Major League Football, Inc. (the “Company,” “we,” “us” or “our”) plans to establish, develop, and operate Major League Football (“MLFB”) as a professional Spring/Summer football League with 4 initial Franchises located in cities overlooked in large part by existing professional sports leagues and provide fans with high quality players and competition in the NFL’s off-season. Our plan is that the initial teams will be located in Ohio, Virginia, Arkansas, and Texas. Our spring playing schedule avoids all competition with the NFL and colleges. Our search committee has located multiple cities with both a passion for sports and football as well as stadium venues whose size will provide our fans an excellent viewing experience at a reasonable rental expense to MLFB. All potential venues are equipped for high quality multi-platform media transmission allowing us the broadcast all our games in multi-levels of today’s technology. We have commenced the process of leasing these venues and have acquired all the necessary football and related equipment to fully outfit at least eight teams, including some of the latest technology for use by our coaches and players.
MLFB plans to serve as a pipeline to develop players, coaches, officials, scouts, trainers, and all other areas of the game that the NFL needs today. We will also give NFL representatives the opportunity to view our team practices, game footage, practice tapes and confer with league coaches, team officials and staff. We believe this will provide our league with recognition and demonstrate our economic model and the market’s desire for spring football.
The accompanying unaudited financial statements have been prepared assuming the Company will continue as a going concern. As reflected in the unaudited financial statements, the Company had no revenues and had a net loss of $1,225,628 for the nine months ended January 31, 2022. Additionally, the Company had net cash used in operating activities of $318,920 for the nine months ended January 31, 2022. At January 31, 2022, the Company has a working capital deficit of $4,718,376, an accumulated deficit of $30,218,410 and a stockholders’ deficit of $4,647,046, which could have a material impact on the Company’s financial condition and operations.
In March 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. Subsequently, the COVID-19 pandemic has continued to spread and various state and local governments have issued or extended “shelter-in-place” orders, which have impacted and restricted various aspects of the Company’s operations. The spread of the pandemic has caused severe disruptions in the global economy and financial markets and could potentially create widespread business continuity issues of an unknown magnitude and duration.
MLFB is in the process of hiring several well-known and experienced coaches, scouts, and trainers as well as individuals looking to improve their skills in these areas. We believe this will provide MLFB with the recognition and credibility to demonstrate the viability of our economic model as well as the market’s desire for spring football. Management studied in depth the possibility of having a Demonstration Season in the summer of 2021 as a means of introducing MLFB as a league and overcoming some of the difficulties encountered because of COVID-19. While the pandemic has gradually eased and crowd capacities increased, this occurred too late in the process to commence a Demonstration Season. Management and our Board of Directors believe that we focus and allocate resources to our planned 2022 football season, and this will include preparation for a launch with training camp beginning in May of 2022. We believe that the planned spring 2022 football season will allow us to put an economically sustainable league and product on the field and one in which our shareholders can be proud for years.
We require short-term financing as well as financing over the next 12 months and we have been pursuing, and will continue to pursue, short-term financing, with the intention of securing larger, more permanent financing facilities. On January 24, 2022, the Company filed form 1-A Regulation A Offering Statement with the Securities and Exchange Commission (“SEC”) for the sale of 125,000,000 shares of our $0.001 par value common stock at a range of $0.01 to $0.05 per share or a range of $1,250,000 to $6,250,000 of gross proceeds. Effective February 8, 2022, the SEC approved and qualified the Offering Statement. There is no minimum number of shares of common stock that must be sold in the offering. The net proceeds from this offering would be utilized to fund our planned spring 2022 football season including equipment purchases and stadium deposits, general and administrative expenses and provide working capital for the Company. In the event we do not obtain the entire offering amount, we may attempt to obtain additional funds through private offerings of our securities or by borrowing funds. Currently, we do not have any committed sources of financing and we may not be able to achieve these capital-raising objectives. If the required capital is not obtained in the proposed timeframe, the Company’s planned 2022 football season could be delayed or not occur. See Note 8 – Subsequent Events.
In view of these matters, recoverability of any asset amounts shown in the accompanying unaudited financial statements is dependent upon the Company’s ability to achieve a level of profitability. These matters raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of the filing of the Company’s Form 10-Q with the SEC. Since inception, the Company has financed its activities from the sale of equity securities and from loans. The Company intends on financing its future development activities and its working capital needs from the sale of public equity securities and debt securities, until such time that funds provided by operations, if ever, are sufficient to fund working capital requirements.
The accompanying unaudited interim period financial statements of the Company are unaudited pursuant to certain rules and regulations of the SEC and include, in the opinion of management, all adjustments (consisting of normal recurring accruals) necessary for a fair statement of the results of the periods indicated. Such results, however, are not necessarily indicative of results that may be expected for the full year. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2021, as filed with the SEC on July 29, 2021. The interim unaudited operating results for the nine months ended January 31, 2022 are not necessarily indicative of operating results expected for the full fiscal year.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future, actual results could differ from the estimates. Significant estimates in the accompanying unaudited financial statements include the valuation of derivative liabilities, estimates of loss contingencies, valuation of equity-based instruments issued for other than cash and valuation allowance on deferred tax assets.
For purposes of the statement of cash flows, the Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at January 31, 2022 and April 30, 2021.
Certain financial instruments potentially subject the Company to concentrations of credit risk. These financial instruments consist primarily of cash. At January 31, 2022 and April 30, 2021, the Company did not have deposits with a financial institution that exceeded the FDIC deposit insurance coverage and determined that it had no cash equivalents.
The Company has $57,223 of football and office equipment at January 31, 2022 and April 30, 2021, respectively. The football and office equipment are held in storage to be utilized in the planned football league operations in 2022. For financial accounting purposes, depreciation for the football and office equipment will be computed by the straight-line method over an estimated useful life of 3 to 7 years. There was no depreciation expense for the nine months ended January 31, 2022 or 2021, respectively, because the football and office equipment is held in storage and has not been put into use because football operations have not commenced.
We account for the embedded conversion option contained in convertible instruments under the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging – Contracts in an Entity’s Own Stock”. The embedded conversion option contained in the convertible instruments were accounted for as derivative liabilities at the date of issuance and shall be adjusted to fair value through earnings at each reporting date. The fair value of the embedded conversion option derivatives was determined using the Binomial Option Pricing model. On the initial measurement date, the fair value of the embedded conversion option derivative was recorded as a derivative liability and was allocated as debt discount up to the proceeds of the notes with the remainder charged to current period operations as initial derivative expense. Any gains and losses recorded from changes in the fair value of the liability for derivative contract is recorded as a component of other income (expense) in the accompanying unaudited Statements of Operations.
The Company follows ASU 260 regarding changes to the classification of certain equity-linked financial instruments (or embedded features) with down round features and clarifies existing disclosure requirements for equity-classified instruments. For freestanding equity-classified financial instruments, entities that present earnings per share (“EPS”) in accordance with Topic 260, to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features would be subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related guidance in Topic 260.
The Company has entered into convertible promissory notes, some of which contain variable conversion options, whereby the outstanding principal and accrued interest may be converted, by the holder, into common shares at a fixed discount to the price of the common stock at the time of conversion. The Company treats these convertible promissory notes as stock settled debt under ASC 480, “Distinguishing Liabilities from Equity” and measures the fair value of the notes at the time of issuance, which is the result of the share price discount at the time of conversion and records the put premium as accretion to interest expense to the date of first conversion.
ASC 820, Fair Value Measurements and Disclosures requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 applies to assets or liabilities where there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash, football equipment, accounts payable, unsecured convertible notes payable, secured convertible notes payable, notes payable, and notes payable – related party. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, the Company believes that the recorded values of the other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
Assets and liabilities measured at fair value on a recurring basis consist of the following at January 31, 2022 and April 30, 2021:
| | Carrying Value at January 31, | | | Fair Value Measurements at January 31, 2022 | |
| | 2022 | | | Level 1 | | | Level 2 | | | Level 3 | |
| | | | | | | | | | | | |
Conversion option liability | | $ | 422,392 | | | $ | - | | | $ | - | | | $ | 422,392 | |
| | Carrying Value at April 30, | | | Fair Value Measurements at April 30, 2021 | |
| | 2021 | | | Level 1 | | | Level 2 | | | Level 3 | |
| | | | | | | | | | | | |
Conversion option liability | | $ | 208,503 | | | $ | - | | | $ | - | | | $ | 208,503 | |
The following is a summary of activity of Level 3 assets and liabilities for the nine months ended January 31, 2022:
Conversion Option Liability | | | |
Balance – April 30, 2021 | | $ | 208,503 | |
Loss from change in the fair value of conversion option liability | | | 213,889 | |
Balance – January 31, 2022 | | $ | 422,392 | |
Changes in fair value of the conversion option liability are included as a separate Other Income (Expense) item in the accompanying unaudited Statements of Operations.
Leases
The Company follows ASC 842 regarding leases whereby lessees need to recognize leases on their balance sheet as a right of use asset and a corresponding lease liability. We have elected to exclude leases with a lease term of one year or less. Accordingly, we have no leases over one year.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION, GOING CONCERN, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
The Company will recognize revenue in accordance with the five-step method prescribed by ASC 606 “Revenues from Contracts with Customers”.
League Tryout Camps
The Company will recognize league tryout camp revenue on the dates that the tryout camps are held. There were no tryout camps held by the Company during the nine months ended January 31, 2022 or 2021, respectively.
Football League Operations
The Company will recognize revenue from future football league operations including gate, parking and concessions, stadium advertising and merchandising, licensing fees, sponsorships, naming rights, broadcast and cable, franchise fees, social media and on-line digital media including merchandising, advertising, and subscriptions. Since the football operations have not commenced, there was no revenue from football league operations during the nine months ended January 31, 2022 and 2021, respectively.
Income Taxes
Deferred income tax assets and liabilities arise from temporary differences associated with differences between the financial statements and tax basis of assets and liabilities, as measured by the enacted tax rates, which are expected to be in effect when these differences reverse.
Deferred tax assets and liabilities are classified as current or non-current, depending upon the classification of the asset or liabilities to which they relate. Deferred tax assets and liabilities not related to an asset or liability are classified as current or noncurrent depending on the periods in which the temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce the deferred tax assets to the amount expected to be realized.
The Company follows the provisions of FASB ASC 740-10 “Uncertainty in Income Taxes” (ASC 740-10). Certain recognition thresholds must be met before a tax position is recognized in the financial statements. An entity may only recognize or continue to recognize tax positions that meet a “more-likely-than-not” threshold. At January 31, 2022 and April 30, 2021, the Company does not believe it has any uncertain tax positions that would require either recognition or disclosure in the accompanying unaudited financial statements.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION, GOING CONCERN, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Stock Based Compensation
The Company records stock-based compensation in accordance with ASC 718, “Stock Compensation”. ASC 718 requires the fair value of all stock-based employee compensation awarded to employees to be recorded as an expense over the shorter of the service period or the vesting period. The Company values employee and non-employee stock-based compensation at fair value using the Black-Scholes Option Pricing Model.
Net Income (Loss) per Share of Common Stock
The Company computes net earnings (loss) per share per ASC 260-10, “Earnings per Share.” ASC 260-10 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 income (loss) available to common stockholders by the weighted average common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period and we have excluded all dilutive potential common shares because their effect is anti-dilutive.
At January 31, 2022, there were 1,200,000 options and 34,650,000 warrants to purchase shares of the Company’s common stock, 34,464,873 shares of the Company’s common stock reserved for issuance related to convertible unsecured notes payable and 11,581,285 shares of the Company’s common stock reserved for issuance related to convertible secured notes payable which may dilute future earnings per share.
At January 31, 2021, there were 1,200,000 options and 1,500,000 warrants to purchase shares of the Company’s common stock, 104,578,586 shares of the Company’s common stock reserved for issuance related to convertible unsecured notes payable and 36,994,956 shares of the Company’s common stock reserved for issuance related to convertible secured notes payable which may dilute future earnings per share.
Contingencies
Certain conditions may exist as of the date the financial statements are issued which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. Company management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be reasonably estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed. The Company does not include legal costs in its estimates of amounts to accrue.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 1- NATURE OF OPERATIONS, BASIS OF PRESENTATION, GOING CONCERN, AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Related Parties
Parties are considered related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. See Note 6 – Related Parties.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from U.S. GAAP the liability and equity separation model for convertible instruments with a cash conversion feature, and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Among other potential impacts, this change is expected to reduce reported interest expense, increase reported net income, and result in a reclassification of certain conversion feature balance sheet amounts from stockholders’ equity to liabilities as it relates to the Company’s convertible notes.
Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS), which is consistent with the Company’s accounting treatment under the current standard. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020 and can be adopted on either a fully retrospective or modified retrospective basis.
On May 1, 2021, we adopted the ASU using the modified retrospective method which did not have a material impact on the Company’s financial statements.
The Company has evaluated other recent accounting pronouncements and their adoption, and has not had, and is not expected to have, a material impact on the Company’s financial position or results of operations. Other new pronouncements issued but not yet effective until after January 31, 2022 are not expected to have a significant effect on the Company’s financial position or results of operations.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 2 – ACCRUED EXPENSES
The Company has recorded accrued expenses that consisted of the following:
| | January 31, 2022 | | | April 30, 2021 | |
Penalties and interest - unpaid state income tax | | $ | 278,130 | | | $ | 261,087 | |
Unpaid federal income tax | | | 1,764 | | | | 1,764 | |
Legal settlement | | | 70,000 | | | | 70,000 | |
Late charges on unpaid promissory note | | | 7,150 | | | | 5,400 | |
Total Accrued Expenses | | $ | 357,044 | | | $ | 338,251 | |
NOTE 3 – DEBT
| | January 31, 2022 | | | April 30, 2021 | |
Notes Payable: | | | | | | |
Aug 28, 2015. No stated interest and principal payable on demand. (Reclassed from Related Party) | | $ | 2,300 | | | $ | 2,300 | |
Nov.18, 2015. Interest at 8% and principal payable on demand. In Default | | | 100,000 | | | | 100,000 | |
Jun. 6, 2016. Interest at 4% and principal payable on demand. | | | 10,000 | | | | 10,000 | |
Aug. 4, 2016. Interest at 8% and principal payable on demand. In Default | | | 35,000 | | | | 35,000 | |
Sep. 27, 2016. Interest at 4% and principal payable on demand. | | | 30,000 | | | | 30,000 | |
Sep. 29, 2016. Interest at 4% and principal payable on demand. | | | 5,000 | | | | 5,000 | |
Sep. 29, 2016. Interest at 4% and principal payable on demand. | | | 30,000 | | | | 30,000 | |
Oct. 3, 2016. Interest at 4% and principal payable on demand. | | | 20,000 | | | | 20,000 | |
Sep. 25, 2019. Interest at 8% and principal and interest due Mar. 25, 2020 In Default with interest recorded at 22% default rate | | | 70,000 | | | | 70,000 | |
Apr. 9, 2020.Interest at 8% and principal due Oct. 9, 2020 In Default with interest recorded at 24% default rate | | | 30,000 | | | | 30,000 | |
Jul. 31, 2021. Interest at 10% and principal and interest due Jul. 31, 2022 | | | 55,000 | | | | - | |
Total Notes Payable | | $ | 387,300 | | | $ | 332,300 | |
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (Continued)
At January 31, 2022 and April 30, 2021, the Company has recorded $387,300 and $332,300 of Notes Payable, respectively. The $387,300 of Notes Payable at January 31, 2022 includes $232,300 from eight third parties and the principal and interest are payable on demand with an interest rate ranging from 4% to 8% annually. Included in the $232,300 balance are the following in default at October 31, 2021 (1) a $100,000 Note Payable dated November 18, 2015, for which the lender requested payment, and the Company recorded a $5,400 late fee that is included in accrued expenses in the accompanying Balance Sheets at January 31, 2022 and April 30, 2021, (2) a $35,000 Note Payable dated August 4, 2016, for which the lender requested payment effective May 1, 2021, and the Company has recorded a $1,750 late fee that is included in other income (expense) in the accompanying Statement of Operations for the nine months ended January 31, 2022 and is included as accrued expenses in the accompanying unaudited Balance Sheet at January 31, 2022, (3) a $70,000 Note Payable dated September 25, 2019 and due March 25, 2020 that the Company is recording default interest at a rate of 22% and (4) a $30,000 Note Payable dated April 9, 2020 and due October 9, 2020 that the Company is recording default interest at a rate of 22%.
On September 25, 2019, the Company received $55,284 of net proceeds from the issuance of a $70,000 face value note payable with debt issue costs paid to or on behalf of the lender of $5,500 and an original issue discount of $9,216. Additionally, the lender directly paid $11,000 to a third party for the purchase for the Company of office equipment that is recorded as property and equipment at January 31, 2022 and April 30, 2021. The terms include interest accrued at 8% annually and the principal and accrued interest were payable on March 25, 2020. The principal and accrued interest were not paid on the due date of March 25, 2020 and as a result, the note payable is in default and default interest at 22% is being utilized as of the due date. At January 31, 2022, the Company had not received an extension of the due date. See Note 7 – Commitments and Contingencies.
On April 9, 2020, the Company received $30,000 of proceeds from the issuance of a note payable with terms including interest accrued at 8% annually and the principal and interest were payable in six months on October 9, 2020. The principal and accrued interest were not paid on the due date of October 9, 2020 and as a result, the note payable is in default and default interest at 24% is being utilized as of the due date. At January 31, 2022, the Company had not received an extension of the due date. See Note 7 – Commitments and Contingencies.
On July 31, 2021, the Company recorded a $55,000 note payable with terms that include interest accrued at 10% annually and the principal and accrued interest are payable on July 31, 2022. The lender loaned the Company’s former CEO money which was then loaned to the Company for general corporate expenses in prior years. Certain of these amounts due to the former CEO were settled in a prior year and recorded as a settlement gain. The lender has since requested repayment of the $55,000 by the Company in the period ended July 31, 2021. In an effort to settle the matter, the Company issued the lender a $55,000 note. The Company recorded the note payable to settlement expense in the accompanying unaudited Statement of Operations for the nine months ended January 31, 2022.
For the nine months ended January 31, 2022 and 2021, the Company recorded $30,900 and $25,997 of interest expense for Notes Payable in the accompanying unaudited Statement of Operations and at January 31, 2022 and April 30, 2021, the Company has recorded $131,717 and $100,817, respectively related to Notes Payable as accrued interest in the accompanying Balance Sheets.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (Continued)
| | January 31, 2022 | | | April 30, 2021 | |
Notes Payable, Related Party: | | | | | | |
Mar. 5, 2020. Interest at 10% and principal due March 31, 2022 | | $ | 25,000 | | | $ | 25,000 | |
Aug. 12, 2020. Interest at 10% and principal due March 31, 2022 | | | 30,000 | | | | 30,000 | |
Total Notes Payable – Related Party | | $ | 55,000 | | | $ | 55,000 | |
On March 5, 2020, the Company received $25,000 of proceeds from the issuance of a note payable with a director of the Company. The terms including interest accrued at 10% annually and the principal and interest are payable on March 31, 2022, by virtue of an extension. See Note 6 – Related Parties.
On August 12, 2020, the Company received $30,000 of proceeds from the issuance of a note payable with a director of the Company. The terms including interest accrued at 10% annually and the principal and interest are payable on March 31, 2022, by virtue of an extension. See Note 6 – Related Parties.
For the nine months ended January 31, 2022 and 2021, the Company recorded $4,158 and $3,304 of interest expense in the accompanying unaudited Statement of Operations and at January 31, 2022 and April 30, 2021, the Company has recorded $9,187 and $5,029, of accrued interest, related party in the accompanying unaudited Balance Sheets.
| | January 31, 2022 | | | April 30, 2021 | |
Convertible Unsecured Promissory Notes: | | | | | | |
April 14, 2016 - Interest at 5% - principal and interest due 12 months from issuance date. In Default | | $ | 50,000 | | | $ | 50,000 | |
| | | | | | | | |
May 2, 2019 - Interest at 10% - principal and interest due August 2, 2020. | | | 6,000 | | | | 12,170 | |
| | | | | | | | |
May 8, 2019 - Interest at 12% - principal and interest due February 8, 2020. In Default with interest recorded at default rate of 24% | | | 138,483 | | | | 138,483 | |
| | | | | | | | |
February 3, 2021, Interest at 10% - principal and interest due February 3, 2022 | | | - | | | | 55,000 | |
| | | | | | | | |
March 17, 2021, Interest at 10% - principal and interest due March 17, 2022 | | | - | | | | 41,000 | |
| | | | | | | | |
January 4, 2022, Interest at 8% - principal and interest due January 4, 2023 | | | 55,000 | | | | - | |
| | | | | | | | |
Plus: put premium | | | 29,615 | | | | 60,642 | |
| | | | | | | | |
Less: debt discount | | | (2,778 | ) | | | (6,000 | ) |
| | | | | | | | |
Total Convertible Unsecured Notes Payable, net of debt discount and put premium | | $ | 280,880 | | | $ | 351,595 | |
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (Continued)
In April 2016, the Company recorded a $50,000 convertible unsecured promissory note. The terms include interest at 5% annually and the principal and interest were payable in one year on April 14, 2017. The unsecured convertible promissory note is in default at January 31, 2022 and the note holder has several remedies including calling the principal amount and accrued interest due and payable immediately. The note holder, at its sole discretion, has the right to convert the principal amount, along with all accrued interest, into shares of the Company’s common stock at the conversion price of $0.30 per share, or 215,043 shares of common stock at January 31, 2022.
Interest expense recorded in the accompanying unaudited Statements of Operations by the Company for the nine months ended January 31, 2022 and 2021 was $1,890, respectively. At January 31, 2022 and April 30, 2021, the Company has recorded $14,513 and $12,263 of accrued interest, respectively in the accompanying Balance Sheets.
Convertible Unsecured Promissory Note – May 2, 2019
On May 2, 2019 (the Original Issue Date (OID), the Company received $85,450 of net proceeds for working capital purposes from the issuance of a $100,000 face value convertible redeemable promissory note (First Note”) with debt issue costs paid to or on behalf of the lender of $12,400 and an original issue discount of $2,150. The terms include interest accrued at 10% annually and the principal and interest payable are payable in one year on May 2, 2020. All interest will be paid in common stock of the Company. Any amount of the principal or interest on this First Note which is not paid when due shall bear Interest at the rate of the lower of Twenty-four Percent (24%) per annum, or the highest rate permitted by law, from the due date thereof until the same is paid. The First Note is exchangeable for an equal principal amount of notes of different denominations, as requested by the lender surrounding the same. The First Note was due and payable on August 2, 2020, by virtue of a signed extension. At October 31, 2021, the First Note is in default. However, the lender has not notified the Company of the default in writing but, the lender has several remedies including calling the principal amount and accrued interest due and payable immediately. The promissory note includes customary affirmative and negative covenants of the Company.
The lender has the right at any time after the effective date, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of common stock of the Company, subject to certain conversion limitations set forth in the promissory note and certain price protection described below, as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. The Conversion Price is equal to Sixty Percent (60%) of the of the average of the two lowest trades of the Common Stock during the fifteen (15) trading Days immediately preceding a conversion date (“Conversion Price”). The Conversion Price is subject to “full ratchet” and other customary anti-dilution protections.
The Company evaluated the First Note in accordance with ASC 480 “Distinguishing Liabilities From Equity” because the First Note (1) embodies an unconditional obligation, (2) requires the Company to settle the unconditional obligation by issuing a variable number of its common shares, and (3) is based solely on a fixed monetary amount known at inception as the lender will receive $166,667 ($100,000 principal divided by the Conversion Price). In accordance with ASC 480, the First Note was classified as stock settled debt and on the note issue date of May 2, 2019, the Company recorded a $66,667 put premium liability with an offset to interest expense.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (Continued)
Through October 31, 2021, the lender had previously converted $87,830 of the principal balance of the First Note resulting in a balance of $12,170. As a result of the partial conversions, the Company previously reclassified $57,417 of the put premium liability as an offset to Additional Paid in Capital and the put premium liability balance was $9,250 at October 31, 2021 and April 30, 2021. On January 13, 2022, the lender elected to convert $6,170 of principal and $2,648 of accrued interest into 1,348,348 shares of the Company’s $0.001 par value common stock. As a result, the principal balance of the First Note is $6,000 at January 31, 2022. As a result of the conversion, the Company reclassified $4,690 of the put premium liability as an offset to additional paid in capital and the put premium balance is $4,560 at January 31, 2022.
On January 25, 2021, the lender requested a $6,000 conversion of the principal and $1,183 of accrued interest into 4,057,954 shares of the Company’s common stock. However, at that time, the Company did not have sufficient shares to be issued for the conversion. In accordance with the First Note, because the shares could not be issued, an event of default occurred, and the Company would pay the lender a penalty of $250 per day the shares are not issued beginning on the 4th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day. The Company calculated a potential penalty of $181,250 and $43,250 at January 31, 2022 and April 30, 2021, respectively. However, the lender provided a waiver, and no penalty was recorded by the Company. The Company has been in discussion with the lender and as a result of the lender converting $6,170 of principal on January 13, 2022 as described above, the lender has the ability to request a conversion of the $6,000 remaining principal but has not requested the conversion. However, the lender has several available remedies including calling the principal amount and accrued interest due and payable immediately.
Interest expense recorded in the accompanying unaudited Statements of Operations by the Company for the nine months ended January 31, 2022 and 2021 was $890 and $1,412, respectively. At January 31, 2022 and April 30, 2021, the Company has recorded $1,032 (net of $2,648 converted) and $2,790 of accrued interest, respectively in the accompanying Balance Sheets.
Convertible Unsecured Promissory Note – May 8, 2019
On May 8, 2019, the Company signed a Securities Purchase Agreement (“SPA”) with an Investor that provides for the issuance of a 12% convertible promissory note in the principal amount of $150,000. In connection with the issuance of the promissory note, the Company issued a common stock purchase warrant to purchase 1,500,000 shares of the Company common stock as a commitment fee to the Investor. The warrant has an exercise price of $0.07 per share and a term of three years through May 8, 2022. See note 8 – Subsequent Events.
On May 8, 2019, the Company received $121,750 of net proceeds for working capital purposes from the issuance of a $150,000 face value convertible promissory note with debt issue costs paid to or on behalf of the lender of $28,250. The terms include interest accrued at 12% annually and the principal and any amount of the principal or interest on the promissory note which is not paid when due shall bear interest at the rate of the lower of twenty-four percent (24%) per annum, or the highest rate permitted by law, from the due date thereof until the same is paid. The promissory note was due and payable on February 8, 2020 and is currently in default.
The lender has the right at any time after the effective date, to convert all or part of the outstanding principal, accrued interest and $750 of conversion fees into shares of common stock of the Company, subject to certain conversion limitations set forth in the promissory note and certain price protection described below, as per the conversion formula:
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (CONTINUED)
Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. The Conversion Price is equal to the lower of (1) the lowest trade during the previous twenty-five (25) trading days or (2) Sixty-One Percent (61%) of the of the lowest trade during the twenty-five (25) trading days immediately preceding a conversion date. The Conversion Price is subject to “full ratchet” and other customary anti-dilution protections. The promissory note contains customary affirmative and negative covenants of the Company. Additionally, the Company issued the lender a common stock purchase warrant with a three (3) year term to acquire 1,500,000 shares of common stock at an exercise price of $0.10 per share.
The Company evaluated the promissory note in accordance with ASC 815 “Derivatives and Hedging” and determined that there was a conversion option feature that should be bifurcated and accounted for as a conversion option liability in the balance sheet at fair value. The initial valuation and recording of the conversion option liability was $446,862, using the Binomial Lattice Option Pricing Model with the following assumptions: stock price $0.02, conversion price $0.0067, expected term of 9 months, expected volatility of 383% and discount rate of 2.38%. The initial $446,862 conversion option liability assumed that 22,354,694 shares would be issued upon conversion of the promissory note.
The Company evaluated the warrant and determined that there was no embedded conversion feature as the warrant contained a set exercise price with an adjustment only based upon customary items including stock dividends and splits, subsequent rights offerings, and pro-rata distributions. The Company calculated the relative fair value between the note and the warrant on the issue date utilizing the Black Scholes Pricing Model for the warrant. As a result, the Company allocated $24,960 to the warrant and recorded as debt discount with an offset to additional paid in capital. The warrant calculation used the following assumptions: stock price $0.02, warrant exercise price $0.10, expected term of 3 years, expected volatility of 383% and discount rate of 2.38%.
As a result of the Company not paying the promissory note and accrued interest on the due date of February 8, 2020, the promissory note is in default at January 31, 2022 and April 30, 2021 with interest accrued at the default rate of 24%. However, the lender has not notified the Company of the default in writing but, the lender has several remedies including calling the principal amount and accrued interest due and payable immediately.
Through January 31, 2022, the lender had previously converted $11,517 of the principal balance of the promissory note resulting in a balance of $138,483.
The Company has performed a periodic revaluation of the conversion option liability using the Binomial Lattice Pricing Model at each of the previous conversion dates and at April 30, 2021, that resulted in an estimated conversion option liability of $208,503.
The Company performed a revaluation of the conversion option liability using the Binomial Lattice Pricing Model at January 31, 2022, that resulted in an estimated conversion option liability of $422,392. The Company has recorded a total loss of $213,889 for the change in the fair value of conversion option liability, recorded to other income (expense) in the accompanying unaudited Statement of Operations for the nine months ended January 31, 2022.
For the revaluation at January 31, 2022, it was estimated with the following assumptions: stock price $0.0231, conversion price $0.0065, expected term of 0.25 years, expected volatility of 187% and discount rate of 0.24%.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (CONTINUED)
Interest expense recorded in the accompanying unaudited Statement of Operations by the Company for the nine months ended January 31, 2022 and 2021 was $25,481 and $25,759, respectively. At January 31, 2022 and April 30, 2021, the Company has recorded $54,257 and $28,776 of accrued interest, respectively in the accompanying unaudited Balance Sheets.
Convertible Unsecured Promissory Note – February 3, 2021
On February 3, 2021, the Company signed an SPA with an investor that provides for the issuance of a 10% convertible promissory note in the aggregate principal amount of $55,000, convertible into shares of common stock of the Company. The Company received $52,000 of net proceeds for working capital purposes from the issuance of the convertible promissory note with debt issue costs paid to or on behalf of the lender of $3,000. Any amount of the principal or interest which is not paid when due shall bear Interest at the rate of the lower of twenty-two percent (22%) per annum, or the highest rate permitted by law, from the due date thereof until the same is paid. The promissory note is due in one year from the date of issuance or February 3, 2022.
The lender from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this convertible promissory note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, has the right, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of common stock of the Company, subject to certain conversion limitations set forth in the convertible promissory note and certain price protection described below, as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. The Conversion Price is equal to Sixty Five Percent (65%) of the of the average of the three lowest trades of the Common Stock during the ten (10) trading Days immediately preceding a conversion date (“Conversion Price”). The Conversion Price is subject to “full ratchet” and other customary anti-dilution protections.
The Company evaluated the First Note in accordance with ASC 480 “Distinguishing Liabilities From Equity” because the convertible promissory note (1) embodies an unconditional obligation, (2) requires the Company to settle the unconditional obligation by issuing a variable number of its common shares, and (3) is based solely on a fixed monetary amount known at inception as the lender will receive $84,615. In accordance with ASC 480, the convertible promissory note was recorded as stock settled debt on the note issue date of January 21, 2020, and the Company recorded a $29,615 put premium liability with an offset to interest expense.
On February 3, 2021, the Company recorded debt issue costs of $3,000 as an offset to the promissory note to be amortized over the 1-year term and the debt discount balance was $3,000 at April 30, 2021.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (CONTINUED)
From August 4, 2021, through August 10, 2021, the lender elected to convert the entire $55,000 of principal and $2,750 of accrued interest into 11,105,164 shares of the Company’s $0.001 par value common stock. See Note 4 – Stock. As a result of the conversion of the entire principal balance, the remaining debt discount balance of $1,537 was amortized to interest expense in the accompanying Statement of Operations for the nine months ended January 31, 2022. Additionally, the put premium liability of $29,615 was reclassified as an offset to additional paid in capital in the unaudited balance sheet effective August 10, 2021, the date of the final conversion.
Interest expense recorded in the accompanying unaudited Statements of Operations by the Company for the nine months ended January 31, 2022, was $1,454.
Convertible Unsecured Promissory Note – March 17, 2021
On March 17, 2021, the Company signed an SPA with an investor that provides for the issuance of a 10% convertible promissory note in the aggregate principal amount of $41,000, convertible into shares of common stock of the Company. The Company received $38,000 of net proceeds for working capital purposes from the issuance of the convertible promissory note with debt issue costs paid to or on behalf of the lender of $3,000. Any amount of the principal or interest which is not paid when due shall bear Interest at the rate of the lower of twenty-two percent (22%) per annum, or the highest rate permitted by law, from the due date thereof until the same is paid. The convertible promissory note is due in one (1) year from the date of issuance or March 17, 2022.
The lender from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this convertible promissory note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, has the right, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of common stock of the Company, subject to certain conversion limitations set forth in the convertible promissory note and certain price protection described below, as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. The Conversion Price is equal to Sixty Five Percent (65%) of the of the average of the three lowest trades of the Common Stock during the ten (10) trading Days immediately preceding a conversion date (“Conversion Price”). The Conversion Price is subject to “full ratchet” and other customary anti-dilution protections.
The Company evaluated the First Note in accordance with ASC 480 “Distinguishing Liabilities From Equity” because the convertible promissory note (1) embodies an unconditional obligation, (2) requires the Company to settle the unconditional obligation by issuing a variable number of its common shares, and (3) is based solely on a fixed monetary amount known at inception as the lender will receive $63,077. In accordance with ASC 480, the convertible promissory note was recorded as stock settled debt on the note issue date of March 17, 2021, and the Company recorded a $22,077 put premium liability with an offset to interest expense.
On March 17, 2021, the Company recorded debt issue costs of $3,000 as an offset to the promissory note to be amortized over the 1-year term and the debt discount balance was $3,000 at April 30, 2021. During the three months ended July 31, 2021, the Company recorded $1,118 for the amortization of the debt discounts to interest expense and the debt discount balance was $1,882 at July 31, 2021.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (CONTINUED)
From September 17, 2021, through September 27, 2021, the lender elected to convert the entire $41,000 of principal and $2,050 of accrued interest into 4,659,872 shares of the Company’s $0.001 par value common stock. See Note 4 – Stock. As a result of the conversion of the entire principal balance, the remaining debt discount balance of $1,882 was amortized to interest expense in the accompanying Statement of Operations for the nine months ended January 31, 2022. Additionally, the put premium liability of $22,077 was reclassified as an offset to additional paid in capital in the unaudited balance sheet effective September 27, 2021, with the final conversion.
Interest expense recorded in the accompanying unaudited Statements of Operations by the Company for the nine months ended January 31, 2022, was $1,549.
Convertible Unsecured Promissory Note – May 3, 2021
On May 3, 2021, the Company signed an SPA with an investor that provides for the issuance of a 10% convertible promissory note in the aggregate principal amount of $48,000, convertible into shares of common stock of the Company. The Company received $45,000 of net proceeds for working capital purposes from the issuance of the convertible promissory note with debt issue costs paid to or on behalf of the lender of $3,000. Any amount of the principal or interest which is not paid when due shall bear Interest at the rate of the lower of twenty-two percent (22%) per annum, or the highest rate permitted by law, from the due date thereof until the same is paid. The convertible promissory note is due in one (1) year from the date of issuance or May 3, 2022.
The lender from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this convertible promissory note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, has the right, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of common stock of the Company, subject to certain conversion limitations set forth in the convertible promissory note and certain price protection described below, as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. The Conversion Price is equal to Sixty Percent (60%) of the of the average of the two lowest trades of the Common Stock during the fifteen (15) trading Days immediately preceding a conversion date (“Conversion Price”). The Conversion Price is subject to “full ratchet” and other customary anti-dilution protections.
The Company evaluated the promissory note in accordance with ASC 480 “Distinguishing Liabilities From Equity” because the convertible promissory note (1) embodies an unconditional obligation, (2) requires the Company to settle the unconditional obligation by issuing a variable number of its common shares, and (3) is based solely on a fixed monetary amount known at inception as the lender will receive $80,000. In accordance with ASC 480, the convertible promissory note was recorded as stock settled debt on the note issue date of May 3, 2021, recorded as a 32,000 put premium liability with an offset to interest expense.
On May 3, 2021, the Company recorded debt issue costs of $3,000 as an offset to the promissory note to be amortized over the 1-year term. During the six months ended October 31, 2021, the Company recorded $1,487 for the amortization of the debt discounts to interest expense and the debt discount balance was $1,513 at October 31, 2021.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (CONTINUED)
On November 4, 2021, the lender elected to convert the entire $48,000 of principal and $2,400 of accrued interest into 7,098,592 shares of the Company’s $0.001 par value common stock. See Note 4 – Stock. As a result of the conversion of the entire principal balance, the remaining debt discount balance of $1,513 was amortized to interest expense in the accompanying Statement of Operations for the nine months ended January 31, 2022. Additionally, the put premium liability of $32,000 was reclassified as an offset to additional paid in capital in the unaudited balance sheet effective November 4, 2021, with the conversion.
Interest expense recorded in the accompanying unaudited Statements of Operations by the Company for the nine months ended January 31, 2022, was $2,400.
Convertible Unsecured Promissory Note – June 7, 2021
On June 7, 2021, the Company signed an SPA with an investor that provides for the issuance of a 10% convertible promissory note in the aggregate principal amount of $53,000, convertible into shares of common stock of the Company. The Company received $50,000 of net proceeds for working capital purposes from the issuance of the convertible promissory note with debt issue costs paid to or on behalf of the lender of $3,000. Any amount of the principal or interest which is not paid when due shall bear Interest at the rate of the lower of twenty-two percent (22%) per annum, or the highest rate permitted by law, from the due date thereof until the same is paid. The convertible promissory note is due in one (1) year from the date of issuance or June 7, 2022.
The lender from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this convertible promissory note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, has the right, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of common stock of the Company, subject to certain conversion limitations set forth in the convertible promissory note and certain price protection described below, as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. The Conversion Price is equal to Sixty Percent (60%) of the of the average of the two lowest trades of the Common Stock during the fifteen (15) trading Days immediately preceding a conversion date (“Conversion Price”). The Conversion Price is subject to “full ratchet” and other customary anti-dilution protections.
The Company evaluated the promissory note in accordance with ASC 480 “Distinguishing Liabilities From Equity” because the convertible promissory note (1) embodies an unconditional obligation, (2) requires the Company to settle the unconditional obligation by issuing a variable number of its common shares, and (3) is based solely on a fixed monetary amount known at inception as the lender will receive $88,333. In accordance with ASC 480, the convertible promissory note was recorded as stock settled debt on the note issue date of June 7, 2021, recorded as a $35,333 put premium liability with an offset to interest expense.
On June 7, 2021, the Company recorded debt issue costs of $3,000 as an offset to the promissory note to be amortized over the 1-year term. During the six months ended October 31, 2021, the Company recorded $1,200 for the amortization of the debt discounts to interest expense and the debt discount balance was $1,800 at October 31, 2021.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (CONTINUED)
On December 9, 2021, the lender elected to convert the entire $53,000 of principal and $2,650 of accrued interest into 9,594,828 shares of the Company’s $0.001 par value common stock. See Note 4 – Stock. As a result of the conversion of the entire principal balance, the remaining debt discount balance of $1,800 was amortized to interest expense in the accompanying Statement of Operations for the nine months ended January 31, 2022. Additionally, the put premium liability of $35,333 was reclassified as an offset to additional paid in capital in the unaudited balance sheet effective December 9, 2021, with the conversion.
Interest expense recorded in the accompanying unaudited Statements of Operations by the Company for the nine months ended January 31, 2022, was $2,650.
Convertible Unsecured Promissory Note – January 4, 2022
On January 4, 2022, the Company signed an SPA with an investor that provides for the issuance of a 8% convertible promissory note in the aggregate principal amount of $55,000, convertible into shares of common stock of the Company. The Company received $52,000 of net proceeds for working capital purposes from the issuance of the convertible promissory note with debt issue costs paid to or on behalf of the lender of $3,000. Any amount of the principal or interest which is not paid when due shall bear Interest at the rate of the lower of twenty-two percent (22%) per annum, or the highest rate permitted by law, from the due date thereof until the same is paid. The convertible promissory note is due in one (1) year from the date of issuance or January 4, 2023.
The lender from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this convertible promissory note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount, has the right, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of common stock of the Company, subject to certain conversion limitations set forth in the convertible promissory note and certain price protection described below, as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. The Conversion Price is equal to Sixty Five Percent (65%) of the of the average of the three lowest trades of the Common Stock during the ten (10) trading Days immediately preceding a conversion date (“Conversion Price”). The Conversion Price is subject to “full ratchet” and other customary anti-dilution protections.
The Company evaluated the promissory note in accordance with ASC 480 “Distinguishing Liabilities From Equity” because the convertible promissory note (1) embodies an unconditional obligation, (2) requires the Company to settle the unconditional obligation by issuing a variable number of its common shares, and (3) is based solely on a fixed monetary amount known at inception as the lender will receive $84,615. In accordance with ASC 480, the convertible promissory note was recorded as stock settled debt on the note issue date of January 4, 2022, recorded as a $29,615 put premium liability with an offset to interest expense.
On January 4, 2022, the Company recorded debt issue costs of $3,000 as an offset to the promissory note to be amortized over the 1-year term. During the nine months ended January 31, 2022, the Company recorded $222 for the amortization of the debt discounts to interest expense and the debt discount balance was $2,778 at January 31, 2022.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (CONTINUED)
Interest expense recorded in the accompanying unaudited Statements of Operations by the Company for the nine months ended January 31, 2022, was $325.
| | January 31, 2022 | | | April 30, 2021 | |
Convertible Secured Note Payable: | | | | | | |
| | | | | | |
May 17, 2018 - Principal and interest at 8% due May 17, 2019. IN DEFAULT with interest recorded at default rate of 18%. | | $ | 16,802 | | | $ | 80,000 | |
| | | | | | | | |
November 24, 2021 – Principal and interest at 12% due November 24, 2022. | | | 315,000 | | | | - | |
| | | | | | | | |
Plus: put premium | | | 11,201 | | | | 53,333 | |
| | | | | | | | |
Less: debt discount | | | (164,515 | ) | | | - | |
| | | | | | | | |
Total Convertible Secured Notes Payable | | $ | 178,488 | | | $ | 133,333 | |
Convertible Secured Note Payable – May 9, 2016
At January 31, 2022, and April 30, 2021, the Company has a remaining balance of $0 from an original $550,000 face value convertible secured promissory note dated March 16, 2016. The Company has recorded $76,367 at January 31, 2022, and April 30, 2021, of accrued interest on the promissory note in the accompanying Balance Sheets.
Convertible Secured Note Payable – May 17, 2018
At January 31, 2022, the Company has recorded $16,802 from the issuance of an original $80,000 convertible secured promissory note dated May 17, 2018, with terms including interest accrued at 10% annually and the principal and interest payable on May 17, 2019. The promissory note balance at April 30, 2021, was $80,000 and is in default at January 31, 2022. However, the lender has not notified the Company of the default in writing but, the lender has several remedies including calling the principal amount and accrued interest due and payable immediately. The promissory note includes customary affirmative and negative covenants of the Company.
On August 5, 2021, the Company repaid $50,000 of principal to the lender and as a result, the principal balance of the promissory note was $30,000.
On August 10, 2021, the lender elected to convert $5,998 of the principal amount of the promissory note into 2,498,971 shares of the Company’s $0.001 par value common stock. As a result, the principal balance of the promissory note was $24,002 at October 31, 2021. See Note 4 – Stock.
On January 28, 2022, the lender elected to convert $7,200 of the principal amount of the promissory note into 1,000,000 shares of the Company’s $0.001 par value common stock. As a result, the principal balance of the promissory note is $16,802 at January 31, 2022. See Note 4 – Stock.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (CONTINUED)
The Company evaluated the promissory note in accordance with ASC 480 “Distinguishing Liabilities From Equity” because the promissory note (1) embodies an unconditional obligation and (2) requires the Company to settle the unconditional obligation by issuing a variable number of its common shares, and (3) is based on a monetary amount known as the lender will receive $133,333 ($80,000 principal divided by the Conversion Price). In accordance with ASC 480, the promissory note has been classified as stock settled debt and the Company recorded a $53,333 put premium liability. Effective May 17, 2019, the Company is accruing interest at the default rate of eighteen percent (18%) per annum from the due date thereof until paid.
As a result of the payment and the two conversions described above, the Company reclassified $42,132 of the put premium liability to additional paid in capital and as a result, the put premium liability balance is $11,201 at January 31, 2022.
During the nine months ended January 31, 2022, and 2021, the Company recorded $5,950 and $10,889 of interest expense in the accompanying unaudited Statements of Operations and at January 31, 2022 and April 30, 2021, $44,069 and $38,119 of accrued interest was recorded in the accompanying Balance Sheets.
Convertible Secured Note Payable – initial tranche August 3, 2021, second tranche September 15, 2021, and third tranche November 5, 2021.
On August 3, 2021, the Company signed an SPA and a Senior Secured Convertible Note (the “Note”) in the aggregate principal amount of up to $750,000 with an original issue discount of 10% OID. There was an initial tranche of $130,000 on the date of the Note, a second tranche of $27,500 on September 15, 2021, and a third tranche of $27,500 on November 5, 2021. The $185,000 total of the three tranches are convertible into shares of the Company’s $0.001 par value common stock.
Interest on the Note will be incurred at the rate of 12% per annum guaranteed and has a maturity date one year from the date of each tranche funded under the Note. In the event of an event of default, interest will be at the rate of twenty percent (20%) per annum, or the highest rate permitted by law, from the due date thereof until the same is paid.
The conversion price is a fixed $0.002 per share and conversion is not permitted for a minimum of six (6) months from the closing of each financing draw and pursuant to each draw, the Company will ensure that common stock is reserved for issuance on a one-to-one basis. If an Event of Default exists at any time after the Issue Date hereof, but prior to the Conversion Date has existed, the Conversion Price shall be the lesser of (i) $0.001 per share or (ii) seventy percent (70%) of the lowest trading price of the Common Stock during the ten (10) consecutive trading days including and immediately preceding the Conversion Date.
The Company received $150,100 of net proceeds from the issuance of the three tranches of the Note after payment of $18,000 for the OID and $16,900 of debt issuance costs. The Company will have the option to prepay prior to maturity at 105% of the then outstanding Note principal and accrued interest.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (CONTINUED)
The Company evaluated the three tranches in accordance with ASU 2020-06 “Debt—Debt with Conversion and Other Options” and determined that the conversion price is at a fixed rate. Further, due to the adoption of ASU 2020-06, no beneficial conversion feature was recorded. As a result, on the dates of each tranche, the Company recorded $185,000 as the liability with offsets of $18,000 for the OID and $16,900 of debt issue costs, both are being amortized to interest expense over the one-year term of the tranches under the Note.
Effective December 2, 2021, the Company prepaid the three tranches principal of $185,000 from the proceeds of a $315,000 convertible secured promissory note dated November 24, 2021 – see discussion below. In total, the Company paid the lender $217,560 representing (1) $185,000 of principal, (2) $22,200 of guaranteed interest and (3) $10,360 representing a 5% prepayment of the outstanding principal and interest.
As a result of the payment, the Company recorded $34,690 ($18,000 of OID and $16,690 of debt issue costs) for the amortization of the debt discount to interest expense and is recorded in the accompanying unaudited Statement of Operations for the nine months ended January 31, 2022.
Interest expense recorded in the accompanying unaudited Statements of Operations by the Company for the nine months ended January 31, 2022, was $32,560 representing $22,200 of guaranteed interest and $10,360 for the prepayment penalty.
Convertible Secured Note Payable – November 24, 2021.
On November 24, 2021, the Company signed an SPA and a Senior Secured Convertible Note (the “Note”) in the aggregate principal amount of $315,000 with an original issue discount of 10% OID. The Company received $255,820 of net proceeds from the issuance of the Note after payment of $31,500 for the OID and $27,680 of debt issuance costs. The Note is convertible into shares of the Company’s $0.001 par value common stock. The Company will have the option to prepay prior to maturity by paying the outstanding principal, accrued and unpaid interest and a $750 administrative fee.
Interest on the Note will be incurred at the rate of 12% per annum and the Note has a maturity date one year from the date of the Note or November 24, 2022. In the event of an event of default, interest will be at the rate of sixteen percent (16%) per annum, or the highest rate permitted by law, from the due date thereof until the same is paid.
The conversion price is a fixed $0.008 per share and conversion is not permitted for a minimum of six (6) months from the closing date of the Note and the Company will ensure that common stock is reserved for issuance on a 1.5 to 1 basis. If an Event of Default exists at any time after the Issue Date hereof, but prior to the Conversion Date has existed, the Company shall pay to the lender an amount equal to the principal amount then outstanding plus accrued interest (including any default interest) multiplied by 125%.
In relation to the Note, the Company issued the lender two warrants, (1) non-cancellable five (5) year term to acquire 10,000,000 shares of common stock of the Company at an exercise price of $0.035 per share and (2) cancellable five (5) year term to acquire 15,000,000 shares of common stock of the Company at an exercise price of $0.035 per share. The 15,000,000 warrant is cancellable if the Company repays the Note prior to maturity. See Note 8 – Subsequent Events.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 3 – DEBT (CONTINUED)
The Company evaluated the Note in accordance with ASU 2020-06 ASU 2020-06 “Debt—Debt with Conversion and Other Options” and determined that the conversion price is at a fixed rate. Further, due to the adoption of ASU 2020-06, no beneficial conversion feature was recorded. As a result, on the Note date of November 24, 2021, the Company recorded $315,000 as the liability for the Note with offsets of $31,500 for the OID and $27,680 of debt issue costs, both are being amortized to interest expense over the one-year term of the Note.
The Company evaluated the warrants and determined that there was no embedded conversion feature as the warrants contained a set exercise price with an adjustment only based upon customary items including stock dividends and splits, subsequent rights offerings, and pro rate distributions. The Company calculated the relative fair value between the note and the warrants on the issue date utilizing the Black Scholes Pricing Model for the warrants. As a result, the Company allocated $143,001 to the warrants which was recorded as a debt discount with an offset to additional paid in capital in the accompanying unaudited financial statements. The warrant calculation used the following assumptions: stock price $0.0116, warrant exercise price $0.035, expected term of 5 years, expected volatility of 316% and discount rate of 0.06%. The debt discount for the warrant will be amortized over the one-year term of the Note. The warrants have typical anti-dilution protections and as a result of the Company’s recent announcement of its form 1-A Regulation A Offering Statement with the SEC at $0.021 per share, the warrants could trigger an adjustment upward of the number of warrants issued to the lender. See Note 1- Nature of Operations, Basis of Presentation, Going Concern, and Summary of Significant Accounting Policies.
In total, the Company recorded $202,181 of debt discounts on the date of the Note (OID, debt discount cost and warrants). During the nine months ended January 31, 2022, the Company recorded $37,666 for the amortization of the debt discounts to interest expense and the debt discount balance was $164,515 at January 31, 2022.
Interest expense recorded in the accompanying unaudited Statements of Operations by the Company for the nine months ended January 31, 2022, was $7,042. At January 31, 2022, the Company has recorded $7,042 of accrued interest, respectively in the accompanying unaudited Balance Sheet.
NOTE 4 – STOCK
Common Stock:
The Company is authorized to issue up to 950,000,000 shares of common stock at $0.001 par value per share. Effective January 5, 2022, the Company amended its Articles of Incorporation to increase authorized shares from 600,000,000 to 950,000,000. See Note 7 – Commitments and Contingencies for discussion related to authorized securities. At January 31, 2022, there were 472,208,377 shares issued and 470,708,377 shares outstanding. There are 1,500,000 shares issued to former officers that were terminated prior to their vesting period and excluded from the shares issued at January 31, 2022. Per the employment agreements, any unvested shares not yet released to employee shall be returned to Company treasury, and employee shall be entitled to no compensation for such shares. The Company plans to pursue the return of the unvested shares.
Effective June 22, 2021, the Company issued 40,000 shares of common stock that were issuable at April 30, 2021.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 4 – STOCK (Continued)
Common Stock Issued
Effective May 19, 2021, the Company granted 16,800,000 restricted $0.001 par value common shares to 14 key consultants, all of whom had made significant contributions to the Company over an extended period of time. All of the common shares were vested fully on the grant date. Of the 16,800,000 shares, 15,300,000 were issued between June 22, 2021, and July 2, 2021. The remaining 1,500,000 shares were not issued because the consultant had not been onboarded and signed the agreement. The 15,300,000 vested shares of common stock were valued at $0.0125 per share, the quoted market price on the date of grant and the Company recorded $191,250 of stock compensation expense in the accompanying unaudited Statement of Operations on the grant date of May 19, 2021.
From August 4, 2021, through August 10, 2021, the lender of a $55,000 convertible unsecured promissory note elected to convert the entire principal amount and $2,750 of accrued interest into 11,105,664 shares of the Company’s $0.001 par value common stock. See Note 3 – Debt.
On August 10, 2021, the lender of an original $80,000 convertible secured promissory note elected to convert $5,998 of the principal amount into 2,498,971 shares of the Company’s $0.001 par value common stock. See Note 3 – Debt.
From September 17, 2021, through September 27, 2021, the lender of a $41,000 convertible unsecured promissory note elected to convert the entire principal amount and $2,050 of accrued interest into 4,659,872 shares of the Company’s $0.001 par value common stock. See Note 3 – Debt.
On November 4, 2021, the lender of a $48,000 convertible unsecured promissory note elected to convert the entire principal amount and $2,400 of accrued interest into 7,098,592 shares of the Company’s $0.001 par value common stock. See Note 3 – Debt.
On December 9, 2021, the lender of a $53,000 convertible unsecured promissory note elected to convert the entire principal amount and $2,650 of accrued interest into 9,594,828 shares of the Company’s $0.001 par value common stock. See Note 3 – Debt.
On January 13, 2022, the lender of an original $100,000 convertible unsecured promissory note elected to convert $6,170 of the principal and $2,648 of accrued interest into 1,348,348 shares of the Company’s $0.001 par value common stock. See Note 3 – Debt.
On January 28, 2022, the lender of an original $80,000 convertible secured promissory note elected to convert $7,200 of the principal amount into 1,000,000 shares of the Company’s $0.001 par value common stock. See Note 3 – Debt.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 5 – STOCK BASED COMPENSATION
Stock Options:
The following table summarizes stock option activity of the Company for the nine months ended January 31, 2022:
| | Stock Options Outstanding | |
| | Number of | | | Weighted Average Exercise | | | Weighted Average Remaining Contractual | | | Aggregate Intrinsic | |
| | Options | | | Price | | | Life (Years) | | | Value | |
Outstanding, April 30, 2021 | | | 1,200,000 | | | $ | 0.05 | | | | 4.21 | | | $ | - | |
Outstanding, January 31, 2022 | | | 1,200,000 | | | $ | 0.05 | | | | 2.45 | | | $ | - | |
Exercisable, January 31, 2022 | | | 1,200,000 | | | $ | 0.05 | | | | 2.45 | | | $ | - | |
Stock Warrants:
Effective May 19, 2021, the Company granted 9,150,000 warrants to 14 key consultants, all of whom had made significant contributions to the Company over an extended period of time. All of the warrants to purchase shares, were vested fully on the grant date. The terms of the warrants are an exercise price of $0.07 per share and an expiration date of January 31, 2024. Of the 9,150,000 warrants, 8,150,000 were issued between June 22, 2021, and July 2, 2021. The remaining 1,000,000 warrants were not issued because the consultant had not been onboarded and signed the agreement.
The Company evaluated the issuance of the issued warrants in accordance with ASC 505-50, Equity Based Payments to Non-Employees, using the Black Scholes Pricing Model to determine the fair value. The fair value for the stock warrants was $98,781, which was recorded to stock compensation expense on the grant date of May 19, 2021.
The Company used the following assumptions in estimating fair value:
Stock Price | | $ | 0.0125 | |
Exercise Price | | $ | 0.070 | |
Expected Remaining Term | | 2.68 years | |
Volatility | | | 302 | % |
Annual Rate of Quarterly Dividends | | | 0.00 | % |
Risk Free Interest Rate | | | 0.01 | % |
On November 24, 2021, in relation to a $315,000 Convertible Secured Promissory Note (See Note 3 Debt), the Company issued the lender two warrants, (1) non-cancellable five (5) year term to acquire 10,000,000 shares of common stock of the Company at an exercise price of $0.035 per share and (2) cancellable five (5) year term to acquire 15,000,000 shares of common stock of the Company at an exercise price of $0.035 per share.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 5 – STOCK BASED COMPENSATION (Continued)
The Company evaluated the warrants and determined that there was no embedded conversion feature as the warrants contained a set exercise price with an adjustment only based upon customary items including stock dividends and splits, subsequent rights offerings, and pro rate distributions. The Company calculated the relative fair value between the note and the warrants on the issue date utilizing the Black Scholes Pricing Model for the warrants. As a result, the Company allocated $143,001 to the warrants and was recorded as a debt discount with an offset to additional paid in capital in the accompanying unaudited financial statements.
The Company used the following assumptions in estimating fair value:
Stock Price | | $ | 0.0116 | |
Exercise Price | | $ | 0.035 | |
Expected Remaining Term | | 5 years | |
Volatility | | | 316 | % |
Annual Rate of Quarterly Dividends | | | 0.00 | % |
Risk Free Interest Rate | | | 0.06 | % |
The following table summarizes stock warrant activity of the Company for the nine months ended January 31, 2022:
| | Stock Warrants Outstanding | |
| | Number of | | | Weighted Average Exercise | | | Weighted Average Remaining Contractual | | | Aggregate Intrinsic | |
| | Warrants | | | Price | | | Life (Years) | | | Value | |
| | | | | | | | | | | | |
Outstanding, April 30, 2021 | | | 1,500,000 | | | $ | 0.13 | | | | 0.77 | | | $ | - | |
Issued May 19, 2021 | | | 8,150,000 | | | $ | 0.07 | | | | 2.00 | | | $ | - | |
Issued November 24, 2021 | | | 25,000,000 | | | $ | 0.04 | | | | 4.82 | | | $ | - | |
Outstanding, January 31, 2022 | | | 34,650,000 | | | $ | 0.03 | | | | 3.96 | | | $ | - | |
Exercisable, January 31, 2022 | | | 34,650,000 | | | $ | 0.03 | | | | 3.96 | | | $ | - | |
NOTE 6 – RELATED PARTY TRANSACTIONS
At January 31, 2022, and April 30, 2021, the Company has recorded $207,650 and $177,868, respectively of accounts payable – related parties for Company related expenses. The January 31, 2022, balance of $207,650 is owed to the contract President, CEO, and member of the Board of Directors for payments made on behalf of the Company, which includes $170,000 of expenses related to a consulting agreement with the Company, $36,900 of expenses related to an office in home and $750 of advances made to the Company. Additionally, the balance at January 31, 2022, and April 30, 2021, includes $0 and $4,268, respectively paid by the contract Executive Vice President and a member of the Board of Directors on behalf of the Company.
MAJOR LEAGUE FOOTBALL, INC.
CONDENSED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
January 31, 2022
NOTE 6 – RELATED PARTY TRANSACTIONS (Continued)
On March 5, 2020, and August 12, 2020, a member of the Board of Directors, provided $55,000 of proceeds to the Company through the issuance of two Note Payables, one for $25,000 and another for $30,000. The Note Payable terms include an annual interest rate of 10% and are both payable on March 31, 2022, by virtue of an extension. For the nine months ended January 31, 2022 and 2021, the Company recorded $4,158 and $3,304 of interest expense in the accompanying unaudited Statement of Operations and at January 31, 2022 and April 30, 2021, the Company has recorded $9,187 and $5,029, of accrued interest, related party in the accompanying Balance Sheets.
NOTE 7 – COMMITMENTS AND CONTINGENCIES
Commitments and Contingencies for the Company have not changed from the disclosures in the Form 10-K for the years ended April 30, 2021, and 2020, filed on July 29, 2021, except for the following:
Unpaid Taxes and Penalties
At January 31, 2022, and April 30, 2021, the Company owed the State of Delaware $110,154 for unpaid state income taxes from the tax year ended April 30, 2007. The Company does not owe income taxes for any other year than 2007. The unpaid state income taxes are included as state income taxes payable in accompanying unaudited Balance Sheet at January 31, 2022, and the audited balance sheet at April 30, 2021, respectively. Additionally, the Company owes the State of Delaware for penalties and interest from the tax year ending April 30, 2007, of $278,130 and $261,087, which is included as accrued expenses in the accompanying unaudited Balance Sheet at January 31, 2022 and the audited balance sheet at April 30, 2021, respectively. The Company has an agreement with the State of Delaware to pay a minimum per month. However, due to cash flow constraints, the Company has been unable to pay the minimum monthly amounts and is in default of the agreement that may cause additional interest and penalties and lead to other collection efforts by the State of Delaware.
Federal Tax Returns
The Company has not filed federal tax returns with the Internal Revenue Service (“IRS”) for tax years from 2005 (initial tax year) through 2020 and remain subject to Internal Revenue Service (“IRS”) examination because the Company has not filed tax returns for these years. Because the Company has not had taxable income for the unfiled tax returns, the IRS charges a non-filing penalty of $210 for each return at 60 days after the date due. The Company has calculated that the estimated penalty for the unfiled returns would be approximately $3,585 at January 31, 2022. The Company has not recorded the potential penalty at January 31, 2022.
NOTE 8 – SUBSEQUENT EVENTS
From February 17, 2022 through March 14, 2022, the Company received $252,800 of proceeds from the sale of 12,038,095 shares of stock at $0.021 per share in relation to the Company’s Form 1-A Regulation A Offering Statement with the SEC for the sale of 125,000,000 shares of $0.001 par value common stock. Additionally, the Company received subscription for 9,200,000 shares of stock at $0.21 per share or $193,200. However, the subscription had not been funded as of the date of this filing. The Company is in active discussions with multiple interested investors for the Form 1-A Regulation A Offering. See Note 1 – Nature of Operations, Basis of Presentation, Going Concern, and Summary of Significant Accounting Policies.
The Company issued a warrant to purchase 1,500,000 shares of the Company’s $0.001 par value common stock to a Convertible Unsecured Note Payable lender dated May 8, 2019 – see Note 3 – Debt. The warrant has an exercise price of $0.07 per share which is higher than the Company’s Form 1-A Regulation A Offering Statement price of $0.021 per share. The warrant includes anti-dilution language that could trigger an adjustment of the conversion price to the $0.021 Regulation A Offering Statement price.
The Company issued two warrants to purchase a total of 25,000,000 shares of the Company’s $0.001 common stock to a Convertible Secured Note Payable lender dated November 24, 2021 - see Note 3 – Debt. The warrants have an exercise price of $0.035 per share which is higher than the Company’s Form 1-A Regulation A Offering Statement price of $0.021 per share. The warrants include anti-dilution language that could trigger an adjustment of the conversion price to the $0.021 Regulation A Offering Statement price.