ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
__________
|
|
*
|
The indicated notes were in default as of August 31, 2019. Default interest rate 24%
|
|
|
(1)
|
The note is convertible beginning six months after the date of issuance.
|
|
|
(2)
|
The notes are convertible at a discount (as indicated) to the average market price and are accounted for and evaluated under ASC 480 as discussed in Note 3.
|
|
|
(3)
|
The conversion price is not subject to adjustment from forward or reverse stock splits.
|
During the three months ended November 30, 2019 and 2018, the Company incurred original issue discounts of $1,250 and $16,250, respectively, and derivative discounts of $25,000 and $385,891, respectively, related to new convertible notes payable issued in those periods. These amounts are included in discounts on convertible notes payable and are being amortized to interest expense over the life of the convertible notes payable. During the three months ended November 30, 2019 and 2018, the Company recognized interest expense related to the amortization of debt discount of $56,171 and $1,296,997, respectively. The Company recorded penalty interest of $175,463 during the three months ended November 30, 2019.
During the nine months ended November 30, 2019 and 2018, the Company incurred original issue discounts of $1,250 and $79,103, respectively, and derivative discounts of $26,250 and $1,309,900, respectively, related to new convertible notes payable. These amounts are included in discounts on convertible notes payable and are being amortized to interest expense over the life of the convertible notes payable. During the nine months ended November 30, 2019 and 2018, the Company recognized interest expense related to the amortization of debt discount of $739,334 and 3,428,164, respectively. The Company recorded penalty interest of $207,116 and $221,055 during the nine months ended November 30, 2019 and November 30, 2018, respectively.
All the notes above are unsecured. As of November 30, 2019, the Company had total accrued interest payable of $1,955,492, of which $1,826,286 is classified as current and $120,906 is classified as noncurrent.
The Company determined that the embedded conversion features in the convertibles notes described below should be accounted for as derivative liabilities as a result of their variable conversion rates.
During the nine months ended November 30, 2019, the Company also had the following convertible note activity:
|
|
●
|
On September 5, 2019, the Company received $25,000 of proceeds from an investor for a promissory note with a principal amount of $26,250, including an original issue discounts of $1,250 and maturing August 29, 2020. The promissory note 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 for the last 20 trading days prior to conversion, and has an 8% per annum interest rate.
|
|
|
●
|
The Company wrote off a note payable for $32,600 and related interest of $97,139. The note has matured in February 2013, the company cannot contact the lender and the note is legally prescribed. A gain on settlement of debt of $129,739 was recorded..
|
|
|
●
|
The company recorded default penalties totaling $207,116 as increases to various notes, with a corresponding charge to interest.
|
|
|
●
|
During the nine months ended November 30, 2019, holders of certain convertible notes payable elected to convert a total of $373,062 of principal and $119,046 accrued interest, and $500 of fees into 3,651,425,069 shares of common stock. No gain or loss was recognized on conversions as they occurred within the terms of the agreement that provided for conversion.
|
12. RELATED PARTY TRANSACTIONS
For the nine months ended November 30, 2019 and 2018, the Company received net advances of $123,790 and $401,473, respectively, from its loan payable-related party. At November 30, 2019, the loan payable-related party was $1,232,704 and $782,844 at February 28, 2019. At November 30, 2019, included in the balance due to the related party is $588,290 of deferred salary and interest, $386,438 of which bears interest at 12%. At February 28, 2019, included in the balance due to the related party is $351,384 of deferred salary and interest, $210,000 of which bears interest at 12%. The accrued interest included at November 30, 2019 and February 28, 2019 was $39,530 and $13,650, respectively.
- 19 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
During the three and nine months ended November 30, 2019 the Company was charged $90,090 and $47,238, respectively in consulting fees for research and development to a company owned by a principal shareholder. The credit received in the quarter ended May 31, 2019 were a result of billing corrections of ($106,444) and after adjusting for this, would bring total charges in the nine months ended November 30, 2019 to $153,662. During the three and nine months ended November 30, 2018, the Company was charged $288,143 and $484,251 in consulting fees for research and development to a company owned by a principal shareholder.
13. OTHER DEBT – VEHICLE LOAN
In December 2016, RAD entered into a vehicle loan for $47,704 secured by the vehicle. The loan is repayable over 5 years maturing November 9, 2021, and repayable $1,019 per month including interest and principal. In November 2017, RAD entered into another vehicle loan secured by the vehicle for $47,661. The loan is repayable over 5 years, maturing October 24, 2022 and repayable at $923 per month including interest and principal. The principal repayments were $0 and $8,984 for the nine months ended November 30, 2019 and 2018, respectively. Regarding the second vehicle loan, the vehicle was returned at the end of fiscal 2019 and the car was subsequently sold by the lender for proceeds of $21,907 which went to reduce the outstanding balance of the loan. A loss of $3,257 was recorded as well. A balance of $21,578 remains on this vehicle loan at November 30, 2019. The remaining total balances of the amounts owed on the vehicle loans were $57,286 and $57,287 as of November 30, 2019 and February 28, 2019, respectively, of which all is current. The Company ceased making payments of principal and interest during the year and the company will return the remaining vehicle to the financing company for disposal in the upcoming months. The company has re-allocated the remaining vehicle from fixed assets to vehicles for disposal at the remaining net book value of $13,251 at November 30, 2019 and February 28, 2019.
14. LOANS PAYABLE
Loans payable consisted of the following at November 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
|
|
|
|
|
Interest
|
|
Date
|
Maturity
|
Description
|
|
Principal
|
Rate
|
|
June 11, 2018
|
June 11, 2019
|
Promissory note
|
(3)
|
48,000
|
25%
|
*
|
August 10, 2018
|
September 1, 2018
|
Promissory note
|
|
10,000
|
25%
|
*
|
August 16, 2018
|
August 16, 2019
|
Promissory note
|
(1)
|
12,624
|
25%
|
*
|
August 16, 2018
|
October 1, 2018
|
Promissory note
|
|
10,000
|
25%
|
*
|
August 23, 2018
|
October 20, 2018
|
Promissory note
|
|
—
|
20%
|
*
|
October 10, 2018
|
December 10, 2018
|
Promissory note
|
(8)
|
2,412
|
25%
|
*
|
October 11, 2018
|
October 11, 2019
|
Promissory note
|
(10)
|
23,000
|
25%
|
*
|
August 5, 2019
|
March 11, 2020
|
Factoring Agreement
|
(4)
|
41,750
|
25%
|
|
July 22, 2019
|
November 15, 2019
|
Factoring Agreement
|
(9)
|
—
|
25%
|
|
July 9, 2019
|
January 5, 2020
|
Factoring Agreement
|
(5)
|
—
|
20%
|
|
September 17, 2019
|
November 26, 2019
|
Factoring Agreement
|
(13)
|
—
|
20%
|
|
November 12, 2019
|
August 11, 2020
|
Factoring Agreement
|
(14)
|
87,315
|
20%
|
|
October 17,2019
|
April 29, 2020
|
Factoring Agreement
|
(15)
|
56,800
|
(4)
|
|
September 27, 2019
|
April 4, 2020
|
Factoring Agreement
|
(16)
|
36,933
|
(9)
|
|
January 31, 2019
|
June 30, 2019
|
Promissory note
|
(2)
|
78,432
|
(5)
|
*
|
January 24, 2019
|
January 24, 2021
|
Loan
|
(11)
|
140,535
|
15%
|
|
May 9, 2019
|
June 30, 2019
|
Promissory note
|
(6)
|
7,850
|
11%
|
*
|
May 31, 2019
|
June 30, 2019
|
Promissory note
|
(7)
|
86,567
|
15%
|
*
|
June 26, 2019
|
June 26, 2020
|
Promissory note
|
(12)
|
79,104
|
15%
|
|
September 24, 2019
|
June 24, 2020
|
Promissory note
|
(17)
|
12,000
|
15%
|
|
|
|
|
|
733,322
|
|
|
Less current portion of loans payable
|
|
|
592,787
|
|
|
Non-current portion of loans payable
|
|
|
140,535
|
|
|
__________
|
|
*
|
Note is in default. No notice has been given by the note holder.
|
- 20 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
(1)
|
Repayable in 12 monthly instalments of $2,376 commencing September 16 ,2018 and secured by revenue earning devices having a net book value of at least $25,000.Only $12,376 has been repaid by the Company and no notices have been received. Accrued interest of $1,511 has been recorded.
|
|
|
(2)
|
The note may be pre-payable at any time. The note balance includes 33% original issue discount of $25,882.
|
|
|
(3)
|
Repayable in 12 monthly instalments of $4,562 commencing August 11 ,2018 and secured by revenue earning devices having a net book value of at least $48,000. No repayments have been made by the Company and no notices have been received.
|
|
|
(4)
|
Total loan $79,750, repayable $475 per business day including fees and interest of $25,170. Original cash proceeds of $31,353 and $23,227 carried from previous loan less repayment of $38,000. The Company has pledged a security interest on all accounts receivable and bank accounts of the Company. Obligation under personal guaranty by the controlling shareholder of the Company.
|
|
|
(5)
|
Total loan of $41,700, repayable $348 per business day including fees and interest of $11,700. Original proceeds of $30,000. $30,928 of the loan has been repaid. The remaining balance of $10,772 has been transferred to new loan (14).The Company has pledged a security interest on all accounts receivable and bank accounts of the Company. Obligation under personal guaranty bv the controlling shareholder of the Company.
|
|
|
(6)
|
The note may be pre-payable at any time. The note balance includes 33% original issue discount of $2,590.
|
|
|
(7)
|
The note may be pre-payable at any time. The note balance includes 33% original issue discount of $28,567.
|
|
|
(8)
|
Repayable in 10 monthly instalments of $848 commencing January 10 ,2019 and secured by revenue earning devices having a net book value of at least $186,000. $2,544 repaid this quarter.
|
|
|
(9)
|
Total loan $52,150, repayable $869 per business day including fees and interest of $17,150. Original cash proceeds of $35,000. The loan has been fully repaid for $52,150.
|
|
|
(10)
|
$20,000 repaid in quarter ended February 28,2019.
|
|
|
(11)
|
$185,000 Canadian loan. Interest payable every calendar quarter commencing June30, 2019, if unpaid accrued interest to be paid at maturity. An additional interest amount calculated as 4% of RAD revenues from SCOT rentals for the fiscal years 2020 and 2021 shall be payable March 31, 2020 and March 31, 2021, respectively. Secured by a general security charging all of RAD’s present and after-acquired property in favor of the lender on a first priority basis subject to the following: the lender’s security in this respect shall be postponeable to security in favor of institutional financing obtained by RAD.
|
|
|
(12)
|
The note may be pre-payable at any time. The note balance includes 33% original issue discount of $26,104.
|
|
|
(13)
|
Total loan of $24,800, repayable $2,480 per week including fees and interest of $4,800. Original proceeds of $20,000 less repayment of $19,840.The remaining balance of $4,860 has been transferred to new loan (14).The Company has pledged a security interest on all accounts receivable and bank accounts of the Company. Obligation under personal guaranty by the controlling shareholder of the Company.
|
|
|
(14)
|
Total loan of $243,639, repayable $1,509 per week including fees and interest of $60,042. Original cash proceeds of $7,877, repayment of loans (5) and (13) totaling $15,732 ,partial repayment of fees of $5,566 all totaling $29,175, additional advances of $17,754 with remaining $136,668 to be advanced to the company over the remaining 18 weeks. The Company has repaid $15,021. The Company has pledged a security interest on all accounts receivable and bank accounts of the Company. Obligation under personal guaranty by the controlling shareholder of the Company.
|
|
|
(15)
|
Total loan of $71,000, repayable $710 per business day including fees and interest of $21,000. Original proceeds of $50,000 less repayment of $14,200. The Company has pledged a security interest on all accounts receivable and bank accounts of the Company. Obligation under personal guaranty by the controlling shareholder of the Company.
|
|
|
(16)
|
Total loan of $59,960, repayable $590 per business day including fees and interest of $19,960. Original proceeds of $40,000 less repayment of $23,027. The Company has pledged a security interest on all accounts receivable and bank accounts of the Company. Obligation under personal guaranty by the controlling shareholder of the Company.
|
|
|
(17)
|
The note may be pre-payable at any time. The note balance includes a $3,000 original issue discount.
|
During the nine months ended November 30, 2019 the Company received proceeds of $681,877 and repaid $411,036 of loans payable.
During the three months ended November 30, 2019 the Company received proceeds of $307,541 and repaid $163,391 of loans payable.
- 21 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
15. DERIVATIVE LIABILITES
As of November 30, 2019, the Company revalued the fair value of all of the Company’s derivative liabilities associated with the conversion features on the convertible notes payable and determined that it had a total derivative liability of $5,342,487.
The Company estimated the fair value of the derivative liabilities using the multinomial lattice model using the following key assumptions during the nine months ended November 30, 2019:
|
|
Strike price
|
$1.25 - $0.0001
|
Fair value of Company common stock
|
$0.0003- $0.0001
|
Dividend yield
|
0.00%
|
Expected volatility
|
528.3% - 373.9%
|
Risk free interest rate
|
1.22% - 2.59%
|
Expected term (years)
|
0.01 - 3.66
|
During the three and nine months ended November 30, 2019, the Company released $109,987 and $493,405, respectively, of the Company’s derivative liability to equity due to the conversions of principal and interest on the associated notes. During the three and nine months ended November 30, 2018, the Company released $233,178 and $984,589, respectively, of the Company’s derivative liability to equity due to the conversions of principal and interest on the associated notes.
The changes in the derivative liabilities (Level 3 financial instruments) measured at fair value on a recurring basis for the nine months ended November 30, 2019 were as follows:
|
|
|
|
Balance as of February 28, 2019
|
$
|
6,170,139
|
|
|
|
|
|
Debt discount due to derivative liabilities
|
|
26,250
|
|
Derivative liability in excess of face value of debt recorded to interest expense
|
|
172,242
|
|
Adjustment on derivative liability due to debt settlement
|
|
(164,768
|
)
|
Release of derivative liability on conversion of convertible notes payable
|
|
(493,405
|
)
|
Change in fair value of derivative liabilities
|
|
(367,971
|
)
|
Balance as of November 30, 2019
|
$
|
5,342,487
|
|
16. STOCKHOLDERS’ EQUITY (DEFICIT)
Summary of Common Stock Activity
On April 23, 2019 the Board of Directors approved an increase in authorized share capital to 5,000,000,000 shares of common stock and to change the par value of the common stock to $0.00001 per share. This became effective on June 20, 2019. The share capital has been retrospectively adjusted accordingly to reflect this change in par value.
On April 23, 2019 the Board of Directors were granted approval to effectuate at its sole discretion a Reverse Stock Split of the Company’s Common Stock, by a ratio of no less than 2:1 and not more than 2000:1, with such ratio to be determined at the sole discretion of the Board and with the process to effect such Reverse Split to be commenced at any time, if at all, within a period of 6 months after May 31, 2019. On December 6, 2019 with shareholder approval, the Board of Directors authorized a 10:000:1 Reverse Split, which has of this filing date has not yet become effective
During the nine months ended November 30, 2019, the Company issued 3,651,425,069 shares of its common stock for the conversion of debt and related interest and fees totaling $492,608 including $373,062 of principal and $119,046 accrued interest, and $500 in fees in connection with debt converted during the period, as well as the release of the related derivative liability (see Note 15).
- 22 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Summary of Stock Option Activity
|
|
|
|
|
|
|
|
|
Number of Warrants
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Years
|
|
|
|
|
|
|
|
Outstanding at March 1, 2019
|
|
20,436,309
|
|
$ 0.01
|
|
2.81
|
Issued
|
|
—
|
|
—
|
|
—
|
Exercised
|
|
—
|
|
—
|
|
—
|
Forfeited and cancelled
|
|
—
|
|
—
|
|
—
|
Outstanding at November 30, 2019
|
|
20,436,309
|
|
$ 0.01
|
|
2.06
|
For the nine months ended November 30, 2019 and November 30, 2018, the Company recorded a total of $0 and $26,092, respectively, to stock-based compensation for options and warrants with a corresponding adjustment to additional paid-in capital.
17. COMMITMENTS AND CONTINGENCIES
Litigation
Occasionally, the Company may be involved in claims and legal proceedings arising from the ordinary course of its business. The Company records a provision for a liability when it believes that is both probable that a liability has been incurred, and the amount can be reasonably estimated. If these estimates and assumptions change or prove to be incorrect, it could have a material impact on the Company’s condensed consolidated financial statements. Contingencies are inherently unpredictable, and the assessments of the value can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions.
In April 2019 the principals of WeSecure (see Note 8) filed lawsuit in California Superior Court seeking damages for non-payment balance of sale of WeSecure assets totaling $25,000, unpaid consulting fees payable to the two principals through to September 2019 totaling $125,924, and labor code violations of $48,434 all totaling $199,358 plus attorney’s fees and damages. The parties finally settled all claims with a full release for $180,000 in June 2019 payable in 14 monthly instalments as follows:
|
|
|
|
|
|
|
2019
|
|
2020
|
|
Total
|
6/30/19
|
$5,000
|
|
1/26/2020
|
$15,000
|
|
|
7/30/19
|
$5,000
|
|
2/25/2020
|
$15,000
|
|
|
8/29/19
|
$7,500
|
|
3/26/2020
|
$15,000
|
|
|
9/28/19
|
$7,500
|
|
4/25/2020
|
$15,000
|
|
|
10/28/19
|
$10,000
|
|
5/25/2020
|
$20,000
|
|
|
11/27/19
|
$10,000
|
|
6/25/2020
|
$20,000
|
|
|
12/27/19
|
$15,000
|
|
7/24/2020
|
$20,000
|
|
|
|
|
|
|
|
|
|
Total
|
$60,000
|
|
|
$120,000
|
|
$180,000
|
The company has fully accrued the above $180,000.
As of January 13, 2020 the Company has paid $17,500. As of this filing the September through December instalments are in arrears.
The related legal costs are expensed as incurred.
The Company currently maintains an office at 1218-1222 Magnolia Ave, Suite 106 Bldg. H, Corona, California 92881 pursuant to a month to month lease commencing March 1, 2019. The Company’s annual rent is $12,000 per year.
RAD maintains a mailing address for 31103 Ranch Viejo Road, Suite d2114 for a nominal fee of $264/yr. RAD previously had its offices at 23121 La Cadena Suite B/C Laguna Hills, California 92675, pursuant to a five-year term ending March 31, 2022. Its annual rental cost for this facility was approximately $65,000, plus a proportionate share of operating expenses of approximately $35,000 annually. The Company also leased premises in northern California. The lease was for three years, beginning in August 2017, and would expire in August 2020. The Company shared these premises with a former supplier who was the co-lessee. Through agreement with the supplier, the Company was to pay 75% of the lease costs and the supplier was to pay 25%. The Company’s share of rent costs
- 23 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
was approximately $43,000 annually. On February 1, 2018 the Company entered into an additional lease for premises for a robotic control center. The lease ran from February 1, 2018 to January 31, 2021 for $6,600 annually. At the end of fiscal 2019 the Company terminated all three preceding leases through verbal arrangement with the landlord. Regarding the lease at La Cadena, the Company agreed to a settlement amount to cover unpaid rent, commissions and leasehold improvements paid by the landlord totaling $62,039 to be paid by the Company in 4 monthly instalments of $5,000 commencing August 1, 2019 with the remaining balance to be paid in $10,000 monthly instalments thereafter. The Company recorded the $62,039 as a loss on settlement. No further liability was recorded for both the northern California and robotic control center leases.
The Company’s leases are accounted for as operating leases. Rent expense is recorded over the lease terms on a straight-line basis. Rent expense was $2,000 and $6,000 for the three and nine months ended November 30, 2019, respectively and $30,155 and $89,917 for the three and nine months ended November 30, 2018, respectively.
At November 30, 2019 there were no Company’s future minimum payments.
Convertible Notes Payable
Certain convertible notes payable carry conditions whereby in the event of any default of any condition the Company would be subject to certain financial penalties.
18. EARNINGS (LOSS) PER SHARE
The net income (loss) per common share amounts were determined as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
|
|
November 30,
|
|
November 30,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common shareholders
|
|
|
(3,396,031
|
)
|
|
7,787,499
|
|
|
(3,080,659
|
)
|
|
17,991,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of common stock equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: interest expense on convertible debt
|
|
|
225,109
|
|
|
316,411
|
|
|
608,965
|
|
|
726,595
|
|
Add (less) loss (gain) on change of derivative liabilities
|
|
|
2,108,596
|
|
|
(10,223,431
|
)
|
|
(367,971
|
)
|
|
(26,216,071
|
)
|
Net income (loss) adjusted for common stock equivalents
|
|
|
(1,062,326
|
)
|
|
(2,119,521
|
)
|
|
(2,839,665
|
)
|
|
(7,498,375
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares - basic
|
|
|
3,127,301,379
|
|
|
8,949,875
|
|
|
1,855,955,342
|
|
|
4,028,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share – basic
|
|
$
|
(0.00
|
)
|
$
|
0.87
|
|
$
|
(0.00
|
)
|
$
|
4.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of common stock equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
—
|
|
|
432,324
|
|
|
—
|
|
|
299,404
|
|
Convertible Debt
|
|
|
—
|
|
|
1,214,611,324
|
|
|
—
|
|
|
1,186,653,028
|
|
Preferred shares*
|
|
|
—
|
|
|
56,069,447
|
|
|
—
|
|
|
56,069,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares – diluted
|
|
|
3,127,301,379
|
|
|
1,280,062,970
|
|
|
1,855,955,342
|
|
|
1,247,050,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share – diluted
|
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
- 24 -
ARTIFICIAL INTELLIGENCE TECHNOLOGY SOLUTIONS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The anti-dilutive shares of common stock equivalents for the three and nine months ended November 30, 2019 and 2018 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended November 30,
|
|
For the Nine Months
Ended November 30,
|
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Stock options and warrants
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Convertible debt
|
|
|
138,526,759,167
|
|
|
—
|
|
|
138,526,759,167
|
|
|
—
|
|
Preferred stock
|
|
|
13,288,319,664
|
|
|
—
|
|
|
13,288,319,664
|
|
|
—
|
|
Total
|
|
|
151,815,078,831
|
|
|
—
|
|
|
151,815,078,831
|
|
|
—
|
|
18. SUBSEQUENT EVENTS
Subsequent to November 30, 2019:
|
|
●
|
convertible note holders converted $2,640 interest into 132,000,000 shares of the Company’s common stock.
|
|
|
●
|
the Company entered into a factoring loan on December 20, 2019 with a 10 week maturity totaling $12,400 including cash proceeds of $10,000 and $2,400 in interest and fees. Repayable $1,240 per week with 3,720 repaid to date.
|
|
|
●
|
The company has received an additional $60,500 in connection with the deferred variable payment obligation of November 18, 2019.
|
|
|
●
|
On December 30, 2019 the Company entered into an agreement with an investors whereby the investor would pay up to $100,000 in exchange for a perpetual 1% royalty on the Company’s reported quarterly revenue. These royalty payments are to be made 90 days after the fiscal quarter with the first payment being due no later than November 30, 2020. If the royalty payments would deplete RAD’s available cash by more than 1%, the payment may be deferred. The investors have agreed to and paid an initial investment of $50,000 (at a pro-rated 0.5% royalty) with an option to pay up to the remaining $50,000, no later than June 30, 2020. If the total investment turns out to be less than $100,000, this would not constitute a breach of the agreement, rather the royalty rate would be adjusted on a pro-rata basis.
|
|
|
●
|
On January 6, 2020 the Company entered into a loan agreement for $4,000 with cash proceeds of $3,000 and an original issue discount of $1,000. The loan bears interest at 15% per annum, and matures on October 6, 2020.
|
- 25 -