(The accompanying notes are an integral part of these condensed consolidated financial statements)
(The accompanying notes are an integral part of these condensed consolidated financial statements)
Notes to the Condensed Consolidated Financial Statements
(Expressed in US dollars)
(unaudited)
1.
Nature of Operations and Continuance of Business
Appiphany Technologies Holdings Corp. (the “Company”) was incorporated in the State of Nevada on February 24, 2010. Currently, the Company is in the business of online fraud protection services.
Going Concern
These condensed consolidated financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at July 31, 2017, the Company has not recognized significant revenue, has a working capital deficit of $987,397, and has an accumulated deficit of $3,998,781. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. The Company will continue to rely on equity sales of its common shares in order to continue to fund business operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year from the date these financial statements are issued. These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
2.
Summary of Significant Accounting Policies
(a)
Basis of Presentation and Principles of Consolidation
The accompanying interim condensed consolidated financial statements of the Company should be read in conjunction with the consolidated financial statements and accompany notes filed with the U.S. Securities and Exchange Commission for the year ended April 30, 2017. These interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
These interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The condensed consolidated financial statements are comprised of the records of the Company and its wholly owned subsidiary, IP Control Risk Inc., a company incorporated in the State of Nevada, United States. All intercompany transactions have been eliminated on consolidation. The Company’s fiscal year end is April 30.
6
(b)
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the collectability of accounts receivable, fair value and estimated useful life of long-lived assets, fair value of convertible debentures, derivative liabilities, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
(c)
Basic and Diluted Net Loss per Share
The Company computes net loss per share in accordance with ASC 260,
Earnings per Share
. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As of July 31, 2017, the Company had 926,927,688 (April 30, 2017 - 569,159,167) potentially dilutive common shares outstanding.
(d)
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
3.
Related Party Transactions
During the period ended July 31, 2017, the Company repaid $nil (July 31, 2016 - $27,156) of the outstanding amount payable. The amount owed is unsecured, non-interest bearing, and due on demand. During the three months ended July 31, 2017, the Company incurred $18,089 (2016 - $nil) in management fees to the President and Director of the Company.
4.
Notes Payable
(a)
As at July 31, 2017, the Company owed $4,616 (April 30, 2017 - $4,616) in notes payable to non-related parties. Under the terms of the notes, the amounts are unsecured, bear interest at 6% per annum, and were due on July 31, 2016. The notes bear a default interest rate of 18% per annum.
7
(b)
On June 6, 2016, the Company issued a note payable to a non-related party for proceeds of $10,000. Under the terms of the note, the amount is unsecured, bears interest at 5% per annum, and is due on July 6, 2017. The note bears a default interest rate of 12% per annum.
(c)
On February 1, 2017, the Company issued a note payable to a non-related party for proceeds of $2,500. Under the terms of the note, the amount is unsecured, bears interest at 5% per annum, and is due on February 1, 2018. The note bears a default interest rate of 12% per annum.
(d)
On March 15, 2017, the Company issued a note payable to a non-related party of $15,000. The note payable was issued as a commitment fee and was recorded to additional paid-in capital. Under the terms of the note, the amount is unsecured, bears interest at 8% per annum, and was due on September 15, 2017. As of the date these financial statements were available to be issued, the note payable remains outstanding. The note bears a default interest rate of 20% per annum.
5.
Convertible Debentures
(a)
On May 21, 2014, the Company issued a convertible debenture, to a non-related party, for proceeds of $37,500. Under the terms of the debenture, the amount is unsecured, bears interest at 8% per annum, and is due on February 23, 2015. After 180 days or November 17, 2014, the debenture is convertible into common shares of the Company at a conversion price equal to 51% of the lowest two trading prices of the Company’s common shares for the past 30 trading days prior to notice of conversion.
Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a full discount to the note payable of $37,500. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $37,500. During the year ended April 30, 2015, the Company issued 360,000 shares of common stock for the conversion of $2,920. During the year ended April 30, 2016, the Company issued 1,850,000 shares of common stock for the conversion of $8,772 of the note. During the year ended April 30, 2017, the Company issued 10,178,976 shares of common stock for the conversion of $16,889 of the note. During the three months ended July 31, 2017, the Company issued 25,693,736 shares of common stock for the conversion of $8,919 of the note and $6,418 of accrued interest. As at July 31, 2017, the carrying value of the note was $nil (April 30, 2017 - $8,919).
(b)
On May 23, 2014, the Company issued a convertible debenture, to a non-related party, for proceeds of $40,000. Under the terms of the debenture, the amount is unsecured, bears interest at 8% per annum, and is due on May 23, 2015. After 180 days or November 19, 2014, the debenture is convertible into common shares of the Company at a conversion price equal to 55% of the lowest trading price of the Company’s common shares for the past 15 trading days prior to notice of conversion.
Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $25,215. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $40,000. During the year ended April 30, 2015, the Company issued 127,655 shares of common stock for the conversion of $1,335 of the note and $69 of accrued interest. During the year ended April 30, 2016, the Company issued 91,831 shares of common stock for the conversion of $188 of the note and $19 of accrued interest. As at July 31, 2017, the carrying value of the note was $38,477 (April 30, 2017 - $38,477).
8
(c)
On July 21, 2016, the Company issued a convertible debenture, to a non-related party, for proceeds of $56,750. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and is due on April 21, 2017. The debenture is convertible into common shares of the Company at a conversion price equal to 50% of the lowest trading price of the Company’s common stock of either (i) the twenty-five prior trading days immediately preceding the issuance of the note or (ii) the twenty-five prior trading days including the day upon which a notice of conversion is received by the Company.
Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $56,750, of which $6,250 of the discount resulted from debt issuance costs. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $56,750. During the year ended April 30, 2017, the Company issued 76,680,000 shares of common stock for the conversion of $48,508 of the note and $4,757 of accrued interest. During the three months ended July 31, 2017, the Company issued 48,129,765 shares of common stock for the conversion of $8,242 of the note and $15,056 of accrued interest. As at July 31, 2017, the carrying value of the note was $nil (April 30, 2017 - $7,367), and the unamortized total discount was $nil (April 30, 2017 - $875).
(d)
On February 13, 2017, the Company issued a convertible debenture, to a non-related party, for proceeds of $105,000. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $94,500. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and is due on November 13, 2017. The debenture is convertible into common shares of the Company at a conversion price equal to 60% of the lowest trading price of the Company’s common stock of the ten prior trading days immediately preceding the issuance of the note.
Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $105,000, of which $20,000 of the discount resulted from debt issuance costs. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $105,000.As at July 31, 2017, the carrying value of the note was $53,250 (April 30, 2017 - $29,231), and the unamortized total discount was $51,750 (April 30, 2017 - $75,769).
(e)
On February 24, 2017, the Company issued a convertible debenture, to a non-related party, for proceeds of $33,000. Under the terms of the debenture, the amount is unsecured, bears interest at 12% per annum, and is due on November 30, 2017. The debenture is convertible into common shares of the Company at a conversion price equal to 58% of the average of the lowest two trading prices of the Company’s common stock of the fifteen prior trading days immediately preceding the issuance of the note.
Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging. As at July 31, 2017, the carrying value of the note was $33,000 (April 30, 2017 - $33,000).
(f)
On April 21, 2017, the Company issued a $57,411 convertible debenture to a non-related party in extinguishment of a convertible debenture originally issued on November 4, 2016 of $55,000 and $2,411 of accrued interest as at April 21, 2017 as noted in Note 6(i). Due to the change of conversion terms, the fair value of the derivative liability increased from $95,302 to $97,264, resulting in a loss in extinguishment of $1,962. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and is due on July 21, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to 50% of the lowest trading prices of the Company’s common shares for the past twenty-five trading days prior to notice of conversion.
9
Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. During the three months ended July 31, 2017, the Company issued 198,600,000 shares of common stock for the conversion of $49,973 of the note and $1,177 of accrued interest. As at July 31, 2017, the carrying value of the note was $7,438 (April 30, 2017 - $57,411).
(g)
On April 28, 2017, the Company issued a $50,000 convertible debenture to a non-related party in extinguishment of a convertible debenture originally issued on November 4, 2016 of $50,000 as noted in Note 6(j). Due to the change of conversion terms, the fair value of the derivative liability increased from $192,604 to $197,630, resulting in a loss in extinguishment of $5,026. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and is due on July 30, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to 50% of the lowest trading prices of the Company’s common shares for the past twenty-five trading days prior to notice of conversion.
Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. During the three months ended July 31, 2017, the Company issued 105,537,143 shares of common stock for the conversion of $50,000 of the note. As at July 31, 2017, the carrying value of the note was $nil (April 30, 2017 - $50,000).
(h)
On May 9, 2017, the Company issued a convertible debenture, to a non-related party, totaling $36,450. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $30,000. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and is due on February 9, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to 60% of the lowest trading price of the Company’s common stock of the past ten trading days prior to notice of conversion.
Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $36,450, of which $6,450 of the discount resulted from debt issuance costs. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $36,450. As at July 31, 2017, the carrying value of the note was $nil (April 30, 2017 - $nil), and the unamortized total discount was $36,450 (April 30, 2017 - $nil).
(i)
On June 28, 2017, the Company issued a convertible debenture, to a non-related party, totaling $57,250. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price and proceeds received was $49,500. Under the terms of the debenture, the amount is unsecured, bears interest at 12% per annum, and is due on March 28, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to the lesser of the 50% of the lowest trading price of the Company’s common stock of the past twenty-five trading days prior to notice of conversion or the issuance of the note.
Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $57,250, of which $7,750 of the discount resulted from debt issuance costs. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $57,250. As at July 31, 2017, the carrying value of the note was $nil (April 30, 2017 - $nil), and the unamortized total discount was $57,250 (April 30, 2017 - $nil).
10
(j)
On July 19, 2017, the Company issued a convertible debenture, to a non-related party, for proceeds of $33,333. Pursuant to the agreement, the note was issued with an original issue discount and as such the purchase price was $28,000. Under the terms of the debenture, the amount is unsecured, bears interest at 12% per annum, and is due on July 19, 2018. The debenture is convertible into common shares of the Company at a conversion price equal to the lesser of the 50% of the lowest trading price of the Company’s common stock of the past twenty-five trading days prior to notice of conversion or the issuance of the note.
Due to this provision, the embedded conversion option qualifies for derivative accounting under ASC 815-15 “Derivatives and Hedging”. The fair value of the derivative liability resulted in a discount to the note payable of $33,333, of which $5,333 of the discount resulted from debt issuance costs. The carrying value of the convertible note will be accreted over the term of the convertible note up to the face value of $33,333. As at July 31, 2017, the carrying value of the note was $nil (April 30, 2017 - $nil), and the unamortized total discount was $33,333 (April 30, 2017 - $nil).
6.
Derivative Liability
The Company records the fair value of the of the conversion price of the convertible debentures disclosed in Note 5 in accordance with ASC 815,
Derivatives and Hedging
. The fair value of the derivative was calculated using a Binomial model. The fair value of the derivative liability is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. During the three months ended July 31, 2017, the Company recorded a gain on the change in fair value of derivative liability of $133,752 (2016 – loss of $237,379). As at July 31, 2017, the Company recorded a derivative liability of $568,696 (April 30, 2017 - $1,082,050).
11
The following inputs and assumptions were used to value the convertible debentures outstanding during the period ended July 31 and April 30, 2017:
|
Expected Volatility
|
Risk-free Interest Rate
|
Expected Dividend Yield
|
Expected Life(in years)
|
|
|
|
|
|
May 21, 2014 convertible debenture:
|
|
|
|
|
As at April 30, 2017 (mark to market)
|
353%
|
1.07%
|
0%
|
0.81
|
As at May 2, 2017 (date of conversion)
|
354%
|
1.08%
|
0%
|
0.81
|
As at May 22, 2017 (date of conversion)
|
384%
|
1.12%
|
0%
|
0.75
|
|
|
|
|
|
May 23, 2014 convertible debenture:
|
|
|
|
|
As at April 30, 2017 (mark to market)
|
245%
|
0.68%
|
0%
|
0.06
|
As at July 31, 2017 (mark to market)
|
365%
|
1.23%
|
0%
|
0.81
|
|
|
|
|
|
July 21, 2016 convertible debenture:
|
|
|
|
|
As at April 30, 2017 (mark to market)
|
512%
|
0.98%
|
0%
|
0.98
|
As at May 3, 2017 (date of conversion)
|
364%
|
1.10%
|
0%
|
0.97
|
As at May 5, 2017 (date of conversion)
|
357%
|
1.10%
|
0%
|
0.96
|
As at May 17, 2017 (date of conversion)
|
355%
|
1.08%
|
0%
|
0.93
|
As at June 12, 2017 (date of conversion)
|
366%
|
1.19%
|
0%
|
0.86
|
|
|
|
|
|
February 13, 2017 convertible debenture
|
|
|
|
|
As at April 30, 2017 (mark to market)
|
394%
|
0.99%
|
0%
|
0.54
|
As at July 31, 2017 (mark to market)
|
300%
|
1.07%
|
0%
|
0.29
|
|
|
|
|
|
February 24, 2017 convertible debenture
|
|
|
|
|
As at April 30, 2017 (mark to market)
|
389%
|
0.99%
|
0%
|
0.58
|
As at July 31, 2017 (mark to market)
|
286%
|
1.07%
|
0%
|
0.33
|
|
|
|
|
|
April 21, 2017 convertible debenture
|
|
|
|
|
As at April 30, 2017 (mark to market)
|
367%
|
1.07%
|
0%
|
0.73
|
As at June 12, 2017 (date of conversion)
|
351%
|
1.09%
|
0%
|
0.61
|
As at June 20, 2017 (date of conversion)
|
345%
|
1.14%
|
0%
|
0.59
|
As at June 23, 2017 (date of conversion)
|
347%
|
1.10%
|
0%
|
0.58
|
As at June 30, 2017 (date of conversion)
|
354%
|
1.14%
|
0%
|
0.56
|
As at July 7, 2017 (date of conversion)
|
360%
|
1.14%
|
0%
|
0.54
|
As at July 14, 2017 (date of conversion)
|
364%
|
1.12%
|
0%
|
0.52
|
As at July 19, 2017 (date of conversion)
|
329%
|
1.12%
|
0%
|
0.51
|
As at July 26, 2017 (date of conversion)
|
327%
|
1.14%
|
0%
|
0.49
|
As at July 31, 2017 (mark to market)
|
327%
|
1.13%
|
0%
|
0.48
|
12
|
Expected Volatility
|
Risk-free Interest Rate
|
Expected Dividend Yield
|
Expected Life (in years)
|
|
|
|
|
|
April 28, 2017 convertible debenture
|
|
|
|
|
As at April 30, 2017 (mark to market)
|
366%
|
1.07%
|
0%
|
0.75
|
As at May 4, 2017 (date of conversion)
|
379%
|
1.11%
|
0%
|
0.74
|
As at May 8, 2017 (date of conversion)
|
382%
|
1.12%
|
0%
|
0.73
|
As at May 10, 2017 (date of conversion)
|
391%
|
1.13%
|
0%
|
0.72
|
As at May 16, 2017 (date of conversion)
|
388%
|
1.04%
|
0%
|
0.71
|
As at May 26, 2017 (date of conversion)
|
388%
|
1.08%
|
0%
|
0.68
|
As at May 31, 2017 (date of conversion)
|
394%
|
1.08%
|
0%
|
0.67
|
As at June 8, 2017 (date of conversion)
|
391%
|
1.11%
|
0%
|
0.64
|
As at July 31, 2017 (mark to market)
|
324%
|
1.13%
|
0%
|
0.5
|
|
|
|
|
|
May 9, 2017 convertible debenture
|
|
|
|
|
As at May 9, 2017 (issuance date)
|
385%
|
1.04%
|
0%
|
0.75
|
As at July 31, 2017 (mark to market)
|
321%
|
1.13%
|
0%
|
0.53
|
|
|
|
|
|
June 28, 2017 convertible debenture
|
|
|
|
|
As at June 28, 2017 (issuance date)
|
379%
|
1.12%
|
0%
|
0.75
|
As at July 31, 2017 (mark to market)
|
331%
|
1.13%
|
0%
|
0.66
|
|
|
|
|
|
July 19, 2017 convertible debenture
|
|
|
|
|
As at July 19, 2017 (issuance date)
|
352%
|
1.23%
|
0%
|
1
|
As at July 31, 2017 (mark to market)
|
352%
|
1.23%
|
0%
|
0.97
|
|
|
|
|
|
A summary of the activity of the derivative liability is shown below:
|
$
|
|
|
Balance, April 30, 2017
|
1,082,050
|
Derivative loss due to new issuances
|
151,631
|
Debt discount
|
127,033
|
Adjustment for conversion
|
(506,634)
|
Mark to market adjustment at July 31, 2017
|
(285,384)
|
|
|
Balance, July 31, 2017
|
568,696
|
7.
Common Shares
During the three months ended July 31, 2017, the Company issued an aggregate of 377,960,644 common shares with a fair value of $646,420 upon the conversion of $117,134 of convertible debentures and $22,651 of accrued interest, as noted in Note 5.
13
8.
Preferred Shares
Authorized: 10,000,000 preferred shares with a par value of $0.001 per share
Convertible Preferred Series A stock
On April 18, 2017, the Company designated 500,000 shares of preferred stock as Series A. The holders of Series A preferred shares are entitled to receive dividends equal to the amount of the dividend or distribution per share of common stock payable multiplied by the number of shares of common stock the shares of Series A preferred shares held by such holder are convertible into. Each Series A preferred shares is convertible into one common share. Each holder of Series A preferred shares is entitled to cast 10,000 votes for every one Series A preferred share held.
9.
Subscriptions Receivable
As at July 31, 2017, 900,000 (April 30, 2017 – 900,000) common shares with a fair value of $13,410 (April 30, 2017 - $13,410) has been issued in excess of the original consulting agreements in error. The agreements are discussed in Note 10. Due to the fact that the shares were issued in error and that the Company intends on cancelling these shares, the amount receivable has been recorded in subscription receivable. Refer to Note 10.
10.
Commitments
On August 26, 2016, the Company entered in consulting agreements with five consultants. Pursuant to the agreements, each consultant is to be compensated by the following:
i)
10% commission on all net revenues derived by the Company through the consultant in the first year;
ii)
5% commission on all net revenues derived by the Company through the consultant in years two and three;
iii)
180,000 common shares payable on the date of the agreement (see Note 9);
iv)
180,000 common shares payable on February 26, 2016 (see Note 9);
v)
180,000 common shares payable on August 26, 2017 (see Note 9); and
vi)
180,000 common shares payable on February 26, 2018 (see Note 9).
Either party may terminate the agreement by providing written thirty days’ notice.
As at July 31, 2017, no commission has been earned, paid, or accrued.
11.
Subsequent Events
(a)
On September 7, 2017, the Company issued 32,500,000 common shares for the conversion of $6,337 of convertible debenture and $163 of accrued interest, as noted in Note 5(f).
(b)
On September 12, 2017, the Company issued 5,513,100 common shares for the conversion of $1,101 of convertible debenture and $2 of accrued interest, as noted in Note 5(f).
14
(c)
On September 13, 2017, the Company issued 28,800,000 common shares for the conversion of $4,385 of convertible debenture and $1,951 of accrued interest, as noted in Note 5(b).
(d)
On September 20, 2017, the Company issued 28,800,000 common shares for the conversion of $14,174 of convertible debenture and $82 of accrued interest, as noted in Note 5(b).
(e)
On September 22, 2017, the Company issued 35,800,000 common shares for the conversion of $13,767 of convertible debenture and $16 of accrued interest, as noted in Note 5(f).
12. Revision of Prior Year Financial Statements
While preparing the financial statements for period ending July 31, 2017, the Company noted that there was an error with the calculation of the conversion price of the February 13, 2017 convertible debenture as described in Note 5(d) and accordingly, has revised its consolidated financial statements as at April 30, 2017 and for the year then ended to reflect the change in fair value of derivative liability during the period and the fair value of the derivative liability as at April 30, 2017. This revision resulted in a decrease to net loss of $169,730 and no change to net loss per share.
In accordance with the guidance provided by the SEC’s Staff Accounting Bulletin 99,
Materiality
and Staff Accounting Bulletin No. 108,
Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements
the Company has determined that the impact of adjustments relating to the correction of this accounting error are not material to previously issued annual audited consolidated financial statements. Accordingly, these changes are disclosed herein and will be disclosed prospectively.
The impact of the error as at April 30, 2017 and for the year then ended is summarized below:
Consolidated Balance Sheet
|
As at April 30, 2017
|
|
As previously reported
|
Adjustment
|
As revised
|
|
$
|
$
|
$
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
Derivative liability
|
1,251,750
|
(169,700)
|
1,082,050
|
|
|
|
|
Total Current Liabilities
|
1,776,376
|
(169,700)
|
1,606,676
|
|
|
|
|
Total Liabilities
|
1,776,376
|
(169,700)
|
1,606,676
|
|
|
|
|
Stockholders’ Equity
|
|
|
|
|
|
|
|
Deficit
|
(4,083,949)
|
169,700
|
(3,914,249)
|
|
|
|
|
Total Stockholders’ Equity
|
(1,718,985)
|
169,700
|
(1,549,285)
|
15
Consolidated Statement of Operations and Comprehensive Loss
|
Year ended April 30, 2017
|
|
As previously reported
|
Adjustment
|
As revised
|
|
|
|
|
|
$
|
$
|
$
|
|
|
|
|
Other Income (Expenses)
|
|
|
|
|
|
|
|
Loss on change in fair value of derivative liability
|
(1,549,642)
|
169,700
|
(1,379,942)
|
|
|
|
|
Total Other Income (Expenses)
|
(1,836,332)
|
169,700
|
(1,666,632)
|
|
|
|
|
Net loss for the year
|
(2,292,458)
|
169,700
|
(2,122,758)
|
|
|
|
|
Net loss attributable to common shareholders
|
(2,243,672)
|
169,700
|
(2,073,972)
|
Consolidated Statement of Stockholders’ Equity
|
Year ended April 30, 2017
|
|
As previously reported
|
Adjustment
|
As revised
|
|
$
|
$
|
$
|
|
|
|
|
Deficit
|
(4,083,949)
|
169,700
|
(3,914,249)
|
|
|
|
|
Stockholders’ Equity
|
(1,718,985)
|
169,700
|
(1,549,285)
|
Consolidated Statement of Cash Flows
|
Year ended April 30, 2017
|
|
As previously reported
|
Adjustment
|
As revised
|
|
$
|
$
|
$
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
Net loss for the year
|
(2,292,458)
|
169,700
|
(2,122,758)
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
Loss on change in fair value of derivative liability
|
(1,549,642)
|
169,700
|
(1,379,942)
|
16