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 (“we”, “our” the “Company”), formally known as Bigfoot Project Investments
Inc. (“Bigfoot, Inc.” “Searching for Bigfoot, Inc.”), was incorporated in the State of Nevada on November
30, 2011. The Company’s principal address is 318 N Carson St, Suite 208, Carson City, Nevada 89701 and its fiscal year ends
July 31. From its inception in 2011, the Company had been engaged in organizational efforts and the pursuit of financing its Bigfoot
entertainment projects. In connection with its change in control in November 2019 (discussed below). The Company retained a 19%
minority ownership stake in their predecessor Bigfoot Project Investments, Inc. upon finalization of transfer of ownership and
name change to Lord Global Corporation.
The
Company, through 27Health, Inc., its wholly owned subsidiary organized in January 2020, has been engaged in providing
services to and making strategic investments in revenue generating projects and entities in which it will take an
active business role. The Company believes that one of its competitive advantages is the wide range of investment
and management experience of the newly constituted 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 unaffiliated
entities to generate revenues from its strategic investments and equity ownership interests. Reference is made to the disclosure
under Note 8-SUBSEQUENT EVENTS, with respect to onging pursuit in furtherance of its plan of operations.
On
November 13, 2019, the former 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 (pre-split) and 45,008 shares of common stock (post-split).
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. As of the date of this Report, the former CEO Carmine T. Biscardi
owns 0% of the outstanding Series A shares and less than 1% of the outstanding shares of common stock.
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. On January 28, 2020, Lord Global
Corporation (the private company) dissolved and 27Health Inc. took majority ownership control of the public company Lord Global
Corporation.
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 28th, 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 corporate actions involving: (i) reverse stock split on a 1:100,000
basis (the “Reverse Split”), (ii) a name change from Bigfoot Project Investments, Inc. to Lord Global Corporation
(the “Name Change”), and (iii) the assignment of a new trading symbol “LRDG” (collectively, the “Corporate
Actions”). On January 28, 2020, FINRA approved the Corporate Actions , with the implementation of the Reverse Split, Name
Change, and assignment of LRDG as the new trading symbol. Unless specifically noted herein, references to share and per-share
amounts give retroactive effect to the Reverse Stock Split.
LORD
GLOBAL CORPORATION
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Basis
of Presentation
The
accompanying unaudited interim consolidated financial statements have been prepared on the same basis as the annual audited consolidated
financial statements and in accordance with accounting principles generally accepted in the United States (“GAAP”)
for interim consolidated financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”)
for interim consolidated 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 nine months ended April 30, 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 $619 and $1,628 for the nine months ended
April 30, 2020 and 2019, 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 CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
●
|
Level
1 -
|
Quoted
prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes for transactions
in active exchange markets involving identical assets.
|
●
|
Level
2 -
|
Quoted
prices for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities
that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable
in active markets. These are typically obtained from readily-available pricing sources for comparable instruments.
|
●
|
Level
3 -
|
Unobservable
inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s
own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best
information available in the circumstances.
|
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
April 30, 2020 and July 31, 2019:
As of July 31, 2019
|
|
Amount
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Embedded conversion derivative liability
|
|
$
|
177,746
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
177,746
|
|
Warrant derivative liability
|
|
|
47,063
|
|
|
|
-
|
|
|
|
|
|
|
|
47,063
|
|
Total as of July 31, 2019
|
|
$
|
224,809
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
224,809
|
|
As of April 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded conversion derivative liability
|
|
$
|
184,809
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
184,809
|
|
Warrant derivative liability
|
|
|
46,946
|
|
|
|
-
|
|
|
|
-
|
|
|
|
46,946
|
|
Total as of April 30, 2020
|
|
$
|
231,755
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
231,755
|
|
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:
Balance at July 31, 2018
|
|
$
|
351,492
|
|
Fair value of derivative liability at issuance charged to debt discount
|
|
|
200,770
|
|
Fair value of derivative liability at issuance charged to derivative loss
|
|
|
128,880
|
|
Reclass to equity due to conversion
|
|
|
(205,391
|
)
|
Write-off of derivative liability due to settlement
|
|
|
(57,248
|
)
|
Unrealized derivative gain included in other expense
|
|
|
(222,828
|
)
|
Balance at April 30, 2019
|
|
$
|
195,675
|
|
|
|
|
|
|
Balance at July 31, 2019
|
|
$
|
224,809
|
|
Fair value of derivative liability at issuance charged to debt discount
|
|
|
20,000
|
|
Fair value of derivative liability at issuance charged to derivative loss
|
|
|
97
|
|
Reclass to equity due to conversion
|
|
|
(16,994
|
)
|
Unrealized derivative (gain) loss included in other expense
|
|
|
3,843
|
|
Balance at April 30, 2020
|
|
$
|
231,755
|
|
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.
Asset
Impairment
ASC
Topic 360 requires that a company recognize an impairment loss if, and only if, the carrying amount of a long-lived asset (asset
group) is not recoverable from the sum of the undiscounted cash flows expected to result from the use and eventual disposal of
the asset (the “Recoverable Amount”), and if the carrying amount exceeds the asset’s Fair Market Value.
In
the event the Company determines an asset is impaired, it is written off to the consolidated statement of operations as a non-operating
loss in the period which Management deems the asset impairment occurred.
During
the nine months ended April 30, 2020, the Company made approximately $280,600 in cash payments to a related party for preservation
and protection of the Company and its subsidiaries collateral interests, as well as its long-term strategic plan. Management accounted
for this transaction by increasing both its capital investment in Bigfoot and also shareholder promissory note for the same amount.
At April 30, 2020, the shareholder note had been forgiven and the investment in Bigfoot, Inc. was considered impaired. Because
of the asset impairment, the entire balance of $280,000 was written off to the statement of income in the current period. Balance
of this shareholder loan as of April 30, 2020 and July 31, 2019 was $0.
Management
has evaluated Accounting Standards Codification (“ASC”) topic 820 Fair Value Measurements and ASC topic 360 asset
impairment over the approximately $280,000 capital contribution in its minority owned subsidiary Bigfoot, Inc.
Due
to results of the impairment analysis, the Company concluded that value associated to the approximate $280,000 capital contribution
made to preserve and protect the Company’s collateral investment in Lord Global Corporation and minority owned subsidiary
Bigfoot, Inc. is impaired. As a result of this analysis and determination, the Company wrote the entire amount of approximately
$280,000 as a loss on asset impairment in the current period statement of income ending April 30, 2020. The Company retains a
19% minority ownership stake in subsidiary Bigfoot, Inc. as of the date of this Report.
Management
performs asset impairment analysis on at least a quarterly basis.
LORD
GLOBAL CORPORATION
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
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
nine months ended April 30, 2020, assumptions used in the valuation include the following: a) underlying stock price ranging from
$0.63 to $10.00 (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, and e) current liquidity of the Company’s stock, daily average
float, and so forth.
For
the nine months ended April 30, 2019, assumptions used in the valuation include the following: a) underlying stock price ranging
from $30 to $160; 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 during the reporting period.
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 nine months ended April 30, 2020 and 2019:
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
April
30, 2020
|
|
|
April
30, 2019
|
|
|
April
30, 2020
|
|
|
April
30, 2019
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) available to common shareholders
|
|
$
|
(21,844
|
)
|
|
$
|
(209,189
|
)
|
|
$
|
(1,300,010
|
)
|
|
$
|
(340,311
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares – basic and diluted
|
|
|
554,335
|
|
|
|
40,540
|
|
|
|
368,417
|
|
|
|
29,064
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) per share – basic and diluted
|
|
$
|
(0.04
|
)
|
|
$
|
(5.16
|
)
|
|
$
|
(3.53
|
)
|
|
$
|
(11.71
|
)
|
Reclassifications and adjustments
Certain prior year amounts have been reclassified
for consistency with the current year presentation and for proper presentation under GAAP. These reclassifications had no effect
on the reported results of operations.
LORD GLOBAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE
2 - GOING CONCERN
The
Company’s consolidated 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 consolidated 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 government or 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 stockholders.
NOTE
3 – ADVANCE FROM SHAREHOLDERS
In
the nine months ended April 30, 2020, additional advances from shareholders were received in the amount of $204,520. The Company
made payments on these advances amounting to $186,220. These advances bear no interest and are due on demand.
In
the nine months ended April 30, 2020, 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. Total
advances from shareholders as of July 31, 2019 were $75,135 and as of April 30, 2019 were $52,479. Liability associated to
the related party promissory note was taken by the Company’s wholly owned subsidiary Health Expedition Inc., and is
therefore included in the Company’s balance sheet at April 30, 2020.
The
total advances from shareholders outstanding as of July 31, 2019 were $75,135 and as of April 30, 2020 were $0.
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 promissory note is subject to annual interest
of 4%. The unpaid principal and the accrued interest were originally payable in full on January 31, 2019, then the maturity date
was extended to January 31, 2020.
During
fiscal year 2020, the Company paid $9,456 against the promissory note balance, and issued the related party promissory note holder
5,000 shares of Series A Convertible Preferred stock (pre-split), 500 shares (post-split) of which were issued in exchange for
$50,000 payment towards the related party promissory note principal balance (see Note 5).
As
of April 30, 2020, and July 31, 2019, the outstanding balance on the related party promissory note was $375,200 and $435,894,
respectively. During fiscal year 2020, Liability associated to the related party promissory note was taken by the Company’s
wholly owned subsidiary Health Expedition Inc., and is therefore included in the Company’s balance sheet at April 30, 2020.
Interest
expense for the Company, in total, during the nine months ended April 30, 2020 and 2019 was $64,013 and $258,741, respectively.
LORD GLOBAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
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 stockholders. 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 1,056,700 and 44,333 shares of common stock issued and outstanding as of April 30, 2020 and July 31, 2019, respectively.
During
the nine months ended April 30, 2020, the Company designated four new classes of preferred stock, par value $0.001 (collectively,
the “Preferred Stock”): Series F Convertible Preferred Stock with 40,000,000 shares authorized; Series T Convertible
Preferred Stock with 375 shares authorized; Series B Super Voting Preferred with 1,000,000 shares authorized; and Series
G Convertible Preferred with 60,000 shares authorized.
During
the nine months ended April 30, 2020, on February 7, 2020, the Company entered into a share exchange agreement with 27 Health,
Inc., an entity controlled by the Company’s executive officers and directors, pursuant to which the Company acquired 100%
of the capital stock of 27 Health in exchange for 10,000 shares of newly authorized Series F Preferred, which shares were issued
in proportion to the ownership percentages of their 27 Health stock. Upon the issuance of the shares of Series F Preferred, 27
Health Inc. became a wholly owned subsidiary of Lord Global Corporation. The acquisition was recorded at the par value of the
stock at the time of issuance. .
During
the nine months ended April 30, 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 update
and fees of $500.
During
the nine months ended April 30, 2019, subsequent to the above conversion notice, 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.
During
the nine months ended April 30, 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 nine months ended April 30, 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, 2020 is $8,647.
During
the nine months ended April 30, 2020, on November 8, 2019, 1,780 shares of Series A Convertible Preferred stock were converted
to 42,720 shares of common stock by the former CEO Carmine T. Biscardi.
During
the nine months ended April 30, 2020, on November 13, 2019, the former 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 (post-split). 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 and as of November 27, 2019.
During
the nine months ended April 30, 2020, on December 13, 2019, by vote of majority shareholders and unanimous consent of the Board,
the Company 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 nine months ended April 30, 2020, the Company designated four new classes of preferred stock: Series F Convertible Preferred
with 40,000,000 shares authorized at $0.001 par value, Series T Convertible Preferred with 375 shares authorized at $0.001 par
value, Series B Super Voting Preferred with 1,000,000 shares authorized at $0.001 par value, and Series G Convertible Preferred
with 60,000 shares authorized at $0.001 par value.
During
the nine months ended April 30, 2020, on February 7, 2020, the Company entered into a share exchange agreement with 27 Health,
Inc. The issued shares of the acquired company will be exchanged for Preferred Series F stock in proportion to the ownership percentages
of the issued stock. Upon the issuance of the stock, 27 Health Inc. will become a wholly owned subsidiary of Lord Global Corporation.
The acquisition was recorded at the par value of the stock at the time of issuance.
During
the nine months ended April 30, 2020, Management returned to treasury 45,008 shares of common stock.
During
the nine months ended April 30, 2020, the Company issued 18 shares of Preferred Series L convertible stock as compensation
for the share exchange agreement with Lord Global Corporation for approximately $1,940 in consideration.
During
the nine months ended April 30, 2020, the Company issued 1,000,000 shares of Preferred Series B Super Voting stock as compensation
for on-going negotiations for acquisitions of revenue generating contracts and/or interests in third party entities.
During
the nine months ended April 30, 2020, the Company issued 550 shares of Preferred Series G convertible stock to CNLT LLC in exchange
for approximately $50,000 cash consideration. Each Series G share converts to 1,000 shares of common stock. No of these
shares were converted into common stock at April 30, 2020 or July 31, 2019.
During
the nine months ended April 30, 2020, JA Ventures, Inc. converted 1,000,000 shares of common stock as compensation for development
of revenue generating contracts and previously held convertible preferred stock.
LORD GLOBAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
Series
A Convertible Preferred Stock
During
the nine months ended April 30, 2020, on October 31, 2019, the Company authorized 1,950 shares of the Series A Convertible
Preferred Stock (“Series A Preferred”), pursuant to the Series A Certificate of Designation, which Series A Preferred
shall be convertible into shares of common stock of the Company at the option of the holders thereof at any time. Each share of
Series A Preferred is convertible 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 nine months ended April 30, 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.
Of
the 5,000 shares of Series A Preferred stock issued, approximately 1,700 shares of Series A Preferred was outstanding at April
30, 2020 and 0 shares at July 31, 2019. Approximately 3,300 shares were converted to common stock by the stockholder.
LORD GLOBAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
Series
B Super Voting Preferred Stock
During
the nine months ended April 30, 2020, pursuant to the Certificate of Designation, the Company authorized 1,000,000 shares of Series
B Super Voting Preferred Stock (“Series B Preferred”), 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 nine months ended April 30, 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. As of the date of this Report, no additional
Series B Super Voting Preferred Stock shares are available to issue.
Series
G Convertible Preferred Stock
During
the nine months ended April 30, 2020, the Company authorized 60,000 shares of Series G Convertible Preferred Stock (“Series
G Preferred”) pursuant to a Series G Certificate of Designation.
The
Series G Preferred Convertible Stock have, among other rights and privileges, the right to convert the shares of Series G Preferred
into 1,000 shares of common stock.
The
Series G Preferred has, in addition to the above conversion rights, a beneficial ownership limitation provision which states,
in substance, that in no event may a holder of shares of Series G Preferred convert into common stock a number of Series G Preferred
if, as a result of such conversion, the holder would own in excess of 4.99% of the Company’s then outstanding shares of
common stock.
During
the nine months ended April 30, 2020, on March 25, 2020, the Company issued 550 shares of Series G convertible preferred stock
(“Series G Preferred”) to CNLT, LLC in exchange for approximately $330,000 cash consideration (see Note 1 and Note
4). None of these shares of Series G Preferred were converted into common stock as of April 30, 2020 or as of the date of this
Report. See Note 8-Subsequent Events with respect to the issuance in May 2020 of 1,500 additional shares of Series G Preferred
to an unrelated third party as part of a Settlement Agreement.
Series
L Convertible Preferred Stock
During
the nine months ending April 30, 2020, on January 17, 2019, pursuant to the Certificate of Designation, the Company authorized
20 shares of the Series L Convertible Preferred Stock (“Series L Preferred”), 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.
LORD GLOBAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
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 nine months ended April 30, 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
During
the nine months ended April 30, 2020, on January 17, 2019, pursuant to the Certificate of Designation, the Company authorized
375 shares of 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.
LORD GLOBAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
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 nine months ended April 30, 2020, approximately 1,333 shares were issued during the year to two investors in exchange for
bon fide management services. The 1,333 preferred shares were converted on April 8, 2020 into 4,000 shares of common stock. As
of the date of this Report, no shares were issued or outstanding with respect to the Company’s Series T Convertible Preferred
stock.
Series
F Convertible Preferred Stock
During
the nine months ended April 30, 2020, on February 7, 2020, the Company authorized 40,000,000 shares of Series F Convertible Preferred
Stock (“Series F Preferred”) pursuant to the Series F Certificate of Designation, which was amended on April 27, 2020,
without making any material change. As of April 30, 2020, and the date of this Report, 10,000 shares of Series F Preferred were
outstanding, all of which are owned by the founders and former owners of 27 Health, Inc.
The
Series F Preferred has, among other rights, the right to convert the shares of Series F Preferred into 97% of the Company’s
common stock on a fully diluted basis, which includes all shares of common stock underlying convertible notes or other securities,
including preferred stock, convertible into shares of the Company’s common stock. The Series F Preferred a beneficial ownership
limitation provision which states, in substance, that in no event may a holder of shares of Series F Preferred convert into common
stock a number of Series F Preferred if, as a result of such conversion, the holder would own in excess of 4.99% of the Company’s
then outstanding shares of common stock.
During
the nine months ended April 30, 2020, the Company entered into a share exchange agreement with the holders of 27 Health, Inc.
pursuant to which the Company issued 10,000 shares of Series F Preferred in exchange for all of the capital stock of 27
Health, Inc. for development of revenue generating contracts to be valued. Upon the issuance of the shares of Series F
Preferred, 27 Health Inc. became a wholly owned subsidiary of Lord Global Corporation. The acquisition was recorded at the par
value of the stock at the time of issuance.
Warrants
On
February 25, 2019, the Company 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 nine months ended April 30, 2020, no warrants were granted, forfeited, expired or cancelled. As of April 30, 2020, there were
189 warrants outstanding with a weighted average exercise price of $350, a weighted average remaining expiration period of approximately
4.0 years and intrinsic value of zero.
LORD GLOBAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
NOTE
6 – DISTRIBUTION AGREEMENTS
The
Company’s predecessor, Bigfoot, 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:
|
a.
|
Compensation
to the Company for the Re-Release will be based on projected gross sales range and royalties for six existing DVD documentaries
which will be offered into all distribution markets as a series with a new introduction narrated by Tom Biscardi.
|
|
|
|
|
b.
|
Compensation
to the Company for the Distribution of new feature-length films is based on past performance of previous productions with
up-front funding and projected royalties over all distribution channels. The Company completed production of the first of
the new feature-length films in July 2017. The film was edited and released in August 2018 through various channels, and the
Company is awaiting sales reports from the distribution company.
|
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 April 30, 2020 of $79,399, is in default and subject to annual interest of 24%. During fiscal year 2020, Liability
associated to the related party promissory note was taken by the Company’s wholly owned subsidiary Health Expedition Inc.,
and is therefore included in the Company’s balance sheet at April 30, 2020.
NOTE
7 – CONVERTIBLE DEBT
On
September 23, 2019, the Company entered into a convertible promissory note with KinerjaPay Corp. in the principal amount of $20,000
(the “KPAY Note”), which had a maturity date of March 23, 2020 and was in default as of April 30, 2020 (subject to
maximum default interest rate allowed by law plus penalties). The KPAY Note bears an annual 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, as defined in the KPAY Note, subject
to penalties in the event of default. (see Note 8 – Subsequent Events, for details of the Settlement Agreement between the
Company and KinerjaPay Corp. pursuant to which the KPAY Note including principal, interest and all default penalties were satisfied
in full in consideration for the issuance of 50,000 shares of common stock and 1,500 shares of newly authorized Series G Convertible
Preferred Stock).
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 funded in tranches (collectively, the “CBP Notes”). The first installment of $28,500 was received for the principal
of $33,000 on March 1, 2019. The CBP Notes provide for an interest rate of 8% per annum and had a maturity date in February 2020.
Crown Bridge has 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 exercisable to purchase
18,857,142 pre-Reverse Split shares of common stock. The CBP Warrants have an exercise price of $0.0035 per share on a pre-Reverse
Split basis, which CBP have an expiration date of February 25, 2024. These CBP Warrants were tainted by the variable conversion
prices on the CBP 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 April 30, 2020, is $33,000 and $26,225, respectively.
LORD GLOBAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
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 1st,
2019. The note is subject to interest rate of 8% and matures in February 2020, and is now in default. 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 $0.0033 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.
On
March 2, 2020, the Company, entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with
a third-party accredited investor, pursuant to which the Company issued to the Investor a convertible promissory note in the principal
amount of $125,000 (the “March 2020 Note”), for an aggregate purchase price of $110,000. The Company received $110,000
cash and recorded $10,000 as issuance cost. The March 2020 Note matures on January 2, 2021, bears interest rate of 12% 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. During the nine months ended April 30, 2020, Crown Bridge Partners, LLC converted their promissory note investment into
common stock. The outstanding principal balance on the note as of July 31, 2019 and April 30, 2020, is $33,000 and $26,225, respectively.
The remaining balance of the loan was recorded as a gain on settlement of debt in the current period.
During
the three months ended April 30, 2020, the Company issued a convertible note to Auctus Fund, LLC, an unaffiliated, third-party
accredited investor in the principal amount of $155,000. Auctus Fund may convert the Note into shares of common stock ata conversion
price equal to a 40% discount the lowest sale price for the common stock during the 20 consecutive trading days including and
immediately preceding the conversion date.
In
the nine months ended April 30, 2020 and 2019, the Company recorded amortization of debt discount in the amount of $45,936 and
$120,438, respectively. Unamortized discount as of April 30, 2020 amounted to $0.
NOTE
8 - SUBSEQUENT EVENTS
In
May 2020, the Company applied for a promissory term loan note agreement with the United States Small Business Administration (“SBA
Loan”). Terms of the SBA Loan are approximately $150,000 principal repaid over 30 years at approximately a 3% fixed interest
rate. Proceeds of the SBA Loan will be used for working capital business requirements at discretion of Management and on behalf
of stockholders.
During
May 2020, 6,000 shares of common stock were issued to Crown Bridge Partners LLC under their previously granted preferred stock
warrant conversion option.
During
May 2020, in connection with the execution of a Settlement Agreement between the Company and KinerjaPay Corp., an unaffiliated
third party (“KPAY”), the Company issued to KPAY 50,000 shares of common stock and 1,500 shares of Series G Convertible
Preferred Stock (“Series G Preferred”), each of which is convertible into 1,000 shares of common stock. Pursuant to
the Settlement Agreement, the 50,000 shares of common stock and 1,500 shares of Series G Preferred were issued in exchange for
full consideration and satisfaction of payment of KPAY’s convertible note balance outstanding principal, accrued unpaid
interest, and penalties, collectively, as of the date of conversion. The outstanding balance of the convertible promissory note
prior to conversion including unpaid interest and penalties was approximately $50,000.
On May 5, 2020,
the Company entered into a non-binding letter of intent (“LOI”) with eWellness Healthcare Corporation, OTCQB: EWLL
(“EWLL”), a copy of which was attached as Exhibit 10.1 to the subject Form 8-K.
The
parties agreed, subject to the execution of a definitive agreement (“Definitive Agreement”), that the Company: (i)
will issue to EWLL shares of a newly authorized series of preferred stock (the “New LRDG Preferred Stock”) which will
be convertible into a total of 2,000,000 shares of the Company’s common stock, subject to a 4.99% “blocker”
or beneficial ownership limitation; (ii) will create a U.S. marketing entity for EWLL’s PHZIO and MSK360 telemedicine physical
therapy operations to independent contractors an “gig” economy workers; (iii) will provide initial funding in an amount
of $250,000 on or about May 15, 2020; (iv) will provide additional funding in an amount equal to 50% of the convertible note financing
transactions entered into by the Company during the 12-month period from the execution of the Definitive Agreement, which will
occur only after EWLL’s pending registration statement on Form S-1 is declared effective by the SEC; and (v) plans on filing
a registration statement after execution of the Definitive Agreement for the registration, issuance and sale of the Company of
the Company’s equity securities for the benefit and funding of EWLL’s growing operations. The foregoing are referred
to collectively, as the “LRDG Obligations”), all of which are subject to the execution of the Definitive Agreement,
after customary due diligence.
In
consideration for the Company’s fulfilment of their LRDG Obligations, EWLL has agreed, subject to the execution of the Definitive
Agreement, to: (i) pay to LRDG 10% of the commissions generated by EWLL from the fees paid to EWLL by the independent contractors
and “gig” workers using the EWLL’s PHZIO and MSK360 platform in their physical therapy practices; and (ii) the
assignment to the Company by EWLL of 25% of EWLL’s cash flow from its revenue stream (“EWLL’s Cash Flow”),
payable in arrears on a quarterly basis, commencing on the execution of the Definitive Agreement. The foregoing are referred to,
collectively, as the “EWLL Obligations.”
LORD
GLOBAL CORPORATION
NOTES
TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The
parties have agreed that during the 1-year period following execution of the Definitive Agreement that EWLL shall have the right
to repurchase up to 20% of EWLL’s Cash Flow in consideration for the repayment of 150% of funding provided EWLL by the Company
from its convertible note financing transactions. The parties further agreed that if the Company does not provide EWLL $250,000
in initial funding by or about May 20, 2020, either party may terminate this non-binding LOI the respective LRDG Obligations and
EWLL Obligations shall be deemed null and void.
Reference
is made to the Company’s Form 8-K filed on May 11, 2020 with respect to the LOI with EWLL. Negotiations for a Definitive
Agreement are continuing.
During
June 2020, 54,355 shares of common stock were issued to the Auctus Fund under their granted preferred stock conversion option.
During
June 2020, 55,500 shares of common stock were issued to Crown Bridge Partners LLC under their granted preferred stock conversion
option.
During
June 2020, 58,200 shares of common stock were issued to the Auctus Fund under their granted preferred stock conversion option.
During
June 2020, in exchange for services associated with development of revenue generating contracts, the Company issued CNLT 950 shares
of Series G Convertible Preferred Stock. These Series G shares issued were in addition to to 550 shares of Series G Preferred
issued in March 2020, for a total of 1,500 Series G shares issued to CNLT as of the date of this Report. As noted above, the Company
issued 1,500 shares of series B Preferred to KinerjaPay in May 2020 pursuant to the Settlement Agreement.
Each
share of Series G Convertible Preferred Stock is convertible into 1,000 shares of common stock. Collectively, up to 3,000,000
shares of common stock are issuable upon conversion of the Series G Preferred, subject to as of the date of this Report. The Series
G Preferred has, in addition to the above conversion rights, a beneficial ownership limitation provision which states, in substance,
that in no event may a holder of shares of Series G Preferred convert into common stock a number of Series G Preferred if, as
a result of such conversion, the holder would own in excess of 4.99% of the Company’s then outstanding shares of common
stock.
On June 18, 2020,
27Health, Inc, (“27Health”), a wholly owned subsidiary of the Company, entered into a Definitive Joint Venture Investment
and Marketing Agreement with Coviguard, Inc. (“CoviGuard”), a copy of which was attached as Exhibit 10.20 to the Company’s
Form 8-K filed on June 19, 2019 (the “Coviguard Agreement”). Coviguard is a private company that has developed and
plans to market its unique, patent pending, oral spray and mouthwash, a product line designed for the purpose eliminating
the CO-SAR2 (COVID-19) viral load in the mouth (the “Covi-Guard™ Products”). Reference is made to the Coviguard
PowerPoint Presentation, attached as Exhibit 10.21 to the June 19, 2020 Form 8-K.
Pursuant
to the terms of the Coviguard Agreement, 27Health agreed to invest up to $100,000 in Coviguard for the production of the Covi-Guard™
Products, including an initial advance of $20,000 for the purpose of manufacturing prototypes. In addition, the Company has agreed,
as partial consideration for Coviguard granting 27Health exclusive marketing rights to Covi-Guard™ Products, to issue 1,000,000
restricted shares of LRDG’s common stock, par value $0.001 (the “Shares” or “Common Stock”) in the
name of Lisa Marie Kao, the principal and owner of Coviguard, subject to the terms and conditions set forth in the Coviguard Agreement.
The
parties further agreed that: (i) net revenues from the sale of Covi-Guard™ Products (other than revenues from the professional
dental market), after manufacturing costs and other variable costs, shall be allocated 75% to 27Health and 25% to Coviguard or
Lisa Marie Kao, at the discretion of Ms. Kao; (ii) net revenues, after expenses, from sales to the professional dental market,
shall be 65% to 27Health and 35% to Coviguard or Lisa Marie Kao; (iii) after receipt by Lisa Marie Kao of $1,000,000 from the
sale of the Shares, Ms. Kao shall invest any excess above $1,000,000 to purchase additional restricted shares of LRDG Common Stock
from the Company at a price equal to 75% of the average closing bid price of such Shares during the twenty (20) trading days prior
to the date of her reinvestment; and (iv) 27Health shall utilize the proceeds from Ms. Kao’s reinvestment for marketing
and promotion of the Covi-Guard™ Products.
Reference
is made to the Company’s Form 8-K filed on June 19, 2020 and specifically to Exhibit 10.20 for complete terms and conditions
of the Coviguard Agreement and to Exhibit 10.21, the recently published Coviguard PowerPoint Presentation.
The
Company, through 27Health, is actively pursuing agreements and strategic relationships, particularly in the health related industry
for the purposes of generating revenues and positive cash flow from operations.