The accompanying condensed consolidated financial statements of MMEX Resources Corporation and subsidiaries (the “Company”) are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, the condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.
Operating results and cash flows for any interim period are not necessarily indicative of the results that may be expected for other interim periods or the full fiscal year. These condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended April 30, 2019 filed with the Securities and Exchange Commission (“SEC”).
Notes to Condensed Consolidated Financial Statements
Three Months Ended July 31, 2019 (Unaudited)
NOTE 1 – BACKGROUND, ORGANIZATION AND BASIS OF PRESENTATION
MMEX Resources Corporation (the “Company” or “MMEX”) is a company engaged in the exploration, extraction, refining and distribution of oil, gas, petroleum products and electric power. We plan to focus on the acquisition, development and financing of oil, gas, refining and electric power projects in Texas, Peru, and other countries in Latin America using the expertise of our principals to identify, finance and acquire these projects. The most significant focus of our current business plan is to build crude oil refining facilities in the Permian Basin in West Texas.
MMEX was formed as a Nevada corporation in 2005. The current management team led an acquisition of the Company (then named Management Energy, Inc.) through a reverse merger completed on September 23, 2010 and changed the Company’s name to MMEX Mining Corporation on February 11, 2011 and to MMEX Resources Corporation on April 6, 2016
The accompanying condensed consolidated financial statements include the accounts of the following entities, all of which the Company maintains control through a majority ownership or through common ownership:
Name of Entity
|
|
%
|
|
Form of Entity
|
|
State of Incorporation
|
|
Relationship
|
|
|
|
|
|
|
|
|
|
MMEX Resources Corporation (“MMEX”)
|
|
-
|
|
Corporation
|
|
Nevada
|
|
Parent
|
Pecos Refining & Transport, LLC (“Pecos Refining”)
|
|
100%
|
|
Corporation
|
|
Texas
|
|
Subsidiary
|
Armadillo Holdings Group Corp. (“AHGC”)
|
|
100%
|
|
Corporation
|
|
British Virgin Isles
|
|
Subsidiary
|
Armadillo Mining Corp. (“AMC”)
|
|
98.6%
|
|
Corporation
|
|
British Virgin Isles
|
|
Subsidiary
|
Pecos Refining was formed in June 2017 with the Company as its sole member. Through Pecos Refining, the Company plans to build and commence operations of a crude oil distillation unit in the Permian Basin in West Texas.
As of April 13, 2016, the Company assigned AMC to an irrevocable trust (the “Trust”), whose beneficiaries are the existing shareholders of MMEX. The accounts of AMC are included in the consolidated financial statements due to the common ownership. AMC through the Trust controls the Hunza coal interest previously owned by MMEX.
All significant inter-company transactions have been eliminated in the preparation of the consolidated financial statements.
These financial statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for a fair presentation of the information contained therein.
The Company has adopted a fiscal year end of April 30.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Our significant accounting policies are described in our Annual Report on Form 10-K for the year ended April 30, 2019 filed with the SEC on July 26, 2019.
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its aforementioned subsidiaries and entities under common ownership. All significant intercompany accounts and transactions have been eliminated in consolidation. The ownership interests in subsidiaries that are held by owners other than the Company are recorded as non-controlling interest and reported in our consolidated balance sheets within stockholders’ deficit. Losses attributed to the non-controlling interest and to the Company are reported separately in our consolidated statements of operations.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Property and equipment
Property and equipment is recorded at the lower of cost or estimated net recoverable amount, and is depreciated using the straight-line method over the estimated useful life of the related asset as follows:
Office furniture and equipment
|
10 years
|
Computer equipment and software
|
5 years
|
Refinery land improvements
|
15 years
|
Refinery land easements
|
10 years
|
The refinery land easements owned by the Company have a legal life of 10 years
Maintenance and repairs are charged to expense as incurred. Significant renewals and betterments will be capitalized. At the time of retirement or other disposition of equipment, the cost and accumulated depreciation will be removed from the accounts and the resulting gain or loss, if any, will be reflected in operations.
The Company will assess the recoverability of property and equipment by determining whether the depreciation and amortization of these assets over their remaining life can be recovered through projected undiscounted future cash flows. The amount of equipment impairment, if any, will be measured based on fair value and is charged to operations in the period in which such impairment is determined by management.
Derivative liabilities
In a series of subscription agreements, the Company issued warrants in prior years that contain certain anti-dilution provisions that have been identified as derivatives. In addition, the Company identified the conversion feature of certain convertible notes payable and convertible preferred stock as derivatives. As of July 31, 2019, the number of warrants or common shares to be issued under these agreements is indeterminate; therefore, the Company concluded that the equity environment is tainted and all additional warrants, stock options and convertible debt are included in the value of the derivatives. We estimate the fair value of the derivatives using multinomial lattice models that value the derivative liabilities based on a probability weighted cash flow model using projections of the various potential outcomes. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility and management’s estimates of various potential equity financing transactions. These inputs are subject to significant changes from period to period and to management's judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.
Fair value of financial instruments
Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, and ASC 825, Financial Instruments, the FASB establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company's financial statements as reflected herein. The carrying amounts of cash, prepaid expense and other current assets, accounts payable, accrued expenses and notes payable reported on the accompanying consolidated balance sheets are estimated by management to approximate fair value primarily due to the short-term nature of the instruments.
An entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value using a hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy prioritized the inputs into three levels that may be used to measure fair value:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in markets that are not active.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
Our derivative liabilities are measured at fair value on a recurring basis and estimated as follows:
July 31, 2019
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
1,191,956
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,191,956
|
|
April 30, 2019
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
1,825,596
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,825,596
|
|
Revenue Recognition
Effective May 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, as amended, using the modified retrospective method, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. To date, the Company has no operating revenues; therefore, there was no cumulative effect of adopting the new standard and no impact on our financial statements. The new standard provides a single comprehensive model to be used in the accounting for revenue arising from contracts with customers and supersedes current revenue recognition guidance, including industry-specific guidance. The standard’s stated core principle is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this core principle, ASC 606 includes provisions within a five-step model that includes identifying the contract with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations, and recognizing revenue when, or as, an entity satisfies a performance obligation.
Refinery start-up costs
Costs incurred prior to opening the Company’s proposed crude oil refinery in Pecos County, Texas, including acquisition of refinery rights, planning, design and permitting, are recorded as start-up costs and expensed as incurred.
Basic and diluted income (loss) per share
Basic net income or loss per share is calculated by dividing net income or loss (available to common stockholders) by the weighted average number of common shares outstanding for the period. Diluted income or loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, such as stock options, warrants, convertible debt and convertible preferred stock, were exercised or converted into common stock. For the three months ended July 31, 2019 and 2018, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share, therefore, basic net loss per share is the same as diluted net loss per share.
Stock-based compensation
Pursuant to FASB ASC 718, all share-based payments to employees, including grants of employee stock options, are recognized in the statement of operations based on their fair values. For the three months ended July 31, 2019 and 2018, the Company recorded share-based compensation to employees of $0 and $1,070, respectively.
Issuance of shares for non-cash consideration
The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably determinable. The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of the standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined as the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
Reclassifications
Certain amounts in the consolidated financial statements for the prior-year period have been reclassified to conform with the current-year period presentation.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing transactions. This new pronouncement, as amended, is effective January 1, 2019 for calendar-year-end public companies, or May 1, 2019 for the Company. The Company currently does not have any material leases and the adoption of this new pronouncement did not have a material impact on its consolidated financial statements.
Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its consolidated financial position or results of operations.
NOTE 3 – GOING CONCERN
Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations, have an accumulated deficit of $39,801,065 and a total stockholders’ deficit of $3,294,773 at July 31, 2019, and have reported negative cash flows from operations since inception. In addition, we do not currently have the cash resources to meet our operating commitments for the next twelve months, and we expect to have ongoing requirements for capital investment to implement our business plan, including the construction of our proposed refinery project. Finally, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which we operate.
Since inception, our operations have primarily been funded through private debt and equity financing, and we expect to continue to seek additional funding through private or public equity and debt financing.
Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs and/or to raise funds to finance ongoing operations and repay debt. However, there can be no assurance that we will be successful in our efforts to raise additional debt or equity capital and/or that our cash generated by our operations will be adequate to meet our needs. These factors, among others, raise substantial doubt that we will be able to continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company's ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4 – RELATED PARTY TRANSACTIONS
Accounts payable and accrued expenses to related parties, consisting primarily of consulting fees, totaled $60,855 and $41,036 as of July 31, 2019 and April 30, 2019, respectively.
During the three months ended July 31, 2019 and 2018, we incurred consulting fees and expense reimbursement related to the development of the refinery project to Maple Resources Corporation (“Maple Resources”), a related party controlled by our President and CEO, totaling $79,991 and $77,639, respectively. Amounts included in accounts payable due to Maple Resources totaled $7,322 and $9,403 as of July 31, 2019 and April 30, 2019, respectively. Effective July 1, 2019, we entered into a consulting agreement with Maple Resources that provides, in addition to the consulting fees and expense reimbursement, for the issuance to Maple Resources of shares of our Class A common stock each month with a value of $5,000, with the number of shares issued based on the average closing price of the stock during the prior month. No shares were issued to Maple Resources in July 2019 under the agreement.
Effective October 1, 2018, we entered into a consulting agreement with a related party to issue shares of our Class A common stock each month with a value of $2,500, with the number of shares issued based on the average closing price of the stock during the prior month. During the three months ended July 31, 2019, we issued a total of 620,534 Class A common shares valued at $5,009 to the related party, with the shares valued at the market price on the date of issuance, in payment of accrued consulting fees totaling $7,500. A gain on extinguishment of debt of $2,491 related to this compensation arrangement was recorded as a contribution to capital.
During the three months ended July 31, 2018, we issued to an employee 274,427 shares of our Class A common stock valued at $1,070 based on the market price on the date of issuance. The employee was terminated in January 2019.
As a condition for entering into an October 9, 2018 convertible debenture (see Note 8), the lender required affiliates of Jack W. Hanks and Bruce Lemons, our directors (the “Affiliates”), to pledge their shares of Class B Common Stock (constituting 100% of the outstanding shares of Class B Common Stock) to the lender to secure the repayment of the debenture by the Company. As consideration to the Affiliates for entering into the pledge agreement, the Company granted a ten-year option, effective as of December 11, 2018, to the Affiliates to purchase 1,000,000 of Class A Shares and 1,000,000 of the Class B Shares at $0.08 per share.
NOTE 5 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at:
|
|
July 31, 2019
|
|
|
April 30,2019
|
|
|
|
|
|
|
|
|
Office furniture and equipment
|
|
$
|
13,864
|
|
|
$
|
13,864
|
|
Computer equipment and software
|
|
|
10,962
|
|
|
|
10,962
|
|
Refinery land
|
|
|
67,088
|
|
|
|
67,088
|
|
Refinery land improvements
|
|
|
443,928
|
|
|
|
441,465
|
|
Refinery land easements
|
|
|
37,015
|
|
|
|
37,015
|
|
|
|
|
572,857
|
|
|
|
570,394
|
|
Less accumulated depreciation and amortization
|
|
|
(47,814
|
)
|
|
|
(39,227
|
)
|
|
|
|
|
|
|
|
|
|
|
|
$
|
525,043
|
|
|
$
|
531,167
|
|
On July 28, 2017, the Company acquired 126 acres of land located near Fort Stockton, Texas for $67,088. This 126-acre parcel is the tract on which the Company intends to build a crude oil refinery (Note 6). Subsequently through July 31, 2019, the Company incurred a total of $480,942 additional costs to acquire certain easements related to the land parcel and make other improvements.
Depreciation and amortization expense totaled $8,587 and $571 for the three months ended July 31, 2019 and 2018, respectively.
NOTE 6 – REFINERY PROJECT
On March 4, 2017, we entered into an agreement with Maple Resources, a related party, to acquire all of Maple’s right, title and interest (the “Rights”) in plans to build a crude oil refinery in Pecos County, Texas (the “Refinery Transaction”). Pursuant to the Refinery Transaction, we agreed to acquire the Rights in exchange for the issuance of 15,000,000 Class B common shares. The 15,000,000 Class B common stock issued for the Rights were valued at $150,000 by an independent valuation firm, with the $150,000 expensed to refinery start-up costs.
Through our wholly-owned subsidiary, Pecos Refining, we intend initially to build and commence operation of a 10,000 barrel-per-day distillation unit (the “Distillation Unit”) that will produce a non-transportation grade diesel primarily for sale in the local market for drilling mud and frac fluids, along with naphtha for use in petrochemical and refinery processing and residual fuel oil to be sold for use in other refineries or as marine fuel. Through a separate subsidiary, we intend to build and commence operation of a crude oil refinery (the “Large Refinery”) with up to 100,000 barrel-per-day capacity at a near-by location in West Texas (collectively with the Distillation Unit, the “Refinery Project”). The Refinery Project will be built on additional acres located 20 miles northeast of Fort Stockton, Texas.
On July 28, 2017, we acquired the 126-acre parcel of the land, which is the site for our planned Distillation Unit (Note 5), at a purchase price of $550 per acre, or $67,088. We continue to negotiate with the seller of property to acquire an additional 381-acre parcel, which is the site for the planned Large Refinery, at a price of $550 per acre, or approximately $210,000. We will be required to obtain additional financing to complete this purchase.
On July 31, 2017, we filed an application with the Texas Commission on Environmental Quality (“TCEQ”) to obtain an air quality permit and obtained permit approval from the TCEQ on August 30, 2017. Accordingly, we will begin construction on the Distillation Unit on 15 acres of our 126-acre tract as soon we receive adequate financing to do so.
Completion of the Refinery Project will require substantial equity and debt financing and is subject to the receipt of required governmental permits.
NOTE 7 – ACCRUED EXPENSES
Accrued expenses consisted of the following at:
|
|
July 31, 2019
|
|
|
April 30, 2019
|
|
|
|
|
|
|
|
|
Accrued payroll
|
|
$
|
30,090
|
|
|
$
|
30,090
|
|
Accrued consulting
|
|
|
4,000
|
|
|
|
4,500
|
|
Accrued interest
|
|
|
253,987
|
|
|
|
209,947
|
|
Other
|
|
|
62,541
|
|
|
|
62,541
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
350,618
|
|
|
$
|
307,078
|
|
NOTE 8 – NOTES PAYABLE
Note Payable, Currently in Default
Note payable, currently in default, consists of the following at:
|
|
July 31, 2019
|
|
|
April 30, 2019
|
|
|
|
|
|
|
|
|
Note payable to an unrelated party, maturing March 18, 2014, with interest at 10%
|
|
$
|
75,001
|
|
|
$
|
75,001
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
75,001
|
|
|
$
|
75,001
|
|
Accrued interest payable on note payable, currently in default, totaled $47,759 and $45,884 at July 31, 2019 and April 30, 2019, respectively.
Convertible Notes Payable, Currently in Default
Convertible notes payable, currently in default, consist of the following at:
|
|
July 31, 2019
|
|
|
April 30, 2019
|
|
Note payable to an unrelated party, maturing January 27, 2012, with interest at 25%, convertible into common shares of the Company at $3.70 per share
|
|
$
|
50,000
|
|
|
$
|
50,000
|
|
Note payable to an unrelated party, maturing December 31, 2010, with interest at 10%, convertible into common shares of the Company at $1.00 per share
|
|
|
25,000
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75,000
|
|
|
|
75,000
|
|
Less discount
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
Accrued interest payable on convertible notes payable, currently in default, totaled $100,054 and $97,241 at July 31, 2019 and April 30, 2019, respectively.
Current Convertible Notes Payable
Current convertible notes payable consisted of the following at:
|
|
July 31, 2019
|
|
|
April 30, 2019
|
|
Note payable to an accredited investor, maturing September 13, 2019, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price
|
|
$
|
52,050
|
|
|
$
|
110,000
|
|
Note payable to an accredited investor, maturing September 18, 2019, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
70,000
|
|
|
|
70,000
|
|
Original issue discount convertible debenture to an accredited investor, maturing October 5, 2019, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
600,000
|
|
|
|
600,000
|
|
Note payable to an accredited investor, maturing January 4, 2020, with interest at 9%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
45,900
|
|
|
|
136,000
|
|
Note payable to an accredited investor, maturing January 11, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
105,200
|
|
|
|
120,000
|
|
Note payable to an accredited investor, maturing January 17, 2020, with interest at 12%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
113,995
|
|
|
|
125,000
|
|
Note payable to an accredited investor, maturing January 31, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
125,000
|
|
|
|
125,000
|
|
Note payable to an accredited investor, maturing February 20, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
110,000
|
|
|
|
110,000
|
|
Note payable to an accredited investor, maturing February 27, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
55,000
|
|
|
|
55,000
|
|
Note payable to an accredited investor, maturing January 24, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
55,000
|
|
|
|
55,000
|
|
Note payable to an accredited investor, maturing May 7, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
100,000
|
|
|
|
-
|
|
Note payable to an accredited investor, maturing May 7, 2020, with interest at 12%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
56,500
|
|
|
|
-
|
|
Note payable to an accredited investor, maturing June 19, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
250,000
|
|
|
|
-
|
|
Note payable to an accredited investor, maturing June 25, 2020, with interest at 9%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
56,500
|
|
|
|
-
|
|
Note payable to an accredited investor, maturing February 27, 2020, with interest at 10%, convertible into common shares of the Company at a defined variable exercise price, paid in full in June 2019
|
|
|
-
|
|
|
|
100,000
|
|
Note payable to an accredited investor, maturing September 21, 2019, with interest at 8%, converted in full into shares of Class A common stock
|
|
|
-
|
|
|
|
47,269
|
|
Total
|
|
|
1,795,145
|
|
|
|
1,653,269
|
|
Less discount
|
|
|
(510,187
|
)
|
|
|
(869,433
|
)
|
|
|
|
|
|
|
|
|
|
Net
|
|
$
|
1,284,958
|
|
|
$
|
783,836
|
|
Effective September 13, 2018, the Company issued and delivered to GS Capital Partners, LLC (“GS”) a 10% convertible note in the principal amount of $110,000. The note was issued at a discount, resulting in the Company’s receipt of $100,000 after payment of $5,500 of the fees and expenses of the lender and its counsel. GS, at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock (i) during the first 180 days, at a price of $3.00 per share of common stock and (ii) thereafter at a 40% discount from the lowest trading price during the 20 days prior to conversion. The note matures on September 13, 2019. The Company may redeem the note at redemption prices ranging from 115% to 135% during the first 180 days after issuance. The note had a principal balance of $110,000 as of April 30, 2019. During the three months ended July 31, 2019, GS converted principal of $57,950 into Class A common shares of the Company, resulting in a principal balance of $52,050 as of July 31, 2019.
Effective September 18, 2018, the Company issued and delivered to GS a 10% convertible note in the principal amount of $70,000. The note was issued at a discount and the Company received no net proceeds. GS paid $56,589 on behalf of the Company to a prior lender in settlement of a dispute and $9,101 was paid for fees and expenses of GS and its counsel. GS, at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock at a 40% discount from the lowest trading price during the 20 days prior to conversion (with a floor of $3.00 per share during the first six months after issuance.) The note matures on September 13, 2019. The Company may redeem the note at redemption prices ranging from 130% to 145% during the first 180 days after issuance. The note had a principal balance of $70,000 as of July 31, 2019 and April 30, 2019.
Effective October 9, 2018, the Company issued and delivered to GS a 10% convertible debenture in the principal amount of $600,000. The debenture was issued with an original issue discount of $50,000, resulting in the Company’s receipt of $550,000 of net proceeds. The debenture was issued pursuant to a securities purchase agreement, which allows for the issuance of additional debentures to one or more holders on substantially identical terms. GS, at its option on and after the six-month anniversary of the date of issuance, may convert the unpaid principal balance of, and accrued interest on, the debentures into shares of common stock thereafter at a 40% discount from the average of the three lowest trading price during the 25 days prior to conversion. The debenture matures on October 5, 2019. The Company may redeem the debenture at redemption prices ranging from 112% to 137% during the first 180 days after issuance. The debenture had a principal balance of $600,000 as of July 31, 2019 and April 30, 2019. Affiliates of Jack W. Hanks and Bruce Lemons, our directors, have pledged their shares of Class B Common Stock (constituting 100% of the outstanding shares of Class B Common Stock) to GS to secure the repayment of the debenture by the Company.
Effective January 4, 2019, the Company issued and delivered to Geneva Roth Remark Holdings, Inc. (“Geneva”) a 9% convertible note in the principal amount of $136,000. The note was issued at a discount, resulting in the Company’s receipt of $125,000 after payment of $3,000 of the fees and expenses of the lender and its counsel. Geneva, at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock beginning 180 days following the date of the note at a 29% discount from the average of the three lowest trading prices during the 20 days prior to conversion. The note matures on January 4, 2020. The Company may redeem the note at redemption prices ranging from 105% to 130% during the first 180 days after issuance. The note had a principal balance of $136,000 as of April 30, 2019. During the three months ended July 31, 2019, Geneva converted principal of $90,100 into Class A common shares of the Company, resulting in a principal balance of $45,900 as of July 31, 2019.
Effective January 11, 2019, the Company issued and delivered to One44 Capital LLC (“One44”) a 10% convertible note in the principal amount of $120,000. The Company received net proceeds of $114,000 after payment of $6,000 of the fees and expenses of the lender and its counsel. One44, at any time at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock at a 40% discount from the lowest trading price during the 20 days prior to and including the day the notice of conversion is received by the Company, with a floor of $0.03 per share. The note matures on January 11, 2020. The Company may redeem the note at redemption prices ranging from 130% to 140% during the first 180 days after issuance. The Company may not redeem the note after 180 days from the issuance date. The note had a principal balance of $120,000 as of April 30, 2019. During the three months ended July 31, 2019, One44 converted principal of $14,800 into Class A common shares of the Company, resulting in a principal balance of $105,200 as of July 31, 2019.
Effective January 17, 2019, the Company issued and delivered to JSJ Investments, Inc. (“JSJ”) a 12% convertible note in the principal amount of $125,000. The Company received net proceeds of $122,000 after payment of $3,000 of the fees and expenses of the lender and its counsel. JSJ, at any time at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock at $0.03 per share or, upon the occurrence of certain defined defaults, at a 42% discount to the lowest trading price during the 20 days prior to the date the notice of conversion is received by the Company. The note matures on January 17, 2020. The Company may redeem the note at redemption prices ranging from 135% to 150% during the first 180 days after issuance. The note had a principal balance of $125,000 as of April 30, 2019. During the three months ended July 31, 2019, JSJ converted principal of $11,005 into Class A common shares of the Company, resulting in a principal balance of $113,995 as of July 31, 2019.
Effective January 31, 2019, the Company issued and delivered to Auctus Fund, LLC (“Auctus”) a 10% convertible note in the principal amount of $125,000. The Company received net proceeds $112,250 after payment of $12,750 of the fees and expenses of the lender and its counsel. Auctus, on or following the 180th calendar day after the issuance date of the note, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock a 40% discount to the lowest trading price during the 20 days prior to the date the notice of conversion is received by the Company. The note matures on January 31, 2020. The Company may redeem the note at redemption prices ranging from 120% to 135% during the first 180 days after issuance. The Company may not redeem the note after 180 days from the issuance date. The note had a principal balance of $125,000 as of July 31, 2019 and April 30, 2019.
Effective February 7, 2019, the Company issued and delivered to Geneva a 12% convertible note in the principal amount of $56,500. The note was issued at a discount, resulting in the Company’s receipt of $50,000 after payment of $3,000 of the fees and expenses of the lender and its counsel and an original issue discount of $3,500. Geneva, at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock beginning 180 days following the date of the note at a 29% discount from the lowest trading price during the 20 days prior to conversion. The note matures on May 7, 2020. The Company may redeem the note at redemption prices ranging from 105% to 130% during the first 180 days after issuance. The note had a principal balance of $56,500 as of July 31, 2019 and April 30, 2019.
Effective February 20, 2019, the Company issued and delivered to GS a 10% convertible note in the principal amount of $110,000. The note was issued at a discount and the Company received net proceeds of $100,000 after payment of $5,500 of the fees and expenses of the lender and its counsel. During the first 180 days, GS, at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock at a price of $0.08 per share and thereafter at 40% discount from the lowest trading price during the 20 days prior to conversion. The note matures on February 20, 2020. The Company may redeem the note at redemption prices ranging from 115% to 135% during the first 180 days after issuance. The note had a principal balance of $110,000 as of July 31, 2019 and April 30, 2019.
Effective February 27, 2019, the Company issued and delivered to Coventry Enterprises, LLC (“Coventry”) a 10% convertible note in the principal amount of $55,000. The Company received net proceeds of $52,500 after payment of $2,500 of the fees and expenses of the lender and its counsel. Coventry, at any time at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock at a 40% discount from the lowest trading price during the 20 days prior to and including the day the notice of conversion is received by the Company. The note matures on February 27, 2020. During the first 150 days the Note is in effect, the Company may redeem the note at a redemption price of 135%. The Company may not redeem the note after 150 days from the issuance date. The note had a principal balance of $55,000 as of July 31, 2019 and April 30, 2019.
Effective March 25, 2019, the Company issued and delivered to Geneva a 9% convertible note in the principal amount of $56,500. The note was issued at a discount, resulting in the Company’s receipt of $50,000 after payment of $3,000 of the fees and expenses of the lender and its counsel and an original issue discount of $3,500. Geneva, at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock beginning 180 days following the date of the note at a 29% discount from the lowest trading price during the 20 days prior to conversion. The note matures on June 25, 2020. The Company may redeem the note at redemption prices ranging from 105% to 130% during the first 180 days after issuance. The note had a principal balance of $56,500 as of July 31, 2019 and April 30, 2019.
Effective April 24, 2019, the Company issued and delivered to EMA Financial, LLC (“EMA”) a 10% convertible note in the principal amount of $55,000. The note was issued at a discount and the Company received net proceeds of $50,000 after payment of $3,750 of the fees and expenses of the lender and its counsel. EMA, at any time at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock at a 40% discount from the lowest trading price during the 20 days prior to the day the notice of conversion is received by the Company. The note matures on January 24, 2020. During the first 180 days the Note is in effect, the Company may redeem the note at redemption prices ranging from 120% to $140%The Company may not redeem the note after 180 days from the issuance date. The note had a principal balance of $55,000 as of July 31, 2019 and April 30, 2019.
Effective May 7, 2019, the Company issued and delivered to Odyssey Capital Funding LLC (“Odyssey”) a 10% convertible note in the principal amount of $100,000. The Company received $95,000 after payment of $5,000 of fees and expenses of the lender and its counsel. Odyssey, at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock at a 40% discount from the lowest trading price during the 20 days prior to and including the conversion date (with a floor of $0.03 per share for the six months following the date of the note). The note matures on May 7, 2020. The Company may redeem the note at redemption prices ranging from 130% to 140% during the first 120 days after issuance. The Company may not redeem the note after the first 120 days after issuance. The note had a principal balance of $100,000 as of July 31, 2019.
Effective June 4, 2019, the Company issued and delivered to Geneva a 9% convertible note in the principal amount of $56,500. The note was issued at a discount and the Company received $50,000 after an original issue discount of $3,500 and payment of $3,000 of fees and expenses of the lender and its counsel. Geneva, at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock at a 29% discount from the lowest trading price during the 20 days prior to conversion. The note matures on September 4, 2020. The Company may redeem the note at redemption prices ranging from 105% to 130% during the first 180 days after issuance. The Company may not redeem the note after the first 180 days after issuance. The note had a principal balance of $56,500 as of July 31, 2019.
Effective June 19, 2019, the Company issued and delivered to Odyssey a 10% convertible note in the principal amount of $250,000. Of the note proceeds, $144,296 was paid to One44 to redeem its February 27, 2019 convertible note and the Company received $80,704 after payment of $25,000 of legal and brokerage fees. Odyssey, at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock at a 40% discount from the lowest trading price during the 20 days prior to and including the date of conversion (with a floor of $0.03 per share for the six months following the date of the note). The note matures on June 19, 2020. The Company may redeem the note at redemption prices ranging from 130% to 140% during the first 120 days after issuance. The Company may not redeem the note after the first 120 days after issuance. The note had a principal balance of $250,000 as of July 31, 2019.
Effective March 21, 2018, the Company issued and delivered to Auctus an 8% convertible note in the principal amount of $220,000. The Company received $202,000 of note proceeds after payment of $18,000 of the fees and expenses of the lender and its counsel. The Company can redeem the note at any time prior to 90 days from the issuance date at a redemption price of 130% plus accrued interest. The redemption price thereafter increases to 145%, plus accrued interest, until the 180th day after issuance. Auctus, at its option, may convert the unpaid principal balance and accrued interest into shares of the Company’s Class A common stock at a price of no lower than $3.00 per share of common stock until the 180th day after issuance and thereafter at a 45% discount from the average of the two lowest trading prices during the 25 days prior to conversion. The note also contains penalty provisions in the event of default in repayment of the note (if not converted by Auctus into shares of common stock) on the maturity date of March 21, 2019. During the year ended April 30, 2019, the maturity date of the note was extended to September 21, 2019 and an extension fee of $15,000 was added to the note principal. During the year ended April 30, 2019, Auctus converted principal of $187,731 into Class A common shares of the Company, resulting in a principal balance of $47,269 as of April 30, 2019. During the three months ended July 31, 2019, the balance of the note was converted in full into shares of the Company’s Class A common stock.
Effective February 27, 2019, the Company issued and delivered to One44 a 10% convertible note in the principal amount of $100,000. The Company received net proceeds of $95,000 after payment of $5,000 of the fees and expenses of the lender and its counsel. One44, at any time at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock at a 40% discount from the lowest trading price during the 20 days prior to and including the day the notice of conversion is received by the Company, with a floor of $0.03 per share. The note matures on February 27, 2020. The Company may redeem the note at redemption prices ranging from 130% to 140% during the first 180 days after issuance. The Company may not redeem the note after 180 days from the issuance date. The note had a principal balance of $100,000 as of April 30, 2019. The note was repaid in full in June 2019.
Long-Term Convertible Notes Payable
Long-term convertible notes payable consisted of the following at: April 30:
|
|
July 31, 2019
|
|
|
April 30, 2019
|
|
Note payable to an accredited investor, maturing two years from each advance, with an original issue discount equal to 10% and a one-time interest charge of 12% added to principal, convertible into common shares of the Company at a defined variable exercise price:
|
|
|
|
|
|
|
Advance dated September 13, 2018, maturing September 13, 2020
|
|
$
|
45,355
|
|
|
$
|
80,700
|
|
Advance dated October 16, 2018, maturing October 16, 2020
|
|
|
123,200
|
|
|
|
246,400
|
|
Note payable to an accredited investor, maturing October 16, 2020, convertible into common shares of the Company at a defined variable exercise price
|
|
|
18,055
|
|
|
|
-
|
|
Note payable to an accredited investor, maturing September 4, 2020, with interest at 9%, convertible into common shares of the Company at a defined variable exercise price
|
|
|
56,500
|
|
|
|
-
|
|
Note payable to an accredited investor, maturing May 7, 2020, with interest at 12%, convertible into common shares of the Company at a defined variable exercise price, reclassified to current convertible notes payable
|
|
|
-
|
|
|
|
56,500
|
|
Note payable to an accredited investor, maturing June 25, 2020, with interest at 9%, convertible into common shares of the Company at a defined variable exercise price, reclassified to current convertible notes payable
|
|
|
-
|
|
|
|
56,500
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
243,110
|
|
|
|
440,100
|
|
|
|
|
|
|
|
|
|
|
Less discount
|
|
|
(120,149
|
)
|
|
|
(263,960
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
122,961
|
|
|
$
|
176,140
|
|
Effective September 13, 2018, the Company issued and delivered to Vista Capital Investments, LLC (“Vista”) a convertible note in the original maximum principal amount of $550,000 (consisting of an initial advance of $100,000 on such date and possible future advances). An original issue discount equal to 10% of each advance will be added to principal. The maturity date of advances under the convertible note is two years from the date of each advance. Terms of the convertible note include certain penalties for additional principal and changes in conversion prices when the trading price of the Company’s common stock decreases to defined levels.
An original issue discount of $10,000 and a one-time 12% interest charge of $13,200 was added to the $100,000 advance at inception, resulting in total initial principal of $123,200. Through April 30, 2019, the note was partially converted into shares of the Company’s Class A common stock resulting in a principal balance of $80,700 as of April 30, 2019. During the three months ended July 31, 2019, JSJ converted principal of $35,345 into Class A common shares of the Company, resulting in a principal balance of $45,355 as of July 31, 2019.
On October 16, 2018, the Company received proceeds of $200,000 from a second advance under the Vista long-term convertible note. An original issue discount of $20,000 and a one-time 12% interest charge of $26,400 was added to the note principal, resulting in total principal of $246,400, which balance was outstanding as of April 30, 2019. Effective May 14, 2019, Vista assigned $123,400 of this note, resulting in a principal balance of $123,400 as of July 31, 2019.
Effective May 14, 2019, EMA purchased $123,400 of the principal balance due Vista from the October 16, 2018 advance under the long-term convertible note payable to Vista discussed above. The terms of the EMA convertible note payable are the same as those under the original Vista note and the note matures October 16, 2020. During the three months ended July 31, 2019, EMA converted principal of $105,145 into Class A common shares of the Company, resulting in a principal balance of $18,055 as of July 31, 2019.
Effective June 4, 2019, the Company issued and delivered to Geneva a 9% convertible note in the principal amount of $56,500. The note was issued at a discount, resulting in the Company’s receipt of $50,000 after an original issue discount of $3,500 and payment of $3,000 of the fees and expenses of the lender and its counsel. Geneva, at its option, may convert the unpaid principal balance of, and accrued interest on, the note into shares of common stock beginning 180 days following the date of the note at a 29% discount from the lowest trading price during the 20 days prior to conversion. The note matures on September 4, 2020. The Company may redeem the note at redemption prices ranging from 105% to 130% during the first 180 days after issuance. The note had a principal balance of $56,500 as of July 31, 2019.
Accrued interest payable on convertible notes payable totaled $106,174 and $66,822 at July 31, 2019 and April 30, 2019, respectively.
The Company has identified the conversion feature of its convertible notes payable as a derivative and estimated the fair value of the derivative using a multinomial lattice model simulation and assuming the existence of a tainted equity environment (see Note 9).
NOTE 9 – DERIVATIVE LIABILITIES
In a series of subscription agreements, the Company issued warrants in prior years that contain certain anti-dilution provisions that have been identified as derivatives. In addition, the Company identified the conversion feature of certain convertible notes payable and recently issued stock options as derivatives. As of July 31, 2019, the number of warrants or common shares to be issued under these agreements is indeterminate; therefore, the Company concluded that the equity environment is tainted and all additional warrants, stock options and convertible debt are included in the value of the derivative.
The Company estimates the fair value of the derivative liabilities at the issuance date and at each subsequent reporting date, using a multinomial lattice model simulation. The model is based on a probability weighted discounted cash flow model using projections of the various potential outcomes.
During the three months ended July 31, 2019, we had the following activity in our derivative liabilities:
|
|
Options and
|
|
|
Convertible
|
|
|
|
|
|
|
Warrants
|
|
|
Notes
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 30, 2019
|
|
$
|
18,063
|
|
|
$
|
1,807,533
|
|
|
$
|
1,825,596
|
|
New issuances of options, warrants and debt
|
|
|
-
|
|
|
|
46,812
|
|
|
|
46,812
|
|
Debt conversions and repayments
|
|
|
-
|
|
|
|
(425,325
|
)
|
|
|
(425,325
|
)
|
Change in fair value of derivative liabilities
|
|
|
(15,316
|
)
|
|
|
(239,811
|
)
|
|
|
(255,127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, July 31, 2019
|
|
$
|
2,747
|
|
|
$
|
1,189,209
|
|
|
$
|
1,191,956
|
|
Key inputs and assumptions used in valuing the Company’s derivative liabilities as of July 31, 2019 are as follows:
|
·
|
Stock prices on all measurement dates were based on the fair market value
|
|
|
|
|
·
|
Risk-free interest rate of 1.89%
|
|
|
|
|
·
|
The probability of future financing was estimated at 100%
|
|
|
|
|
·
|
Computed volatility ranging from 207% to 317%
|
These inputs are subject to significant changes from period to period and to management's judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.
NOTE 10 – STOCKHOLDERS’ DEFICIT
Authorized Shares
The Company currently has authorized 12,010,000,000 shares consisting of 10,000,000,000 shares of Class A common stock, 2,000,000,000 shares of Class B common stock and 10,000,000 shares of preferred stock. No shares of preferred stock have been issued.
The Company is proposing to amend its articles of incorporation to increase the number of authorized shares of capital stock from 12,010,000,000 shares to 25,010,000,000 shares. The Company also proposes to designate Series A preferred stock consisting of 1,000 shares and having the rights and preferences set forth in the Certificate of Designation of the Series A preferred stock. Shareholders owning in excess of 50.1% of the outstanding shares of voting common stock of the Company executed a written consent approving an amendment to Article IV of the Amended and Restated Articles of Incorporation of the Company for these proposals. Upon the effectiveness and on the date that is 20 days following the mailing of the required Information Statement, the board of directors shall have the Company’s Certificate of Amendment to the Amended and Restated Articles of Incorporation filed with the State of Nevada in order to effect the changes.
On September 14, 2018, the Company amended its articles of incorporation to provide for a 1 for 100 reverse stock split of our Class A and Class B common shares. Shareholders owning in excess of 50.1% of the outstanding shares of voting common stock of the Company executed a written consent approving an amendment to Article IV of the Amended and Restated Articles of Incorporation of the Company. The amendment was also approved by the Company’s Board of Directors and declared effective by FINRA on November 15, 2018. The Company has given retroactive effect to the reverse stock split for all periods presented.
Stock Issuances
During the three months ended July 31, 2019, the Company issued a total of 322,125,328 shares of its Class A common stock: 30,000 shares for services valued at $84; 1,116,961 shares valued at $11,508 in payment of accrued expenses of $13,500 resulting in a gain on extinguishment of debt of $1,992 and 320,978,367 shares valued at $368,932 in conversion of convertible notes principal of $361,614, accrued interest payable of $5,568 and payment of fees of $1,750. Settlement of derivative liabilities in the debt conversions totaled $425,325.
During the three months ended July 31, 2018, the Company issued a total of 3,152,899 shares of its Class A common stock: 99,623 shares for services valued at $38,026; 16,031 shares valued at $6,262 in payment of accrued expenses of $13,500 resulting in a gain on extinguishment of debt of $1,992; 2,047,771 shares valued at $308,617 in conversion of convertible notes principal of $303,069 and accrued interest payable of $5,548; and 989,474 shares for stock subscriptions receivable of $116,252 pursuant to an equity purchase agreement. Settlement of derivative liabilities in the debt conversions totaled $244,639.
Warrants
The Company has issued warrants in prior years to investors in a series of subscription agreements in equity financings or for other stock-based compensation. Certain of the warrants contain anti-dilution provisions that the Company has identified as derivatives. We estimate the fair value of the derivatives using multinomial lattice models that value the warrants based on a probability weighted cash flow model using projections of the various potential outcomes and considering the existence of a tainted equity environment (see Note 9).
A summary of warrant activity during the three months ended July 31, 2019 is presented below:
|
|
Shares
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average
Remaining Contractual Life (Years)
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, April 30, 2019
|
|
|
1,789,293
|
|
|
$
|
1.00
|
|
|
|
2.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
10,759,954
|
|
|
$
|
1.00
|
|
|
|
|
|
Canceled / Expired
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, July 31, 2019
|
|
|
12,549,247
|
|
|
$
|
1.00
|
|
|
|
2.66
|
|
The warrant shares granted during the three months ended July 31, 2019 are comprised of warrant shares issued to warrant holders pursuant to anti-dilution provisions.
Stock Options
As a condition for entering into the October 9, 2018 GS convertible debenture (see Note 8), GS required affiliates of Jack W. Hanks and Bruce Lemons, our directors (the “Affiliates”), to pledge their shares of Class B Common Stock (constituting 100% of the outstanding shares of Class B Common Stock) to GS to secure the repayment of the debenture by the Company. As consideration to the Affiliates for entering into the GS pledge agreement, the Company granted a ten-year option, effective as of December 11, 2018, to the Affiliates to purchase 1,000,000 of Class A Shares and 1,000,000 of the Class B Shares at $0.08 per share.
A summary of combined Class A and Class B stock option activity during the three months ended July 31, 2019 is presented below:
|
|
Shares
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average
Remaining Contractual Life (Years)
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, April 30, 2019
|
|
|
2,000,000
|
|
|
$
|
0.08
|
|
|
|
9.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Canceled / Expired
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, July 31, 2019
|
|
|
2,000,000
|
|
|
$
|
0.08
|
|
|
|
9.37
|
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Common Stock Reserved
At July 31, 2019, 9,624,702,245 shares of the Company’s Class A common stock were reserved for issuance of outstanding warrants, stock options, and convertible notes payable. Combined with the 375,297,755 Class A common shares outstanding, all authorized Class A common shares have been issued or reserved and no Class A common shares are available for share issuances other than those shares included in the reserves pending completion of the increase in authorized Class A common shares discussed above. At July 31, 2019, 1,000,000 shares of the Company’s Class B common stock were reserved for issuance of outstanding stock options.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Legal
There were no legal proceedings against the Company.
NOTE 12 – SUBSEQUENT EVENTS
In accordance with ASC 855-10, all subsequent events have been reported through the filing date as set forth below.
Subsequent to July 31, 2019, the Company issued a total of 1,097,598,126 shares of its Class A common stock in consideration for the conversion of note payable principal totaling $136,882 and accrued interest payable of $13,592.
Effective August 5, 2019, we issued and delivered to Maple Resources Corporation (“Maple”), a related party, a 5% convertible promissory note in the principal amount of $26,000. Maple, at its option may convert the unpaid principal balance of, and accrued interest on, the note into shares of the Company’s Class A common stock at a conversion price equal to 110% of the lowest price at which shares of the common stock have been issued by the Company during the twenty prior trading days. The note matures on August 5, 2020.
Effective September 5, 2019, we issued and delivered to Maple, a 5% convertible promissory note in the principal amount of $10,000 for consulting services. Maple, at its option may convert the unpaid principal balance of, and accrued interest on, the note into shares of the Company’s Class A common stock at a conversion price equal to 110% of the lowest price at which shares of the common stock have been issued by the Company during the twenty prior trading days. The note matures on September 5, 2020.
Effective August 5, 2019, we issued and delivered to BNL Family Trust (“BNL”), a related party, a 5% convertible promissory note in the principal amount of $15,000. BNL, at its option may convert the unpaid principal balance of, and accrued interest on, the note into shares of the Company’s Class A common stock at a conversion price equal to 110% of the lowest price at which shares of the common stock have been issued by the Company during the twenty prior trading days. The note matures on August 5, 2020.
Effective August 5, 2019, we issued and delivered to a consultant (the “Consultant”) a 5% convertible promissory note in the principal amount of $15,000. The Consultant, at his option may convert the unpaid principal balance of, and accrued interest on, the note into shares of the Company’s Class A common stock at a conversion price equal to 110% of the lowest price at which shares of the common stock have been issued by the Company during the twenty prior trading days. The note matures on August 5, 2020. The Consultant funded the note with $5,000 cash and applied $10,000 of consulting fees payable.