaries, to attend all board
meeting in a non-voting observer capacity. In addition, at issuance the Company recognized $6,462,050 in Derivative liability associated
with these warrants.
A summary of the warrants as of April 30, 2021,
and July 31, 2020, and the changes during the nine months ended April 30, 2021, are presented below:
|
|
|
|
|
|
|
|
Weighted average
|
|
|
|
|
|
|
Weighted average
|
|
|
remaining contractual
|
|
|
|
Warrants
|
|
|
exercise
price
|
|
|
term
(years)
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at July 31, 2020
|
|
|
2,540,000
|
|
|
$
|
0.33
|
|
|
|
1.61
|
|
Granted
|
|
|
107,701,179
|
|
|
$
|
0.01
|
|
|
|
9.50
|
|
Exercised
|
|
|
(300,000
|
)
|
|
$
|
0.10
|
|
|
|
-
|
|
Forfeited and cancelled
|
|
|
(105,000
|
)
|
|
$
|
0.50
|
|
|
|
-
|
|
Outstanding at April 30, 2021
|
|
|
109,836,179
|
|
|
$
|
0.02
|
|
|
|
9.39
|
|
Exercisable at April 30, 2021
|
|
|
82,610,885
|
|
|
$
|
0.01
|
|
|
|
9.40
|
|
The aggregate intrinsic value (the difference
between the Company’s closing stock price on the last trading day of the period and the exercise price, multiplied by the number
of in-the-money warrants) of the 109,836,179 and 2,540,000 warrants outstanding at April 30, 2021, and July 31, 2020, was $15,677,051
and $6,160, respectively.
The aggregate intrinsic value of 82,610,885 and 1,940,000 warrants
exercisable at April 30, 2021, and July 31, 2020, was $11,772,883 and $6,160, respectively.
During the nine months ended April 30, 2020, we
issued the following warrants.
In March 2020, the Company received $25,000 in
professional services and issued 25,000 shares of Series A Convertible Preferred Stock at a conversion price of $0.30 per share and warrants
to purchase an additional 50,000 shares of its common stock at an exercise price of $0.20 per share. We determined that the warrants issued
in connection with the services received were equity instruments and did not represent derivative instruments. The Company adopted a sequencing
policy and determined that the warrants with fixed exercise price were excluded from derivative consideration.
During
the nine months ended April 30, 2021, the Company extended the expiration date for 300,000 warrants that previously set to expired in
fiscal year ended July 31, 2020. The extended expiration date is to October 12, 2022.
During the nine months ended
April 30, 2021, 105,000 warrants expired with an exercise price of $0.50. These warrants were issued in August and October 2017.
During the nine months ended
April 30, 2021, the Company received $30,000 in proceeds from the exercise of 300,000 warrants, with an exercise price of $0.10. These
warrants were issued in March 2018.
In December 2017, the Company
issued 100,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years, with
an exercise price of $0.50. Additionally, the Company committed to issue 100,000 warrants if the Company’s stock price traded at
$0.75 per share for 10 consecutive days, to issue 100,000 warrants if the Company’s stock price traded at $1.00 per share for 10
consecutive days, and to issue 100,000 warrants if the Company’s stock price traded at $1.25 per share for 10 consecutive days.
The 300,000 commitment warrants have not been issued since the requirements were not achieved during the nine months ending April 30,
2021.
NOTE 6 – NOTES PAYABLE
NON-CONVERTIBLE
Notes Payable Non-convertible
On April 30, 2018, T3 Communications, Inc., a
Nevada corporation (“T3”), our majority owned subsidiary, entered into a secured promissory note for $650,000 with an effective
annual interest rate of 0% and an initial maturity date of May 14, 2018. The lender subsequentially continued to extend the maturity date
on the note. On October 14, 2020, the lender agreed to extend the maturity date until October 31, 2020, the Company continued to pay $3,250
per week in late fees. In conjunction with the note, T3 entered into a Security Agreement, whereby T3 agreed to pledge one third of the
outstanding shares of its Florida operations, T3 Communications, Inc. On November 17, 2020, the Company paid the total principal balance
outstanding of $700,000. As of April 30, 2021, and July 31, 2020, the outstanding principal balance were $0 and $700,000, respectively.
On April 30, 2018, T3 entered into a credit facility
under a secured promissory note of $500,000, interest payment for the first twenty-three months with a balloon payment on the twenty-fourth
month and a maturity date of April 30, 2020. The note was collateralized by T3’s accounts receivables. On April 10, 2020, the Company
increased the credit facility to $600,000 and the lender agreed to extend the maturity date until April 10, 2022. In addition, the Company
agreed to a revised effective annual interest rate of prime plus 5.75%, adjusted quarterly on the first day of each calendar quarter.
On November 17, 2020, the Company paid the total principal balance outstanding of $600,000 and $11,115 in accrued interest and fees. As
of April 30, 2021, and July 31, 2020, the outstanding principal balance were $0 and $600,000, respectively.
On October 22, 2018, the Company issued a secured
promissory note for $50,000, bearing interest at a rate of 8% per annum, with maturity date of December 31, 2018.In February 2020, the
maturity date was extended until December 31, 2020. In March 2021, the maturity date was extended until July 31, 2021. The promissory
note is secured by a Pledge and Escrow Agreement, whereby the Company agreed to pledge rights to a collateral due under certain Agreement.
The outstanding balance as of April 30, 2021, and July 31, 2020, was $50,000.
On June 14, 2019, the Company, entered into a
Stock Purchase Agreement (the “Agreement”) to acquire a 12% minority interest in Itellum Comunicacions Costa Rica, S.R.L. In
conjunction with this transaction, we entered into a non-recourse promissory note for $17,500 with an effective annual interest rate of
8% and an initial maturity date of September 14, 2019. On February 15, 2020, the maturity date was extended to July 31, 2020. On August
1, 2020, the lender agreed to extend the maturity date to October 31, 2020. Subsequentially, the lender agreed to extend the maturity
date to January 31, 2021. Additionally, the lender agreed to extend the maturity date to April 30, 2021. The outstanding balance as of
April 30, 2021, and July 31, 2020, was $7,500. Subsequently, on May 7, 2021, the Company paid the total principal balance outstanding
of $7,500 and $1,136 in accrued interest.
On February 26, 2020, the Company entered into
a secured promissory note for $30,000 with an effective annual interest rate of 12% and a maturity date of May 1, 2020. Subsequently,
the note holder agreed to extend the maturity date until August 31, 2020. The promissory note was secured by the Company’s receivables.
On November 17, 2020, the Company paid the total principal balance outstanding of $30,000 and $2,604 in accrued interest. The outstanding
balance as of April 30, 2021, and July 31, 2020, were $0 and $30,000, respectively.
On April 22, 2020, the
Company, entered into two unsecured promissory notes (the “Notes”) for $62,500 and $86,000 made to the Company under the Paycheck
Protection Program (the “PPP”). In addition, on May 4, 2020, the Company, entered into a third unsecured promissory note (the
“Note”) for $213,100 made to the Company under the Paycheck Protection Program (the “PPP”). The PPP was established
under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business
Administration (the “SBA”). The loans to the Company were made through The Bank of San Antonio (the “Lender”).
On April 15, 2021, the SBA informed the Company that the total outstanding balance of $62,500 and accrued interest of $608 were forgiven.
As a result, the Company recognized a gain on settlement of debt of $63,108. In addition, on April 15, 2021, the SBA informed the Company
that the total outstanding balance of $86,000 and accrued interest of $836 were forgiven. At the time of the forgiveness, the Company
recognized a gain on settlement of debt of $86,836. Subsequently, on May 13, 2021, the SBA informed the Company that the total outstanding
balance of $213,100 and accrued interest of $2,172 were forgiven. Subsequentially, on May 13, 2021, the Company recognized a gain on settlement
of debt of $215,272.
The Notes provide for
an interest rate of 1.00% per year and matures two years after the issuance date. Beginning on the seventh month following the date of
the Notes, the Company is required to make 18 monthly payments of principal and interest in the amount of $8,316 and $11,933, respectively.
The Notes may be used for payroll costs, costs related to certain group health care benefits and insurance premiums, rent payments, utility
payments, mortgage interest payments and interest payments on any other debt obligation that were incurred before February 15, 2020. The
Notes contain events of default and other conditions customary for a Note of this type.
As of April 30, 2021,
the principal balance on the various notes were $0, $0, and $213,100, respectively. As of July 31, 2020, the principal balance on the
various notes were $62,500, $86,000, and $213,100, respectively.
Credit Agreement and Notes
On November 17, 2020, T3 Communications, Inc.,
a Nevada corporation (“T3 Nevada”), a majority owned subsidiary of Digerati Technologies, Inc. (the “Company”)
and the Company’s other subsidiaries entered into a credit agreement (the “Credit Agreement”) with Post Road. The Company
is a party to certain sections of the Credit Agreement. Pursuant to the Credit Agreement, Post Road will provide T3 Nevada with a secured
loan of up to $20,000,000 (the “Loan”), with initial loans of $10,500,000 pursuant to the issuance of a Term Loan A Note and
$3,500,000 pursuant to the issuance of a Term Loan B Note, each funded on November 17, 2020, and an additional $6,000,000 on loans, in
increments of $1,000,000 as requested by T3 Nevada before the 18 month anniversary of the initial funding date to be lent pursuant to
the issuance of a Delayed Draw Term Note. After payment of transaction-related expenses and closing fees of $964,000, net proceeds to
the Company from the Note totaled $13,036,000. The Company recorded these discounts and cost of $964,000 as a discount to the Notes and
will be amortized over the term of the notes.
The Company used $14,000,000 of the credit facility
for the payment of approximately $9.452 million for the purchase price for the merger of Nexogy, $1.190 million for the purchase price
and transaction fees of certain assets of ActiveServe, Inc., $1.487 million for the payment in full of outstanding debts owed and accrued
interest to three creditors, including the secured creditor Thermo Communication, Inc., the payment of approximately $464,000 paid to
Post Road, and recognized as deferred financing cost, and will be amortized over the terms of the notes. In addition, the Company expensed
$430,000 in legal fees associated to the acquisitions and financing.
During the nine months ending April 30, 2021,
the Company amortized $1,294,000 of the total debt discount as interest expense for the Term Loan A Note and the Term Loan B Note. The
total debt discount outstanding on the notes as of April 30, 2021, was $6,132,000.
The Term Loan A and Delayed Draw Term Notes have
maturity dates of November 17, 2024, and an interest rate of LIBOR (with a minimum rate of 1.5%) plus twelve percent (12%). Term Loan
A is non-amortized (interest only payments) through the maturity date and contains an option for the Company to pay interest in kind (PIK)
for up to five percent (5%) of the interest rate in year one, four percent (4%) in year two and three percent (3%) in year three. The
principal balance and accrued PIK interest outstanding on the note were $10,500,000 and $245,881, respectively as of April 30, 2021.
Term Loan B has a maturity date of December 31,
2021, and an interest rate of LIBOR (with a minimum rate of 1.5%) plus twelve percent (12%). Term Loan B is non-amortized (interest only
payments) through the maturity date and contains an option for the Company to pay interest in kind (PIK) for up to five percent (5%) of
the interest rate in year one, four percent (4%) in year two and three percent (3%) in year three. The principal balance and accrued PIK
interest outstanding on the note were $3,500,000 and $81,960, respectively as of April 30, 2021.
The Credit Agreement contains customary representations,
warranties, and indemnification provisions. The Credit Agreement also contains affirmative and negative covenants with respect to operation
of the business and properties of the loan parties as well as financial performance. Below are key covenants requirements, (measured quarterly):
|
1.
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Maximum Allowed - Senior Leverage Ratio of 5.08 to 1.00
|
|
2.
|
Minimum Allowed - EBITDA of $703,091
|
|
3.
|
Minimum Allowed - Liquidity of $1,250,000
|
|
4.
|
Maximum Allowed - Capital Expenditures of $94,798
|
|
5.
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Minimum Allowed – Fixed Charge Coverage Ratio of 1.5 to 1.00
|
As of April 30, 2021, the Company is in compliance
of the financial covenants mentioned above.
T3 Nevada’s obligations under the Credit
Agreement are secured by a first-priority security interest in all of the assets of T3 Nevada and guaranteed by the other subsidiaries
of the Company pursuant to the Guaranty and Collateral Agreement, dated November 17, 2020, by and among T3 Nevada, the Company’s
other subsidiaries, and Post Road Administrative LLC (the “Guaranty and Collateral Agreement”). In addition, T3 Nevada’s
obligations under the Credit Agreement are, pursuant to a Pledge Agreement (the “Pledge Agreement”), secured by a pledge of
a first priority security interest in T3 Nevada’s 100% equity ownership of each of T3 Nevada’s operating companies.
NOTE 7 – RELATED PARTY
PROMISORY NOTES
On May 1, 2018, T3 entered into a secured promissory
note for $275,000 with an effective annual interest rate of 8.08% with an interest and principal payment of $6,000 per month and shall
continue perpetuity until the entire principal amount is paid in full. The promissory note is guaranteed to the lender by 15% of the stock
owned by T3 in its Florida operations, T3 Communications, Inc., the secured interest will continue until the principal balance is paid
in full. In conjunction with the promissory note, the Company issued 3-year warrants to purchase 100,000 shares of common stock at an
exercise price of $0.50 per share. Under a Black-Scholes valuation the relative fair market value of the warrants at time of issuance
was approximately $26,543 and was recognized as a discount on the promissory note. The company amortized as interest expense during the
periods ended April 30, 2021, and July 31, 2020, $6,300 and $10,386, respectively. The total unamortized discount as of April 30, 2021,
and July 31, 2020, were $0 and $6,300, respectively. The note holder also serves as Board Member of T3 Communications, Inc., a Florida
Corporation, one of our operating subsidiaries. During the nine months ending April 30, 2021, the Company paid the total principal balance
outstanding of $152,634. The total principal outstanding as of April 30, 2021, and July 31, 2020, were $0 and $152,634, respectively.
On February 27, 2020, the Company entered into
an unsecured promissory note for $70,000 with an effective annual interest rate of 12% and a maturity date of May 1, 2020. Subsequently,
the note holder agreed to extend the maturity date until August 31, 2020. In addition, the Company agreed to pay the lender in services
provided by the Company, and any unpaid principal and accrued interest will be paid in cash. During the nine months ended April 30, 2020,
and April 30, 2021, the Company provided VoIP Hosted and fiber services of $128,927 and $130,029, respectively. On August 3, 2020, the
promissory note was paid in full. The total principal outstanding as of April 30, 2021, and July 31, 2020, were $0 and $16,298, respectively.
The note holder also serves as a Board Member of T3 Communications, Inc., a Florida Corporation, one of our operating subsidiaries.
ActivePBX Asset Purchase
On November 17, 2020, our indirect, wholly owned
subsidiary, T3 Communications, Inc., a Florida corporation (“T3 Florida”), executed and closed on an Asset Purchase Agreement
(the “Purchase Agreement”) with ActiveServe, Inc., a Florida corporation (“Seller”). Pursuant to the Purchase
Agreement, T3 Florida acquired the customer base, certain equipment, certain intellectual property, inventory, contract rights, software
and other licenses and miscellaneous assets used in connection with the operation of Seller’s telecommunications business known
as ActivePBX (collectively, the “Purchased Assets”).
The aggregate purchase price for the Purchased
Assets was $2,555,000 in cash, subject to adjustment as provided therein (the “Purchase Price”). $1,190,000 of the
Purchase Price was payable at closing, with $50,000 of such amount being withheld by T3 Florida for a period of 12 months to cover
part of potential future indemnification obligations of Seller to T3 Florida due to Seller’s breaches, if any, of any
representations and warranties made to T3 Florida by Seller under the Purchase Agreement, and $40,000 of such amount being
credited to T3 Florida against a payment in that amount made by T3 Florida to Seller pursuant to the Second Amendment to Letter of Intent
between Seller and T3 Florida dated as of October 15, 2020.
Part of the Purchase Price is payable in
8 equal quarterly payments of $136,250, subject to T3 Florida achieving quarterly post-purchase recurring
revenues under monthly contracts or subscriptions from the acquired customer base, excluding charges for taxes, regulatory fees,
additional set-up fees, equipment purchases or lease, and consulting fees. To the extent that a quarterly revenue threshold is not reached,
the amount of the corresponding quarterly payment shall be reduced on a proportional basis. T3 Florida’s $1,140,000 payment obligation
is represented by a promissory note of T3 Florida in the form included as an exhibit to the Purchase Agreement. The note, in turn, is
subject to the Subordination Agreement, included as an Exhibit to the Purchase Agreement, among Seller, the Company’s parent, T3
Nevada, and Post Road Administrative, LLC, in its capacity as administrative agent for the Post Road lenders. $275,000 of the
Purchase Price (the “Customer Renewal Value”) represents an incentive earn-out to be paid with respect to Seller’s
customer accounts which are transferred to T3 Florida at closing, that are renewed, expanded and/or revised with T3 Florida for a minimum
term of twelve months with an auto-renewal for 12 months. During the period ended April 30, 2021, the Company made one of the quarterly
principal payments of $136,250, and a payment of $11,000 towards the Holdback amount, the total principal outstanding on the notes as
of April 30, 2021, was $1,267,750.
In connection with the Purchase Agreement, the
Company entered with the Note Holders into Consulting Agreements and a Non-Compete Agreement with each of Alex Gonzalez and Jose Gonzalez,
the Chief Executive Officer and Chief Technology Officer of ActivePBX. Under the Consulting Agreements, the Company will pay on an annual
basis $90,000 to each the consultants.
NOTE 8 – CONVERTIBLE NOTES PAYABLE
At April 30, 2021, and July 31, 2020, convertible notes payable consisted of the following:
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|
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|
|
April 30,
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|
|
July 31,
|
|
CONVERTIBLE NOTES PAYABLE NON-DERIVATIVE
|
|
2021
|
|
|
2020
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|
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|
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In November 2019 and February 2020, the holder agreed to extend the maturity date of the notes until April 30, 2020. In June 2020, the note holder agreed to extend the maturity date until August 31, 2020, which was again extended until January 31, 2021. The holder agreed to extend the Maturity date until February 15, 2021. On February 12, 2021, the promissory note was settled under a debt exchange agreement in which the holder received payment in full for the outstanding balance of $32,000 and $3,929.50 in accrued interest. On March 11, 2021, the Company issued a total of 17,965 shares of Series B Preferred Stock for settlement of debt of $16,000 on a promissory note and $1,965 in accrued interest. In addition, the Company issued a total of 598,825 shares of Common Stock for settlement of debt of $16,000 on a promissory note and $1,965 in accrued interest.
|
|
$
|
-
|
|
|
$
|
32,000
|
|
|
|
|
|
|
|
|
|
|
On October 13, 2020, the Company entered into a variable convertible promissory note with an aggregate principal amount of $330,000, annual interest rate of 8% and a maturity date of October 13, 2021. After payment of transaction-related expenses and closing fees of $32,000, net proceeds to the Company from the Note totaled $298,000. The Company recorded $32,000 as a discount to the Note and amortized over the term of the note. In connection with the execution of the note, the Company issued 1,000,000 shares of our common stock to the note holder, at the time of issuance, the Company recognized the relative fair market value of the shares of $45,003 as debt discount, and it will be amortized to interest expense during the term of the promissory note. Additionally, the Company recognized $134,423 as debt discount for the intrinsic value of the conversion feature, and it will be amortized to interest expense during the term of the promissory note. The Company analyzed the Note for derivative accounting consideration and determined that since the note has a fix conversion price at issuance, it does not require to be accounted as a derivative instrument. The Company will evaluate every reporting period and identify if any default provisions and other requirements triggered a variable conversion price and if the note needs to be classified as a derivative instrument. The Company amortized as interest expense during the period ended April 30, 2021, $167,379. The total unamortized discount on the Note as of April 30, 2021, was $44,047. On April 16, 2021, the Company paid $165,000 of the principal outstanding, $13,381 of the accrued interest and $35,676 in redemption premium. The total principal balance outstanding as of April 30, 2021, was $165,000. (See below variable conversion terms No.1)
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165,000
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-
|
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|
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On October 15, 2020, the Company entered into a variable convertible promissory note with an aggregate principal amount of $27,500, annual interest rate of 8% and a maturity date of October 15, 2021. After payment of transaction-related expenses and closing fees of $2,500, net proceeds to the Company from the Note totaled $25,000. Additionally, the Company recorded $6,075 as a discount to the Note and amortized over the term of the note. The Company analyzed the Note for derivative accounting consideration and determined that since the note has a fix conversion price at issuance, it does not require to be accounted as a derivative instrument. The Company will evaluate every reporting period and identify if any default provisions and other requirements triggered a variable conversion price and if the note needs to be classified as a derivative instrument. The Company amortized as interest expense during the nine months ended April 30, 2021, $8,575. The total unamortized discount on the Note as of April 30, 2021, was $0. On January 31, 2021, the holder agreed to roll over to a new consolidated note the principal balance outstanding of $27,500 and $982 of accrued interest. The total principal balance outstanding as of April 30, 2021, was $0. (See new consolidated note dated January 31, 2021, for $80,235) (See below variable conversion terms No.1)
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-
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-
|
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On January 27, 2021, the Company entered into a variable convertible promissory note with an aggregate principal amount of $250,000, annual interest rate of 8% and a maturity date of January 27, 2022. In connection with the execution of the note, the Company issued 500,000 shares of our common stock to the note holder, at the time of issuance, the Company recognized the relative fair market value of the shares of $24,368 as debt discount, and it will be amortized to interest expense during the term of the promissory note. Additionally, the Company recognized $44,368 as debt discount for the intrinsic value of the conversion feature, and it will be amortized to interest expense during the term of the promissory note. The Holder may elect to convert up to 100% of the principal amount outstanding and any accrued interest on the Note into Common Stock at any time after 180 days of funding the Note. The Conversion Price shall be the greater of $0.05 or 75% of the lowest daily volume weighted average price (“VWAP”) for the ten (10) trading day period immediately preceding the conversion date. The Holder shall, in its sole discretion, be able to convert any amounts due hereunder at a twenty-five percent (25%) discount to the per share price of the Qualified Uplisting Financing. The Company analyzed the Note for derivative accounting consideration and determined that since the note has a conversion price floor, it does not require to be accounted as a derivative instrument. The Company will evaluate every reporting period and identify if any default provisions and other requirements triggered a variable conversion price and if the note needs to be classified as a derivative instrument. The Company amortized as interest expense during the nine months ended April 30, 2021, $17,184. The total unamortized discount on the Note as of April 30, 2021, was $51,552. The total principal balance outstanding as of April 30, 2021, was $250,000.
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|
|
250,000
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|
|
|
-
|
|
On April 14, 2021, the Company entered into a variable convertible promissory note with an aggregate principal amount of $250,000, annual interest rate of 8% and a maturity date of April 14, 2022. In connection with the execution of the note, the Company issued 500,000 shares of our common stock to the note holder, at the time of issuance, the Company recognized the relative fair market value of the shares of $63,433 as debt discount, and it will be amortized to interest expense during the term of the promissory note. Additionally, the Company recognized $96,766 as debt discount for the intrinsic value of the conversion feature, and it will be amortized to interest expense during the term of the promissory note. The Holder may elect to convert up to 100% of the principal amount outstanding and any accrued interest on the Note into Common Stock at any time after 180 days of funding the Note. The Conversion Price shall be the greater of $0.15 or 75% of the lowest daily volume weighted average price (“VWAP”) for the ten (10) trading day period immediately preceding the conversion date. The Company analyzed the Note for derivative accounting consideration and determined that since the note has a conversion price floor, it does not require to be accounted as a derivative instrument. The Company will evaluate every reporting period and identify if any default provisions and other requirements triggered a variable conversion price and if the note needs to be classified as a derivative instrument. The Company amortized as interest expense during the nine months ended April 30, 2021, $13,350. The total unamortized discount on the Note as of April 30, 2021, was $146,849. The total principal balance outstanding as of April 30, 2021, was $250,000.
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|
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250,000
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-
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|
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|
|
|
|
|
Total convertible notes payables non-derivative:
|
|
$
|
665,000
|
|
|
$
|
32,000
|
|
|
|
|
|
|
|
|
|
|
CONVERTIBLE NOTES PAYABLE - DERIVATIVE
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|
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On August 30, 2019, the Company entered into variable convertible note for $93,500, bearing interest at a rate of 10% per annum and a maturity date of May 30, 2020. On August 10, 2020, the noteholder agreed to extend the maturity date until October 31, 2020. After payment of transaction-related expenses of $8,500, net proceeds to the Company from the Note totaled $85,000. The Company recorded these discounts and cost of $8,500 as a discount to the Note and fully amortized as interest expense during the period. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $100,978, of which $85,000 was recorded as debt discount and will be amortized during the term of the Note, and $15,978 was recorded as day 1 derivative loss. During the nine months ended April 30, 2021, the Company issued 5,000,000 shares of common stock for the conversion of $80,000 of the principal balance outstanding. The total unamortized discount on the Note as of April 30, 2021, and July 31, 2020, was $0. The Company amortized $0 and $93,500 of debt discount as interest expense during the periods ended April 30, 2021and July 31, 2020, respectively. On January 31, 2021, the holder agreed to roll over to a new consolidated note the principal balance outstanding of $13,500 and $9,300 of accrued interest. The total principal balance outstanding as of April 30, 2021, and July 31, 2020, were $0 and $93,500, respectively. (See new consolidated note dated January 31, 2021, for $80,235) (See below variable conversion terms No.2)
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|
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-
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93,500
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On January 10, 2020, the Company entered into an Assignment Agreement whereby Armada Investment Fund LLC (the “Assignor”) assigned to Platinum Point Capital LLC (the “Assignee”) a principal amount of $145,297 and $35,750, representing the outstanding principal balance on the Convertible Promissory Notes dated July 11, 2019, and October 18, 2019, respectively, plus accrued interest of $28,953. The new notes are in the aggregate principal amount of $210,000, annual interest rate of 3% and a maturity date of January 10, 2021. On January 22, 2020, the Company entered into an Assignment Agreement whereby BHP Capital NY Inc. (the “Assignor”) assigned to Platinum Point Capital LLC (the “Assignee”) a principal amount of $146,625, representing the outstanding principal balance on the Convertible Promissory Note dated July 11, 2019, plus accrued interest of $33,375. The new note is in the aggregate principal amount of $180,000, annual interest rate of 3% and a maturity date of January 22, 2021. On January 22, 2020, the Company entered into an Assignment Agreement whereby Jefferson Street Capital LLC (the “Assignor”) assigned to Platinum Point Capital LLC (the “Assignee”) a principal amount of $146,625, representing the outstanding principal balance on the Convertible Promissory Note dated July 11, 2019, plus accrued interest of $33,375. The new note is in the aggregate principal amount of $180,000, annual interest rate of 3% and a maturity date of January 22, 2021. The Company analyzed the notes for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of the assignment, the Company recognized derivative liability for the new convertible notes of $784,565, of which $570,000 was recorded as debt discount and amortized over the term of the notes, and $214,565 was recorded as day 1 derivative loss. During the year ended July 31, 2020, the Company issued 25,312,983 shares of common stock for the conversion of $230,000 of the principal outstanding and $12,000 in accrued interest and fees. During the period ended April 30, 2021, the Company issued 11,371,125 shares of common stock for the conversion of $211,769 of the principal outstanding. In addition, during the period ended April 30, 2021, the Company paid $101,203 of the outstanding principal and $37,797 in accrued interest and fees. The total unamortized discount on the Notes as of April 30, 2021, and July 31, 2020, were $0 and $172,611, respectively. The Company amortized $397,389 and $172,611 of debt discount as interest expense during the year ended July 31, 2020, and the period ended April 30, 2021, respectively. On January 31, 2021, the holder agreed to roll over to a new consolidated note the principal balance outstanding of $27,028 and $1,925 of accrued interest. The total principal balance outstanding as of April 30, 2021, and July 31, 2020, were $0 and $340,000, respectively. (See new consolidated note dated January 31, 2021, for $80,235) (See below variable conversion terms No.2)
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|
|
-
|
|
|
|
340,000
|
|
|
|
|
|
|
|
|
|
|
On February 13, 2020, the Company entered into a variable convertible note. The note is in the aggregate principal amount of $33,500, annual interest rate of 10% and a maturity date of February 13, 2021. After payment of transaction-related expenses of $3,500, net proceeds to the Company from the note totaled $30,000. The Company recorded these discounts and cost of $3,500 as a discount to the note and fully amortized as interest expense during the period. The Company analyzed the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $42,976, of which $30,000 was recorded as debt discount and will be amortized during the term of the Note, and $12,976 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of April 30, 2021, and July 31, 2020, were $0 and $15,000, respectively. During the period ended April 30, 2021, the Company issued 1,465,920 shares of common stock for the conversion of $33,500 of the principal outstanding and $3,148 of accrued interest. The total principal balance outstanding as of April 30, 2021, and July 31, 2020, were $0 and $33,500, respectively. The Company amortized $15,000 and $15,000 of debt discount as interest expense during the period ended April 30, 2021, and the year ended July 31, 2020, respectively. The notes were immediately convertible into shares of the Company’s Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.2)
|
|
|
-
|
|
|
|
33,500
|
|
|
|
|
|
|
|
|
|
|
On April 28, 2020, the Company entered into a variable convertible note. The note is in the principal amount of $15,000, annual interest rate of 10% and a maturity date of April 28, 2021. The Company analyzed the Note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $26,629, of which $15,000 was recorded as debt discount and will be amortized during the term of the Note, and $11,629 was recorded as day 1 derivative loss. The total unamortized discount on the Note as of April 30, 2021, and July 31, 2020, were $0 and $11,250. During the period ended April 30, 2021, the Company issued 644,040 shares of common stock for the conversion of $15,000 of the principal outstanding and $1,101 of accrued interest. The total principal balance outstanding as of April 30, 2021, and July 31, 2020, were $0 and $15,000, respectively. The Company amortized $11,250 and $3,750 of debt discount as interest expense during the period ended April 30, 2021, and the year ended July 31, 2020, respectively. The note was immediately convertible into shares of the Company’s Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.2)
|
|
|
-
|
|
|
|
15,000
|
|
On July 27, 2020, the Company entered into a variable convertible promissory note with an aggregate principal amount of $275,000, annual interest rate of 8% and a maturity date of March 27, 2021. After payment of transaction-related expenses and closing fees of $35,000, net proceeds to the Company from the Note totaled $240,000. The Company recorded these discounts and cost of $35,000 as a discount to the Note and amortized over the term of the note. In connection with the execution of the note, the Company issued 500,000 shares of our common stock to the note holder, at the time of issuance, the Company recognized the relative fair market value of the shares of $11,626 as debt discount, and it will be amortized to interest expense during the term of the promissory note. Until the earlier of 6 months or the Company listing on Nasdaq or NYSE American, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable shares of Common Stock the Note Conversion Price shall equal the greater of $0.05 (five) cents or 25% discount to up-listing price or offering/underwriting price concurrent with the Company listing on Nasdaq or NYSE American., subject to adjustment as provided in this Note. If an Event of Default occurs, the Conversion Price shall be the lesser of (a). $0.05 (five) cents or (b). 75% of the lowest traded price in the prior fifteen trading days immediately preceding the Notice of Conversion. The Company analyzed the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. On January 28, 2021, the holder agreed to extend the maturity date until August 1, 2021. In conjunction with the amendment, the Company agreed to add to the outstanding balance $50,000 as consideration for the extension of the maturity date. The total principal balance outstanding as of April 30, 2021, and July 31, 2020, were $325,000 and $275,000, respectively.
|
|
|
325,000
|
|
|
|
275,000
|
|
|
|
|
|
|
|
|
|
|
On July 28, 2020, the Company entered into an Assignment Agreement whereby one of the variable noteholders assigned a principal amount of $35,750 and accrued interest and penalties of $17,081. The new variable convertible note is for $52,831, annual interest rate of 10% and a maturity date of July 28, 2021. The Company analyzed the assignment of the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. As a result, at the time of issuance, the Company recognized derivative liability for the convertible note of $70,888, of which $49,180 was recorded as debt discount and will be amortized during the term of the Note, and $21,708 was recorded as day 1 derivative loss. The Company amortized $49,180 and $0 of debt discount as interest expense during the period ended April 30, 2021, and the year ended July 31, 2020, respectively. The total unamortized discount on the Note as of April 30, 2021, and July 31, 2020, were $0 and $49,180, respectively. During the period ended April 30, 2021, the Company issued 2,195,680 shares of common stock for the conversion of $52,831 of the principal outstanding and $2,061 of accrued interest. The total principal balance outstanding as of April 30, 2020, and July 31, 2020, were $0 and $52,831, respectively. The note was immediately convertible into shares of the Company’s Common Stock, at any time, at a conversion price for each share of Common Stock. (See below variable conversion terms No.2)
|
|
|
-
|
|
|
|
52,831
|
|
|
|
|
|
|
|
|
|
|
On January 31, 2021, the Company entered into a variable convertible promissory note with an aggregate principal amount of $80,235, annual interest rate of 8% and a maturity date of February 17, 2022. Until the earlier of 6 months or the Company listing on Nasdaq or NYSE American, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable shares of Common Stock the Note Conversion Price shall equal the greater of $0.05 (five) cents or seventy-five percent (75%) of the lowest daily volume weighted average price (“VWAP”) over the ten (10) consecutive trading day period ending on the trading day immediately prior to the applicable conversion date (the “Variable Conversion Price”); provided, however, that the Holder shall, in its sole discretion, be able to convert any amounts due hereunder at a twenty-five percent (25%) discount to the per share price of the Qualified Uplisting Financing of over $4MM. If, no later than December 31, 2021, the Borrower shall fail to uplist to any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE MKT, the conversion price under the Note (and the Exchange Note) will be adjusted to equal the lesser of (i) $0.05 per share; or (ii) seventy-five percent (75%) of the lowest VWAP (as defined in the Note and Exchange Note) in the preceding twenty (20) consecutive Trading Days. The Company analyzed the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. The total principal balance outstanding as of April 30, 2021, was $80,235.
|
|
|
80,235
|
|
|
|
-
|
|
On February 17, 2021, the Company entered into a variable convertible promissory note with an aggregate principal amount of $175,000, annual interest rate of 8% and a maturity date of February 17, 2022. After payment of transaction-related expenses and closing fees of $5,000, net proceeds to the Company from the Note totaled $170,000. Additionally, the Company recorded $5,000 as a discount to the Note and amortized over the term of the note. Until the earlier of 6 months or the Company listing on Nasdaq or NYSE American, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable shares of Common Stock the Note Conversion Price shall equal the greater of $0.05 (five) cents or seventy-five percent (75%) of the lowest daily volume weighted average price (“VWAP”) over the ten (10) consecutive trading day period ending on the trading day immediately prior to the applicable conversion date (the “Variable Conversion Price”); provided, however, that the Holder shall, in its sole discretion, be able to convert any amounts due hereunder at a twenty-five percent (25%) discount to the per share price of the Qualified Uplisting Financing of over $4MM. If, no later than December 31, 2021, the Borrower shall fail to uplist to any tier of the NASDAQ Stock Market, the New York Stock Exchange or the NYSE MKT, the conversion price under the Note (and the Exchange Note) will be adjusted to equal the lesser of (i) $0.05 per share; or (ii) seventy-five percent (75%) of the lowest VWAP (as defined in the Note and Exchange Note) in the preceding twenty (20) consecutive Trading Days. The Company analyzed the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. The total principal balance outstanding as of April 30, 2021, was $175,000.
|
|
|
175,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
On April 15, 2021, the Company entered into a variable convertible promissory note with an aggregate principal amount of $113,000, annual interest rate of 8% and a maturity date of January 15, 2022. After payment of transaction-related expenses and closing fees of $13,000, net proceeds to the Company from the Note totaled $100,000. Additionally, the Company recorded $13,000 as a discount to the Note and amortized over the term of the note. In connection with the execution of the note, the Company issued 100,000 shares of our common stock to the note holder, at the time of issuance, the Company recognized the relative fair market value of the shares of $14,138 as debt discount, and it will be amortized to interest expense during the term of the promissory note. Until the earlier of 6 months or the Company listing on Nasdaq or NYSE American, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and nonassessable shares of Common Stock. The Note Conversion Price shall equal the greater of $0.15 (fifteen) cents or 25% discount to up-listing price or offering/underwriting price concurrent with the Company listing on Nasdaq or NYSE American., subject to adjustment as provided in the Note. If an Event of Default occurs, the Conversion Price shall be the lesser of (a). $0.15 (fifteen) cents or (b). seventy-five percent (75%) of the lowest traded price in the prior fifteen (15) consecutive trading day period ending on the trading day immediately prior to the applicable conversion date (the “Variable Conversion Price”). The Company analyzed the note for derivative accounting consideration and determined that the embedded conversion option qualified as a derivative instrument, due to the variable conversion price. The total principal balance outstanding as of April 30, 2021, was $113,000.
|
|
|
113,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total convertible notes payable - derivative:
|
|
$
|
693,235
|
|
|
$
|
809,831
|
|
|
|
|
|
|
|
|
|
|
Total convertible notes payable derivative and non-derivative
|
|
|
1,358,235
|
|
|
|
841,831
|
|
Less: discount on convertible notes payable
|
|
|
(491,903
|
)
|
|
|
(294,667
|
)
|
Total convertible notes payable, net of discount
|
|
|
866,332
|
|
|
|
547,164
|
|
Less: current portion of convertible notes payable
|
|
|
(866,332
|
)
|
|
|
(547,164
|
)
|
Long-term portion of convertible notes payable
|
|
$
|
-
|
|
|
$
|
-
|
|
Additional terms No.1:
The Holder shall have the right at any time on or after six (6) months from the Issue Date to convert any portion of the outstanding
and unpaid principal balance into fully paid and nonassessable shares of Common Stock. The Note Conversion Price shall equal (1) $0.05
(five) cents provided however that in the event the Borrower fails to complete the acquisition of Nexogy, Inc., the Conversion Price shall
equal (2) the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights
offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations,
recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall
mean eighty-five percent (85%) multiplied by the Market Price (as defined herein) (representing a discount rate of fifteen percent (15%)).
“Market Price” means the lowest Trading Price for the Common Stock during the ten (10) Trading Day period ending on the latest
complete Trading Day prior to the Conversion Date.
Variable Conversion No.2:
The notes are immediately convertible into shares of the Company’s Common Stock, at any time, at a conversion price for each share
of Common Stock equal to the lesser of (i) the lowest trading price of the Common Stock (as defined in the Note) as reported on the National
Quotations Bureau OTC Marketplace exchange upon which the Company’s shares are traded during the twenty (20) consecutive Trading
Day period immediately preceding the issuance date of each Note; or (ii) 60% multiplied by the lowest traded price of the Common Stock
during the twenty (20) consecutive Trading Day period immediately preceding the Trading Day that the Company receives a notice of conversion
(the “Variable Conversion Price”). The Variable Conversion Price may further be adjusted in connection with the terms of the
Notes.at a discount of 35% to the average of the three lowest trading closing prices of the stock for ten days prior to conversion.
The total unamortized discount on the convertible
notes as of April 30, 2021, and July 31, 2020, were $491,903 and $294,667, respectively. The total principal balance outstanding as of
April 30, 2021, and July 31, 2020, were $1,358,235 and $841,831, respectively. During the periods ended April 30, 2021, and July 31, 2020,
the Company amortized $528,645 and $1,228,000, respectively, of debt discount as interest expense.
Fair Value of Financial Instruments.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. A fair value hierarchy is used which requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. The fair value hierarchy based on the three levels of inputs that may be used to measure fair value
are as follows:
Level 1 – Quoted
prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs
other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable
inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing
models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value
requires significant judgment or estimation.
For certain of our financial instruments, including
cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate fair value due
to the short maturity of these instruments. The carrying value of our long-term debt approximates its fair value based on the quoted market
prices for the same or similar issues or the current rates offered to us for debt of the same remaining maturities.
Our derivative liabilities as of April 30, 2021,
and July 31, 2020, of $17,339,843 and $606,123, respectively.
The following table provides the fair value of
the derivative financial instruments measured at fair value using significant unobservable inputs:
|
|
|
|
|
Fair value measurements at reporting date using:
|
|
|
|
|
|
|
Quoted
prices in
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
active markets
|
|
|
other
|
|
|
Significant
|
|
|
|
|
|
|
for identical
|
|
|
observable
|
|
|
unobservable
|
|
|
|
|
|
|
liabilities
|
|
|
inputs
|
|
|
inputs
|
|
Description
|
|
Fair Value
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Convertible notes & warrants derivative liability at July 31, 2020.
|
|
$
|
606,123
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
606,123
|
|
Convertible notes & warrants derivative liability at April 30, 2021.
|
|
$
|
17,339,843
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
17,339,843
|
|
The fair market value of all derivatives during
the nine months ended April 30, 2021, was determined using the Black-Scholes option pricing model which used the following assumptions:
Expected dividend yield
|
0.00%
|
Expected stock price volatility
|
83.28% - 282.87%
|
Risk-free interest rate
|
0.09% -2.67%
|
Expected term
|
0.01 - 10.00 years.
|
Level 3 inputs.
The following table provides a summary of the
changes in fair value of the derivative financial instruments measured at fair value on a recurring basis using significant unobservable
inputs:
Balance at July 31, 2020
|
|
$
|
606,123
|
|
Derivative from warrants issued in conjunction with new notes
|
|
|
6,462,050
|
|
Derivative liability resolved to additional paid in capital due to debt conversion
|
|
|
(588,097
|
)
|
Derivative (gain) / loss
|
|
|
10,859,767
|
|
Balance at April 30, 2021
|
|
$
|
17,339,843
|
|
NOTE 9 - LEASES
The leased properties have a remaining lease term
of sixteen to seventy-two months as of August 1, 2019. At the option of the Company, it can elect to extend the term of the leases.
Beginning August 1, 2019, operating ROU assets
and operating lease liabilities are recognized based on the present value of lease payments, including annual rent increases, over the
lease term at commencement date. Operating leases in effect prior to August 1, 2019, were recognized at the present value of the remaining
payments on the remaining lease term as of August 1, 2019. Because none of our leases included an implicit rate of return, we used our
incremental secured borrowing rate based on lease term information available as of the adoption date or lease commencement date in determining
the present value of lease payments. The incremental borrowing rate on the leases is 8.0%.
On January
1, 2021, the Company entered into a new office lease, with a monthly base lease payment and applicable shared expenses of $4,750 and $2,140,
respectively. The base rent will increase on an annual basis by 2% of the base lease payment. The lease expires on January 1, 2026, and
at the option of the Company, the lease can be extended for one (1) five (5) year term with a base rent at the prevailing market rate
at the time of the renewal. The
Company recorded ROU asset and liability of $254,375 for this new lease, using the incremental borrowing rate of 8.0% over a 5 year term.
The impact of ASU No. 2016-02 (“Leases (Topic
842)” on our consolidated balance sheet beginning August 1, 2019, was through the recognition of ROU assets and lease liabilities
for operating leases. Amounts recognized on July 31, 2020, and April 30, 2021, for operating leases are as follows:
ROU Asset
|
|
July 31, 2020
|
|
$
|
176,097
|
|
Amortization
|
|
|
|
$
|
(95,694
|
)
|
Addition - Asset
|
|
|
|
$
|
254,375
|
|
ROU Asset
|
|
April 30, 2021
|
|
$
|
334,778
|
|
|
|
|
|
|
|
|
Lease Liability
|
|
July 31, 2020
|
|
$
|
176,097
|
|
Amortization
|
|
|
|
$
|
(95,694
|
)
|
Addition - Liability
|
|
|
|
$
|
254,375
|
|
Lease Liability
|
|
April 30, 2021
|
|
$
|
334,778
|
|
|
|
|
|
|
|
|
Lease Liability
|
|
Short term
|
|
$
|
73,985
|
|
Lease Liability
|
|
Long term
|
|
$
|
260,793
|
|
Lease Liability
|
|
Total:
|
|
$
|
334,778
|
|
Operating lease cost:
|
|
$
|
118,167
|
|
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
|
|
|
|
|
Operating cashflow from operating leases:
|
|
$
|
118,167
|
|
|
|
|
|
|
Weighted-average remain lease term-operating lease:
|
|
|
1.74 years
|
|
|
|
|
|
|
Weighted-average discount rate
|
|
|
8.0
|
%
|
For the period ended April 30, 2021, the amortization
of operating ROU assets was $95,694.
For the period ended April 30, 2021, the amortization
of operating lease liabilities was $95,694.
The future minimum lease payment under the operating
leases are as follows:
|
|
Lease
|
|
Period Ending July 31,
|
|
Payments
|
|
2021
|
|
$
|
146,549
|
|
2022
|
|
|
114,935
|
|
2023
|
|
|
84,475
|
|
2024
|
|
|
59,528
|
|
2025
|
|
|
60,228
|
|
2026
|
|
|
30,362
|
|
Total:
|
|
$
|
496,077
|
|
NOTE 10 – PREFERED
STOCK
CONVERTIBLE SERIES
A PREFERRED STOCK
In March 2019, the Company’s
Board of Directors designated and authorized the issuance up to 1,500,000 shares of the Series A Preferred Stock. Each share of Series
A Preferred Stock has a par value of $0.001 per share and a stated value equal to one dollar ($1.00) (the “Stated Value”)
and are entitled to a dividend at an annual rate of eight percent (8%) per share. The Company had 225,000 shares of the Convertible Series
A Preferred Stock outstanding as of April 30, 2021. During the three months ending April 30, 2021, the Company declared a dividend of
$5,000 and had $35,000 as accumulated dividends as of April 30, 2021.
The terms of our Series A Preferred Stock allow
for:
Voting Rights. Unless otherwise required by the Nevada
Revised Statutes, the shares of Series A Preferred Stock shall not be entitled to vote on any matter presented at any annual or special
meeting of stockholders of the Corporation, or through written consent.
Optional Conversion. Each holder
of shares of Series A Preferred Stock may, at holder’s option and commencing on April 30, 2020, convert any or all such shares,
on the terms and conditions set forth herein, into fully paid and non-assessable shares of the Corporation’s Common Stock. The number
of shares of Common Stock into which each share of Series A Preferred Stock may be converted shall be determined by dividing the Original
Issue Price of each share of Series A Preferred Stock, plus accrued and unpaid dividends through the Conversion Date, to be converted
by the Conversion Price (as defined below) in effect at the time of conversion. The “Conversion Price” at which shares of
Common Stock shall be issuable upon conversion of any shares of Series A Preferred Stock shall initially be the greater of (i) $0.40 per
share, (ii) a 30% discount to the offering price of the Common Stock (or Common Stock equivalent) in a $10 million or greater equity financing
that closes concurrently with an up-listing of the Company Common Stock on the NYSE American or Nasdaq, in the event of such up-listing,
and (iii) a 30% discount to the average closing price per share of the Common Stock for the 5 consecutive trading days commencing upon
the date the Common Stock is up-listed on either the NYSE American or Nasdaq in which there is no concurrent $10 million equity financing,
in the event of such up-listing, subject to adjustment as provided below.
Mandatory Conversion. Each share
of Series A Preferred Stock shall automatically convert into shares of Common Stock, as described in paragraph 2a, at the then applicable
Conversion Price, upon the earlier of (i) the closing of a public or private offering (or series of offerings within a 90-day period)
of Corporation equity or equity equivalent securities placed by a registered broker-dealer resulting in minimum gross proceeds to the
Corporation of $10 million, (ii) commencing on April 30, 2020, if the Common Stock shall close (or the last trade shall be) at or above
150% of the Conversion Price per share for 20 out of 30 consecutive trading days, and (iii) the uplisting of the Corporation’s Common
Stock to a national securities exchange or the Nasdaq stock market ((i), (ii) and (iii) are collectively referred to as “Mandatory
Conversion Event”). The Corporation will provide notice to holder within 20 days of the occurrence of a Mandatory Conversion Event
(failure of the Corporation to timely give such notice does not void the mandatory conversion). Holder shall surrender to the Corporation,
within 10 days of receiving such notice, the certificate(s) representing the shares of Series A Preferred Stock to be converted into Common
Stock. In the event holder does not surrender such certificate(s) within 10 days of receiving such notice, the Corporation shall deem
such certificate(s) cancelled and void. As soon as practicable, after the certificate(s) are either surrendered by the holder or cancelled
by the Corporation, as the case may be, the Corporation will issue and deliver to holder a new certificate for the number of full shares
of Common Stock issuable upon such mandatory conversion in accordance with the provisions hereof and cash as provided in paragraph 2(c)
in respect of any fraction of a share of Common Stock otherwise issuable upon such mandatory conversion, unless fractional shares are
rounded up to the next whole share. Holder will be deemed a Common Stockholder of record as of the date of the occurrence of a Mandatory
Conversion Event.
During the period ended April 30, 2021, the Company
evaluated Series A Convertible Preferred Stock and concluded that none of the mandatory conversion events occurred during the period and
determined that the convertible shares were classified as equity instruments.
CONVERTIBLE SERIES B PREFERRED
STOCK
In April 2020, the Company’s
Board of Directors designated and authorized the issuance up to 1,000,000 shares of the Series B Preferred Stock. The Series B Preferred
Stock is only issuable to the Company’s debt holders as of March 25, 2020 (“Existing Debt Holders”) who may purchase
shares of Series B Preferred Stock at the Stated Value by converting all or part of the debt owed to them by the Corporation as of March
25, 2020. Each share of Series B Preferred Stock has a par value of $0.001 per share and a stated value equal to one dollar ($1.00) (the
“Stated Value”). In April 2020, the Company issued a total of 407,477 shares of Series B Preferred Stock for settlement of
debt of $370,000 on various promissory notes and $37,477 in accrued interest. In March 2021, the Company issued a total of 17,965 shares
of Series B Preferred Stock for settlement of debt of $16,000 on a promissory note and $1,965 in accrued interest.
The Company had 425,442
shares of Convertible Series B Preferred Stock outstanding as of April 30, 2021. No dividends are payable on the Convertible Series B
Preferred Stock.
The terms of our Series B Preferred Stock allow
for:
Voting Rights. Except as otherwise
provided by the Nevada Revised Statutes, other applicable law or as provided in this Certificate of Designation, the Series B Preferred
Stock shall have no voting rights. However, as long as any shares of Series B Preferred Stock are outstanding, the Corporation shall not,
without the affirmative vote of the Holders of a majority of the then outstanding shares of the Series B Preferred Stock, (a) alter or
change adversely the powers, preferences or rights given to the Series B Preferred Stock or alter or amend this Certificate of Designation,
(b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the Holders,
(c) increase the number of authorized shares of Series B Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.
Mandatory Conversion. Upon (i) an
up-listing of the Corporation’s Common Stock to Nasdaq or a US national securities exchange, (ii)an underwriting involving the sale
of $5,000,000 or more of the Corporation’s Common Stock or Common Stock Equivalents (a “Material Underwriting”), (iii)
the Corporation ceases to be a public corporation as the result of a going private transaction, (iv) the Corporation, directly or indirectly,
effects any sale, lease, exclusive license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions (including a transaction involving the Corporation’s spin-off of its operating subsidiary,
T3 Communications, Inc.), (v) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another
Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities,
cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (vi) the Corporation, directly or
indirectly, in one or more related transactions, effects any reclassification, reorganization or recapitalization of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash
or property, or (vii) the Corporation, directly or indirectly, in one or more related transactions, consummates a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with another Person, other than an officer or director of the Company, whereby such other Person acquires more than 50% of the outstanding
shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) , all shares
of Series B Preferred Stock shall be automatically converted, without any further action by the holders of such shares and whether or
not the certificates representing such shares are surrendered to the Corporation or its transfer agent, into the number of fully paid
and nonassessable shares of Common Stock in an amount equal, following conversion ,to 18% of the Corporation’s issued and outstanding
shares of Common Stock . Each of (i)-(vii) above shall be hereafter referred to as a “Conversion Event” and the date of a
Conversion Event shall be hereafter referred to as a “Conversion Date”. Upon any such mandatory conversion and the issuance
of Conversion Shares further thereto, the shares of Series B Preferred Stock shall be deemed cancelled and of no further force or effect.
A mandatory conversion is the only means by which Series B Preferred Stock is convertible as the shares of Series B Preferred Stock are
not convertible at the option of the Holder. For purposes of the foregoing Conversion Events, conversion will be deemed to have taken
place immediately prior to the Conversion Event. By way of example, if the Corporation engages in a Material Underwriting, the Series
B Preferred Stock will be treated as having been converted immediately prior to the issuance of the securities in the Material Underwriting.
Redemption. At any time on
or after the second anniversary of the date of issuance of shares of Series B Preferred Stock to the Holder, the Corporation, in its sole
discretion ,may elect, by delivering written notice to the Holder no less than 10 days or more than 20 prior to the redemption date set
forth in such notice (the “Redemption Date”), to redeem all or any portion of the Series B Preferred Stock held by such Holder
at a price per share (the “Redemption Price”) equal to 120% of the Stated Value per share being redeemed . The Corporation
shall, unless otherwise prevented by law, redeem from such holder on the Redemption Date the number of shares of Series B Preferred Stock
identified in such notice of redemption. The Company will evaluate the convertible shares at each reporting balance sheet date and determine
if a re-classification is required.
During the period ended April 30, 2021, the Company
evaluated Series B Convertible Preferred Stock and concluded that none of the mandatory conversion events occurred during the period and
determined that the convertible shares were classified as equity instruments.
CONVERTIBLE SERIES
C PREFERRED STOCK
In July 2020, the Company’s
Board of Directors designated and authorized the issuance up to 1,000,000 shares of the Series C Preferred Stock. Each share of Series
C Preferred Stock has a par value of $0.001 per share and a stated value equal to ten dollars ($10.00) (the “Stated Value”).
On February 25, 2021, Digerati’s Board
of Directors approved the issuance of the following shares of Series C Convertible Preferred Stock.:
|
●
|
Arthur L. Smith – 28,928 shares of Series C Convertible Preferred Stock
|
|
●
|
Antonio Estrada – 19,399 shares of Series
C Convertible Preferred Stock
|
|
●
|
Craig Clement – 7,073 shares of Series
C Convertible Preferred Stock
|
The Series C Convertible
Preferred Stock were issued for accrued compensation to the management team of $554,000.
The Company had 55,400
shares of Convertible Series C Preferred Stock outstanding as of April 30, 2021. No dividends are payable on the Convertible Series C
Preferred Stock.
The terms of our Series C Preferred Stock allow
for:
Designation, Amount and Par Value; Eligible
Recipients. The series of preferred stock shall be designated as its Series C Convertible Preferred Stock (the “Series C
Preferred Stock”) and the number of shares so designated shall be up to one million (1,000,000) (which shall not be subject to increase
without the written consent of the holders of a majority of the outstanding Series C Preferred Stock (each, a “Holder” and
collectively, the “Holders”). Series C Preferred Stock shall only be issuable to the Company’s officers and directors
as of July 1, 2020 who may from time-to-time purchase shares of Series C Preferred Stock at the Stated Value by converting all or part
of the compensation owed to them by the Corporation. Each share of Series C Preferred Stock shall have a par value of $0.001 per share
and a stated value equal to Ten Dollars ($10.00) (the “Stated Value”).
Dividends. No dividends are payable
on the shares of Series C Preferred Stock.
Voting Rights. Except as otherwise
provided by the Nevada Revised Statutes, other applicable law or as provided in this Certificate of Designation, the Series C Preferred
Stock shall have no voting rights. However, as long as any shares of Series C Preferred Stock are outstanding, the Corporation shall not,
without the affirmative vote of the Holders of a majority of the then outstanding shares of the Series C Preferred Stock, (a) alter or
change adversely the powers, preferences or rights given to the Series C Preferred Stock or alter or amend this Certificate of Designation,
(b) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the Holders,
(c) increase the number of authorized shares of Series C Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing.
Automatic Conversion. Upon (i) an up-listing of
the Corporation’s Common Stock to Nasdaq or a US national securities exchange, (ii) a financing or offering involving the sale of
$5,000,000 or more of the Corporation’s Common Stock or Common Stock Equivalents (a “Material Financing”), (iii) the
Corporation ceases to be a public corporation as the result of a going private transaction, (iv) the Corporation, directly or indirectly,
effects any sale, lease, exclusive license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions (including a transaction involving the Corporation’s spin-off of its Nevada subsidiary,
T3 Communications, Inc.), (v) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another
Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities,
cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (vi) the Corporation, directly or
indirectly, in one or more related transactions, effects any reclassification, reorganization or recapitalization of the Common Stock
or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash
or property, or (vii) the Corporation, directly or indirectly, in one or more related transactions, consummates a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement)
with another Person, other than an officer or director of the Company, whereby such other Person acquires more than 50% of the outstanding
shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), all issued
shares of Series C Preferred Stock shall be automatically converted, without any further action by the holders of such shares and whether
or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, into the number of fully paid
and nonassessable shares of Common Stock in an amount equal, following conversion, to 22% of the Corporation’s issued and outstanding
shares of Common Stock. Each of (i)-(vii) above shall be hereafter referred to as a “Conversion Event” and the date of a Conversion
Event shall be hereafter referred to as a “Conversion Date”. Upon any such mandatory conversion and the issuance of Conversion
Shares further thereto, the shares of Series C Preferred Stock shall be deemed cancelled and of no further force or effect. A mandatory
conversion is the only means by which Series C Preferred Stock is convertible as the shares of Series C Preferred Stock are not convertible
at the option of the Holder. For purposes of the foregoing Conversion Events, conversion will be deemed to have taken place immediately
prior to the Conversion Event. By way of example, if the Corporation engages in a Material Financing, the Series C Preferred Stock will
be treated as having been converted immediately prior to the issuance of the securities in the Material Underwriting.
Redemption. At any time on or after
the second anniversary of the date of issuance of shares of Series C Preferred Stock to the Holder, the Corporation, in its sole discretion
,may elect, by delivering written notice to the Holder no less than 10 days or more than 20 prior to the redemption date set forth in
such notice (the “Redemption Date”), to redeem all or any portion of the Series C Preferred Stock held by such Holder at a
price per share (the “Redemption Price”) equal to 120% of the Stated Value per share being redeemed . The Corporation shall,
unless otherwise prevented by law, redeem from such holder on the Redemption Date the number of shares of Series C Preferred Stock identified
in such notice of redemption.
SERIES F SUPER
VOTING PREFERRED STOCK
In July 2020, the Company’s
Board of Directors designated and authorized the issuance up to 100 shares of the Series F Super Voting Preferred Stock. Each share of
Series F Super Voting Preferred Stock has a par value of $0.001 per share and a stated value equal to one cent ($0.01) (the “Stated
Value”).
On November 17, 2020, Digerati’s Board
of Directors approved the issuance of the following shares of Series F Super Voting Preferred Stock. (See note 10 for designations):
|
●
|
Arthur L. Smith - 34 shares of Series F Super Voting Preferred Stock
|
|
●
|
Antonio Estrada - 33 shares of Series F Super
Voting Preferred Stock
|
|
●
|
Craig Clement - 33 shares of Series F Super Voting
Preferred Stock
|
As of April 30, 2021,
the Company has 100 shares outstanding of the Series F Super Voting Preferred Stock. No dividends are payable on the Series F Super Voting
Preferred Stock.
The terms of our Series F Super Voting Preferred
Stock allow for:
Designation, Amount and Par Value; Eligible
Recipients. The series of preferred stock shall be designated as its Series F Preferred Stock (the “Series F Preferred Stock”)
and the number of shares so designated shall be up to one hundred (100) (which shall not be subject to increase without the written consent
of the holders of a majority of the outstanding Series F Preferred Stock (each, a “Holder” and collectively, the “Holders”).
Series F Preferred Stock shall only be issuable to members of the Corporation’s Board of Directors, as joint tenants, who may purchase
shares of Series F Preferred Stock at the Stated Value per share. Each share of Series F Preferred Stock shall have a par value of $0.001
per share and a stated value equal to one cent ($0.01) (the “Stated Value”).
Voting Rights. As long as any shares
of Series F Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the
then outstanding shares of the Series F Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the
Series F Preferred Stock or alter or amend this Certificate of Designation, (b) amend its certificate of incorporation or other charter
documents in any manner that adversely affects any rights of the Holders, (c) increase the number of authorized shares of Series F Preferred
Stock, (d) sell or otherwise dispose of any assets of the Corporation not in the ordinary course of business, (e) sell or otherwise effect
or undergo any change of control of the corporation, (f) effect a reverse split of its Common Stock, or (g) enter into any agreement with
respect to any of the foregoing.
Holder of the Series F Preferred Stock shall be
entitled to vote on all matters subject to a vote or written consent of the holders of the Corporation’s Common Stock, and on all
such matters, the shares of Series F Preferred Stock shall be entitled to that number of votes equal to the number of votes that all issued
and outstanding shares of Common Stock and all other securities of the Corporation are entitled to, as of any such date of determination,
on a fully diluted basis, plus one million (1,000,000) votes, it being the intention that the Holders of the Series F Preferred
Stock shall have effective voting control of the Corporation. The Holders of the Series F Preferred Stock shall vote together with the
holders of Common Stock as a single class on all matters requiring approval of the holders of the Corporation’s Common Stock and
separately on matters not requiring the approval of holders of the Corporation’s Common Stock.
Conversion. No conversion rights apply to the Series
F Preferred Stock.
Redemption. At any time while share of Series F Preferred
Stock are issued and outstanding, the Corporation, in its sole discretion, may elect to redeem the shares of Series F Preferred Stock.
NOTE 11 – EQUITY
During the nine months ended
April 30, 2021, the Company issued the following shares of common stock that are not disclosed in other footnotes:
On August 1, 2020, the Company
issued an aggregate of 2,000,000 shares of common stock, at the time of issuance the Company recognized the market value $58,000 as stock
compensation expense for professional services.
On January 26, 2021, the Company
issued 1,000,000 shares of common stock for the settlement of $60,000 in accounts payable for professional services.
On February 5, 2021, the Company
entered into a Consulting Agreement, in which the Company agreed to issue a total of 2,000,000 shares of Common Stock, at issuance the
Company recognized the market value of the stock of $125,000 as stock compensation expense for professional services.
NOTE 12 – BUSINESS
ACQUISITIONS
Acquisitions
Nexogy Merger
On November 17, 2020, T3 Nevada’s wholly
owned subsidiary, Nexogy Acquisition, Inc., merged with and into Nexogy, Inc. (“Nexogy”) resulting in Nexogy becoming a wholly
owned subsidiary of T3 Nevada (the “Merger”). Nexogy is a leading provider in South Florida of Unified Communications as a
Service and managed services, offering a portfolio of cloud-based solutions to the high-growth SMB market.
The purchase price for Nexogy was $9 million in
cash, plus an additional $452,000 in initial excess Net Working Capital, with $900,000 of the $9 million being placed in an indemnity
escrow account and $50,000 of the $9 million being placed in a working capital escrow account. In addition, at the closing of the Merger,
T3 Nevada paid a number of Nexogy’s liabilities which were included in the $9 million purchase price.
ActivePBX Asset Purchase
On November 17, 2020, our indirect, wholly owned
subsidiary, T3 Communications, Inc., a Florida corporation (“T3 Florida”), executed and closed on an Asset Purchase Agreement
(the “Purchase Agreement”) with ActiveServe, Inc., a Florida corporation (“Seller”). Pursuant to the Purchase
Agreement, T3 Florida acquired the customer base, certain equipment, certain intellectual property, inventory, contract rights, software
and other licenses and miscellaneous assets used in connection with the operation of Seller’s telecommunications business known
as ActivePBX (collectively, the “Purchased Assets”).
The aggregate purchase price for the Purchased
Assets was $2,555,000 in cash, subject to adjustment as provided therein (the “Purchase Price”). $1,190,000 of the
Purchase Price was payable at closing, with $50,000 of such amount being withheld by T3 Florida for a period of 12 months to cover
part of potential future indemnification obligations of Seller to T3 Florida due to Seller’s breaches, if any,
of any representations and warranties made to T3 Florida by Seller under the Purchase Agreement, and $40,000 of such amount
being credited to T3 Florida against a payment in that amount made by T3 Florida to Seller pursuant to the Second Amendment to Letter
of Intent between Seller and T3 Florida dated as of October 15, 2020.
Part of the Purchase Price is payable in
8 equal quarterly payments of $136,250, subject to T3 Florida achieving quarterly post-purchase recurring
revenues under monthly contracts or subscriptions from the acquired customer base, excluding charges for taxes, regulatory fees,
additional set-up fees, equipment purchases or lease, and consulting fees. To the extent that a quarterly revenue threshold is not reached,
the amount of the corresponding quarterly payment shall be reduced on a proportional basis. T3 Florida’s $1,190,000 payment obligation
is represented by a promissory note of T3 Florida in the form included as an exhibit to the Purchase Agreement. The note, in turn, is
subject to the Subordination Agreement, included as an Exhibit to the Purchase Agreement, among Seller, the Company’s parent, T3
Nevada, and Post Road Administrative, LLC, in its capacity as administrative agent for the Post Road lenders. $275,000 of the
Purchase Price (the “Customer Renewal Value”) represents an incentive earn-out to be paid with respect to Seller’s
customer accounts which are transferred to T3 Florida at closing, that are renewed, expanded and/or revised with T3 Florida for a minimum
term of twelve months with an auto-renewal for 12 months.
In connection with the Purchase Agreement, we
entered into Consulting Agreements and a Non-Compete Agreement with each of Alex Gonzalez and Jose Gonzalez, the Chief Executive Officer
and Chief Technology Officer of Seller.
The total purchase price for Nexogy and ActivePBX
were $9,452,000 and $2,555,000, respectively. The acquisitions were accounted for under the purchase method of accounting, with Digerati
identified as the acquirer. Under the purchase method of accounting, the aggregate amount of consideration assumed by Digerati was allocated
to customer contracts acquired and intangible assets based on their estimated fair values as of November 17, 2020. Allocation of the purchase
price is based on the best estimates of management.
The following information summarizes the allocation
of the fair values assigned to the assets at the purchase date. The allocation of fair values is preliminary and is subject to change
in the future during the measurement period.
|
|
Nexogy
|
|
|
ActivePBX
|
|
|
Total
|
|
|
|
(in thousands)
|
|
Cash
|
|
$
|
358
|
|
|
$
|
-
|
|
|
$
|
358
|
|
Accounts receivables
|
|
|
278
|
|
|
|
78
|
|
|
|
356
|
|
Intangible Assets and Goodwill
|
|
|
9,018
|
|
|
|
2,555
|
|
|
|
11,573
|
|
Property and equipment, net
|
|
|
164
|
|
|
|
-
|
|
|
|
164
|
|
Other Assets
|
|
|
83
|
|
|
|
2
|
|
|
|
85
|
|
Total identifiable assets
|
|
$
|
9,901
|
|
|
$
|
2,635
|
|
|
$
|
12,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: liabilities assumed
|
|
|
270
|
|
|
|
80
|
|
|
|
350
|
|
Total Purchase price
|
|
$
|
9,631
|
|
|
$
|
2,555
|
|
|
$
|
12,186
|
|
The following table summarizes the estimated cost
of intangible assets related to the acquisition:
|
|
Nexogy
|
|
|
ActivePBX
|
|
|
Total
|
|
|
Useful life
(years)
|
|
|
(in thousands)
|
|
|
|
Customer Relationships
|
|
$
|
4,100
|
|
|
$
|
1,610
|
|
|
$
|
5,710
|
|
|
7
|
Trade Names & Trademarks
|
|
|
2,600
|
|
|
|
270
|
|
|
|
2,870
|
|
|
7
|
Non-compete Agreement
|
|
|
200
|
|
|
|
90
|
|
|
|
290
|
|
|
2-3
|
Nexogy Goodwill
|
|
|
2,118
|
|
|
|
585
|
|
|
|
2,703
|
|
|
-
|
|
|
$
|
9,018
|
|
|
$
|
2,555
|
|
|
$
|
11,573
|
|
|
|
The Company incurred approximately $460,000 in
costs associated with the acquisitions. These included legal, regulatory, and accounting. The Company incurred and expensed these costs
of $158,000 and $302,000, during the year ended July 31, 2020, and nine months ended April 30, 2021, respectively.
Pro-forma
The following schedule contains unaudited proforma
consolidated results of operations for both acquisitions for the three and nine months ended April 30, 2021, and 2020 as if the acquisition
occurred on August 1, 2019. The unaudited pro-forma results of operations are presented for informational purposes only and are not indicative
of the results of operations that would have been achieved if the acquisition had taken place on August 1, 2019, or of results that may
occur in the future.
|
|
Three months ended April 30,
|
|
|
Nine months ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
|
Reported
|
|
|
Pro-forma
|
|
|
Reported
|
|
|
Pro-forma
|
|
|
Reported
|
|
|
Pro-forma
|
|
|
Reported
|
|
|
Pro-forma
|
|
Revenue
|
|
$
|
3,751
|
|
|
$
|
3,751
|
|
|
$
|
1,566
|
|
|
$
|
3,574
|
|
|
$
|
8,629
|
|
|
$
|
11,127
|
|
|
$
|
4,712
|
|
|
$
|
10,773
|
|
Income (loss) from operations
|
|
|
(588
|
)
|
|
|
(588
|
)
|
|
|
(472
|
)
|
|
|
(70
|
)
|
|
|
(1,978
|
)
|
|
|
(1,461
|
)
|
|
|
(1,842
|
)
|
|
|
(808
|
)
|
Net income (loss)
|
|
$
|
(12,956
|
)
|
|
$
|
(12,956
|
)
|
|
$
|
(1,108
|
)
|
|
$
|
(796
|
)
|
|
$
|
(15,692
|
)
|
|
$
|
(15,247
|
)
|
|
$
|
(3,130
|
)
|
|
$
|
(2,389
|
)
|
Earnings (loss) per common share-Basic and Diluted
|
|
$
|
(0.09
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.12
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.06
|
)
|
As part of the acquisitions of Nexogy and ActivePBX, the Company secured
an office and rooftop lease, with monthly base lease payments of $13,720 and $3,546, respectively, the leases expire on July 31, 2022.
Additionally, the Company secured four (4) additional leases, with
the following terms:
|
|
Base
Monthly
Lease
|
|
|
Commencement
|
|
Expiration
|
|
|
Lease
|
|
Payment
|
|
|
Date
|
|
Date
|
|
Additional terms
|
1 - Colocation
|
|
$
|
4,130
|
|
|
June 8, 2020
|
|
June 8, 2023
|
|
With an option to extend for an additional twelve (12) months, and 5% increase in base monthly lease payment.
|
2 - Rooftop
|
|
$
|
2,450
|
|
|
June 1, 2015
|
|
June 1, 2021
|
|
With an option to extend for five (5) additional one (1) year terms.
|
3 - Rooftop
|
|
$
|
979
|
|
|
December 1, 2015
|
|
December 1, 2025
|
|
Initial term for five (5) years, lease renewed for additional five (5) years.
|
4 - Rooftop
|
|
$
|
2,700
|
|
|
November 30, 2013
|
|
November 30, 2023
|
|
Initial term for five (5) years, lease renewed for additional five (5) years, with an option for a second renewal for an additional five (5) years.
|