NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature
of Business
On
February 28, 2018 the Company changed its corporate domicile from Nevada to Wyoming. On August 9, 2010 the Company was incorporated
as Nepia Inc. in the State of Nevada. From August 9, 2010 to July 18, 2013, the Company was in the business of developing, manufacturing,
and selling small boilers aimed at farmers primarily in Southeast Asia. Beginning on July 19, 2013, the Company acquired bio-pharmaceutical
intellectual property for the treatment of acute myeloid leukemia (AML) and is entering into phase II human studies. The
goal is to perfect this indication for marketing purposes for distribution world-wide. On August 26, 2013, as a consequence
of our new business direction, the Company changed its name to Rich Pharmaceuticals, Inc. (“Rich” or “the Company”).
On
July 18, 2013, the Company designated, from our 10,000,000 authorized shares of preferred stock, par value $0.001, 6,000,000 shares
of Series “A” Preferred Stock. Our Series “A” Preferred Stock has voting rights of 100 votes per share
and votes with common shares as a single class.
On
July 18, 2013, the Company entered into an Asset Assignment Agreement (the “Assignment Agreement”) with Imagic, LLC
and its principals to acquire certain assets including a US Patent entitled “Phorbol esters as anti-neoplastic and white
blood cell elevating agents” and all related intellectual property associated with the patent. In consideration for the
intellectual property the Company issued 41,384 common shares, and 6,000,000 Series “A” Preferred shares. The common
and preferred shares were valued at $123,973. The Company further agreed to use its best efforts to complete a financing resulting
in proceeds of at least $2,000,000. If the Company was unable to raise $400,000 according to the terms of the Assignment Agreement,
the patent reverts back to Imagic, LLC and its principals. On January 17, 2014, the right of reversion was terminated in exchange
for a payment of $20,000.
On
July 19, 2013, the Company entered into an Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of Obligations
(the “Sale Agreement”) with our prior officers and directors. Pursuant to the Sale Agreement, the Company transferred
all assets and business operations associated with our boiler business in exchange for assumption of all obligations associated
with that business and cancellation of loans amounting to $28,818. The cancellation of debt was recorded as additional paid-in
capital. In consequence to the Sale Agreement two former officers sold 265,646 common shares held by them to our new officer/director.
In turn, our new officer/director agreed to cancel 250,128 of those shares he received and returned them to treasury for retirement.
Certain other shareholders also agreed to cancel 131,261 common shares. (All shares stated at post-split amounts.)
On
September 5, 2013, the Company increased the authorized common shares, par value $0.0010, from 900,000 shares to 375,030,000 shares.
Correspondingly, the Company affirmed a forward split of 4.167 for 1 in which each shareholder was issued 4.167 common shares
for each share held. All share and per share date included in these financial statements has been retrospectively adjusted to
account for the stock split.
Effective
February 11, 2016, the Company approved a reverse stock split of the common stock, par value $0.001 per share at a ratio of 1
for 100 of each share issued and outstanding on the effective date. These financial statements retroactively reflect the reverse
stock split for all periods.
Effective
June 7, 2017, the Company approved a reverse stock split of the common stock, par value $0.001 per share at a ratio of 1 for 20
of each share issued and outstanding on the effective date. These financial statements retroactively reflect the reverse stock
split for all periods.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. At March 31, 2018
and March 31, 2017 the Company had $6,222 and $40,903, respectively, of unrestricted cash.
Basis
of Presentation
The
financial statements of the Company have been prepared using the accrual basis of accounting in accordance with generally accepted
accounting principles in the United States of America and are presented in U.S. dollars. The Company has adopted a March 31 fiscal
year end.
Property
and Equipment
Property
and equipment is recorded at cost and is depreciated using the straight-line method over the estimated useful lives of the related
assets. The useful lives of the assets are as follows: Computer equipment, 3 years.
Long-Lived
and Intangible Assets
The
Company accounts for long-lived and intangible assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment
or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate.
The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result
from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an
impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value.
Fair
Value of Financial Instruments
The
Company’s financial instruments consist of cash and cash equivalents, prepaid expenses, accounts payable, accrued expenses,
amounts due to related parties, stock deposits, and a convertible note payable. The carrying amount of these financial instruments
approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise
disclosed in these financial statements.
The
Company accounts for financial instruments in accordance with guidance from ASU 820 – Fair Value Measurements and Disclosures.
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for
inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by
requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in
valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable
inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the
asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:
Level
1 – Observable inputs such as quoted prices in active markets;
Level
2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;
Level
3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own
assumptions.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair
Value of Financial Instruments (continued)
The
Company did not have any level 1 or level 3 financial instruments at March 31, 2018 or March 31, 2017. As of March 31, 2018, the
derivative liabilities were considered a level 2 item; see Note 9.
The
Company has securities available for sale which are not evaluated using the above hierarchy due to common control issues, these
securities are carried at the transaction price. (See Note 3)
For
any delinquent convertible notes, the Company increases the term of the note by 180 days for calculation of Black Scholes valuation
only, until the note is paid in full.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.
Income
Taxes
Income
taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and
liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and
are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax
assets that, based on available evidence, are not expected to be realized.
Revenue
Recognition
The
Company will recognize revenue when products are fully delivered or services have been provided and collection is reasonably assured.
Research
and Development
The
Company will charge research and development costs to expense when incurred. The research and development costs include payments
made to unrelated third party vendors for their work on enhancements to existing technology, or research into new potentially
patentable products or processes.
Stock-Based
Compensation
Stock-based
compensation is accounted for at fair value in accordance with ASC Topic 718. On September 6, 2013, the Company approved the adoption
of Rich Pharmaceuticals, Inc. 2013 Stock Option/Stock Issuance Plan (the "2013 Plan”). The 2013 Plan is intended to
aid in recruiting and retaining key employees, directors or consultants and to motivate them by providing incentives through the
granting of awards of stock options or other stock based awards. The 2013 Plan is administered by the board of directors. Directors,
officers, employees and consultants and our affiliates are eligible to participate under the 2013 Plan. A total of 195,002 common
shares have been reserved for awards under the 2013 Plan. During the year ended March 31, 2015, the Company granted 9,875 stock
options to officers, directors, employees and consultants. During the period ended March 31, 2016, the Company granted 195,000
stock options to officers, directors, employees and consultants. During the period ended March 31, 2017, the Company granted 29,000,000
stock options to officers, directors, employees and consultants. The Company made the following modifications to the exercise
prices of its options: January 12, 2015, the Company modified the exercise price on all outstanding stock options to $3.40; April
6, 2015, the Company modified the exercise price on all outstanding stock options to $1.60 per share; August 4, 2015, the Company
modified the exercise price on all outstanding stock options to $0.20 per share. (All shares are stated at post-split amounts).
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basic
Loss Per Share
The
basic earnings (loss) per share is calculated by dividing the Company’s net income available to common shareholders by the
weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the
Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding
during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as
of the first of the year for any potentially dilutive debt or equity. Total potentially dilutive instruments are: 9,446,533 common
share warrants, and 29,228,627 common shares upon exercise of outstanding options, and 9,397,575,000 common shares upon conversion
of all convertible notes. In periods of net losses the dilutive loss per share is the same as the basic loss per share because
the effect of the dilutive shares in periods of loss is antidilutive.
Recent
Accounting Pronouncements
In
May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which
clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the
new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the
award (as equity or liability) changes as a result of the change in terms or conditions. It is effective prospectively for the
annual period ending June 30, 2019 and interim periods within that annual period. Early adoption is permitted. The Company does
not expect ASU 2017-09 will have a significant impact on its financial statements upon adoption.
In
July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480)
and Derivatives and Hedging (Topic 815): I. Accounting for Certain Financial Instruments with Down Round Features; II. Replacement
of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests with a Scope Exception. Part I of this update addresses the complexity of accounting for certain
financial instruments with down round features. Down round features are features of certain equity-linked instruments (or embedded
features) that result in the strike price being reduced on the basis of the pricing of future equity offerings. Current accounting
guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments)
with down round features that require fair value measurement of the entire instrument or conversion option. Part II of this update
addresses the difficulty of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive
pending content in the FASB Accounting Standards Codification. This pending content is the result of the indefinite deferral of
accounting requirements about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily
redeemable noncontrolling interests. The amendments in Part II of this update do not have an accounting effect. This ASU is effective
for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is evaluating the effect
that ASU 2017-11 will have on its financial statements and related disclosures.
On
June 20, 2018, the FASB issued ASC 2018-7, Compensation – Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based
Payment Accounting. This guidance largely aligns the accounting for share-based payments issued to employees and nonemployees.
Under this guidance the existing employee guidance in Topic 718 will also be applied to all nonemployee stock-based transactions,
as long as the transaction is not effectively a form of financing. The Company currently accounts for nonemployee stock-based
compensation as if the Company had paid cash for the services which is consistent with the ASC 2018-7 guidance.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The
Company accounts for employee stock-based compensation in accordance with the guidance of ASC Topic 718: Compensation - Stock
Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized
in the financial statements based on their fair values.
The
Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than
Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants
and other non-employees. In accordance with ASC Topic 505-50, these stock options issued as compensation for services provided
to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the
option, whichever can be more clearly determined.
NOTE
2 – PROPERTY AND EQUIPMENT
Property
and equipment, recorded at cost, consisted of the following as of March 31, 2018 and March 31, 2017:
|
March
31, 2018
|
|
March
31, 2017
|
Computer
equipment & furniture
|
$
|
5,160
|
|
|
$
|
5,160
|
|
Less:
accumulated depreciation
|
|
(4,247
|
)
|
|
|
(3,035
|
)
|
Property
and equipment, net
|
$
|
913
|
|
|
$
|
2,125
|
|
The
useful life of the computer equipment and furniture is 3 years.
Depreciation
expense was $1,212 and $1,606 for the periods ended March 31, 2018 and 2017, respectively.
NOTE
3 – SECURITIES AVAILABLE FOR SALE
The
Company received 15,000,000 common stock shares of an entity that is majority owned by a non-majority stockholder of the Company
as partial payment for access to the Company’s intellectual property. This holding represents about 11% of the ownership
of the invested company.
The Company stipulated that it will distribute a certain number of these shares to its shareholders
as dividends upon necessary approvals, however, the cost to affect this distribution is prohibitive at this time, and the Company
will re-evaluate the ability to make the distribution in the future.
The Company classifies
its equity securities held as available for sale, and as such, they are carried at fair value. Changes in fair value of available
for sale securities will be reported as a component of other comprehensive income and evaluated at the end of each quarter.
The shares currently do not have a firm trading price and thus they are carried at their par value until such time as the shares
have established a trading price in the market.
During
the year ended March 31, 2018, the Company paid for $27,000 of consulting fees with 1,000,000 shares of the securities available
for sale. The Company also paid for $54,000 of advertising and promotion fees with 2,000,000 shares of the securities available
for sale, recognizing an additional $52,000 gain on this transaction. The total gain on the sale of securities available for sale
during the year ended March 31, 2018 was $52,000.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
4 – INTANGIBLE ASSETS
On
July 18, 2013, the Company entered into an Asset Assignment Agreement (the “Assignment Agreement”) with Imagic, LLC
and its principals to acquire certain assets including a US Patent entitled “Phorbol esters as anti-neoplastic and white
blood cell elevating agents” and all related intellectual property associated with the patent. In consideration for the
intellectual property the Company issued 41,384 common shares and 6,000,000 Series “A” Preferred Stock. These shares
were valued at a total of $123,973. The Company has also paid additional funds to third parties to further the development of
this asset and terminate the right of reversion totaling $45,000. The Company analyzed the assets at March 31, 2014 and determined
that the value could not be supported and impaired the assets to $0.
On
October 6, 2014, the Company entered into an Asset Assignment Agreement (the “Assignment Agreement”) with Imagic,
LLC and its principals to acquire certain assets including a US Patent entitled “Compositions and methods of use of Phorbol
Esters for the treatment of Hodgkin’s Lymphoma”, and all related intellectual property, inventions and trade secrets,
data and clinical study results. In consideration for the intellectual property the Company issued 110,396 common shares. These
shares were valued at a total of $7,904,355; however, since the asset was acquired from a related party the Company valued the
asset at the cost of the asset to the related party, $82,120, and treated the excess value as a deemed dividend reducing additional
paid in capital. The Company analyzed the assets at March 31, 2015 and determined that the value could not be supported and impaired
the assets to $0.
NOTE
5 – ACCRUED EXPENSES
Accrued
expenses consisted of the following as of March 31, 2018 and 2017:
|
March
31, 2018
|
|
March
31, 2017
|
Wages
and taxes
|
$
|
1,274,745
|
|
|
$
|
829,231
|
|
Accrued
interest
|
|
569,462
|
|
|
|
108,552
|
|
Total
accrued expenses
|
$
|
1,844,207
|
|
|
$
|
937,783
|
|
NOTE
6 – RELATED PARTY DEBT AND TRANSACTIONS
During
the year ended March 31, 2015, the Company received a $6,000 loan from a shareholder. During the period ended March 31, 2017 the
Company received an additional $6,280 from this related party. The loan is unsecured and bears 8% interest and has an original
due date of January 8, 2016. There is a total due of $12,280 as of March 31, 2018 and March 31, 2017. Interest accrued on the
note as of March 31, 2018 was $1,517.
The Company is in default on the balance of this note.
During
the period ending March 31, 2016, the Company received $22,200 in unsecured non-interest bearing loans from related parties and
during the period ending March 31, 2017 received an additional $14,450, the Company has repaid $36,650 of these loans leaving
a total due of $0 as of March 31, 2018. These loans are deemed to be short-term and are payable at the discretion of the Company.
Periodically,
related parties incur expenses for the Company and are expected to be repaid for those expenditures. As of March 31, 2018, the
balance owed to related parties for these types of expenses is $2,522. These liabilities do not have stated interest rates or
due dates, but are payable at the discretion of the Company.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
6 – RELATED PARTY DEBT AND TRANSACTIONS (CONTINUED)
The
Company has a consulting agreement with a related party to provide research into new technologies as well as essential development
of current products. The amounts owed to this related party for past work is a part of accounts payable and totals $393,953 and
$53,000 for the periods ending March 31, 2018 and 2017, respectively.
On
September 6, 2013, the Company entered into an Employment Agreement with our Chief Executive Officer, Chief Financial Officer,
President and Secretary. The Employment Agreement provides for a term of two years, and has been extended for an additional two
years; annual compensation of $275,000, a signing bonus of $68,750, and options to purchase up to 1,500 shares of common stock
at an exercise price of $40.00 per share. The CEO earned $275,000 and $275,000 for the years ended March 31, 2018 and 2017 (respectively)
as a result of this agreement, these amounts contribute to the $943,862 and $645,945 of officer compensation which is included
in accrued expenses, as of March 31, 2018 and March 31, 2017.
The
Company received $100,000 cash and 15,000,000 common stock shares of an entity that is majority owned by a non-majority stockholder
of the Company as partial payment for access to the Company’s intellectual property. This receipt is classified as income
in the period it was earned. (See Note 3)
During
the year ended March 31, 2017, the Company loaned $10,000 to an entity owned by a related party. During the year ended March 31,
2018, the Company loaned an additional $5300 to this entity, for a balance receivable of $15,300. This loan is short-term and
has no stated interest.
NOTE
7 – NOTE PAYABLE
On
May 31, 2016, the Company issued a secured promissory note in the amount of $900,000. The note is due on August 1, 2017 and bears
interest at 10% per annum. The loan replaced an account payable to a legal professional to cover past due amounts and penalties
for non-payment. The note is guaranteed personally by two shareholders and collateralized by assets of the company and guarantors.
The principal balance was $880,000 and a
ccrued
interest was $164,718 as of March 31, 2018.
On
February 21, 2017, the Company issued a non-secured promissory note in the amount of $20,000. The note is due on August 21, 2017
and bears interest at 8% per annum. The loan was in payment for professional fees related to an equity financing agreement dated
February 21, 2017, thus no cash was received by the Company.
Accrued
interest was $1,767 as of March 31, 2018.
NOTE
8 – CONVERTIBLE NOTE PAYABLE
On
February 5, 2015, the Company issued a convertible promissory note in the amount of $54,000. The note is due on November 9, 2015
and bears interest at 8% per annum. The loan becomes convertible 180 days after the date of the note. The loan and any accrued
interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price,
which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending
on the latest complete trading day prior to the conversion date. During the period ending March 31, 2016 the note holder converted
$33,020 in principal into 619,652 shares of common stock, and incurred a default fee of $27,000 leaving a remaining balance of
$47,980.
On February 22, 2017, this note was
purchased for a renegotiated face value of $59,799, incurring additional financing fees of $11,819. (Details are provided under
the note dated February 22, 2017 below). As of March 31, 2017 the principal and accrued interest balance is $0.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
8 – CONVERTIBLE NOTE PAYABLE (CONTINUED)
On
March 9, 2015, the Company issued a convertible note payable in the amount of $55,000. The note bears 8% interest and was originally
due on December 9, 2015, with a revised due date of June 23, 2017.
The loan becomes convertible
180 days after the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s
common stock at a rate of 55% multiplied by the market price, which is the average of the lowest two (2) trading prices for the
common stock during the twenty-five (25) trading day period ending on the latest complete trading day prior to the conversion
date. During the period ending March 31, 2016 the note holder converted $38,785 in principal and $5,135 in accrued interest into
2,886,693 shares of common stock. During the period ending June 30, 2016 the note holder converted $7,377 in principal and $422
in accrued interest into 2,324,229 shares of common stock leaving a remaining balance of $ 8,838.
On February 20, 2017,
this note was consolidated with other outstanding convertible notes and purchased for a renegotiated face value of $8,838, (details
are provided under the note dated February 22, 2017 below). As of March 31, 2017 the principal and accrued interest balance is
$0.
On
March 26, 2015, the Company issued a convertible note payable in the amount of $29,680 including an original issue discount of
$1,680. The note bears 8% interest and is due on March 23, 2016.
The loan becomes convertible
180 days after the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s
common stock at a rate of 58% multiplied by the market price, which is the average of the lowest three (3) trading prices for
the common stock during the ten (10) days prior to the conversion date. During the period ending March 31, 2016 the note holder
converted $10,929 in principal into 796,236 shares of common stock leaving a remaining balance of $18,751.
Accrued interest
was $5,350 as of March 31, 2018.
The Company is in default on the balance of this note.
On
May 5, 2015, the Company issued a convertible note payable in the amount of $68,900 including an original issue discount of $3,900.
The note bears 8% interest and is due on May 5, 2016.
The loan becomes convertible 180 days
after the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s common
stock at a rate of 42% multiplied by the market price, which is the average of the lowest three (3) trading prices for the common
stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. . During
the period ending March 31, 2016 the note holder converted $8,461 in principal and $566 in accrued interest into 906,763 shares
of common stock. During the period ending March 31, 2017 the note holder converted $60,439 in principal and $6,839 in accrued
interest into 44,551,004 shares of common stock leaving a remaining balance of $0. Accrued interest was $0 as of
March
31, 2017
.
On
May 6, 2015, the Company issued a convertible note payable in the amount of $10,500. The note bears 8% interest and is due on
February 8, 2016.
The loan becomes convertible 180 days after the date of the note. The
loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied
by the market price, which is the average of the lowest three (3) trading prices for the common stock during the thirty (30) trading
day period ending on the latest complete trading day prior to the conversion date. The Company incurred a default fee of $5,250,
leaving a balance of $15,750 as of
March 31, 2017
.
On February 22, 2017, this
note was purchased for a renegotiated face value of $20,900, incurring additional financing fees of $5,150. (Details are provided
under the note dated February 22, 2017 below). As of March 31, 2017 the principal and accrued interest balance is $0.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
8 – CONVERTIBLE NOTE PAYABLE (CONTINUED)
On
August 28, 2015, the Company issued a convertible note payable in the amount of $15,000. The note bears 8% interest and is due
on August 28, 2016.
The loan becomes convertible 180 days after the date of the note. The
loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied
by the market price, which is the lowest trading prices for the common stock during the twenty (20) trading day period ending
on the latest complete trading day prior to the conversion date. During the period ending
March 31, 2017
the
note holder converted $15,000 in principal and $939 in accrued interest into 4,351,619 shares of common stock leaving a remaining
balance of $0.
As of March 31, 2017 the principal and accrued interest balance is $0.
On
September 4, 2015, the Company issued a convertible note payable in the amount of $19,000. The note bears 8% interest and is due
on June 4, 2016.
The loan becomes convertible 180 days after the date of the note. The loan
and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 55% multiplied by
the market price, which is the average of the lowest two (2) trading prices for the common stock during the fifteen (15) trading
day period ending on the latest complete trading day prior to the conversion date.
On February 20, 2017, this note was
consolidated with other outstanding convertible notes and purchased for a renegotiated face value of $20,280, incurring additional
financing fees of $1,280. (Details are provided under the note dated February 20, 2017 below). As of March 31, 2017 the principal
and accrued interest balance is $0.
On
December 29, 2015, the Company issued a convertible note payable in the amount of $57,378. The note bears 8% interest rate and
was originally due on December 30, 2016
,
with a revised due date of June 23, 2017.
The
loan becomes convertible on
December 29
, 2015, the issue date of the note. The loan
can then be converted into shares of the Company’s common stock at a rate of 65% multiplied by the market price, which is
the average of the lowest three (3) trading prices for the common stock during the twelve (12) trading day period prior to the
conversion date. During the period ending March 31, 2016 the note holder converted $59,934 in principal and $1,222 in accrued
interest into 1,796,394 shares of common stock, and incurred a default penalty of $4,165, leaving a remaining balance of $1,609.
On February 20, 2017, this note was consolidated with other outstanding convertible notes and purchased for a renegotiated
face value of $1,609. (Details are provided under the note dated February 20, 2017 below). As of March 31, 2017 the principal
and accrued interest balance is $0.
On
January 22, 2016, the Company issued a convertible note payable in the amount of $60,500. The note bears 10% interest and is due
on October 22, 2016.
The loan becomes convertible on January 22, 2016. The loan and any
accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied by the market
price, which is the average of the lowest two (2) trading prices for the common stock during the twenty (20) trading day period
prior to the conversion date.
On April 4, 2017, this note was purchased for a renegotiated face value of $71,457. (Details
provided under the note dated April 4, 2017 below). As of March 31, 2018 the principal and accrued interest balance is $0.
On
February 25, 2016, the Company issued a convertible note payable in the amount of $27,500. The note bears 8% interest rate and
is due on February 25, 2017.
The loan becomes convertible on
February 25, 2016
,
the issue date of the note. The loan and any accrued interest can then be converted into shares of the Company’s common
stock at a rate of 65% multiplied by the market price, which is the average of the lowest three (3) trading prices for the common
stock during the twelve (12) trading day period ending on the latest complete trading day prior to the conversion date.. During
the period ending
March 31, 2017
the note holder converted $16,745 in principal and
$1,380 in interest into 3,325,000 shares of common stock leaving a remaining balance of $10,755.
On February 20, 2017,
this note was consolidated with other outstanding convertible notes and purchased for a renegotiated face value of $10,755. (Details
are provided under the note dated February 20, 2017 below). As of March 31, 2017 the principal and accrued interest balance is
$0.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
8 – CONVERTIBLE NOTE PAYABLE (CONTINUED)
On
March 24, 2016, the Company issued a convertible note payable in the amount of $7,500. The note bears 8% interest rate and is
due on March 24, 2017.
The loan becomes convertible on
March 24, 2016
,
the issue date of the note. The loan and any accrued interest can then be converted into shares of the Company’s common
stock at a rate of 65% multiplied by the market price, which is the average of the lowest three (3) trading prices for the common
stock during the twelve (12) trading day period ending on the latest complete trading day prior to the conversion date.
On
February 20, 2017, this note was consolidated with other outstanding convertible notes and purchased for a renegotiated face value
of $7,500. (Details are provided under the note dated February 20, 2017 below). As of March 31, 2017 the principal and accrued
interest balance is $0.
On
May 25, 2016, the Company issued a convertible note payable in the amount of $30,000. The note bears 8% interest and is due on
May 25, 2017.
The loan becomes convertible 180 days after issuance or November 21, 2016.
The loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied
by the market price, which is the lowest trading prices for the common stock during the twenty (20) trading day period ending
on the latest complete trading day prior to the conversion date.
On February 20, 2017, this note was consolidated with
other outstanding convertible notes and purchased for a renegotiated face value of $38,107, incurring additional financing fees
of $8,107. (Details are provided under the note dated February 20, 2017 below). As of March 31, 2017 the principal and accrued
interest balance is $0.
On
June 8, 2016, the Company issued an 8% Convertible Redeemable Promissory Note in the principal amount of $84,250. The note bears
interest at the rate of 8% and must be repaid on or before June 8, 2017. The note and any accrued interest may be converted into
shares of Company common stock at a conversion price equal to 50% of the lowest trading price during the 20-day period prior to
conversion. On February 20, 2017, this note was consolidated with other outstanding convertible notes and purchased for a renegotiated
face value of $134,214, incurring additional financing fees of $49,964. (Details are provided under the note dated February 20,
2017 below). As of March 31, 2017 the principal and accrued interest balance is $0.
On
June 23, 2016, the Company issued an 8% Convertible Redeemable Promissory Note in the principal amount of $56,000. The note bears
interest at the rate of 8% and must be repaid on or before June 23, 2017. The note and any accrued interest may be converted by
lender into shares of Company common stock at a conversion price equal to 50% of the lowest trading price during the 20-day period
prior to conversion. As of March 31, 2018 the accrued interest balance is $7,929. The Company is in default on this note.
On
July 7, 2016, the Company issued an 8% Convertible Redeemable Promissory Note in the principal amount of $58,000. The note bears
interest at the rate of 8% and must be repaid on or before July 7, 2017. The note and any accrued interest may be converted by
lender into shares of Company common stock,
180 days after issuance or January 3, 2017,
at a conversion price equal to 50% of the lowest trading price during the 20-day period prior to conversion. During the
period ended March 31, 2018, the lender converted $28,945 in principal and $1,902 in accrued interest into 69,039,300 common shares,
leaving a remaining principal balance of $29,055. As of March 31, 2018 the accrued interest balance is $4,028. The Company is
in default on this note.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
8 – CONVERTIBLE NOTE PAYABLE (CONTINUED)
On
October 20, 2016, the Company issued an 8% Convertible Redeemable Promissory Note in the principal amount of $32,000. The note
bears interest at the rate of 8% and must be repaid on or before October 20, 2017. The note and any accrued interest may be converted
by lender into shares of Company common stock,
180 days after issuance or January 3, 2017,
at a conversion price equal to 50% of the lowest trading price during the 20-day period prior to conversion. As of March
31, 2018, the accrued interest balance is $3,696. The Company is in default on this note.
On
November 17, 2016, the Company issued an 8% Convertible Redeemable Promissory Note in the principal amount of $56,000. The note
bears interest at the rate of 8% and must be repaid on or before June 23, 2017. The note and any accrued interest may be converted
by lender into shares of Company common stock,
180 days after issuance or January 3, 2017,
at a conversion price equal to 50% of the lowest trading price during the 20-day period prior to conversion. As of March
31, 2018, the accrued interest balance is $7,929. The Company is in default on this note.
On
January 5, 2017, the Company issued a 10% Convertible Redeemable Promissory Note in the principal amount of $335,000. The note
bears interest at the rate of 10%, contains a $30,000 OID, and must be repaid by October 5, 2017. The note and any accrued interest
may be converted by lender into shares of Company common stock,
upon execution or January
5, 2017,
at a conversion price equal to 60% of the lowest trading price during the 10-day period prior to conversion. During
the period ended March 31, 2018, the lender converted $0 in principal and $74,707 in accrued interest into 656,380,000 common
shares, leaving a remaining principal balance of $335,000. As of March 31, 2018, the accrued interest is $174,751, and the OID
balance is $0. The Company is in default on this note.
On
February 20, 2017, the Company issued an 8% Convertible Redeemable Promissory Note in the principal amount of $563,028 which is
partially funded, the current balance consolidates unpaid convertible notes dated March 9, 2015; September 4, 2015; December 29,
2015; February 25, 2016; March 24, 2016; May 25, 2016; June 8, 2016; June 23, 2016; July 7, 2016; October 20, 2016; November 17,
2016. The note bears interest at the rate of 8%, and must be repaid by October 25, 2017. The note and any accrued interest may
be converted by lender into shares of Company common stock,
upon execution or February 20,
2017,
at a conversion price equal to 60% of the lowest trading price during the 20-day period prior to conversion. During
the period ended March 31, 2017 the lender converted $34,370 in principal and $1,124 in accrued interest into 29,775,000 shares
of common stock. During the period ended March 31, 2018 the lender converted $86,857 in principal and $13,143 in accrued interest
into 277,300,000 common shares, leaving a principal balance of $124,095. As of March 31, 2018, the accrued interest is $66,239.
The Company is in default on this note.
On
February 21, 2017, the Company issued an 8% Convertible Redeemable Promissory Note in the principal amount of $15,000. The note
bears interest at the rate of 8%, and must be repaid by October 25, 2017. The note and any accrued interest may be converted by
lender into shares of Company common stock,
upon execution or February 21, 2017,
at a conversion price equal to 60% of the lowest trading price during the 20-day period prior to conversion. As of March 31, 2018,
the accrued interest is $11,032.
The
Company is in default on this note.
On
February 22, 2017, the Company issued a 10% Convertible Redeemable Promissory Note in the principal amount of $59,799, which refinances
an unpaid convertible note dated February 5, 2015. The note bears interest at the rate of 10%, and must be repaid by October 25,
2017. The note and any accrued interest may be converted by lender into shares of Company common stock,
upon
execution or February 22, 2017,
at a conversion price equal to 60% of the lowest trading price during the 20-day period
prior to conversion. This loan incurred default penalties for late filing of financial documents of $31,407 during the period
ended March 31, 2018. The lender converted $59,799 of principle, $4,795 of interest, and $31,407 of penalties into 311,043,058
shares of common stock, leaving a loan and accrued interest balance of $0, as of March 31, 2018.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
8 – CONVERTIBLE NOTE PAYABLE (CONTINUED)
On
February 22, 2017, the Company issued a 10% Convertible Redeemable Promissory Note in the principal amount of $20,900, which refinances
an unpaid convertible note dated May 6, 2015. The note bears interest at the rate of 10%, and must be repaid by October 22, 2017.
The note and any accrued interest may be converted by lender into shares of Company common stock,
upon
execution or February 22, 2017,
at a conversion price equal to 60% of the lowest trading price during the 20-day period
prior to conversion. This loan incurred default penalties for late filing of financial documents of $34,156 during the quarter
ended September 30, 2017. The lender converted $20,900 of principle, $23,913 of interest, and $34,156 of penalties into 293,848,193
shares of common stock, leaving a loan balance and accrued interest balance of $0 as of March 31, 2018.
On
April 4, 2017, the Company issued an 8% Convertible Redeemable Promissory Note in the principal amount of $71,457, which refinances
an unpaid convertible note dated January 22, 2016. The note bears interest at the rate of 8%, and must be repaid by January 4,
2018. The note and any accrued interest may be converted by lender into shares of Company common stock,
upon
execution or
April 4, 2017
,
at a conversion price equal to 60% of the lowest
trading price during the 20-day period prior to conversion. As of March 31, 2018, the accrued interest is $46,957. The Company
is in default on this note.
On
April 18, 2017, the Company issued a 10% Convertible Redeemable Promissory Note in the principal amount of $109,500. The note
bears interest at the rate of 10%, a 10% original issue discount and the lender will hold $1,500 to cover transaction costs, the
note must be repaid by January 30, 2018. The note and any accrued interest may be converted by lender into shares of Company common
stock,
upon execution or
April 4, 2017
,
at a conversion price equal to 60% of the lowest trading price during the 10-day period prior to conversion. As of March 31, 2018,
the accrued interest is $67,234, and the OID balance is $0. The Company is in default on this note.
On
November 3, 2017, the Company issued a 10% Convertible Redeemable Promissory Note in the principal amount of $34,500. The note
bears interest at the rate of 10%, a 10% original issue discount and the lender will hold $1,500 to cover transaction costs, the
note must be repaid by August 3, 2018. The note and any accrued interest may be converted by lender into shares of Company common
stock,
upon execution or
November 3, 2017
,
at a conversion price equal to 60% of the lowest trading price during the 10-day period prior to conversion. As of March
31, 2018, the accrued interest is $1,408, and the OID balance is $1,335.
On
December 18, 2017, the Company issued a 10% Convertible Redeemable Promissory Note in the principal amount of $43,850. The note
bears interest at the rate of 10%, a 10% original issue discount and the lender will hold $1,500 to cover transaction costs, the
note must be repaid by September 18, 2018. The note and any accrued interest may be converted by lender into shares of Company
common stock,
upon execution or
December 18, 2017
,
at a conversion price equal to 60% of the lowest trading price during the 10-day period prior to conversion. As of March
31, 2018, the accrued interest is $1,511, and the OID balance is $2,375.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
8 – CONVERTIBLE NOTE PAYABLE (CONTINUED)
On
January 10, 2018, the Company issued a 10% Convertible Redeemable Promissory Note in the principal amount of $67,500. The note
bears interest at the rate of 10%, a 10% original issue discount and the lender will hold $1,500 to cover transaction costs, the
note must be repaid by October 10, 2018. The note and any accrued interest may be converted by lender into shares of Company common
stock,
upon execution or
January 10, 2018
,
at a conversion price equal to 60% of the lowest trading price during the 10-day period prior to conversion. As of March
31, 2018, the accrued interest is $1,461, and the OID balance is $3,999.
On
February 15, 2018, the Company issued a 10% Convertible Redeemable Promissory Note in the principal amount of $78,500. The note
bears interest at the rate of 10%, a 10% original issue discount and the lender will hold $1,500 to cover transaction costs, the
note must be repaid by November 15, 2018. The note and any accrued interest may be converted by lender into shares of Company
common stock,
upon execution or
February 15, 2018
,
at a conversion price equal to 60% of the lowest trading price during the 10-day period prior to conversion. As of March
31, 2018, the accrued interest is $1,110, and the OID balance is $5,444.
On
March 15, 2018, the Company issued a 10% Convertible Redeemable Promissory Note in the principal amount of $56,500. The note bears
interest at the rate of 10%, a 10% original issue discount and the lender will hold $1,500 to cover transaction costs, the note
must be repaid by December 15, 2018. The note and any accrued interest may be converted by lender into shares of Company common
stock,
upon execution or
March 15, 2018
,
at a conversion price equal to 60% of the lowest trading price during the 10-day period prior to conversion. As of March 31, 2018,
the accrued interest is $343, and the OID balance is $4,444.
During the year ended March 31, 2018,
the Company incurred $456,494 under convertible loan default provisions. This amount has been included as interest expense.
NOTE
9 – DERIVATIVE LIABILITIES
In
accordance with ASC 815, the Company has bifurcated the conversion feature of their convertible notes and recorded a derivative
liability on the date each note became convertible. The derivative liability was then revalued on each reporting date.
As
detailed in Note 7 (above) the Company has issued several convertible notes in varying amounts and terms, with the following loans
becoming convertible during the periods ending March 31, 2018 and March 31, 2017: $29,680 note dated March 26, 2015; $60,500 note
dated January 22, 2016 $56,000 note dated June 23, 2016; $58,000 note dated July 7, 2016; $32,000 note dated October 20, 2016;
$56,000 note dated November 17, 2016; $335,000 note dated January 5, 2017; $563,028 note dated February 20, 2017; $15,000 note
dated February 21, 2017; $59,799 note dated February 22, 2017; $20,900 note dated February 22, 2017; $71,457 note dated April
4, 2017; $115,000 note dated April 18, 2017; $34,500 note dated November 3, 2017; $43,850 note dated December 18, 2017; $67,500
note dated January 10, 2018; $78,500 note dated February 15, 2018; $56,500 note dated March 15, 2018
.
ASC
815 requires Company management to assess the fair market value of certain derivatives at each reporting period and recognize
any change in the fair market value as another income or expense item. The Company’s only asset or liability
measured at fair value on a recurring basis is its derivative liability associated with the above convertible debt. During
the period ended March 31, 2018, the Company recorded a total change in the fair market value of the derivative liabilities of
$1,549,678.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
9 – DERIVATIVE LIABILITIES (CONTINUED)
The
Company uses the Black-Scholes option pricing model to value the derivative liability upon the initial conversion date and at
each reporting period. Included in the model to value the derivative liabilities of the above loans are the following
assumptions: stock price at valuation date of $0.0003, exercise price of $0.00015 - $0.00012, dividend yield of zero, years to
maturity of 0.0137 – .70959, a risk free rate of 1.63% - 2.09%, and annualized volatility of 278% - 456%. The above loans
were all discounted in full. Based on the valuations on the initial valuation dates for the period ending March 31, 2018, the
Company recognized debt discounts related to the conversion features totaling $887,871 and a derivative expense of $549,807 related
to the excess value of the derivative liabilities. Once the loans are fully converted, the remaining derivative liability is reclassified
to equity as additional paid-in capital , $169,544 was reclassified during the year ended March 31, 2018. As of March
31, 2018, unamortized debt discount, including original issue discounts totaled $312,669. The derivative liabilities totaled $2,099,424
as of March 31, 2018, of which $- related to long-term debt.
NOTE
10 – EQUITY TRANSACTIONS
The
Company has 40,000,000,000 common shares authorized with a par value of $0.001 per share as of February 28,
2018.
The
Company has 10,000,000 preferred shares authorized with a par value of $ 0.001 per share.
The
following is a summary of the inputs used to determine the value of the warrants issued in connection with common stock using
the Black-Scholes option pricing model.
Date
|
March
30, 2017
|
Warrants
|
9,200,000
|
Stock
price on grant date
|
$0.002
|
Exercise
price
|
$0.002
|
Expected
life
|
5
year
|
Volatility
|
120%
|
Risk-free
rate
|
1.96%
|
Calculated
value
|
$15,278
|
Fair
value allocation of proceeds
|
$45,466
|
Unamortized
option expense
|
$0
|
The
following is a summary of the warrant activity for the period March 31, 2017 to
March
31, 2018
:
|
|
Number
of warrants
|
|
Weighted
average exercise price
|
|
Outstanding,
March 31, 2017
|
|
|
|
9,446,533
|
|
|
$
|
0.102
|
|
|
Granted
|
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
|
|
|
|
—
|
|
|
|
—
|
|
|
Outstanding,
March 31, 2018
|
|
|
|
9,446,533
|
|
|
$
|
0.102
|
|
On
February 28, 2018, the Company effected an increase in authorized common stock to 40,000,000,000 shares.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
10 – EQUITY TRANSACTIONS (CONTINUED)
Effective
June 7, 2017, the Company approved a reverse stock split of the common stock, par value $0.001 per share at a ratio of 1 for 20
of each share issued and outstanding on the effective date. These financial statements retroactively reflect the reverse stock
split for all periods.
During
the period ended March 31, 2018, the Company issued common stock to satisfy convertible debt conversions at a price below par
value as obligated by contract. During this period the Company issued 1,522,860,551 common shares at a below par rate, incurring
an adjustment to additional paid in capital of $1,227,890
.
During
August 2017, the Company received $100,000 from a related party as consideration for a stock subscription agreement dated October
16, 2017. The agreement stipulates issuance of 333,333,333 common stock and an additional warrants to purchase another 333,333,333
common shares at $0.0003 per share for a five year term. As of March 31, 2018, the Company has available shares to fulfill this
obligation but are awaiting the transfer agent’s instructions, thus the $100,000 collected on this agreement is recorded
as common stock to be issued in the financial statements until such instructions become available to complete this transaction.
During
the period ended March 31, 2017, the Company received, as listed, conversion notices from various note holders. The Company issued
the following common shares to satisfy the conversion of the following debt and interest:
Date
|
Debt/Interest
Converted
|
Common
Stock Issued
|
Price
per Share
|
April
1, 2016
|
$2,197
|
488,316
|
$ 0.00450
|
April
4, 2016
|
$4,847
|
862,500
|
$ 0.00562
|
April
7, 2016
|
$1,750
|
486,111
|
$ 0.00360
|
April
14, 2016
|
$4,158
|
962,500
|
$ 0.00432
|
April
15, 2016
|
$1,318
|
488,311
|
$ 0.00270
|
April
26, 2016
|
$1,705
|
631,489
|
$ 0.00270
|
May
4, 2016
|
$2,067
|
485,901
|
$ 0.00426
|
May
31, 2016
|
$ 828
|
230,003
|
$ 0.00360
|
June
2, 2016
|
$9,120
|
1,500,000
|
$ 0.00608
|
June
2, 2016
|
$4,401
|
1,467,017
|
$ 0.00300
|
June
14, 2016
|
$5,847
|
1,461,795
|
$ 0.00400
|
June
17,2016
|
$5,691
|
1,422,808
|
$ 0.00400
|
June
29, 2016
|
$6,580
|
1,063,518
|
$ 0.00618
|
August
23, 2016
|
$2,567
|
1,106,487
|
$ 0.00232
|
August
29, 2016
|
$2,570
|
1,107,806
|
$ 0.00232
|
September
6, 2016
|
$2,547
|
1,097,634
|
$ 0.00232
|
September
20, 2016
|
$2,443
|
1,263,383
|
$ 0.00194
|
September
26, 2016
|
$2,946
|
1,269,672
|
$ 0.00232
|
September
28, 2016
|
$2,947
|
1,270,172
|
$ 0.00232
|
September
30, 2016
|
$3,949
|
2,553,336
|
$ 0.00154
|
October 7,
2016
|
$3,381
|
2,914,578
|
$ 0.00116
|
October 14,
2016
|
$3,380
|
2,913,784
|
$ 0.00116
|
October 21,
2016
|
$3,385
|
2,917,784
|
$ 0.00116
|
October 26,
2016
|
$3,382
|
2,915,828
|
$ 0.00116
|
October 31,
2016
|
$5,037
|
4,341,852
|
$ 0.00116
|
November 7
, 2016
|
$5,015
|
4,323,647
|
$ 0.00116
|
November 22,
2016
|
$5,513
|
4,753,008
|
$ 0.00116
|
November 29,
2016
|
$5,515
|
4,754,647
|
$ 0.00116
|
December
6, 2016
|
$4,058
|
3,497,965
|
$ 0.00116
|
January
10, 2017
|
$6,301
|
6,301,150
|
$ 0.00100
|
February
22, 2017
|
$4,290
|
3,575,000
|
$ 0.00120
|
March
13, 2017
|
$4,080
|
3,400,000
|
$ 0.00120
|
March
21, 2017
|
$4,920
|
4,100,000
|
$ 0.00120
|
March
22, 2017
|
$5,160
|
4,300,000
|
$ 0.00120
|
March
24, 2017
|
$5,460
|
4,550,000
|
$ 0.00120
|
March
30, 2017
|
$5,645
|
4,800,000
|
$ 0.00118
|
March
31, 2017
|
$5,939
|
5,050,000
|
$ 0.00118
|
March
31, 2017 Total
|
$150,939
|
90,628,002
|
|
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
10 – EQUITY TRANSACTIONS (CONTINUED)
During
the period ended
March 31, 2018
,
the Company received, as listed, conversion notices from various note holders. The Company issued the following common shares
to satisfy the conversion of the following debt and interest:
Date
|
Debt/Interest
Converted
|
Common
Stock Issued
|
Price
per Share
|
April
5, 2017
|
$6,233
|
5,300,000
|
$0.00118
|
April
10, 2017
|
$6,586
|
5,600,000
|
$0.00118
|
April
11, 2017
|
$6,880
|
5,850,000
|
$0.00118
|
April
18, 2017
|
$7,291
|
6,200,000
|
$0.00118
|
April
20, 2017
|
$7,644
|
6,500,000
|
$0.00118
|
April
21, 2017
|
$16,464
|
14,000,000
|
$0.00118
|
April
25, 2017
|
$17,287
|
14,700,000
|
$0.00118
|
April
26, 2017
|
$26,600
|
26,600,000
|
$0.00100
|
May
1, 2017
|
$8,700
|
14,500,000
|
$0.00060
|
June
13, 2017
|
$1,200
|
10,000,000
|
$0.00012
|
June
16, 2017
|
$1,930
|
19,299,400
|
$0.00010
|
June
16, 2017
|
$1,300
|
11,000,000
|
$0.00012
|
June
20, 2017
|
$1,392
|
11,600,000
|
$0.00012
|
June
21, 2017
|
$2,314
|
23,139,900
|
$0.00010
|
June
22, 2017
|
$1,590
|
13,250,000
|
$0.00012
|
June
22, 2017
|
$1,470
|
12,250,000
|
$0.00012
|
June
26, 2017
|
$1,800
|
15,000,000
|
$0.00012
|
June
29, 2017
|
$1,980
|
16,500,000
|
$0.00012
|
July
3, 2017
|
$2,088
|
17,400,000
|
$0.00012
|
July
12, 2017
|
$2,088
|
17,400,000
|
$0.00012
|
July
13, 2017
|
$2,484
|
13,800,000
|
$0.00018
|
July
14, 2017
|
$3,374
|
19,000,000
|
$0.00018
|
July
18, 2017
|
$3,374
|
19,000,000
|
$0.00018
|
July
20, 2017
|
$3,582
|
19,900,000
|
$0.00018
|
July
24, 2017
|
$6,270
|
20,900,000
|
$0.0003
|
July
25, 2017
|
$6,870
|
22,900,000
|
$0.0003
|
July
28, 2017
|
$7,200
|
24,000,000
|
$0.0003
|
August
2, 2017
|
$7,200
|
24,000,000
|
$0.0003
|
August
4, 2017
|
$9,000
|
25,000,000
|
$0.00036
|
August
8, 2017
|
$11,119
|
26,475,000
|
$0.00042
|
August
11, 2017
|
$13,920
|
29,000,000
|
$0.00048
|
August
16, 2017
|
$12,810
|
30,500,000
|
$0.00042
|
August
22, 2017
|
$6,709
|
19,168,058
|
$0.00035
|
August
25, 2017
|
$11,200
|
32,000,000
|
$0.00035
|
August
31, 2017
|
$9,600
|
32,000,000
|
$0.0003
|
September
7, 2017
|
$9,900
|
36,000,000
|
$0.00028
|
September
15, 2017
|
$9,437
|
37,900,000
|
$0.00025
|
September
22, 2017
|
$9,910
|
39,800,000
|
$0.00025
|
September
28, 2017
|
$10,408
|
41,800,000
|
$0.00025
|
October
3, 2017
|
$10,931
|
43,900,000
|
$0.00025
|
October
5, 2017
|
$7,582
|
30,448,193
|
$0.00025
|
January
2, 2018
|
$9,530
|
47,650,000
|
$0.00020
|
January
12, 2018
|
$10,000
|
50,000,000
|
$0.00020
|
January
18, 2018
|
$9,875
|
50,000,000
|
$0.0001975
|
January
24, 2018
|
$8,250
|
55,000,000
|
$0.00015
|
February
1, 2018
|
$7,220
|
57,760,000
|
$0.000125
|
February 9,
2018
|
$6,065
|
60,650,000
|
$0.00010
|
February
20, 2018
|
$6,367
|
63,670,000
|
$0.00010
|
February
27, 2018
|
$6,685
|
66,850,000
|
$0.00010
|
March 2,
2018
|
$7,018
|
70,180,000
|
$0.00010
|
March 7,
2018
|
$7,369
|
73,690,000
|
$0.00010
|
March
16, 2018
|
$7,736
|
77,360,000
|
$0.00010
|
March
22, 2018
|
$8,122
|
81,220,000
|
$0.00010
|
March
31, 2018
|
$0
|
1,055
|
$0.00000
|
March
31, 2018 Total
|
$389,954
|
1,607,611,606
|
|
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
10 – EQUITY TRANSACTIONS (CONTINUED)
(2)
Effective April 6, 2015, the Company approved the re-pricing of all 135,627 previously granted options under the Company’s
2013 Equity Incentive Plan, which had exercise prices between $1.60 per share and $3.40 per share, to $1.60 per share which was
the closing price of the Company’s common stock on April 6, 2015. All of the other terms of the options remained unchanged.
(3) Effective August 4, 2015, the Company approved the re-pricing of all 185.627 previously granted options under the Company’s
2013 Equity Incentive Plan, which had exercise prices between $1.60 per share and $0.40 per share, to $0.40 per share which was
the closing price of the Company’s common stock on August 4, 2015. All of the other terms of the options remained unchanged.
The Company revalued all existing options on January 12, 2015 and again on April 6, 2015, and again on August 4, 2015 using the
Black-Scholes option pricing model using the initial terms of the options and the modified terms of the options. The difference
in the valuations was recorded as additional expense. The re-pricing of the options resulted in the recognition of an additional
$50,448 on January 9, 2015 and an additional $9,316 on April 6, 2015, and an additional $47,463 on August 4, 2015 in related stock
based compensation expense for those periods.
The
following is a summary of the inputs used to determine the value of the options using the Black-Scholes option pricing model.
Date
|
April
6, 2015
|
June
9, 2015
|
December
15, 2015
|
March
30, 2017
|
Options
|
102,000
|
50,000
|
43,000
|
29,000,000
|
Stock
price grant date
|
$1.60
|
$0.40
|
$0.20
|
$0.002
|
Initial
Exercise price
|
$1.60
|
$0.40
|
$0.20
|
$0.002
|
Modified
Exercise price
|
$0.20
|
$0.20
|
$0.20
|
-
|
Expected
life
|
5.0
|
5.0
|
5.0
|
5.0
|
Volatility
|
99%
|
99%
|
84%
|
120%
|
Risk-free
rate
|
1.31%
|
1.74%
|
1.70%
|
1.93%
|
Calculated
value
|
$120,778
|
$14,838
|
$5,736
|
$48,017
|
Modified
value
|
$151,221
|
$16,347
|
$5,736
|
$48,017
|
The
following is a summary of the option activity for the period March 31, 2017 through March 31, 2018:
|
|
Number
of options
|
|
Weighted
average exercise price
|
|
Outstanding,
March 31, 2017
|
|
|
|
29,228,627
|
|
|
$
|
0.004
|
|
|
Granted
|
|
|
|
—
|
|
|
|
—
|
|
|
Exercised
|
|
|
|
—
|
|
|
|
—
|
|
|
Expired
|
|
|
|
—
|
|
|
|
—
|
|
|
Outstanding,
March 31, 2018
|
|
|
|
29,228,627
|
|
|
$
|
0.004
|
|
NOTE
11 – COMMITMENTS AND CONTINGENCIES
The
Company leases office space on a verbal month-to-month agreement. Monthly rent is about $2,800.
On
July 8, 2016, the Company engaged a foreign based company to evaluate the safety and efficacy of RP-323 over a 27 month period.
The contract stipulates a commitment of up to $193,255 as the Company utilizes services, with additional fees for pass-through
expenses . As of March 31, 2018, the Company has paid $19,326 and accrued $3,934 in payables for services received.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
11 – COMMITMENTS AND CONTINGENCIES (CONTINUED)
The
inventor of the intellectual property which was assigned to Rich Pharmaceuticals, Inc. in July 2013 by Imagic, LLC and Richard
L. Chang’s Holdings, LLC is presently in declaratory relief litigation with Biosuccess Biotech, Co. LTD. (“Biosuccess”),
a company who was previously assigned licensing rights in the intellectual property. In connection with this litigation, on January
17, 2014, the Company received notice of a complaint filed by Biosuccess against the Company, Imagic, LLC, Richard L. Chang’s
Holdings, LLC, and Ben Chang (our CEO and a director) in the United States District Court, Central District of California Western
Division (the “District Court”). The Complaint includes allegations of patent and copyright infringement, misappropriation
of trade secrets, breach of fiduciary duty, unfair competition and other causes of actions against the Company, Imagic, LLC, Richard
L. Chang’s Holdings, LLC, and Ben Chang (the “Litigation”). The Complaint seeks relief which includes compensatory
damages, attorneys’ fees and costs, an award of treble damages, and such other relief as the court may deem just and proper.
As previously disclosed on January 4, 2016, the Litigation has been settled through a confidential mediation process supervised
by the Federal Court and the Litigation has been dismissed with prejudice by the Federal Court. The Company incurred substantial
fees in defending the litigation.
On
April 1, 2017, the Company entered into a tentative agreement with CannCodex to issue 78,000,000 common shares of stock in exchange
for data base assets of CannCodex. However, this agreement was not finalized and subsequently the Company is not responsible for
issuance of the stock. Unrelated to this agreement, the Company has issued short-term loans to CannCodex totaling $15,300 as of
March 31, 2018
.
NOTE
12 – LIQUIDITY AND GOING CONCERN
The
Company has a working capital deficit, has not yet received significant revenues from sales of products or services, and has incurred
losses since inception. These factors create substantial doubt about the Company’s ability to continue as a going concern
for the twelve months following the date that these financial statements were issued. The financial statements do not include
any adjustment that might be necessary if the Company is unable to continue as a going concern.
The
ability of the Company to continue as a going concern is dependent on the Company generating cash from the sale of its common
stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its
equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no
assurance the Company will be successful in these efforts.
NOTE
13 – INCOME TAXES
As
of March 31, 2018, the Company had net operating loss carry forwards of approximately $14,137,110 that may be available to reduce
future years’ taxable income in varying amounts through 2033. Future tax benefits which may arise as a result of these losses
have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly,
the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
RICH
PHARMACEUTICALS, INC.
NOTES
TO THE FINANCIAL STATEMENTS
MARCH
31, 2018
NOTE
13 – INCOME TAXES (CONTINUED)
The
provision for Federal income tax consists of the following for the years ended March 31, 2018 and 2017:
|
March
31, 2018
|
|
March
31, 2017
|
Federal
income tax benefit attributable to:
|
|
|
|
|
|
|
|
Current
operations
|
$
|
575,396
|
|
|
$
|
1,102,052
|
|
Less:
valuation allowance
|
|
(575,396
|
)
|
|
|
(1,102,052
|
)
|
Net
provision for Federal income taxes
|
$
|
—
|
|
|
$
|
—
|
|
The
cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as
of March 31, 2018 and 2017:
|
March
31, 2018
|
|
March
31, 2017
|
Deferred
tax asset attributable to:
|
|
|
|
|
|
|
|
Net
operating loss carryover
|
$
|
4,806,617
|
|
|
$
|
4,231,221
|
|
Less:
valuation allowance
|
|
(4,806,617
|
)
|
|
|
(4,231,221
|
)
|
Net
deferred tax asset
|
$
|
—
|
|
|
$
|
—
|
|
Due
to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of approximately $13,970,710
for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating
loss carry forwards may be limited as to use in future years.
NOTE
14 – SUBSEQUENT EVENTS
On
April 13, 2018, the Company issued a 10% Convertible Redeemable Promissory Note in the principal amount of $206,100. The note
bears interest at the rate of 10%, a 10% original issue discount and the lender will hold $1,500 to cover transaction costs, the
note must be repaid by December 15, 2018. The note and any accrued interest may be converted by lender into shares of Company
common stock,
upon execution or
December 13, 2018
,
at a conversion price equal to 60% of the lowest trading price during the 10-day period prior to conversion.
Subsequent
to the period ended March 31, 2018, the Company received, as listed, conversion notices from various note holders. The Company
issued the following common shares to satisfy the conversion of the following debt and interest:
Date
|
Debt/Interest
Converted
|
Common
Stock Issued
|
Price
per Share
|
April
4, 2018
|
$8,528
|
85,280,000
|
$0.0001
|
April
10, 2018
|
$8,953
|
89,530,000
|
$0.0001
|
Subsequent
Total
|
$17,481
|
174,810,000
|
|
In
accordance with ASC 855-10, the Company
has analyzed its operations subsequent to March 31,
2018 to the date these financial statements were issued, and has determined that it does not have any material subsequent events
to disclose in these financial statements other than the events described above.