LRDG Lord Global Corporation (CE)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization, Nature of Business and Trade Name

A summary of significant accounting policies of Lord Global Corporation (the “Company”), a company organized in the state of Nevada, is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the companying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity.

Lord Global Corporation fka Bigfoot Project Investments Inc. (“we”, “our” the “Company”) was incorporated in the State of Nevada on November 30, 2011. The Company’s mailing address is 318 N Carson St, Suite 208, Carson City, Nevada 89701 and its fiscal year ended July 31. Since inception, the Company has been engaged in organizational efforts and the pursuit of financing. The Company was established as an entertainment investment business.

The Company’s mission is to create exciting and interesting proprietary investment projects. The Company engages in the service of providing services in connection with revenue generating projects. The Company’s competitive advantage is the in-house knowledge of the current Board. The Company will capitalize on the current and future projects through contractual agreements which allow the Company to continue to create and establish strategic alliances with other organizations to create revenue as a stand-alone business.

On November 13, 2019, the CEO Carmine T. Biscardi entered into a share purchase agreement with Lord Global Company and Joseph Cellura to sell 3,220 shares of Preferred Series A Convertible stock and 45,008 shares of common stock. This agreement transferred controlling interest of both the Preferred Series A (100% issued and outstanding) and common stock (51.16% issued and outstanding) effective November 27, 2019.

On December 9, 2019, the standing Board of Directors held a meeting and elected a new officers and Board of Directors. All newly elected Officers will also serve on the Board of Directors.

On December 31, 2019, the Company acquired a private Nevada based company named Lord Global Corporation. As part of the acquisition, the Company issued Preferred Series L stock to the shareholders of Lord Global Corporation in exchange for the shares held in proportion to the ownership percentages of the existing shareholders of the private corporation. Upon execution of the agreement, Lord Global Corporation (The private company) became a wholly owned subsidiary of Bigfoot Project Investments Inc.

Subsequent to the acquisition, the Company applied to FINRA for an approval of a reverse stock split, a name change, and a ticker symbol change. FINRA approved the changes on January 28^th, 2020 with the new Company name changing to Lord Global Corporation with a ticker symbol of LRDG.

After the acquisition of Lord Global Corporation, the Company affected a reverse stock split of the issued and outstanding Preferred Series A and Common stock at a ratio of 1 for 100,000, (“the Reverse Stock Split”). Unless otherwise noted herein, references to share and per-share amounts give retroactive effect to the Reverse Stock Split.

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared on the same basis as the annual audited financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. In the opinion of management such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of this interim information. Operating results and cash flows for interim periods are not necessarily indicative of the results that can be expected for the entire year. The information included in this report should be read in conjunction with our audited financial statements and notes thereto included in our 10-K for the year ended July 31, 2019 filed on SEC website on December 9, 2019.

Revenue Recognition

The Company accounts for revenues according to ASC Topic 606, “Revenue from Contracts with Customers” which establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The new standard’s core principal is that an entity will recognize revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring good or services to a customer. The principals in the standard are applied in five steps:

1) Identify the contract(s) with a customer;

2) Identify the performance obligations in the contract;

3) Determine the transaction price;

4) Allocate the transaction price to the performance obligations in the contract; and

5) Recognize revenue when (or as) the entity satisfies a performance obligation.

During the six months ended January 31, 2020 and 2019, the Company’s revenues were primarily made up of revenue generated from our online streaming distributor. The Company generated revenues from contracted sources of $438 and $263 for the three months ended October 31, 2019 and 2018, respectively.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled operating subsidiaries. All intercompany accounts and transactions have been eliminated.

Fair value of financial instruments

The carrying value of cash, accounts receivable, accounts payable and accrued expenses, and debt approximate their fair values because of the short-term nature of these instruments. Management believes the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable.

LORD GLOBAL CORPORATION

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 1 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The following tables present the derivative financial instruments, the Company’s only financial liabilities measured and recorded at fair value on the Company’s balance sheets on a recurring basis, and their level within the fair value hierarchy as of January 31, 2020 and July 31, 2019:

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs:

The Company evaluated its convertible notes to determine if the embedded component of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The Company determined that due to the variable number of common stock that the notes convert to, the embedded conversion option were required to be bifurcated and accounted for as a derivative liability. The fair value of the derivative liability is calculated at the time of issuance and the Company records a derivative liability for the calculated value. Changes in the fair value of the derivative liability are recorded in other income (expense) in the consolidated statements of operations. Upon conversion of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.

The Company’s derivative instruments were valued using the Lattice model (for convertible notes) based on a probability weighted discounted cash flow model, and the Montel Carlo model (for tainted warrants) based on a multipath random event model. For the six months ended January 31, 2020, assumptions used in the valuation include the following: a) underlying stock price ranging from $0.00010 (pre-reverse) to $1.26 (post-reverse); b) projected discount on the conversion price ranging from 40.68% to 70.10% with the notes effectively converting at discounts in the range of 40% to 58%; c) projected volatility of 397.5% to 440.0%; d) probabilities related to default and redemption of the notes during the term of the notes.

For the six months ended January 31, 2019, assumptions used in the valuation include the following: a) underlying stock price ranging from $0.0016 (pre-reverse) to $0.0003 (pre-reverse); b) projected discount on the conversion price ranging from 40% to 58% with the notes effectively converting at discounts in the range of 38.70% to 65.17%; c) projected volatility of 261.1% to 310.1%; d) probabilities related to default and redemption of the notes during the term of the notes.

The Company has considered the provisions of ASC 480, Distinguishing Liabilities from Equity, as the conversion feature embedded in each debenture could result in the note principal being converted to a variable number of the Company’s common shares.

Basic and Diluted Earnings per Share

Basic earnings per share are based on the weighted-average number of shares of common stock outstanding.

The FASB ASC Topic 260, “Earnings per Share”, requires the Company to include additional shares in the computation of earnings per share, assuming dilution.

Diluted earnings per share are based on the assumption that all dilutive options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options are assumed to be exercised at the time of issuance, and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

We calculate basic earnings (loss) per share by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share is calculated similarly but reflects the potential impact of outstanding stock options, stock warrants and other commitments to issue common stock, including shares issuable upon the conversion of convertible notes outstanding, except where the impact would be anti-dilutive.

The following is a reconciliation of basic and diluted earnings per share for the three and six months ended January 31, 2020 and 2019:

NOTE 2 - GOING CONCERN

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of American applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. These conditions raise substantial doubt about our ability to continue as a going concern.

Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.

Historically, the Company has mostly relied upon internally generated funds such as shareholder loans and advances to finance its operation and growth. Management may raise additional capital by future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon it and its shareholders.

NOTE 3 – ADVANCE FROM SHAREHOLDERS

In the six months ended January 31, 2020, additional advances from shareholders were received in the amount of $204,520. The Company made payments on these advances amounting to $174,476. These advances bear no interest and are due on demand. The total advances from shareholders as of July 31, 2019 were $75,135 and as of January 31, 2020 were $152,886.

In the six months ended January 31, 2019, additional advances from shareholders were received in the amount of $74,759. The Company made payments on these advances amounting to $63,133. These advances bear no interest and are due on demand. The total advances from shareholders as of July 31, 2018 were $57,524 and as of January 31, 2019 were $69,150.

NOTE 4 – NOTE PAYABLE – RELATED PARTY

In January 2013, Lord Global Corporation executed a promissory note in the amount of $484,029 as part of the asset transfer agreement for the transfer of all assets held by Searching for Bigfoot, Inc. In August 2013, the Company increased the balance of the promissory note by $489 to add an asset that was not included in the original transfer. The note is subject to annual interest of 4%. The unpaid principal and the accrued interest are payable in full on January 31, 2019.

The holder of the note has agreed to allow the note to be renewed for another year making the current maturity date, January 31, 2020. The Company was able to pay $9,456 towards the principal of the loan during the six months ended January 31, 2020. The Company also issued 5,000 shares of Series A Convertible Preferred stock in exchange for $50,000 of principal on the note. As of January 31, 2020, and July 31, 2019, the outstanding balance on the note was $376,437 and $435,894, respectively.

Interest expense for the six months ended January 31, 2020 and 2019 was $4,724 and $9,447, respectively.

NOTE 5 - CAPITAL STOCK

Common Stock

The holders of the Company’s common stock are entitled to receive dividends out of assets or funds legally available for the payment of dividends at such times and in such amounts as the board from time to time may determine. Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders. There is no cumulative voting of the election of directors then standing for election. The common stock is not entitled to pre-emptive rights and is not subject to conversion or redemption. Upon liquidation, dissolution or winding up of the company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the common stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors.

The Company has 51,971 and 48,531 shares of common stock issued and outstanding as of January 31, 2020 and July 31, 2019, respectively.

During the three months ended October 31, 2019, the Board of Directors with the consent of majority shareholders authorized an increase in the authorized stock to 500,000,000 shares Preferred Series A and 19,500,000,000 shares common stock.

During the six months ended January 31, 2020, the Board of Directors with the consent of majority shareholders authorized a reverse stock split at the ratio of 1 for 100,000 shares of Preferred Series A and common stock.

During the six months ended January 31, 2020, the Board of Directors with the consent of majority shareholders authorized a decrease in the authorized stock to 100,000,000 shares allocated to the various Preferred Series stock and 900,000,000 shares common stock.

During the six months ended January 31, 2020, Auctus Fund LLC (“Auctus Fund”) issued a conversion notice for the loan executed on August 1, 2018 to the Company for 2,048 shares of common stock for a principal reduction of $2,917, interest of $4,776 and fees of $500.

During the six months ended January 31, 2020, Crown Bridge Partners Fund LLC issued a conversion notice for the loan executed February 25, 2019 to the Company for 2,150 shares of common stock for a principal reduction of $6,775 and fees of $750.

During the six months ended January 31, 2019, the Company reserved 217 shares of common stock for Veyo Partners per the consulting agreement dated November 30, 2017. Fair value of the shares reserved as of January 31, 2019 is $8,647.

During the six months ended January 31, 2019, the Company issued to Auctus Fund 1,103 shares of common stock to convert the principal amount due of $3,516 and settlement of unpaid interest of $83 and penalty of $10,000.

On November 8, 2019, 1,780 shares of Series A Convertible Preferred stock were converted to 42,720 shares of common stock.

On November 13, 2019, the CEO Carmine T. Biscardi entered into a share purchase agreement with Lord Global Corporation and Joseph Cellura to sell 3,220 shares of Preferred Series A Convertible stock and 45,008 shares of common stock. This agreement transferred controlling interest of both the Preferred Series A (100% issued and outstanding) and common stock (51.16% issued and outstanding) to these parties, effective November 27, 2019.

On December 13, 2019, the Company by vote of majority shareholders and unanimous consent of the Board, approved a 100,000 to 1 reverse stock split. On December 16, 2019, the Company filed with the State of Nevada a Certificate of Change registering the 100,000 to 1 reverse stock split for each class of stock. The reverse stock split was approved by FINRA effective January 29, 2020.

During the six months ended January 31, 2020, the Company designated three new classes of preferred stock: Series F Convertible Preferred with 40,000,000 shares authorized at $0.001 par value and Series T Convertible Preferred with 37,500,000 shares authorized at $0.001 par value, and Series B Super Voting Preferred with 1,000,000 shares authorized at $0.001 par value.

During the six months ended January 31, 2020, Management returned to treasury 45,008 shares of common stock.

During the six months ended January 31, 2020, the Company issued 1,940,000 shares of Preferred Series L convertible stock as compensation for the share exchange agreement with Lord Global Corporation.

During the six months ended January 31, 2020, the Company issued 1,000,000 shares of Preferred Series B Super Voting stock as compensation for on-going negotiations for revenue generating contracts.

Series A Convertible Preferred Stock

On October 31, 2019, pursuant to the Certificate of Designation, the Company authorized 19,500,000 shares of the Series A Convertible Preferred Stock, which shall be convertible into shares of common stock of the Company at the option of the holders thereof at any time after the issuance of the preferred stock. Each Series A Convertible Preferred Stock shall be converted into 24 shares of common stock.

The Series A Convertible Preferred Stock has the following rights and privileges:

Voting – The holders of the Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which such shares of Preferred Stock could be converted.

Conversion – Each share of Preferred Stock, is convertible at the option of the holder into twenty-four shares of common stock, subject to certain adjustments for dilution, if any, resulting from future stock issuances, including for any subsequent issuance of common stock at a price per share less than that paid by the holders of the Preferred Stock. The outstanding shares of Preferred Stock can be converted into common stock upon the request of the holding shareholder.

Liquidation – In the event of any liquidation, dissolution, winding-up or sale or merger of the Company, whether voluntarily or involuntarily, each holder of Preferred Stock is entitled to receive, in preference to the holders of common stock, a per-share amount equal to the original issue price of $0.001 (as adjusted, as defined), plus all declared but unpaid dividends.

Contingent redemption - In the event that a Mandatory Redemption Event (as defined below) occurs, each Holder shall have the right to have all or any portion of the Preferred Shares held by such Holder redeemed by the Company (a “Mandatory Redemption”) at the Mandatory Redemption Price. The “Mandatory Redemption Price” shall be equal to the Liquidation Preference of the Preferred Shares being redeemed multiplied by one hundred and twenty five percent (125%) in same day funds. In order to exercise its right to effect a Mandatory Redemption, a Holder must deliver a written notice (a “Mandatory Redemption Notice”) to the Company at any time on or before the Business Day following the day on which such event is no longer continuing.

(i) the Company fails for any reason (including without limitation as a result of not having a sufficient number of shares of Common Stock authorized and reserved for issuance, or as a result of the limitation contained in the stock designation, or due to voluntary action undertaken by the Company or a failure by the Company to take action, to issue shares of Common Stock to a Holder and deliver certificates representing such shares to such Holder as and when required by the provisions hereof upon Conversion of any Preferred Shares, and such failure continues for ten (10) Business Days;

(ii) the Company breaches, in a material respect, due to voluntary action undertaken by the Company or a failure by the Company to take action, any covenant or other material term or condition of the Preferred Stock, or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated thereby, and such breach continues for a period of five (5) Business Days after written notice thereof to the Company from a Holder;

(iii) any material representation or warranty made by the Company in any agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby or thereby is inaccurate or misleading in any material respect as of the date such representation or warranty was made due to voluntary action undertaken by the Company or a failure by the Company to take action.

The Board voted to award the CEO Carmine T. Biscardi 5,000 shares of Preferred Series A stock, of which 500 shares of Series A convertible preferred stock were issued in exchange for $50,000 of the debt and 4,500 shares of Series A convertible preferred stock were issued as compensation for his long service to the Company. We determined the fair value of the preferred stock as of the issuance date based on the market price of $10 for common stock with 1 share of Series A Preferred Stock convertible to 24 shares of common stock, resulting in a fair value of $240 per share. Thus, the fair value for 500 and 4,500 shares of Series A Convertible Preferred Stock is $120,000 and $1,080,000, respectively. The Company recognized a loss on settlement of debt of $70,000 and stock-based compensation of $1,080,000 for the above-mentioned preferred stock issuances, during the six months ended January 31, 2020. Due to the Preferred Stock’s contingent redemption feature, the Series A Convertible Preferred Stock are reported as temporary equity in the consolidated balance sheet.

Series B Super Voting Preferred Stock

During the six months ended January 31, 2020, pursuant to the Certificate of Designation, the Company authorized 1,000,000 shares of the Series B Super Voting Preferred Stock, which shall have non-dilutable voting rights equivalent to 68% of all voting shares.

The Series B Super Voting Preferred Stock has the following rights and privileges:

Voting – The holders of the Preferred Stock shall have non-dilutable majority voting rights of 68% over the entire capital structure.

Liquidation – In the event of any liquidation, dissolution, winding-up or sale or merger of the Company, whether voluntarily or involuntarily, each holder of Preferred Stock is entitled to receive, in preference to the holders of common stock, a per-share amount equal to the original issue price of $0.001 (as adjusted, as defined), plus all declared but unpaid dividends.

During the six months ended January 31, 2020, the Company issued 1,000,000 shares of Series B Super Voting Preferred Stock to 27 Health, Inc. as compensation for on-going negotiations for revenue generating contracts.

Series L Convertible Preferred Stock

On January 17, 2019, pursuant to the Certificate of Designation, the Company authorized 2,000,000 shares of the Series L Convertible Preferred Stock, which shall be convertible into shares of common stock of the Company at the option of the holders thereof at any time after the issuance of the preferred stock. Each Series L Convertible Preferred Stock shall be converted into 3 shares of common stock.

The Series L Convertible Preferred Stock has the following rights and privileges:

Voting – The holders of the Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which such shares of Preferred Stock could be converted.

Conversion – Each share of Preferred Stock, is convertible at the option of the holder into twenty-four shares of common stock, subject to certain adjustments for dilution, if any, resulting from future stock issuances, including for any subsequent issuance of common stock at a price per share less than that paid by the holders of the Preferred Stock. The outstanding shares of Preferred Stock can be converted into common stock upon the request of the holding shareholder.

Liquidation – In the event of any liquidation, dissolution, winding-up or sale or merger of the Company, whether voluntarily or involuntarily, each holder of Preferred Stock is entitled to receive, in preference to the holders of common stock, a per-share amount equal to the original issue price of $0.001 (as adjusted, as defined), plus all declared but unpaid dividends.

Contingent redemption - In the event that a Mandatory Redemption Event (as defined below) occurs, each Holder shall have the right to have all or any portion of the Preferred Shares held by such Holder redeemed by the Company (a “Mandatory Redemption”) at the Mandatory Redemption Price. The “Mandatory Redemption Price” shall be equal to the Liquidation Preference of the Preferred Shares being redeemed multiplied by one hundred and twenty five percent (125%) in same day funds. In order to exercise its right to effect a Mandatory Redemption, a Holder must deliver a written notice (a “Mandatory Redemption Notice”) to the Company at any time on or before the Business Day following the day on which such event is no longer continuing.

(i) the Company fails for any reason (including without limitation as a result of not having a sufficient number of shares of Common Stock authorized and reserved for issuance, or as a result of the limitation contained in the stock designation, or due to voluntary action undertaken by the Company or a failure by the Company to take action, to issue shares of Common Stock to a Holder and deliver certificates representing such shares to such Holder as and when required by the provisions hereof upon Conversion of any Preferred Shares, and such failure continues for ten (10) Business Days;

(ii) the Company breaches, in a material respect, due to voluntary action undertaken by the Company or a failure by the Company to take action, any covenant or other material term or condition of the Preferred Stock, or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated thereby, and such breach continues for a period of five (5) Business Days after written notice thereof to the Company from a Holder;

(iii) any material representation or warranty made by the Company in any agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby or thereby is inaccurate or misleading in any material respect as of the date such representation or warranty was made due to voluntary action undertaken by the Company or a failure by the Company to take action.

During the six months ended January 31, 2020, pursuant to the share exchange agreement with Lord Global Corporation dated December 31, 2019, the Company issued 1,940,000 shares of Preferred Series L stock in exchange for the outstanding shares of the private company. The stock has a stated par value of $0.001, the transaction was recorded at the stated par value of the stock.

Series T Convertible Preferred Stock

On January 17, 2019, pursuant to the Certificate of Designation, the Company authorized 37,500,000 shares of the Series T Convertible Preferred Stock, which shall be convertible into shares of common stock of the Company at the option of the holders thereof at any time after the issuance of the preferred stock. Each Series T Convertible Preferred Stock shall be converted into 3 shares of common stock.

The Series T Convertible Preferred Stock has the following rights and privileges:

Voting – The holders of the Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which such shares of Preferred Stock could be converted.

Conversion – Each share of Preferred Stock, is convertible at the option of the holder into three shares of common stock, subject to certain adjustments for dilution, if any, resulting from future stock issuances, including for any subsequent issuance of common stock at a price per share less than that paid by the holders of the Preferred Stock. The outstanding shares of Preferred Stock can be converted into common stock upon the request of the holding shareholder.

Liquidation – In the event of any liquidation, dissolution, winding-up or sale or merger of the Company, whether voluntarily or involuntarily, each holder of Preferred Stock is entitled to receive, in preference to the holders of common stock, a per-share amount equal to the original issue price of $0.001 (as adjusted, as defined), plus all declared but unpaid dividends.

Contingent redemption - In the event that a Mandatory Redemption Event (as defined below) occurs, each Holder shall have the right to have all or any portion of the Preferred Shares held by such Holder redeemed by the Company (a “Mandatory Redemption”) at the Mandatory Redemption Price. The “Mandatory Redemption Price” shall be equal to the Liquidation Preference of the Preferred Shares being redeemed multiplied by one hundred and twenty five percent (125%) in same day funds. In order to exercise its right to effect a Mandatory Redemption, a Holder must deliver a written notice (a “Mandatory Redemption Notice”) to the Company at any time on or before the Business Day following the day on which such event is no longer continuing.

(i) the Company fails for any reason (including without limitation as a result of not having a sufficient number of shares of Common Stock authorized and reserved for issuance, or as a result of the limitation contained in the stock designation, or due to voluntary action undertaken by the Company or a failure by the Company to take action, to issue shares of Common Stock to a Holder and deliver certificates representing such shares to such Holder as and when required by the provisions hereof upon Conversion of any Preferred Shares, and such failure continues for ten (10) Business Days;

(ii) the Company breaches, in a material respect, due to voluntary action undertaken by the Company or a failure by the Company to take action, any covenant or other material term or condition of the Preferred Stock, or any other agreement, document, certificate or other instrument delivered in connection with the transactions contemplated thereby, and such breach continues for a period of five (5) Business Days after written notice thereof to the Company from a Holder;

(iii) any material representation or warranty made by the Company in any agreement, document, certificate or other instrument delivered in connection with the transactions contemplated hereby or thereby is inaccurate or misleading in any material respect as of the date such representation or warranty was made due to voluntary action undertaken by the Company or a failure by the Company to take action.

Warrants

On February 25, 2019, the Company also issued Crown Bridge Partners LLC a Common Stock Purchase Warrant for 189 shares of common stock. The warrants have an exercise price of $350 per share and expiration date of February 25, 2024. These warrants were tainted by the variable notes and the fair value of $47,063 was accounted for as a derivative liability in accordance with ASC 815. During the six months ended January 31, 2020, no warrants were granted, forfeited, expired or cancelled. As of January 31, 2020, there were 189 warrants outstanding with a weighted average exercise price of $350, a weighted average remaining of 4.3 years and intrinsic value of zero.

NOTE 6 – DISTRIBUTION AGREEMENTS

The Company entered into a Distribution Agreement on September 2, 2011 with the Bosko Group LLC providing them a non-exclusive right to market the sales of the Company’s DVD’s. The Distribution Agreement requires the Company to pay the Bosko Group LLC ten percent (10%) of the selling price of the DVD’s sold. This agreement remained in effect for a period of 4 years and has been automatically renewed for an additional 4 years with no limit on the number of times the agreement may be automatically renewed, unless either party gives notice to the other of its desire to terminate the Agreement at least sixty (60) days before expiration of the original or renewal term.

In May 2017, the Company entered into two separate agreements (the “Re-Release”) with The Bosko Group LLC (the “Distributor”) to provide distribution and promotional services to the Company. The terms of the agreements provide for the following:

On August 1, 2018, the Company, entered into a Securities Purchase Agreement (the Securities Purchase Agreement”) with an investor, pursuant to which the Company sold to the Investor a convertible promissory note in the principal amount of $110,000 (the “August 2018 Note”), for an aggregate purchase price of $100,000. The Company received $100,000 cash and recorded $10,000 as issuance cost. The August 2018 Note matures on May 1, 2019, bears interest rate of 10% per year payable on maturity date in cash or shares of common stock at the Company’s option (subject to certain conditions), and is convertible into shares of the Company’s common stock at the conversion price equal to the lower of (i) the closing sale price of the common stock on the principal market on the trading day immediately preceding the closing date, and (ii) 55% of either the lowest sale price for the common stock during the 20 consecutive trading days including and immediately preceding the conversion date. This note became convertible on issuance date and the variable conversion feature was accounted for as a derivative liability in accordance with ASC 815. The Company recorded an increase in the principal of $15,000 since the conversion price is less than $0.01. The August 2018 Note has an outstanding balance as of January 31, 2020 of $79,399, is in default and subject to annual interest of 24%.

On September 23, 2019, the Company entered into a convertible promissory note with KinerjaPay Corp. for an aggregate purchase price of $20,000. The Note matures on March 23, 2020, bears interest rate of 10% per year payable on maturity date in cash or shares of common stock at the Company’s option (subject to certain conditions), and is convertible into shares of common stock at the conversion rate equal to 50% multiplied by the Market Price. “Market Price” means the average of the lowest Trading Price (as defined below) for the Common Stock during the thirty (30) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price on the OTCQB, OTCQX, Pink Sheets electronic quotation system or applicable trading market (the “OTC”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTC is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets”. The variable conversion feature was accounted for as a derivative liability under ASC 815, resulting in the recognition of a discount of $20,000 on the issuance date. The balance of principal on the September 23, 2019 note as of January 31, 2020 is $20,000.

On February 25, 2019, the Company signed a convertible promissory note with Crown Bridge Partners, LLC for a principal sum of $165,000 to be requested in installments. The first installment of $28,500 was received for the principal of $33,000 on March 1^st, 2019. The note is subject to interest rate of 8% and matures in February 2020. The holder of the note shall have the right to convert the notes at any time, the note bears interest rate of 8% per year payable on maturity date in cash or shares of common stock at the Company’s option (subject to certain conditions), and is convertible into shares of the Company’s common stock at the conversion price which equals 50% multiplied by the lowest one trading price for the common stock during the 25 day trading day period ending on the last complete trading day prior to the conversion date. The note is convertible on issuance date and the variable conversion feature with a fair value of $56,216 was accounted for as a derivative liability in accordance with ASC 815 with a corresponding charge of $28,500 to debt discount and $27,716 to day one loss on derivative. On February 25, 2019, the Company also issued Crown Bridge Partners LLC a Common Stock Purchase Warrant for 18,857,142 shares of common stock. The warrants have an exercise price of $0.0035 per share and expiration date of February 25, 2024. These warrants were tainted by the variable notes and the fair value of $47,063 was accounted for as a derivative liability in accordance with ASC 815. The outstanding balance of the principal on the note as of July 31, 2019 and January 31, 2020, is $33,000 and $26,225, respectively.

In the six months ended January 31, 2020 and 2019, the Company recorded amortization of debt discount in the amount of $25,329 and $100,335, respectively. Unamortized discount as of January 31, 2020 amounted to $20,607.